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

          POWERING AMERICA: TECHNOLOGY'S ROLE IN EMPOWERING CONSUMERS

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

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON ENERGY

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 26, 2017

                                   __________

                               Serial No. 115-58

          Printed for the use of the Committee on Energy and Commerce

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                      __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    27-322 PDF                  WASHINGTON : 2017

    ----------------------------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Publishing Office,
    http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
    U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
    E-mail, gpo@custhelp.com.

                        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

                                  ----------
                                                                       Page
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     1
        Prepared statement...........................................     3
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................     4
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     5
        Prepared statement...........................................     6
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     7
        Prepared statement...........................................     8

                                   Witnesses

    Arvin Ganesan, Vice President of Federal Policy, Advanced Energy
      Economy........................................................     9
        Prepared statement...........................................    12
        Answers to submitted questions...............................   103
    Karen Butterfield, Chief Commercial Officer, Stem................    20
        Prepared statement...........................................    22
    Monica Lamb, Director, Regulated Markets, LO3 Energy.............    30
        Prepared statement...........................................    32
        Answers to submitted questions...............................   106
    Bryan J. Hannegan, Ph.D., President and Chief Executive Officer,
      Holy Cross Energy..............................................    36
        Prepared statement...........................................    38
    Val Jensen, Senior Vice President for Customer Operations, ComEd.    49
        Prepared statement...........................................    51
        Answers to submitted questions...............................   109
    Todd Sandford, Senior Vice President, North America Distributed
      Energy and Power, Direct Energy................................    65
        Prepared statement...........................................    67

          POWERING AMERICA: TECHNOLOGY'S ROLE IN EMPOWERING CONSUMERS

                                  ----------

                          TUESDAY, SEPTEMBER 26, 2017

                      House of Representatives,
                                Subcommittee on Energy,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:03 a.m., in
    Room 2123, Rayburn House Office Building, Hon. Fred Upton
    (chairman of the subcommittee) presiding.
        Members present: Representatives Upton, Olson, Barton,
    Shimkus, Murphy, Latta, McKinley, Kinzinger, Griffith, Johnson,
    Bucshon, Flores, Mullin, Hudson, Cramer, Walberg, Walden (ex
    officio), Rush, McNerney, Green, Doyle, Castor, Sarbanes,
    Welch, Tonko, Loebsack, Schrader, Kennedy, and Pallone (ex
    officio).
        Staff present: Elena Brennan, Legislative Clerk, Energy/
    Environment; Wyatt Ellertson, Research Associate, Energy/
    Environment; 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; Mark Ratner, Policy Coordinator; Annelise
    Rickert, Counsel, Energy; Dan Schneider, Press Secretary; Sam
    Spector, Policy Coordinator, Oversight and Investigations;
    Jason Stanek, Senior Counsel, Energy; Madeline Vey, Policy
    Coordinator, Digital Commerce and Consumer Protection; Hamlin
    Wade, Special Advisor for External Affairs; Priscilla Barbour,
    Minority Energy Fellow; Jeff Carroll, Minority Staff Director;
    Rick Kessler, Minority Senior Advisor and Staff Director,
    Energy and Environment; Alexander Ratner, Minority Policy
    Analyst; Andrew Souvall, Minority Director of Communications,
    Member Services, and Outreach; Tuley Wright, Minority Energy
    and Environment Policy Advisor; and C.J. Young, Minority Press
    Secretary.
        Mr. Upton. You may be seated. I don't usually have to say
    that.

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

        Welcome. So good morning, everybody. Today we are going to
    kick off our fifth hearing in the Energy Subcommittee's
    Powering America series. And these hearings as we know have
    provided valuable insight into the complexities of our Nation's
    electric grid and electricity markets.
        And as many in this room are aware and are watching now,
    this week is National Clean Energy Week so that makes our
    hearing this morning even more timely. I look forward to the
    opportunity to hear how advanced energy technologies are giving
    consumers greater control, convenience, and choice when it
    comes to their electricity use.
        And that is why we are all here. Our Nation's grid is an
    engineering marvel that has enabled our country to become the
    advanced and modern society that it is today. However, that
    grid is currently undergoing a significant transformation--
    changing fuel mixes, advances in energy technologies, evolving
    consumer demands to say the least--and these changes present
    opportunities for consumers to become active market
    participants and to have greater control over their energy
    usage.
        Some within the electric industry are recognizing the need
    to address and integrate the electric industry, to integrate
    these new energy technologies to meet the consumers' demand and
    preferences. Consumers now expect a certain level of control,
    convenience, and choice. No longer dependent on one centralized
    generation source, consumers, or ``prosumers,'' can generate
    their own energy and sell that surplus back to the grid and
    behind-the-meter energy storage lets consumers store
    electricity for later use.
        Intelligent energy technologies enable consumers to monitor
    and manage that energy consumption. The ability to manage
    energy gives consumers the opportunity to utilize techniques
    such as peak shaving, which is reducing electric power
    consumption during periods of maximum demand. That allows the
    consumer to save money on their electric bills.
         And we know that with technological innovation, that is
    moving us closer to integrating artificial intelligence into
    our electricity systems which will for sure ensure an
    efficient, reliable, and resilient electrical grid.
        Now most of these energy technologies are located at the
    distribution level of the electric grid. State utility
    regulators have jurisdiction over distribution level or retail
    markets while FERC has jurisdiction over the wholesale markets.
    However, the traditional jurisdictional lines are becoming
    blurred, in part, by the development and deployment of energy
    technologies, State energy policies, and the valuation of new
    energy resources such as demand response.
        The digitization of the electric grid coupled with more
    distributed generation, energy storage, energy management
    technologies, and other distributed energy resources does
    indeed open the door for market-based transactive exchanges
    between energy producers and consumers. This transactive energy
    would allow for a more dynamic balance of supply and demand
    across the entire electricity system using the value as a key
    operational parameter. At the same time, energy technologies
    could help ensure that reliability, security, and resiliency of
    the grid is not compromised.
        Looking forward, the traditional utility model could
    operate more as a market platform where consumers can find
    exactly what they need to meet their energy needs. Ultimately,
    this platform could lead to a better optimized grid where a
    consumer demand is more responsive in real-time to price.
        Today we are going to hear from a robust panel of witnesses
    representing a variety of energy technologies on the cutting
    edge of innovation. We have witnesses who represent different
    utilities, electric utilities, and companies that are leading
    the way in accommodating and integrating these new energy
    technologies. A more dynamic and flexible grid, it does empower
    consumers and allows for energy to be available in a reliable
    and affordable manner.
        [The statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        Good morning. Today we kick off our fifth hearing in the
    energy subcommittee'sPowering Americahearing series. These
    hearings have provided valuable insightinto the complexities of
    our Nation's electric grid and electricity markets. As many in
    this room are aware, this week is National Clean Energy Week,
    which makes our hearing this morning all the more timely. I
    look forward to the opportunity to hear how advanced energy
    technologies are giving consumers greater control, convenience,
    and choice when it comes to their electricity use.
        Our Nation's electric grid is an engineering marvel that
    has enabled our country to become the advanced and modern
    society that it is today. However, the electric grid is
    currently undergoing a significant transformation--changing
    fuel mixes, advances in energy technologies, and evolving
    consumer demands. These changes present opportunities for
    consumers to become active market participants and to have
    greater control over their energy usage. Some within the
    electric industry are recognizing the need to address and
    integrate these new energy technologies to meet consumers'
    demand and preferences.
        Consumers now expect a certain level of control,
    convenience and choice. No longer dependent on one centralized
    generation source, consumers, or ``prosumers''can generate
    their own energy and sell the surplus power back to the
    electric grid. Behind-the-meter energy storage lets consumers
    store electricity for later use. Intelligent energy
    technologies enable consumers to monitor and manage their
    energy consumption. The ability to manage energy gives
    consumers the opportunity to utilize techniques such as peak
    shaving--which is reducing electric power consumption during
    periods of maximum demand. This allows consumers to save money
    on their electric bills. Technological innovation is moving us
    closer to integrating artificial intelligence into our
    electricity systems--which can help ensure an efficient,
    reliable, and resilient electrical grid.
        Most of these energy technologies are located at the
    distribution level of the electric grid. State utility
    regulators have jurisdiction over distribution level or retail
    markets, while the FERC has jurisdiction over the wholesale
    markets. However, the traditional jurisdictional lines are
    becoming blurred, in part, by thedevelopment and deployment of
    energy technologies, State energy policies, and the valuation
    of new energy resources such as demand response.
        The digitization of the electric grid coupled with more
    distributed generation, energy storage, energy management
    technologies, and other distributed energy resources opens the
    door for market-based transactive exchanges between energy
    producers and consumers. This ``transactive energy'' would
    allow for a more dynamic balance of supply and demand across
    the entire electricity system using value as a key operational
    parameter. At the same time, energy technologies could help
    ensure that reliability, security, and resiliency of our
    electric grid is not compromised. Looking forward the
    traditional utility model could operate more as a market
    ``platform'' where consumers can find what they need to meet
    their energy needs. Ultimately, this platform could lead to a
    better optimized electric grid, where consumer demand is more
    responsive in real-time to price.
        Today we will hear from a robust panel of witnesses
    representing a variety of energy technologies on the cutting
    edge of innovation. We also have several witnesses who
    represent different electric utilities and companies that are
    leading the way in accommodating and integrating these new
    energy technologies.
        A more dynamic and flexible electric grid empowers
    consumers and allows for energy to be available in reliable and
    affordable manner. These energy technologies will enhance the
    reliability, security, and resiliency of our Nation's electric
    grid--particularly in the event of extreme weather events. The
    key to ensuring the continued growth of technological
    innovation is competitive and wellfunctioning energy markets,
    which is an issue the committee will continue toexplore going
    forward.

        Mr. Upton. So we look forward to your testimony moving
    forward, and I would yield for an opening statement, my friend
    and colleague from the good State of Illinois, Mr. Rush, the
    ranking member of the subcommittee, 5 minutes.

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

        Mr. Rush. Good morning, Mr. Chairman. I want to thank you
    for holding this important hearing today, Examining
    Technology's Role in Empowering Consumers.
        Mr. Chairman, as we convene here today, our thoughts and
    our prayers are with the three million American citizens on the
    island of Puerto Rico who still have no power and very little
    communication, as well as the people of Houston and Florida and
    all of those who have been uprooted by this historic and deadly
    season of hurricanes.
        Mr. Chairman, it is my sincere hope and my expectation that
    these profound indicators that scientists have been warning us
    about for years now will finally spur serious consideration,
    compensation, and action by this subcommittee to finally
    address one of the greatest threats facing this Nation and our
    world, and that is the issue of global warming.
        I must also note, Mr. Chairman, that we are holding this
    hearing in the midst of National Clean Energy Week, which is
    fitting, Mr. Chairman, considering that today we will hear
    about a variety of new and innovative technological
    advancements in the clean energy arena that would help move our
    Nation forward.
        Mr. Chairman, the fact that as consumers we have become
    more aware of our carbon footprint and how their behavior
    impacts the environment, consumers are also demanding more
    information and the American consumers are demanding more
    control over how their energy is produced and consumed.
    Meanwhile, many changes in our electric grid are spurred by
    State and Federal policy and market forces.
        It is important to understand that consumers are also
    driving many of the trends we see taking place in the
    electricity market. From an increase in smarter appliances with
    real-time access to data to local solar and wind gardens
    supplying an entire community, consumers are pushing many of
    these changes as they demand new tools to more responsibly use
    energy both as a way to save money and as a way to save our
    environment.
        In addition to greater access to data and more control over
    their energy use, other consumer-driven trends we see emerging
    include a greater demanding for cleaner, renewable sources of
    energy to compete with traditional fossil fuels and increase a
    more discriminative generation in demand response resources,
    more energy efficiency initiatives as well as a demand for
    lower energy costs.
        Mr. Chairman, I look forward to this hearing, and I want to
    thank you. And with that I yield back the balance of my time.
        Mr. Upton. The gentleman yields back. The Chair would
    recognize the chair of the full committee, the gentleman from
    Oregon, Mr. Walden.

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

        Mr. Walden. Thank you, Mr. Chairman. As you know, today we
    continue our Empowering America hearing series and we
    appreciate the witnesses who are here today to share with us as
    we look at new energy technologies and how they benefit and
    empower electricity consumers.
        While the committee continues its review of wholesale power
    markets in ensuring reliability and affordability, this hearing
    is intended to examine the ways in which the traditional model
    of delivering electricity through a centralized system and one-
    way power flows is being disrupted by an increasingly de-
    centralized system with power being generated and managed by a
    growing number of new distributed technologies located at the
    edge of the grid.
        You don't have to look far to see examples of how
    innovation is transforming the way electricity is being
    generated, delivered, and consumed and how consumers are
    interacting with the grid. For example, in my district in
    Oregon, Oregon Tech uses geothermal power to operate its entire
    campus. They also have a big solar array as well. They sell the
    excess energy back to the grid.
        And I visited Oregon Tech's one-of-a-kind geothermal plant
    in August and saw firsthand how they are taking advantage of
    great renewable resources in the Klamath Basin. It is pretty
    cool to see. I think they may be the only university in America
    that is fully self-contained with renewable energy.
        Today's hearing also allows us to examine how advanced
    electricity technologies are not only transforming the way the
    grid operates, but also how these technologies are empowering
    consumers. Today's consumers both large and small increasingly
    expect more from the energy infrastructure systems and the
    rigid regulatory structures of the past. Modern consumers want
    an electricity that is nimble enough to accommodate new
    technologies and provide consumers with greater control over
    how they purchase and manage their electricity usage and needs.
        Advanced technologies are allowing consumers to express
    their preferences in electric generation and consumption to
    make purchasing decisions based on affordability, control, time
    of use, and the generation source or location of their
    electricity. And this consumer behavior is having an effect on
    electricity prices, choice, the environment, the grid
    resiliency, and reliability.
        So in many instances, advanced energy technologies are
    being deployed behind the meter at consumers' homes or
    businesses. However, even though these technologies are
    physically located on the distribution system, we are seeing
    more and more instances where distributed energy technologies
    are beginning to have impacts on the bulk power system and the
    wholesale electricity markets. These technologies raise
    questions on what role, if any, Federal regulators and regional
    grid operators should play in relation to distributed energy
    technologies, an issue that this committee will continue to
    explore.
        Joining us in this hearing, we have witnesses representing
    a wide range of energy technologies along with witnesses from
    utilities who are successfully attempting to implement and
    accommodate new types of grid technologies. I would like to
    welcome our witnesses. I want to thank you for contributing
    your experience and expertise to this hearing.
        I am confident this hearing will help us better understand
    the role that technologies such as distributed energy,
    microgrids, demand response, and battery storage play in the
    21st century electricity system. Furthermore, today's hearing
    will also shed light on the challenges that are preventing
    advanced technologies from deploying in more areas around the
    country and at faster rates.
        The U.S. electricity sector is one of the most regulated
    sectors in the American economy, evidenced by the numerous
    oversight entities positioned at both the State and the Federal
    levels. This regulatory structure has been crafted for good
    reason and remains critical in ensuring that all Americans have
    access to affordable and reliable electricity. However, when it
    comes to advanced energy technologies we must make sure that
    the country's regulatory structure and policies continue to be
    updated and modernized so they do not stand in the way of
    innovation.
        With that Mr. Chairman, I yield back the balance of my time
    and again thank the witnesses for participating in our series
    of hearings.
        [The statement of Mr. Walden follows:]

                     Prepared statement of Hon. Greg Walden

        We continue our ``Powering America'' hearing series today
    with a closer look at how new energy technologies are
    benefiting and empowering electricity consumers.
        While the committee continues its review of wholesale power
    markets and ensuring reliability and affordability, this
    hearing is intended to examine the ways in which the
    traditional model of delivering electricity through a
    centralized system and one-way power flows is being disrupted
    by an increasingly decentralized system with power being
    generated and managed by a growing number of new distributed
    technologies located at the edge of the grid.
        You don't have to look far to see examples of how
    innovation is transforming the way electricity is being
    generated, delivered, and consumed, and how consumers are
    interacting with the grid. For example, in my district, Oregon
    Tech uses geothermal power to operate its entire campus and
    sells excess energy back to the grid. I visited Oregon Tech's
    one-of-a-kind geothermal plant in August, and saw firsthand how
    they are taking advantage of this great renewable resource in
    the Klamath Basin.
        Today's hearing also allows us to examine how advanced
    electricity technologies are not only transforming the way the
    grid operates but also how these technologies are empowering
    consumers. Today's consumers, both large and small,
    increasingly expect more from their energy infrastructure
    systems and the rigid regulatory structures of the past. Modern
    consumers want an electricity system that is nimble enough to
    accommodate new technologies and provide consumers with greater
    control over how they purchase and manage their electricity
    needs.
        Advanced technologies are allowing consumers to express
    their preferences in electric generation and consumption; to
    make purchasing decisions based on affordability, control, time
    of use, and the generation source or location of their
    electricity. And this consumer behavior is having an effect on
    electricity prices, choice, the environment, and grid
    resiliency and reliability.
        In many instances, advanced energy technologies are being
    deployed behind-the-meter at consumers' homes or businesses.
    However, even though these technologies are physically located
    on the distribution system, we are seeing more and more
    instances where distributed energy technologies are beginning
    to have impacts on the bulk power system and the wholesale
    electricity markets. These technologies raise questions on what
    role, if any, Federal regulators and regional grid operators
    should play in relation to distributed energy technologies; an
    issue that this committee will continue to explore.
        Joining us in this hearing, we have witnesses representing
    a range of energy technologies along with witnesses from
    utilities who are successfully attempting to implement and
    accommodate new types of grid technologies. I would like to
    welcome these witnesses and thank them for contributing their
    expertise to this hearing. I am confident that this hearing
    will help us better understand the role that technologies such
    as distributed generation, microgrids, demand response, and
    battery storage play in a 21st century electricity system.
    Furthermore, today's hearing will also shed light on the
    challenges that are preventing advanced technologies from
    deploying in more areas around the country and at faster rates.
        The U.S. electricity sector is one of the most regulated
    sectors in the American economy, evidenced by the numerous
    oversight entities positioned at both the State and the Federal
    level. This regulatory structure has been crafted for good
    reason and remains critical in ensuring that all Americans have
    access to affordable and reliable electricity. However, when it
    comes to advanced energy technologies, we must make sure that
    the country's regulatory structure and policies continue to be
    updated and modernized so they do not stand as barriers to
    innovation.

        Mr. Upton. The gentleman yields back. The Chair would
    recognize the ranking member of the full committee, the
    gentleman from New Jersey.

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

        Mr. Pallone. Thank you, Mr. Chairman, for holding this
    hearing examining the role of technology and its impact on
    electricity consumers.
        Today's electric grid is incorporating technology in ways
    unimaginable 20 years ago. Electricity and information on the
    grid no longer flow in one direction and as a result consumers
    are embracing the ability to take control of their energy needs
    not just through internet-connected devices such as smart
    thermostats, but also by turning their homes into generators of
    electricity through technologies like rooftop solar. And this
    is all good news.
        And as electric technologies evolve, they are demanding a
    grid that accommodates two-way flows of electricity and
    information. Our job is to recognize these advancements and
    align policies to facilitate new technologies, empower
    consumers, and deliver a grid that is more resilient and
    efficient.
        2 weeks ago we held a hearing to look at how we define
    reliability in a transforming electricity industry. At that
    hearing, Gerry Cauley, president and CEO of the North American
    Electric Reliability Corporation stated that over the past 6
    years the 50 largest events impacting the grid were caused by
    severe weather. Clearly, in today's world, making our grid more
    reliable means making it more resilient to the impacts of
    extreme weather.
        And nowhere is this more evident today than in Puerto Rico
    which is suffering from the aftermath of Hurricane Maria. While
    the overall toll is still being assessed, the island has lost
    at least 80 percent of its transmission and distribution
    infrastructure. The lack of electricity means there is no power
    for lighting, air conditioning, drinking water treatment,
    refrigeration for food and medicine, and so much more.
        And this is catastrophic. We must keep the people of Puerto
    Rico in our hearts and minds and help them in any way we can.
    And it would be nice if the President could turn his attention
    away from the NFL games long enough to realize that everything
    in Puerto Rico is not fine and this is a humanitarian crisis
    and they need our help now.
        Hurricane Maria followed Hurricanes Harvey and Irma which
    also resulted in widespread outages in Texas and Florida. These
    hurricanes should serve as a wake-up call to prioritize
    investments in the technological advancements that can make our
    grid more resilient and help us adapt to the catastrophic
    potential of climate change.
        Some of the new technologies we will discuss today like
    battery storage and microgrids are uniquely positioned to
    provide considerable resiliency benefits to the electric grid.
    These new technologies are also enabling us to generate and
    store power close to where it is consumed. Until recently, grid
    resiliency meant building more transmission lines and
    fortifying substations. That is simply not the case today
    thanks to increased deployment of battery storage and
    microgrids as well as solar and other distributed energy
    resources.
        These new technologies are providing greater localized
    solutions to keeping critical facilities powered in the
    aftermath of severe weather that has caused large-scale damage
    to the grid. In the aftermath of Superstorm Sandy, I spoke to a
    lot of local officials in my district who were interested in
    developing microgrids in their area. And thankfully, New Jersey
    recently announced a plan to develop 13 microgrids across the
    State.
        And this is a good start, but more needs to be done to
    fully protect our grid from another major storm. The Federal
    Government should also be doing more to incentivize this shift
    to utilize new technologies to make our grid more resilient.
    Earlier this year, committee Democrats introduced the LIFT
    America Act which includes $4 billion for modern, efficient,
    and resilient electric grid infrastructure. We need to make
    real and significant investments in our country's grid
    infrastructure now, so we can protect our grid from a major,
    long-term outage like we are now seeing in Puerto Rico.
        And we have a knowledgeable group of witnesses before us
    today and I look forward to hearing their testimony. I yield
    back, Mr. Chairman.
        [The statement of Mr. Pallone follows:]

                 Prepared statement of Hon. Frank Pallone, Jr.

        Thank you for holding this hearing examining the role of
    technology and its impact on electricity consumers.
        Today's electric grid is incorporating technology in ways
    unimaginable 20 years ago. Electricity and information on the
    grid no longer flow in one direction. As a result, consumers
    are embracing the ability to take control of their energy
    needs, not just through internet-connected devices such as
    smart thermostats, but also by turning their homes into
    generators of electricity through technologies like rooftop
    solar. This is all good news. And as electric technologies
    evolve, they are demanding a grid that accommodates two-way
    flows of electricity and information. Our job is to recognize
    these advancements and align policies to facilitate new
    technologies, empower consumers, and deliver a grid that is
    more resilient and efficient.
        Two weeks ago, we held a hearing to look at how we define
    reliability in a transforming electricity industry. At that
    hearing Gerry Cauley, President and CEO of the North American
    Electric Reliability Corporation (NERC), stated that ``over the
    past six years, the 50 largest events impacting the grid were
    caused by severe weather.'' Clearly, in today's world, making
    our grid more reliable means making it more resilient to the
    impacts of extreme weather.
        Nowhere is this more evident today than in Puerto Rico,
    which is suffering from the aftermath of Hurricane Maria. While
    the overall toll is still being assessed, the island has lost
    at least 80 percent of its transmission and distribution
    infrastructure. The lack of electricity means that there is no
    power for lighting, air conditioning, drinking water treatment,
    refrigeration for food and medicine and so much more. This is
    catastrophic. We must keep the people of Puerto Rico in our
    hearts and minds and help them in any way we can. And it would
    be nice if the President could turn his attention away from NFL
    games long enough to realize that everything in Puerto Rico is
    not fine--this is a humanitarian crisis and they need our help
    now.
        Hurricane Maria followed Hurricanes Harvey and Irma, which
    also resulted in widespread outages in Texas and Florida. These
    hurricanes should serve as a wakeup call to prioritize
    investments in the technological advancements that can make our
    grid more resilient and help us adapt to the catastrophic
    potential of climate change.
        Some of the new technologies we will discuss today, like
    battery storage and microgrids, are uniquely positioned to
    provide considerable resiliency benefits to the electric grid.
        These new technologies are also enabling us to generate and
    store power closer to where it is consumed. Until recently,
    grid resiliency meant building more transmission lines and
    fortifying substations. But that's simply not the case today
    thanks to increased deployment of battery storage and
    microgrids as well as solar and other distributed energy
    resources. These new technologies are providing greater
    localized solutions to keeping critical facilities powered in
    the aftermath of severe weather that has caused large-scale
    damage to the grid.
        In the aftermath of Superstorm Sandy, I spoke to a lot of
    local officials who were interested in developing microgrids in
    their area. Thankfully, New Jersey recently announced a plan to
    develop 13 microgrids across the State. This is a good start,
    but more needs to be done to fully protect our grid from
    another major storm.
        The Federal Government should also be doing more to
    incentivize this shift to utilize new technologies to make our
    grid more resilient. Earlier this year, committee Democrats
    introduced the LIFT America Act, which includes $4 billion for
    modern, efficient, and resilient electric grid infrastructure.
    We need to be making real and significant investments in our
    country's grid infrastructure now so we can protect our grid
    from a major, long-term outage like we are seeing in Puerto
    Rico.
        We have a knowledgeable group of witnesses before us today,
    and I look forward to hearing their testimony.
        Thank you, I yield back.

        Mr. Upton. The gentleman yields back. We are ready to start
    with our testimony and I think you all know the routine. Each
    of you, thank you for submitting your testimony in advance. We
    have had an opportunity to go through that. You will each have
    5 minutes and then we will start a question and answer after
    that.
        And we will start with Mr. Ganesan. Is that correct?
        Mr. Ganesan. That is correct.
        Mr. Upton. Vice President of Federal Policy at Advanced
    Energy Economy, welcome.
        Mr. Ganesan. Thank you.

    STATEMENTS OF ARVIN GANESAN, VICE PRESIDENT OF FEDERAL POLICY,
     ADVANCED ENERGY ECONOMY; KAREN BUTTERFIELD, CHIEF COMMERCIAL
     OFFICER, STEM; MONICA LAMB, DIRECTOR, REGULATED MARKETS, LO3
    ENERGY; BRYAN J. HANNEGAN, PH.D., PRESIDENT AND CHIEF EXECUTIVE
     OFFICER, HOLY CROSS ENERGY; VAL JENSEN, SENIOR VICE PRESIDENT
    FOR CUSTOMER OPERATIONS, ComEd; AND TODD SANDFORD, SENIOR VICE
     PRESIDENT, NORTH AMERICA DISTRIBUTED ENERGY AND POWER, DIRECT
                                 ENERGY

                       STATEMENT OF ARVIN GANESAN

        Mr. Ganesan. Thank you, Chairman Upton, Ranking Member
    Rush, Vice Chairman Olson, and distinguished members of the
    committee. I am honored to testify today on the evolving role
    of consumers in the electricity system and how technological
    innovation is transforming our grid for the better. My name is
    Arvin Ganesan and I am vice president for Federal Policy at
    Advanced Energy Economy.
        We are a national trade association representing over 120
    advanced energy corporations across the United States and our
    member companies deploy, produce, or use a wide variety of
    different energy technologies including, but not limited to,
    storage in different forms, small modular nuclear reactors,
    solar, wind, and a variety of smart grid technologies in
    addition to many others. I am happy to join two of our member
    companies on this panel.
        Over the last 6 years, this sector, the advanced energy
    sector, has grown by close to 30 percent. Our industry supports
    jobs across the country, as well with more than three million
    jobs supported by our growth. So I want to talk about what is
    driving that growth: two factors--declining costs and consumer
    preferences. Renewable energy has increasingly been a
    significant provider of energy and will continue to grow in the
    United States based on economic competitiveness.
        Since 2007, the cost for utility-scale wind and solar power
    has declined by 66 and 85 percent, respectively. In their most
    recent analysis, the investment house Lazard finds that wind
    and solar PV have become increasingly cost-competitive with
    conventional generation technologies--this is the most
    important part--on an unsubsidized basis. Because of this rapid
    decline in costs, large-scale renewable energy purchases that
    were once driven primarily by State policies such as RPSs are
    now increasingly being made on economics and on corporate
    preference.
        But the consumer demand is in no way limited just to
    corporations. Declining costs also have a significant impact on
    the everyday consumer. More consumers are increasingly
    exercising choice and control over their energy needs, whether
    that means purchasing solar panels for their rooftops, charging
    electric vehicles in their garages at night, or managing their
    household energy consumptions from their phone, which is
    connected to a smart thermostat, consumers are increasingly
    active participants in the grid. For example, U.S. revenues
    from home energy management systems such as Nest thermostats
    grew from $91 million in 2011 to $1.3 billion last year. And
    through consumer engagement, companies like Oracle have helped
    more than 15 million households in the United States save more
    than $1 billion in energy costs.
        This transformation is changing the very nature of the
    electricity system. We are shifting from a rigid, centralized
    grid to a more dynamic and diverse one and this transformation
    will further help improve the stability of the grid. Allow me
    to give one example of how a dynamic and diverse grid can help
    improve resiliency.
        During the 2014 polar vortex, the extreme cold, winter
    cold, caused a winter record demand for electricity and
    contributed to the failure of 22 percent of the generation in
    PJM. Of the unplanned power outages, coal plants accounted for
    26 percent of the total and natural gas 55, due to the freezing
    of onsite fuel supplies like coal piles, frozen control and
    sensor equipments, and the inability to receive fuel from
    outside providers due to natural gas pipeline constraints.
        Facing this situation, grid operators were able to turn to
    demand response which paid consumers to reduce their
    consumption during peak times, and wind energy to meet electric
    power needs to recover to keep the lights on when other
    resources failed.
        Let me wrap up my testimony by making some brief remarks
    about the potential role for Federal policy. As we all know and
    believe, competition brings out the best in everyone and the
    same is true for energy technology. By enabling true
    competition, the main beneficiaries will be consumers. For
    example, in parts of PJM they have seen over $11.8 billion in
    savings in just 1 year from demand response and energy
    efficiency, which was enabled by rules that allowed these
    resources to compete against building additional power
    generation.
        However, these competitive markets continue to suffer from
    technology-specific barriers that prevent advanced energy from
    providing a full suite of benefits. In fact, some market rules
    prevent new and emerging technologies from selling their
    services on the open market, stifling innovation and keeping
    our electricity system from being modernized for higher
    performance.
        For example, in Indianapolis, Indianapolis Power and Light
    recently constructed a state-of-the-art lithium ion battery
    facility utility-scale that had the ability to improve the
    reliability of the grid. But that facility was not able to get
    compensated because out-of-date definitions of storage were
    baked deep into RTO policies and prevented anything from older
    definitions of storage from simply competing.
        Mr. Chairman, I really appreciate this series of hearings
    and I really appreciate the opportunity to testify before the
    committee. Thank you for your attention and your vision on
    these issues.
        [The statement of Mr. Ganesan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Upton. Well, thanks very much. Thanks for your kind
    words and we are glad that you are here.
        And we will go next to Ms. Butterfield, who is chief
    commercial officer of Stem. Welcome.

                     STATEMENT OF KAREN BUTTERFIELD

        Ms. Butterfield. Chairman Upton, Ranking Member Rush, Vice
    Chairman Olson, and distinguished members of the subcommittee,
    thank you for the opportunity to provide this testimony on the
    role of consumers in the evolving electricity grid. My name is
    Karen Butterfield and I serve as chief commercial officer of
    Stem, a technology and services company that operates the
    world's smartest energy storage network. We applaud the
    subcommittee for thinking through how consumers can play a more
    active role in the modernization of our electric
    infrastructure.
        We believe that software-driven energy storage enables
    consumer participation, drives down costs, increases U.S.
    competitiveness, and helps the grid. Stem was founded 8 years
    ago when the idea that lithium ion batteries combined with
    superfast and superintelligent software would become highly
    valuable to both electricity consumers and the Nation's
    critical electric grids. We install battery storage systems to
    help businesses and institutional customers save money, take
    greater control of their energy usage, and more actively
    participate in energy markets.
        Stem provides storage as a service, financing the hardware
    so that customers pay nothing up front but rather pay a monthly
    subscription fee to save and participate. Our software then
    automatically charges and discharges the batteries to maximize
    savings and help balance the needs of the grid. We install
    battery systems at local facilities including businesses,
    schools, and Government sites in what is called behind-the-
    meter energy storage.
        Installing at the site allows the system to play many
    different roles related to capacity, energy, and voltage. We
    then connect these batteries together virtually, using super
    intelligent software known as Athena. Athena takes data from
    all the sites from weather stations and from the grid and
    creates virtual power plants or VPPs.
        Stem is now active in seven major U.S. markets as broad-
    ranging and complex as California and Texas. Our market
    traction demonstrates that strong commercial demand exists
    today. We have over 700 customer sites installed or in
    deployment. We have eight contracts with U.S. utilities to
    build battery networks with enough capacity to power 30,000
    homes for 4 hours.
        We also have over $500 million in project financing. The
    traditional thinking of the grid is evolving as new
    technologies become more cost effective. Consumers are looking
    for more control and behind-the-meter energy storage gives them
    second-by-second control. It also makes decisions automatically
    without impacting their operations.
        Today, Stem empowers forward-thinking companies like
    Cargill, Extended Stay America, Macy's, Marriott, Albertsons,
    and a host of schools, hospitals, and Government locations. At
    one customer site, the StubHub Center, a professional soccer
    stadium, we were saving them thousands of dollars on their
    utility bills by charging and discharging their storage systems
    at the right time.
        They called us and asked us whether we could modify the
    software to allow them to discharge the battery to help deliver
    on a demand response program with their local utility. We made
    a few changes through Athena, uploaded the algorithms in the
    cloud, and were able to save them tens of thousands more using
    the same exact hardware at the site.
        This may sound futuristic, but Stem is delivering network
    storage just like this today. For example, one day last month
    when the California grid was strained by a record-breaking heat
    wave, Stem software automatically dispatched 14 VPPs that
    included batteries in over a hundred of our customers'
    buildings spread across the State. Not only were we able to
    deliver exactly when called upon, our customers enjoyed knowing
    they were helping keep the lights on in California.
        The Federal Government can drive the modernization of our
    electric infrastructure by putting this technology option in
    the hands of the consumers. FERC has taken the first step by
    opening a rulemaking on how energy storage and distributed
    energy resources can participate in wholesale markets. This
    proceeding should move forward with urgency to capture the
    value of energy storage.
        The Federal Government can also take a leadership role in
    education and standardization of interconnection and permitting
    rules. Stem has served customers in over 75 different U.S.
    jurisdictions and knows firsthand how the lack of standards and
    education increase barriers to installation.
        In summary, now more than ever the consumer-driven electric
    grid requires super intelligent energy storage to optimize
    usage and to operate virtual power plants when and where they
    are needed most. Customer adoption of energy storage will be an
    essential facet of modern, vibrant energy markets here in the
    United States and around the world.
        I am honored to testify before the committee on Stem's
    experience with customers. Thank you and I am happy to answer
    any questions about energy storage and the role of the consumer
    in modernizing the electric grid.
        [The statement of Ms. Butterfield follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Upton. Thank you very much.
        We are joined next by Monica Lamb. Ms. Lamb, Director of
    Regulated Markets, LO3 Energy, welcome.

                        STATEMENT OF MONICA LAMB

        Ms. Lamb. Thank you, Chairman Upton, Ranking Member Rush,
    and members of the subcommittee. Thank you for the opportunity
    to testify today. My name is Monica Lamb and I serve as
    director, Regulated Markets for LO3 Energy, an energy
    technology company that enables an interactive multisided
    marketplace to allow customers, producers, and utilities to
    deploy and manage energy assets in an increasingly open and
    competitive electricity market using distributed ledger
    information architecture built on a blockchain data structure.
        LO3 Energy is a young company with deep roots in energy,
    finance, and technology. We are passionate about the future of
    an increasingly flexible, responsive, and reliable utility
    grid. We are developing ways to give people and utilities
    opportunities to shape that future. The community energy
    marketplaces that we are building enable utilities and
    neighborhoods to share in the responsibilities and the benefits
    of reliable distributed energy resources.
        You may be familiar with the concept of the internet of
    things, the idea that our devices, machines, thermostats,
    automobiles, and appliances are able to use built-in sensors
    and computing power to communicate information, coordinate with
    each other, and manage our environment and our energy use
    intelligently and independently by following the rules that
    their owners program into them. Our blockchain platform
    activates an internet of things within the local power grid,
    enabling it to generate market signals that will govern and
    balance neighborhood loads, generation, and storage assets, and
    allowing it to coordinate with the broader interconnected
    transmission grid.
        Currently, LO3 Energy is developing such a marketplace
    within the community of Brooklyn, New York, through a benefit
    corporation called Brooklyn Microgrid. The goal of this project
    is to enable a multisided, multiparticipant marketplace for
    consumer choice that is envisioned by the energy regulators in
    New York, and to improve the local community's energy security
    during extreme weather events and other emergencies.
        This community energy marketplace in Brooklyn, which can be
    replicated in hundreds more communities around the U.S. and
    globally will create a locally optimized energy network that
    also coordinates with the broader power grid. These local
    energy resources provide resiliency for emergencies, reduce
    customer costs, optimize the utility infrastructure
    investments, and enable renewable electricity, energy
    efficiency, and energy storage deployments within that
    community. Meanwhile, the new market drives community
    investment and jobs boosting the local economy.
        The role of public policy is key in enabling the community
    energy marketplace. Policy can enable the integration of new,
    peer-to-peer, local consumer choice energy markets with the
    existing wholesale markets.
        In summary, we think the community energy marketplace
    enabled by the internet of things through blockchain will be
    critical to enabling consumers to participate in and benefit
    from community-based energy resources both during normal
    operations and in emergencies. We see this as a win for the
    consumer, a win for the utility, and a win for the grid. We are
    grateful that the committee is discussing these important
    issues and we look forward to serving as a resource as you
    continue these conversations.
        Thank you again for the opportunity to testify and I look
    forward to addressing any questions from the members.
        [The statement of Ms. Lamb follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Upton. Thank you so much.
        We are joined next by Dr. Bryan Hannegan, president and CEO
    of Holy Cross Energy. Welcome to you.

                     STATEMENT OF BRYAN J. HANNEGAN

        Dr. Hannegan. Good morning, Mr. Chairman and Ranking Member
    Rush, Vice Chairman Olson, and distinguished members of the
    subcommittee. Thank you very much for the opportunity to be
    here today to testify on how innovations in electricity
    technologies are opening up whole new realms for empowering
    customers. My name is Bryan Hannegan, and I am president and
    chief executive officer of Holy Cross Energy in Glenwood
    Springs, Colorado.
        Before I start, I just want to say our thoughts continue to
    be with those affected by the hurricanes in Texas, Louisiana,
    Florida, Puerto Rico, and the Virgin Islands, as well as those
    affected by the wildfires out in the West. As residents of
    these States work to rebuild their homes, businesses, and
    communities, I want to recognize the ongoing events of the
    efforts of the thousands of utility employees that are working
    around the clock to safely restore power. It is during these
    difficult times that we are all reminded of the critical
    importance of our Nation's energy infrastructure, especially
    the electric grid.
        Holy Cross Energy was formed in 1939 as a not-for-profit,
    member-owned, electric cooperative utility that provides
    electricity, energy, and energy services to more than 56,000
    customers in the western Colorado counties of Eagle, Pitkin,
    Garfield, Mesa, and Gunnison. The more than 3,000 miles of
    transmission and distribution lines that we maintain deliver
    energy to farmers, ranchers, and hardworking communities and
    towns of the Colorado Western Slope. Our workforce includes 158
    skilled and dedicated employees that are committed to serving
    the energy needs of our member-owners and we are governed by a
    seven-member board of directors that is democratically elected
    from the local communities in which they reside.
        So empowering the customer and empowering the consumer is
    vitally important to Holy Cross in everything that we do.
    Working together, our board and our staff make decisions on
    long-term investments and near-term operations in order to
    efficiently optimize our resources on behalf of the members
    that we serve, providing them with safe, affordable, and
    reliable energy supply. However, several of you noted in your
    opening statements the landscape on which we are doing this is
    rapidly changing and I am pleased to share our views with you
    on how these changes will benefit our members and the Nation as
    a whole.
        In my testimony today I make five key points which I would
    like to call to your attention. The first, as it has been said
    several times this morning, the architecture of the U.S.
    electricity grid is rapidly changing from a conventional hub
    and spoke model with large generation and relatively passive
    customers to a grid which is more dynamic, decentralized, and
    distributed. And this offers a tremendous opportunity for
    customers, but it also has profound implications for how we
    design, operate and manage the grid.
        This change in architecture is being driven by several
    factors. Not only the decline in costs for solar PV and other
    distributed energy technologies, but by the increasing
    digitalization of the grid, the availability of metering data,
    and the software platforms, some of which my colleagues have
    hinted at that allow us to bring new services to customers.
        The third main point I would like to make is that the
    Department of Energy's grid modernization initiative is already
    yielding significant benefits for the Nation as it responds to
    these changes, in many cases in public-private partnership with
    companies like those that you see here, and it merits continued
    support by this Congress.
        Several of the many projects supported by the grid
    modernization initiative are already yielding benefits. For
    example, in Hawaii, we are using power electronics located on
    the back of distributed solar panels to absorb the shock of the
    variability those solar panels provide to the grid and actually
    allow us to emplace on those grids several times more solar
    than engineers thought possible only a few years ago. We are
    doing the same thing with utility solar installations in
    California and elsewhere where we can actually ramp solar
    production up and down in accordance with the needs of the
    grid.
        So too can we do this with wind turbines depending on what
    demands are needed in the marketplace. In Vermont, local
    utilities are using advanced distribution management systems to
    directly control energy storage and other DER on the grid in
    new ways that avoid the need for system upgrades and optimized
    asset utilization. And in Washington State, two university
    campuses and a national lab are engaging in transactive energy
    where buildings and even building components can interact
    directly with the marketplace and tailor their production to
    the needs of the grid.
        Because cooperatives are member-owned, member-governed,
    not-for-profit utilities, we are naturally consumer-centric and
    so as a result we put the needs of the consumer first and we
    will be responding and developing and deploying these
    technologies where it makes sense to provide safe, affordable,
    and reliable electric supply.
        I thank the committee for the opportunity to testify today
    and I look forward to your questions.
        [The statement of Dr. Hannegan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Upton. Thank you so much.
        Next, we have Mr. Val Jensen, Senior VP of Customer
    Operation, ComEd. Welcome.

                        STATEMENT OF VAL JENSEN

        Mr. Jensen. Thank you, Chairman Upton, Ranking Member Rush,
    Vice Chairman Olson, members of the subcommittee. My name is
    Val Jensen. I am senior vice president of Customer Operations
    at Commonwealth Edison, a electric distribution company serving
    about 3.8 million customers in Chicago and northern Illinois,
    and also one of six member utilities of the Exelon family of
    utilities serving about ten million customers in Delaware,
    Illinois, Maryland, New Jersey, Pennsylvania, and the District
    of Columbia. Thank you so much for the opportunity to testify
    today.
        And I am going to probably sound at this point in the panel
    like I am plagiarizing. I assure you I am not, but hopefully I
    can offer some insight into the issues my co-panelists have
    been talking about from the perspective of an electric utility.
    Change for our industry is not a choice. It is inevitable. It
    is imperative. And it is driven by four immutable truths. The
    first of these is that technology will continue to get better,
    faster, smaller, cheaper, more pervasive, and more powerful.
        Second, this technology will be ever more interconnected
    offering new opportunities for control both on the part of the
    customer and the grid itself. Data, the lifeblood of
    technology, will continue to proliferate exponentially offering
    opportunities to better understand our customers.
        And most importantly, customers have an inherent desire to
    exercise choice and control, something that has not been
    allowed to them for most of the history of our industry, but
    will be as technology improves. We know that these truths are
    rendering our industry's business model obsolete. The model
    that will ultimately emerge will be more decentralized,
    distributed, and community-focused.
        The industry that we imagine will be obsessively focused on
    helping customers do their jobs or live their lives that are
    better, faster, cheaper, greener, and more customized.
    Historically, our business was to generate, distribute, and
    sell kilowatt hours, a linear process like a pipeline or an
    assembly line. But today, distribution utilities in competitive
    States like ComEd in Illinois act much more like platforms,
    entities that make it possible for other parties to exchange
    products and services.
        Today at ComEd, a customer essentially buys access to the
    grid and to a variety of energy-related services. They can
    purchase power and electricity. They can get access to energy
    efficiency programs. They can install rooftop solar and sell
    the output of that array to Commonwealth Edison, and they can
    share energy data with parties who offer other products and
    services. Tomorrow they will use our grid to buy and sell
    energy services among themselves. The value of this platform
    grows directly as a function of the number of transactions that
    occur on it and we believe it is in our business interest to
    promote as many of those transactions as possible.
        There is no useful conversation about the future of this
    industry that isn't also a conversation with policymakers about
    the interlocking set of statutes, rules, regulations, and
    orders that together form the regulatory policy superstructure
    for our industry and there is no question that local, State,
    and national policymakers are vital to the transformation that
    serves the public interest.
        So I will leave you with a few thoughts for your
    consideration. First, we need a collective purpose that drives
    us forward, particularly when things seem most unclear as they
    may today in our industry. And to me that purpose is to
    maximize the net value that we create for our customers and to
    ensure that all customers can share in that value. And I don't
    mean this as kind of a lofty policy preamble, but as a very
    real standard for judging the value of our investments. The old
    standard of simply minimizing costs sells customers short in a
    world in which value is proliferating.
        Second, we need to honor the pervasive uncertainty we face
    during this transition. The natural urge is going to be to
    hunker down and take actions that create the illusion of
    certainty, when what we need to do is place as many small bets
    as we can. Many will not pay off, but the more we place the
    higher the chance that one pays off big for us. We need
    policies that don't prematurely close off options.
        And third, our federalist system remains a brilliant model
    for fostering innovation. We can argue with what any individual
    State might do, but the ability for different States to explore
    different approaches is enormously valuable to us. It reduces
    risk and makes the overall regulatory policy system much more
    robust.
        So again, we should be cautious about solutions in the name
    of certainty that freeze that experimentation and ultimately
    make the grid and its policy framework more rigid and
    vulnerable. I got involved in electricity policy almost 40
    years ago because it seemed like an area that offered some
    clear opportunities to find practical solutions to tough
    problems and I haven't been disappointed. In fact, I have been
    rewarded by living long enough and being given a job that
    presents me with what I think is the chance to participate in
    the greatest policy opportunity of all, the remaking of this
    industry in the image of the customers that it serves.
        Thank you very much again for the chance to appear.
        [The statement of Mr. Jensen follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Upton. Thank you.
        Mr. Sandford, Senior VP, North America Distributed Energy &
    Power, Direct Energy, thank you for being here.

                       STATEMENT OF TODD SANDFORD

        Mr. Sandford. Thank you, Chairman Upton, Ranking Member
    Rush, Vice Chairman Olson, and members of the committee. Thank
    you for the opportunity to testify this morning. My name is
    Todd Sandford. I am a senior vice president with Direct Energy
    and I look after our Distributed Energy & Power group in North
    America and it really is a pleasure to be with you today.
        Direct Energy is North America's largest competitive energy
    and energy services company and serving close to five million
    customers in the U.S. and Canada and our corporate vision is to
    provide energy and services to meet the changing needs of our
    customers. And there is no doubt that our customers' needs are
    changing and that change is being empowered by technology in
    ways we couldn't imagine just a couple of years ago.
        We now live in a world where a hospitality company like
    Airbnb, which owns no property, is worth more than the Hilton
    and Hyatt hotel franchises combined; or Uber, a company that
    maximizes the value of other people's time and vehicles is now
    estimated to be worth $70 billion. Today's consumer has very
    high and increasing expectations: convenience, personalization,
    ease, on-demand, and efficient. These are the standards by
    which so many of us are being measured now.
        And while regulators and policymakers can drive change, the
    greatest force for change today is consumer behavior and that
    is being aided and magnified by advances in technology. We at
    Direct Energy see two primary trends driving consumer behavior
    around energy: the digitization and distribution of energy. As
    our industry increasingly moves from an analog world to a
    digital one, Direct Energy is turning that digital data into
    unique insights that deliver value to both our residential and
    business customers.
        For residential customers, one example we see is our Direct
    Your Energy tool that uses customers' smart meter interval
    data, disaggregates their electricity bill into the consumption
    and spending by appliance, and while it is a simple idea it is
    something customers haven't seen before and they are engaging,
    they are learning, and they are taking action.
        In Texas we sell a smart-meter-enabled offered to
    residential customers called Power-to-Go. It is a prepaid
    energy product and these customers engage with us much more
    frequently with other customers. And the net result of that
    engagement is we see them using 14 percent less energy than
    their peer or comparative group.
        For business customers, advancements in technology are
    enabling most buildings to install cost effective, real-time
    energy monitoring devices. We offer an energy insight solution
    called Panoramic Power that lets our customers see exactly how
    their businesses use energy right down to the device or circuit
    level. Our typical building installation is generating 250
    million data points a year. Compare that to 12 for a standard
    electromagnetic meter or about 35,000 for a smart meter.
        This robust data set is being translated to real-time,
    actionable insights for our customers allowing them to reduce
    energy waste, identify equipment not operating properly, and
    improve operational efficiency. The insights and use cases
    around the digitization of energy are exciting and demonstrate
    clearly that customers will engage with energy when given the
    opportunity.
        The second trend that we see is around distributed energy.
    New, smaller, and cleaner sources of energy like solar,
    batteries, gas-fired generators, combined heat and power to
    name a few, are being developed closer to the point of need.
    These sources are being linked to intelligent systems that help
    businesses manage demand and consumption.
        Today's consumer can decide how much energy to take from
    the grid and how much to produce themselves. They can track and
    manage the use to become more efficient. They can store energy
    to use later. They can sell surplus energy back to the grid.
    They can get paid to reduce or delay their energy consumption
    and smooth out the peaks in their demand. All of this is
    allowing consumers to save on energy costs and get a more
    predictable and reliable supply. Customers are asking for and
    executing distributed energy products because it meets their
    most stated goals: cost savings and reliability.
        I look forward to your questions and thank you very much.
        [The statement of Mr. Sandford follows:]
        [GRAPHIC] [TIFF OMITTED] T7322.046

        [GRAPHIC] [TIFF OMITTED] T7322.047

        [GRAPHIC] [TIFF OMITTED] T7322.048

        [GRAPHIC] [TIFF OMITTED] T7322.049

        [GRAPHIC] [TIFF OMITTED] T7322.050

        [GRAPHIC] [TIFF OMITTED] T7322.051

        [GRAPHIC] [TIFF OMITTED] T7322.052

        [GRAPHIC] [TIFF OMITTED] T7322.053

        [GRAPHIC] [TIFF OMITTED] T7322.054

        Mr. Upton. Well, thank you all. Thank you all for your
    testimony. We will now move to questions from the dais here.
        Ms. Lamb, you talked about interactive devices, and how
    many States allow you to do that? For Michigan it is a rather
    recent phenomena, the legislation that Governor Snyder signed
    into law last year allows that to happen. But how many States
    allow you to do that and therefore, you know, figure out how
    many States don't?
        Ms. Lamb. I actually will have to get back to you with the
    answer to that question.
        Mr. Upton. Does anyone know the answer to that question?
    OK. All right, I look forward to your response back.
        Mr. Ganesan, you talked about 30 percent growth in jobs,
    three million around the country. What type of training do you
    insist on? Are there community colleges that help? Is this is a
    operation where not interns but journeymen and women go into
    the field? What type of training and how many jobs are actually
    available? If you had your way you would have x amount of jobs
    that are you looking to fill at this point?
        Mr. Ganesan. It is a great question. The vast majority of
    those three million jobs are in energy efficiency, so that is
    contractors who can go into houses, kind of take other trade
    training to make houses or other buildings more energy
    efficient. The vast majority of the jobs are in that sector.
        With respect to workforce training this is a major issue, a
    gap that needs to be addressed, and if I could give you an
    example from Michigan about this. There was a large wind
    turbine manufacturer that wanted to take some of the excess
    welding jobs from Detroit and from Michigan and reapply them to
    turbines, to welding turbines, but the skills associated with
    welding cars are very, very different than the skills
    associated for welding turbines.
        So that is a gap and that is the workforce development gap
    that needs to take place. In order to bring those jobs to
    Michigan that particular company had to finance training of
    those workers to repurpose them towards welding turbines. So
    your point is spot on, there is a workforce development gap to
    retrain workers who are in other sectors to capitalize into
    this sector.
        Mr. Upton. So a quick question, and I don't know if you
    know the answer to this. But as we look at the tragedy in
    Puerto Rico, maybe months without power, probably a mass, you
    know, migration to the States during this very troubled time,
    what type of technology did Puerto Rico have? We have heard
    about the inadequacies of the grid, you know, a whole host of
    things, but I am just thinking about, you know, these folks as
    they leave, forced to leave and move to communities around the
    country. Did Puerto Rico have any sizeable trained folks that
    maybe this would be an avenue for them?
        Mr. Ganesan. So I am not, I unfortunately am not a Puerto
    Rico expert, but a couple of general observations. I think as
    they rebuild their grid there are a lot of folks that can start
    to either get retrained into these new sectors or they can
    redevelop their grid in a more resilient way. And I agree with
    you that there is an opportunity.
        Mr. Upton. So Mr. Jensen, as we see bad storms, a variety
    of things that usually the industry is very responsible, you
    know, they team up to help the neighbor in need. You know, I
    see American Electric Power, I see Consumers Energy, I see DTE,
    I see, you know, Pepco, and others send trucks and crews to
    help wire communities when they have real difficulties. We saw
    that in Florida with Irma, we saw that in Texas.
        Puerto Rico is a different situation because you can't
    drive there with those trucks and technicians. Do you know in
    terms of the industry itself what they have been able to reach
    out and help our citizens, our fellow citizens in Puerto Rico?
        Mr. Jensen. Mr. Chairman, I do know that actually today a
    number of conversations are going on involving FEMA and the
    utility industry as the co-op industry as well as the investor-
    owned industry to try and figure out what the best response
    could be. Clearly it is difficult logistically to land
    equipment and personnel in Puerto Rico. I think part of the
    challenge is we just don't know how bad it is yet in terms of
    the destruction.
        Mr. Upton. It is pretty bad based on what we have seen on
    the news.
        Mr. Jensen. It is. It will take months if not years to
    fully rebuild. So the industry is standing ready in force to
    help when it can, but to land people now would be
    counterproductive because we don't have the equipment.
        Mr. Upton. Last question, as I have 1 second left.
    Technology, talked about it, cyber, you know, as people sign up
    and see these new devices where is the needle on vulnerability
    in terms of cyberattacks on either the company providing that
    technology or the business or homeowner themselves in terms of
    protections so that things don't go haywire at some point?
        Mr. Jensen. Well, I think the experts will tell you that
    there is no system that is completely impregnable, but we spend
    about $10 million a year on cybersecurity. They don't honestly
    tell me much about what they do because for obvious reasons,
    but we have hired experts from NSA, the CIA, FBI. We have a
    very well developed defensive in-depth strategy for
    cybersecurity. When we do connect devices to the grid those
    cybersecurity experts pay special attention to ensure that we
    are not creating new portals into our system that would make us
    vulnerable. I would say it is probably the most important issue
    in most utilities today.
        Mr. Upton. Thank you. The Chair will recognize Ranking
    Member Mr. Rush for 5 minutes.
        Mr. Rush. I certainly want to thank you, Mr. Chairman.
        Mr. Ganesan, again I want to welcome you to this hearing,
    this very important hearing. In your written testimony you
    reference the 2014 polar vortex and other natural disasters and
    of course these are in the forefront of our minds and our
    attention. And you know that fuel diversity including battery
    storage and you also mentioned bringing more renewables on to
    the grid that it actually helps reliability and resilience.
         Can you discuss how adding advanced energy and greater
    fuel diversity helps make the grid more reliable while it also
    increases competition and drives down costs? And I would like
    to also hear from Ms. Butterfield on the role of energy storage
    in making the grid more reliable.
        Mr. Ganesan. Thank you for the question, Mr. Rush. Fuel
    diversity as polar vortex shows is crucial to ensure that any
    one fuel source if it is compromised you can't put yourself in
    a situation where the compromising of one fuel source leads to
    mass outages. During the polar vortex, which was a very rare
    and hopefully a phenomenon we are not going to see any time
    soon though these events seem to happen more and more
    frequently, coal piles froze which shows how cold it was.
    Mechanical equipment such as gas turbines and coal turbines
    froze given the significant cold.
        And what occurred to keep the lights moving was the fact
    that PJM brought in a diversity of different technologies
    including advanced energy technologies. It paid consumers to
    reduce their demand in demand response, which reduced the
    overall amount of electricity that the system needed, and they
    were able to draw on wind resources that didn't have the same
    susceptibility to cold weather as natural gas and cold did.
         So fuel diversity is absolutely crucial. As you bring in
    more of these technologies including storage, which my
    colleague will talk about, it allows your grid to have a more
    diverse fuel sourcing so that you are not relying on one
    particular type of technology. And storage as will be discussed
    brings about a lot of different capabilities to deal with a lot
    of different types of weather events.
        Ms. Butterfield. Thank you for your question. Obviously
    lithium ion battery storage lasts for just so long, right, we
    have cell phones and we have now automobiles that run on
    lithium ion batteries. So in a situation where we want
    resilience in a community where we want to deal with a storm or
    outages after a storm we need a design that allows for
    microgrid or islanding. So in, for example, in Puerto Rico we
    have an island system that really got wiped out and, you know,
    on the mainland United States various grids would have been
    able to support that; in the case of Puerto Rico it cannot.
        So the new design of the system should be distributed and
    in a way that allows certain segments of the grid to come back
    up after a disaster. This is, you know, called a microgrid. And
    battery storage in a lot of these commercial buildings or even
    in homes can be tapped into that kind of backup or standby
    generation as you bring up other generation sources and it is a
    perfect solution to complement microgrids. Unfortunately, today
    our systems are really not designed that way, so as we rebuild
    or as we redesign systems they need to be compartmentalized
    like that.
        Mr. Rush. Well, so are you suggesting then that as we go
    forward that that should be a part of the planning for the
    future, and how aggressive should we be in terms of trying to
    implement this new system?
        Ms. Butterfield. Right. We believe that energy storage and
    battery storage has a perfect application in a grid, in any
    grid, a big grid or a small grid, a microgrid, and that it can
    bridge the gap between outages or it can, you know, charge and
    discharge just at the right time in the grid. It can reduce the
    need for peaker plants that might only go on for 15 or 20
    minutes. So a combination of battery storage within the grid is
    healthy.
        Mr. Rush. I want to thank you, Mr. Chairman. I yield back.
        Mr. Olson [presiding]. The gentleman yields back. The Chair
    now calls upon the chairman of the full committee, Mr. Walden
    from Oregon, for 5 minutes.
        Mr. Walden. Thank you, Mr. Chairman. Again I want to thank
    our witnesses, really good testimony and most helpful. Pretty
    exciting about what is out there and what we are on the edge
    of. I toured one of the national labs, the one in Richland,
    Washington, with Secretary Perry earlier, I think it was in
    August we were there, and it is phenomenal the work they are
    doing and the work they are doing on battery storage and all
    that. So I think it makes you feel good about your investment
    here where we make some of these funding decisions and all to
    see it actually play out there.
        I guess as we talk about these hearings we are having on
    energy we want to make sure we get it right and that we
    understand fully what is happening in your world because you
    are living it every day, every electron. And what I would like
    to know is are the markets working? Are they serving their
    intended purpose and what is it we could do or should do if
    they are not?
        Now, my charge to the committee and the staff has been put
    the consumer first, and if the consumer is winning, that means
    you have got a competitive market. You have got choice. That
    will drive innovation. That should drive down price. I mean,
    that is if you believe in the market effects, which you all
    described are taking place.
        But I was intrigued by your comment that buried somewhere
    in an RTO is that storage doesn't include battery, and I think
    most of us would shake our heads at that. So are there things
    like that? And what can we do, because I mean we can, in
    theory, write the laws. Now some of this is best at the local
    level or State level and I get that. But from a Federal
    perspective, from this committee's perspective, what would you
    have us do that would be helpful?
        Mr. Ganesan. I don't profess to have all the answers but
    I--and if I did, good on me.
        Mr. Walden. That is why we have other panelists.
        Mr. Ganesan. So the example that I used actually is a great
    illustration of the role of this committee. And just to give a
    little bit of background here, in that particular case, the
    rules of the RTO defined storage as a process that involved
    moving a flywheel, so it is a very, very old definition of what
    storage used to be and still used all over the country.
        Mr. Walden. Well, can they change that or do we have to?
        Mr. Ganesan. They can. The RTO can change that but it has
    been, I think, 10 or so years and there has been no progress in
    the change of the definition. It is an example of a very arcane
    definition that illustrates whether or not a facility can be
    built and whether that facility can get compensated for all the
    reliability services that it provides.
        Mr. Walden. Got it.
        Mr. Ganesan. So the one point I would make for a role for
    this committee is to embrace competitive markets, which you
    have. We embrace it. And I think that the role of this
    committee and FERC is to ensure that all the competitive
    markets in the United States do not have a technology bias.
    They simply, the RTOs set outcomes and let the market and
    technologies come in to fill how to get to that outcome.
        Mr. Walden. All right. Can we just go down the panel and
    each of you just, what are your thoughts? And then I only have
    2 minutes so.
        Ms. Butterfield. I will just offer one example in the
    California ISO obviously regulated by FERC we have a duck chart
    which is the shape that the solar provides the State. The belly
    of the duck is negative pricing. If we could charge our
    batteries and get paid to charge our batteries in the belly of
    the duck that would be a perfect market solution. Today we
    can't do that. That is the kind of----
        Mr. Walden. Is that a FERC issue or is that a State issue?
        Ms. Butterfield. It is a State issue, but the FERC NOPR
    that has been opened has to do with allowing distributed energy
    resources to participate in wholesale markets across the board.
        Mr. Walden. OK.
        Ms. Lamb. The technology platform that LO3 Energy is
    developing enables a local community energy marketplace. And so
    what policymakers can do is recognize and help streamline the
    integration of local community energy marketplaces with the
    wholesale markets and encourage communication and cooperation
    and interaction between those markets.
        And Federal policy can also clarify that distributed
    behind-the-meter consumer energy assets can access energy
    markets on equal footing with in-front-of-the-meter energy
    assets and that distributed energy resources like batteries and
    thermal storage and active demand management can transact
    energy services just like traditional generation. And that will
    allow consumers to make choices, to exercise choice by
    selecting sources and suppliers of energy that are aligned with
    their values.
        Mr. Walden. All right.
        Dr. Hannegan. Mr. Chairman, you have hit on the first point
    which is with all of the differences in technologies and the
    differences in regional and customer needs the local decision
    making has to remain paramount. So I would encourage you not to
    think of this as a one-size-fits-all solution because each
    utility, each community is going to take on different paces of
    innovation and flexibility.
        And then the second thing related to that is keep in mind
    someone has got to keep the lights on. Someone has got to
    maintain the poles and wires. Someone has got to interact with
    the customer. Someone has got to provide that obligation to
    serve. And it is not clear how those functions get compensated,
    taken care for, and guaranteed in a purely market environment.
    There is some blend of the two that the committee will likely
    have to keep in mind.
        Mr. Walden. All right.
        Mr. Jensen. I would offer two things, Mr. Chairman. First,
    we could probably debate forever what the right competitive
    market structure looks like, but there is no disputing the fact
    that customers have benefited to the billions of dollars from
    the markets that we do have. Our customers in the PJM zone
    certainly have.
        Secondly, I would say Federal support for R&D is absolutely
    essential. The work that the national labs have done, as you
    have pointed out, has literally transformed our industry just
    creating the technology that is forcing the changes that we are
    now dealing with. So to maintain that investment in that
    precious resource, I think, is very important.
        Mr. Sandford. Quickly, I know we are short on time, but I
    would just say continue or really support the growth of new
    markets for flexibility. Everything that we have talked about
    today requires a level of flexibility bilateral that we have
    never had before and that is really what would allow customers
    to engage in energy.
        Mr. Walden. All right. I appreciate the indulgence of the
    committee to get all the way down the panel. Thank you.
        Mr. Olson. The Chairman yields back. A point of personal
    privilege, Ms. Butterfield, I want to recognize the duck model.
    Our chairman is an Oregon Duck--well played.
        The Chair now calls upon the ranking member of the
    subcommittee, from California, Mr. McNerney, for 5 minutes.
        Mr. McNerney. I thank the chairman. I thank the panelists,
    very interesting testimony, very enthusiastic testimony as
    well. I am going to start with Mr. Sandford. In your view,
    should we improve on the current patchwork of State-by-State
    regulations on consumer protections of smart meter data?
        Mr. Sandford. I think obviously data security and data
    privacy is a huge challenge for our industry and others. You
    know, I think from our perspective the most important thing is
    that it is a level playing field for everybody and that we are
    not just, you know, looking to impose a level of requirements
    on regulated bodies, but everybody who is accessing the data, I
    think, should play by an overarching level set of rules.
        Mr. McNerney. So there should be maybe a Federal rule that
    preempts State-by-State regulations?
        Mr. Sandford. Yes.
        Mr. McNerney. Thank you. In your experience, Mr. Sandford,
    is the electric sector properly utilizing the data that is
    collected from smart meters?
        Mr. Sandford. No. I mean the industry has come a long way,
    but there still is a very low penetration rate of smart meters
    and subsequently, you know, low use of that. I think, you know,
    the most important thing from engaging, which is a big step, is
    would we actually be bold enough to show all consumers real-
    time pricing and send price signals and invite that level of
    engagement? I think that would really unlock the power of the
    data that is coming out of these types of devices.
        Mr. McNerney. Thank you.
        Mr. Jensen, do you believe there is adequate models and
    structures in place regarding the future of our electric grid?
    I mean you mentioned you didn't think there was an overall
    purpose. Do you think there is out there some vision of what we
    should be doing?
        Mr. Jensen. I would say at this point, Congressman, there
    is pervasive uncertainty. I don't think any of us are quite
    sure where this is going to end up. I think the industry is
    beginning to coalesce around this notion of the platform
    business model and the utility becoming an enabler for
    customers and third parties to transact independently across
    that network, but I would be lying if I said there is unanimity
    across the industry at this point.
        Mr. McNerney. Well, do you think that the PUCs' and the
    ISOs' policies have kept pace with the development of
    technology?
        Mr. Jensen. I don't think any of us have kept pace with
    technology. I think it has been moving so quickly lately. I
    think commissions are making a very honest, sincere effort to
    understand the implications for their regulatory environments
    in their respective States. I know our Illinois Commerce
    Commission has been a leader in promoting innovation in our
    business.
        So I think everyone is trying to do what they can. I have
    never seen the industry so characterized by consensus around
    the need to work together as I do today.
        Mr. McNerney. Well, that is good news, I guess.
        Ms. Lamb, what role will electric vehicles have on the grid
    and how can we increase their presence and capitalize on the
    potential benefits that they offer?
        Ms. Lamb. Sure. Electric vehicles are storage location for
    electricity that can interact dynamically with the grid and
    what we can do is enable, you know, a marketplace that allows
    owners of vehicles to transact that energy on the grid like
    other sources of energy.
        Mr. McNerney. So there is a significant potential benefit
    from these----
        Ms. Lamb. Certainly.
        Mr. McNerney [continuing]. For the grid instability.
        Ms. Butterfield, it sounds like most of your customers are
    governments or businesses, and there aren't too many
    residential customers in your model. Is that because businesses
    and governments have time-of-day pricing and residences don't,
    or is there some reason you haven't gone to residential
    customers?
        Ms. Butterfield. I think that is the primary reason, also
    scale. It is an early stage of our industry and so by putting a
    large battery and putting this complicated software into a
    larger facility it is much more cost effective when we can
    scale that way.
        Mr. McNerney. OK, thank you.
        Mr. Ganesan, we have heard a lot about the potential
    benefits for energy storage to the electric system. How will
    FERC's proposal to remove the barriers for storage and
    distributed energy resources in the market help consumers?
        Mr. Ganesan. Well, I think first it allows them to compete
    to provide services. It doesn't mandate them on the grid, but I
    think that given the declining costs of storage, their ability
    to access the wholesale market through competition is what many
    types of storage need to simply get their product deployed. So
    it is a significant opportunity for them.
        Mr. McNerney. Great. And I am going to go back to Mr.
    Sandford for my last question. How does the smart meter
    technology benefit consumer choice particularly in the retail
    markets?
        Mr. Sandford. Again I think for, you know, if I take an
    example from a business and a consumer residential separately,
    for a business customer, you know, we talked a little bit about
    demand response today. And now if I know more through smart
    metering or other device level exactly how much energy I am
    using, I really can proactively optimize my participation in
    some of the flexible programs that ultimately are benefiting
    the grid and do that with confidence.
        So demand response is looking for greater participation
    faster and that is scaring customers, but customers that are
    really armed with actually how their process runs, how much
    energy they use are much better prepared to participate.
        On the residential side, again a lot of our business
    customers pay time-of-use rates or pay a rate that is somewhat
    reflective of when they use it. Most residential customers kind
    of pay towards a curve, but we have had programs for
    residential customers trying to promote weekend use. So we have
    had free Saturdays, for example, as a program really trying to
    send a signal ahead of how everything gets settled out to
    consumers that using your dishwasher on a weekend is much more
    cost effective and better for the grid in trying to incent and
    push usage away.
        Mr. McNerney. Thank you, Mr. Chairman. I yield back.
        Mr. Olson. The gentleman yields back. The Chair now calls
    upon the vice chairman of the full committee, the chairman
    emeritus of the full committee and a fellow Texan, Mr. Barton,
    for 5 minutes.
        Mr. Barton. Thank you, Mr. Chairman.
        Mr. Sandford, your company is called North America, I
    think, Distributed Energy. Do you do business in all 50 States,
    or, I guess, 48 States?
        Mr. Sandford. So the company in North America is Direct
    Energy, and then we have got a group that I look after that
    does distributed energy and power and we look beyond some of
    the regulated States that our traditional supply business
    operates. Direct Energy is owned by a company called Centrica
    in the U.K., so that is a geographical distinction just in the
    hierarchy of our overall business.
        Mr. Barton. But in the United States do you do business in
    both regulated and deregulated States?
        Mr. Sandford. We have energy--yes, we do.
        Mr. Barton. OK. Do you see any differences of approach for
    your product in a regulated versus an unregulated State like
    Texas?
        Mr. Sandford. Yes. And so my answer is right that we do do
    business, but we do different business depending on whether a
    State is open for competition or continues to be regulated. So.
        Mr. Barton. Then let me fine-tune it one more time.
        Mr. Sandford. Sorry.
        Mr. Barton. Does this great new world that everybody is
    alluding to work in a regulated State?
        Mr. Sandford. It can work in a regulated State. I think
    today there is much more engagement, in more companies like
    ours, in those competitive markets with customers today. So I
    think it is happening in those areas quicker, but there is
    nothing stopping it from happening in a regulated State.
        Mr. Barton. Well, the gentlelady Mrs. Lamb is operating
    this microgrid for L03 in Brooklyn, New York. I assume that is
    a regulated market; is that correct?
        Ms. Lamb. Certainly. And we have been working closely with
    our local regulators to enable a system, to transition over to
    a system where community members and neighbors can transact
    energy over the public wires.
        And I would like to point out that--well, for example, we
    think that our technology can be the core of these new markets.
    It will ultimately be up to the utilities to manage those
    markets and set the rules for transactions. And we expect that
    because every jurisdiction has different needs that each
    utility will customize those markets to fit with the cultural
    and regulatory context that they are operating in.
        Mr. Barton. Mr. Jensen, does Commonwealth Edison serve
    Brooklyn, New York?
        Mr. Jensen. No, sir.
        Mr. Barton. They don't, OK. What is the utility that serves
    Brooklyn?
        Ms. Lamb. ConEd.
        Mr. Barton. What is it?
        Ms. Lamb. ConEd.
        Mr. Jensen. Consolidated Edison.
        Mr. Barton. Consolidated, OK. All right, I had it wrong.
    Well, let me go back to Mr. Stanford. My staff says that you
    are a Texas-based company. Is that right?
        Mr. Sandford. Yes. Our headquarters in North America are in
    Houston.
        Mr. Barton. Houston, OK. And you have a school district in
    Carrollton, Texas that saved, according to my staff, $23,000.
    Who paid for the initial cost to deploy that system, do you
    know?
        Mr. Sandford. The school district did.
        Mr. Barton. The school district did. Is it proprietary how
    much it costs to deploy the technology?
        Mr. Sandford. I don't have the price point for that.
    Generally speaking--and that was the Panoramic Power device
    level circuit breaker technology I talked about earlier today--
    we generally talk to customers and expect them to see 10 to 15
    percent savings on their bill. Generally we are looking at a 6-
    to 9-month payback on something like that.
        Mr. Barton. 6- to 9-month, that is great.
        My last question I will go back to Ms. Lamb. I am co-
    chairman of the Privacy Caucus. And if I understand correctly,
    your technology requires your consumers to give up a lot of
    their privacy rights; is that true or not true?
        Ms. Lamb. No. In order to operate a blockchain all of the
    users do have to have access to a single ledger, but the users
    in that ledger can be anonymized and so that they are only
    identified by our randomly generated alpha-numeric code. So it
    actually does allow consumers to have more choice over what
    they do with their energy, but does not require it to be
    public.
        Mr. Barton. Well, the data that your program collects, is
    it monetized in any way? Do you sell it to other entities or
    keep it totally in-house?
        Ms. Lamb. It is a private blockchain which means that the
    data is used to settle the market internally.
        Mr. Barton. So you don't collect it and----
        Ms. Lamb. Sell it to others?
        Mr. Barton [continuing]. Offer it for sale to people that
    might want to use it to market?
        Ms. Lamb. No. So individual users are not, do not need to
    be identified. They can remain anonymous.
        Mr. Barton. OK. Thank you, Mr. Chairman.
        Mr. Olson. The gentleman's time is expired. The Chair now
    calls upon another gentleman from Texas, Mr. Green, for 5
    minutes.
        Mr. Green. Thank you, Mr. Chairman, and thank you and the
    ranking member for having this hearing today. While I am glad
    to hear from our experts today on how technology is empowering
    our consumers, I would first like to use some of my time to
    address a serious issue that is happening in our district in
    the Houston area.
        While Houston has begun to recover from the terrible
    effects of Hurricane Harvey, we are not receiving the clear
    help communication from the EPA in regards to possible
    environmental disasters. EPA has removed 517 containers of
    unidentified potentially hazardous material from supersites in
    Texas which the agency reviews to provide any information about
    the nature of the waste or the threat to human health,
    especially the San Jacinto Waste Pits--it is in Congressman
    Babin's district--and also the U.S. Oil Recovery in Pasadena,
    which these are superfund sites and the one in Pasadena is in
    my district. The one in San Jacinto Waste Pits has been in and
    out of our district over a number of years.
        EPA has not been forthcoming in response to the benzene
    leak at the Valero refinery in our district which might now be
    more than double than what initially was reported. Our office
    has been pressuring EPA for answers, but all we receive is
    radio silence. Our administrator, Mr. Pruitt, still has not
    appeared before the committee to date, an unprecedented absence
    this fall under a new administration. Congress has oversight
    over Federal agencies, it is time we start answering questions
    about the job they are supposed to be doing.
        Now to the issue of the day, the power industry is
    undergoing a major transformation due to the technological
    information, innovation, and changing consumer preferences.
    While technology provides the ability for continued grid
    optimization, consumer expectations are also shaping
    consumption and generation as they continue to take more
    control over their energy habits.
        Mr. Sandford, I am glad to hear your unique perspective as
    a retailer when it comes to these issues, particularly since
    you serve in the Texas market in our district. In your
    testimony you talk about other changing markets like hotel
    industry, transportation industry that have undergone shifts in
    the last 10 years. Can you talk about how digitalization in the
    retail market has changed that landscape?
        Mr. Sandford. So I think again I come back to a handful of
    examples where we see customers choosing to engage in energy
    and at the early stages generate, you know, significant
    efficiencies in a market where we are, you know, challenged to
    think about not only the traditional delivery model but how
    much supply do we need to build new power plants.
        And there is great latent efficiency opportunity out there
    and the digitization is really empowering customers to take
    advantage of that and actually save themselves some money and
    take some stress off the grid near term.
        Mr. Green. Well, not only for individual consumers but your
    business customers, they realize that they can control their
    energy costs.
        Mr. Sandford. Correct.
        Mr. Green. Do you find that the demand from consumers for
    data, does that demand drive consumer habits? How does this
    play into the Power-to-Go program you offer?
        Mr. Sandford. So the Power-to-Go program is really a
    fantastic success because it is a prepaid program. And in a lot
    of markets customers that have some of the worst credit wind up
    paying the highest energy prices and so by a prepay program you
    are now, you know, offering customers a lower cost option. And
    we are seeing our customers on that program on average engage
    or make five to six payments a month and so they are engaging
    with energy, it is top of mind.
        And I alluded to in my testimony we have seen a 14 percent
    reduction against a control group, so just that level of
    engagement, daily text what is my balance, not only are we
    offering a more affordable rate to those customers, we are
    actually helping them use less energy.
        Mr. Green. Typically when a State or a city is trying to
    encourage an industry to move there, energy costs are one of
    the big issues. And would you say that because industry can
    control their costs now or at least know what their costs will
    be it is a plus for a State like Texas?
        Mr. Sandford. Definitely.
        Mr. Green. Right now, and I want to access the consumers'
    energy, usage data is regulated on a State-by-State basis. Does
    Direct Energy in its other States do you find certain
    frameworks are better suited than others when it comes to
    regulating the energy usage data?
        Mr. Sandford. I alluded to earlier in an answer that I mean
    ultimately what we are looking for is a level playing field.
    But you know that part of the business is not something I am a
    resident expert on, but we certainly can get you a follow-up
    answer.
         Mr. Green. OK. Well, I am almost out of time. But my next
    question would be do you feel like there is a Federal framework
    in this space or if so what should it look like? Of course I
    come from an area if it ain't broke don't fix it, but should
    there be a Federal framework in this space?
        Mr. Sandford. On the data, consumer privacy of the data?
        Mr. Green. Yes.
        Mr. Sandford. Yes. Again I think I would defer to providing
    you some written answers to that question.
        Mr. Green. OK, thank you. Thank you, Mr. Chairman.
        Mr. Olson. The gentleman's time is expired. The chairman
    now calls upon himself for 5 minutes. The Texas run continues.
        First, I would like to start by thanking you, Mr. Sandford,
    and all the people at Direct Energy. As you know you all played
    a big role in helping most of the power stay on as Hurricane
    Harvey hit my hometown and my home State not once but twice.
    Hit us head-on. It would be the most expensive hurricane in
    American history. 280,000 Texans lost their power and that is a
    lot, but in terms of our population that is .01 percent. That
    is amazing. Thank you very much. Puerto Rico, we know, will be
    much worse. They may have lost all their power for up to 6
    months, a half of a year.
        Mr. Sandford, Mr. Ganesan mentioned reliability in a
    disaster in his testimony, but some storms like Harvey and Irma
    and Maria are just too strong. Can you talk about how next
    generation energy can help improve the strength of our grid
    during natural disasters, lessons learned from Harvey maybe
    already and Maria or even Irma?
        Mr. Sandford. Yes. I mean there are some great examples in
    Texas of customers that have had, you know, gas-fired and
    diesel standby generators that have been able to keep stores
    open for their communities and have been able to kind of be a
    presence at a time of need. Certainly as we see in the business
    space, consumers looking for a level of reliability we see
    consumers opting for a baseload application like a combined
    heat and power that really, you know, ensures that regardless
    of what happens to the transmission and distribution wires as
    long as natural gas is flowing they have got power.
        And a lot of them will accompany that with a standby
    generator to kind of top up their peak demand and have absolute
    confidence, you know, that for days in an event like that they
    can keep their businesses open. And a lot of them, you know,
    consider themselves strong foundations of the community and not
    only from a business continuity perspective but from public
    good perspective that is very important to them.
        Mr. Olson. Anyone else want to comment on that the
    importance of reliability in an emergency situation, a
    disaster? Mr. Ganesan, I know it was in your testimony.
        Mr. Ganesan. Yes, absolutely. So if you look at examples, I
    think it is too early for me at least to comment on the
    disasters that have struck your district and others recently.
    But if you look at recent ones in 2014, like polar vortex, it
    is this diversity that allowed certain assets to stay on line
    during key times. So if you look at the hospitals in New York
    during Superstorm Sandy, they stayed on line by microgridding,
    by using combined heat and power, and a litany of other
    resources and those are the types of lessons that we can apply
    going forward.
        Mr. Olson. Mrs. Butterfield, do you care to comment on that
    reliability of the grid in an emergency?
        Ms. Butterfield. I concur with Mr. Ganesan. I will say that
    you know, the idea that military bases or universities or
    hospitals that can become community locations, even churches,
    and as we design our communities to have these resilient places
    in the community it is very helpful.
        Mr. Olson. Mrs. Lamb, care to comment, ma'am, on our grid
    in an emergency?
        Ms. Lamb. Sure. And I agree with my colleagues here and I
    would point out that the type of community energy marketplace
    that we are developing helps enable the installation of these
    types of distributed energy assets. And so enabling a community
    energy marketplace where these assets can be used and monetized
    all the time obviously makes them more available during an
    emergency as well.
        Mr. Olson. It sounds like to your model having power
    generation stations, smaller ones, scattered all over is much
    more reliable. For example, Puerto Rico might have power to the
    island with power right now that they don't have, so that is
    maybe let's--going forward.
        Dr. Hannegan, your comments about our grid in an emergency?
        Dr. Hannegan. I think the key here is to think of grid and
    reliability in the same breath as you think about your disaster
    preparedness. So identify those vital resources you are going
    to need as part of your recovery strategy and then build
    whether it is a microgrid, whether it is storm hardening,
    whether it is backup supplies that can be moved in, you have
    got to incorporate that into your overall disaster
    preparedness.
        Mr. Olson. Thank you. Mr. Jensen?
        Mr. Jensen. Yes, sir. In addition to the ideas offered so
    far, I think there is a serious role for grid hardening. I
    think if you look at a lot of the damage it is a function of
    infrastructure that perhaps hadn't been as strong as it could
    have been. We have embarked on a major rebuilding program on
    our grid to have reduced seven million customer outages as a
    result of just making the core infrastructure stronger.
        Mr. Olson. Well, I think back home they have done this.
    They have buried a lot of power lines instead of put up on
    poles, because poles tend to break in heavy winds and floods.
        So my time is expired. Now I call upon the gentleman from
    Pennsylvania, Mr. Doyle, for 5 minutes.
        Mr. Doyle. Thank you, Mr. Chairman, and thank you for
    holding this hearing today. I want to take this opportunity to
    welcome another Pittsburgher, Todd Sandford, before our
    committee today. Glad to have you here, Todd.
        Let me ask you. I know Direct Energy has worked with many
    businesses in or near my district including Excela Health,
    Carnegie Robotics, and the home ice for the back-to-back
    Stanley Cup champions, the Pittsburgh Penguins. Yes, thank you.
    PPG Paints Arena, I also want to point out, was the first LEED
    Gold Certified major sports venue in the country.
        Mr. Sandford, can you explain how demand response programs
    affected the Arena's power use and any other benefits to the
    arena?
        Mr. Sandford. Yes. I mean they are a fantastic partner and
    they have done some great things with that arena including
    hosting some really good hockey teams. But clearly, you know,
    the great thing about their participation in demand response is
    it hasn't impacted their power usage at all, right. And that is
    one of the values that it has actually helped and it helps the
    grid locally but is very manageable by that customer.
        So that is a very progressive customer looking to do
    everything they can from an environmental and efficiency
    perspective and saw demand response and see demand response as
    a very practical, nonintrusive way where they can actually earn
    some revenue by not using energy when it is most needed by the
    grid.
        Mr. Doyle. Excellent. I also appreciate you featuring
    combined heat and power systems in your testimony. You know, a
    2016 study from the Department of Energy found that
    Pennsylvania ranked fourth nationally in potential onsite
    generation. The Mid-Atlantic CHP Technical Assistance
    Partnership, which is headquartered at my alma mater Penn
    State, estimates that there are over 12,700 potential CHP sites
    in our home State. However, there are only 168 currently
    operating. These existing sites and systems create good jobs
    and significantly reduce carbon emissions, avoiding 248 million
    metric tons of CO2 per year.
        So tell me, what makes Pennsylvania such a good State for
    CHP and what can we do at our committee to increase deployment
    of these systems?
        Mr. Sandford. So one of the big drivers of the economics
    behind CHP is really the spark spread, and Pennsylvania and the
    Northeast are, you know, is one of the most attractive markets
    nationally for spark spread. So there is a good foundation.
    There are a number of Federal and some State programs to
    promote and incent CHP, you know, which is fantastic.
        And then there still is tremendous untapped opportunity to
    really convey the message to kind of first-time adopters who
    haven't had CHP on their premise that are great applications to
    start to kind of understand the role of reliability and some of
    the other engagement tools we have talked about today, how now
    might be an even better time to think about CHP than in the
    past.
        Mr. Doyle. Thank you.
        Mr. Ganesan, you highlighted the deployment of incredible
    cost savings of distributed energy resources in Brooklyn. As
    you explained, the cost of that project went from $1 billion
    down to a projected cost of 200 million. Now that is for an
    area that is experiencing an incredible population and economic
    boom. How can this be applied to more established cities? Does
    the rapid growth contribute to this dramatic decline in costs
    and deployment?
        Mr. Ganesan. I think that that particular example is a
    testament to the regulators as well as the local utility who
    were able to kind of piece together a solution to a complicated
    problem by bringing in different types of distributed
    technologies as opposed to simply the usual solution which is
    to build out additional capacity there.
        So I think that the lesson that can be applied elsewhere
    is, you know, a collaboration at all levels including, you
    know, utilities, vendors, regulators. That is the way that you
    can get these technologies deployed and lower the cost for
    consumers.
        Mr. Doyle. Thank you.
        Mr. Jensen, in your testimony you explain that because of
    the new existence of consumer producer, you know, a cycle of
    innovation, cost improvement, and economic development will be
    set in motion. So tell me, how do we as policymakers accelerate
    this cycle?
        Mr. Jensen. Well, one way, Congressman, I think, is again
    by your support for the U.S. Government's R&D structure. The
    technology that is driven out of the labs has been absolutely
    instrumental to everything we do not just on the consumer side
    but on the utility reliability side as well. That I think is
    probably the single most valuable investment the Federal
    Government has made is in that lab structure and the technology
    that it has produced.
        Mr. Doyle. Yes. And I hope my colleagues are paying
    attention to that. We see more and more resources being taken
    away from Federal research. And because of the downward
    pressure on our budgets on nondefense discretionary spending
    that pot of money keeps going down this way. And I think it is
    penny wise and pound foolish for us to be cutting resources for
    R&D in this country.
        So thank you for your testimony. Mr. Chairman, thank you. I
    yield back.
        Mr. Upton. The gentleman yields back. The Chair would
    recognize Dr. Murphy for 5 minutes.
        Mr. Murphy. I appreciate that Mr. Chairman. Since we had a
    series of Texas questions it is only appropriate we have a
    couple of Pennsylvania ones as well.
        I want to address my first question to Mr. Stanford on
    this. We talked a little bit before of this about the low-
    hanging fruit of dealing with emissions, et cetera, is really
    conservation which is what your company works with. You showed
    me a little device. Could you have that with you that tell me
    how that works that a homeowner can use this, or is this more
    of a corporate--tell me how that works.
        Mr. Sandford. Yes. I mean today this is really a business
    application, but it could be used in a house, and this is our
    Panoramic Power. I talked earlier about our real-time device
    capture and this is a wireless current transformer that you can
    put on a circuit breaker or isolate a piece of equipment. And
    this signals real-time, six-times-an-hour data feeds up to the
    Amazon web and allows customers to see real-time what their
    energy is.
        And so it is really important, you know, for the 90-plus
    percent of nonresidential businesses that building controls
    today are cost-prohibitive for, this is a really powerful
    behavioral tool that allows customer to get alerts on their
    phone real-time, their air conditioning is running at an hour
    when they said that their air conditioner shouldn't be running,
    to take action. Rather than a report 45 days after the fact
    telling you what you should have done, it can tell you the next
    morning that that decision to not do anything cost you $75.
        Mr. Murphy. So given that, have you worked out metrics in
    terms of if a number of businesses or residential facilities
    use this what we are looking at in terms of actually reducing
    how much energy has to be produced on the grid by power plants
    if----
        Mr. Sandford. You know, we haven't done the math, but I
    stated earlier what we are seeing with all of our deployments
    on average is Customer seeing in the 10 to 15 percent reduction
    and that is on the behavior. There are ancillary benefits of
    predictive maintenance and operational benefits to some
    manufacturing customers that would be on top of that.
        Mr. Murphy. So given this, I mean our grid it is a strange
    thing to say, but sometimes the way our power plants and grid
    is set up it is based upon an assumption of inefficiency. I
    mean yours is working towards efficiency. And given that since
    there is the principle there is always in equal ops a reaction,
    my understanding is that part of the problem is, is the
    benefits associated with these advanced energy technologies may
    also be that there could be some increased electricity costs,
    displacement of baseload resources, or decreased system
    reliability. Am I correct on that?
        Any other panelists may also answer that too, perhaps Mr.
    Jensen or Dr. Hannegan. Am I correct in that, that there are
    also some problems that could occur and how do we deal with
    that?
        Mr. Sandford. I mean clearly the whole grid is a delicate
    balance of supply and demand, and if consumers are really
    empowered and engaged and significantly change not only the
    amount of energy they use but when they use it there are
    certainly ramifications to the grid. But those could be net
    positive or negative depending on the situation.
        Mr. Murphy. Mr. Jensen, do you have a comment on that?
        Mr. Jensen. I think with respect to energy efficiency
    technologies there is nothing but upside for the grid and for
    our customers. We have estimated over the next 13 years we will
    save $4 billion for customers. That may result in some increase
    in price just because of the strange economics of the utility
    business, but overall cost for customers will fall by $4
    billion. So from our perspective, energy efficiency is the
    first best option.
        Mr. Murphy. Dr. Hannegan?
        Dr. Hannegan. In terms of operating the grid there is a
    tremendous amount of potential in that federally funded R&D
    that we have been supporting to take the advanced metering
    data, the grid sensor data from devices like the one Mr.
    Sandford showed and incorporate that into software that I
    referred to in my testimony, advanced distribution management
    software, and then the same at a building level to actually
    provide the sheet music for the storage and the electric
    vehicles and the solar panels and everything to work in
    balance.
        And when you do that, what we are finding is you actually
    have a more reliable solution not a less reliable solution
    because you are able to separate and then reconnect to the grid
    at times where it makes sense to operate as a microgrid versus
    connect into the larger scale resources.
        Mr. Murphy. Now it was also referenced too that sometimes
    with the overproduction of power referencing that some
    utilities would offer or are offering customers an opportunity
    of free electricity on weekends when they could adjust that.
    Does that over time mean that energy companies would say let's
    just produce less, we don't need as many power plants? Is that
    another issue that comes up?
        Dr. Hannegan. It ends up increasing the asset utilization
    so you are able to more optimize the amount of resources that
    you are providing. You can optimize when and where and how you
    provide them. So platforms like Ms. Lamb's blockchain now allow
    for trading among customers at a level below where we would
    trade with each other as utilities.
        You heard Mr. Sandford talk about their Saturdays program.
    I think that creates the opportunity for us in the utility
    space to design new programs, perhaps a flat rate program for
    our low and middle income consumers that takes the variable
    cost of energy and makes it a fixed one.
        Mr. Murphy. What is fascinating about this whole thing, Mr.
    Chairman, is that energy use was very often passive for the
    residential customer and commercial customer; now it is very
    much active. Perhaps the democratization of the whole process,
    everybody with data has a vote in this process. Do you want to
    use it or not use it; higher price, lower price. Tremendous
    responsibility and really pretty a cool thing for consumers.
        Thank you, Mr. Chairman. I yield back.
        Mr. Griffith [presiding]. I thank the gentleman and now
    recognize the gentleman from Iowa, Mr. Loebsack, for 5 minutes.
        Mr. Loebsack. Thank you, Mr. Chair. This has been a great
    panel. One of the advantages of sitting so far down is that I
    get to hear a lot of really great things from you folks and
    from my colleagues.
        I do want to state at the outset, along with Mr. Doyle and
    I am sure others here, the importance of this Federal R&D. I
    think Federal support for R&D, I really do believe that is
    really, really critical and I hope that we can continue to get
    really great bipartisan support for that. So thanks for those
    of you here who have expressed that concern that we consider to
    support R&D at the Federal level.
        I do want to begin, Mr. Ganesan--is that how we pronounce
    that?
        Mr. Ganesan. Exactly.
        Mr. Loebsack. All right, thank you. You mentioned that the
    cost of wind and solar has been dropping over the years. You
    may know that in Iowa, and the poor folks here they get to hear
    me talk about this all the time. But, you know, upwards of 37
    percent of our electricity in Iowa is generated by wind. We are
    increasing our production of electricity via solar as well. I
    just did a solar farms tour not long ago in one of my counties.
        In terms of the cost for wind and for solar, you know that
    the PTC and the ITC, for example, are on kind of a 5-year phase
    out, if you will. How much are we talking about here as far as
    those credits? How has that contributed to the reduction in the
    cost of solar and wind? And it is great for consumers
    obviously. That is the bottom line for me. And if those were to
    be phased out entirely what are we looking at?
        Mr. Ganesan. So as you mentioned they are phasing out. They
    are on a phase-out trajectory that Congress agreed to. The
    market has priced that in. After they phase out there is no
    need for additional tax credits for those technologies. At this
    point right now, even if you have removed the value of the ITC
    and the PTC, wind resources in Iowa are cost-competitive with
    other generation sources. So the phase out is working and the
    market is working as well for those resources.
        Mr. Loebsack. And I guess we should credit the credits in
    that sense too for helping to create those industries in the
    first place.
        Mr. Ganesan. That is right. That is right. Those credits,
    when they started in play several decades ago now, they started
    spurring an industry and then the industry has matured to the
    point where it is cost-competitive now.
        Mr. Loebsack. Thank you. I want to move on to rural co-ops.
    And Dr. Hannegan--and I--well, of course as in so many rural
    parts of America we have so many of these RECs that are doing a
    great job, provide a great source of energy and great jobs.
    That is a big part of it. Going forward, when we talked about
    sort of all these technological changes that RECs can
    incorporate as well, any idea of what kind of effects that
    might have on the jobs that now exist with respect to these
    RECs?
        Dr. Hannegan. Thank you for that question, Congressman.
    Many of our rural co-ops have extremely small staffs by the
    measure of my colleague here from Chicago, and one of the
    challenges that we are facing is how do we retrain--and we
    talked a lot about workforce training and retraining from other
    fields.
        But even in the position that they are in today, how do our
    linemen now do their work in light of all these new
    technologies coming on to the grid? How do our member service
    coordinators interact with these new customers that see things
    on the TV or read about something in a magazine and say I want
    this? How do we rethink our business model which at its core is
    about service to the member and kind of giving the members what
    they want? How do we rethink that and then maintain the
    financial viability because we are such a great employer and
    such a pillar in our communities?
        So it is forcing us to really rethink the cooperative
    principles in a new light. And all of us are working together
    collaboratively to sort through this. I will say it is very
    exciting because the technologies are evolving in such a way
    that now we have access to these wind and solar and renewable
    resources and these distributed generation technologies where
    the price points really are watched. And so we can now engage
    and think about new opportunities that we might not have even a
    decade ago.
        Mr. Loebsack. And how to retrain workers as well.
        Dr. Hannegan. And how do we train workers to deal with
    those and how do our members some of whom aren't, you know,
    advanced technology experts either, how do they see the
    potential to get their needs met in a lower cost, more
    reliable, and perhaps more sustainable way.
        Mr. Loebsack. Right. And I don't have a lot of time left. I
    don't really have another question, but I do want to reiterate
    what has been said. Already my friend, Dr. Murphy from
    Pennsylvania, he and I agree on a good number of things and one
    of them is this democratization I think that he mentioned of
    individuals. It is one thing to talk about businesses and
    having more control over, you know, their energy consumption
    and what have you, but individual consumers in homes need to
    have more control as well. And I really hope that we can
    continue to advance the technology on that front too.
        I like some of these ideas about the weekend, you know,
    doing certain things on the weekend. We need to have more of
    that and more educational opportunities for individual
    consumers in residential areas too. So thanks to the panel and
    thank you, Mr. Chair, and I yield back.
        Mr. Griffith. I thank the gentleman and now recognize Mr.
    Latta of Ohio for 5 minutes.
        Mr. Latta. Well, thank you, Mr. Chairman. And thanks very
    much to our panel for being with us today. It has been a very
    good panel discussion today.
        And Dr. Hannegan, if I could, we are not picking on you
    here now, but my district has the largest number of electric
    co-ops in the State and in your testimony you mentioned the
    electric co-opters are naturally consumer-centric because they
    are member-owned, member-governed, and not-for-profit
    utilities.
        Would you discuss the process, and again this is--we have
    been kind of going around talking about this in different
    ways--but would you discuss the process that you use to
    determine which technologies to deploy to benefit consumers?
    And referred from Mr. Sandford a little bit earlier of the
    different devices with his testimony with Dr. Murphy, but are
    your consumers seeking a more active and dynamic role in the
    energy usage out there?
        Dr. Hannegan. Thank you, sir. I appreciate that question.
    Cooperatives are very heavily embedded in the communities that
    they serve. We are at the town parades. We are at the city hall
    meetings. We are at the local picnics and events. Folks stop by
    to pay their bill, still, with a check. Not everybody is paying
    electronically. And some folks even use that as an opportunity
    to connect with their neighbors.
        We have annual meetings and open board meetings where
    attendance from the community comes in and gives us all sorts
    of feedback. I and my senior team are also out there with our
    large customers, our towns, our communities, and even our
    individual folks that call in for a service outage. So we have
    no shortage of feedback and input as to what kinds of things
    our members desire and I know the same is true for other
    cooperatives.
        The challenge is that a lot of times when we hear from them
    in terms of different demands for things again it comes, as I
    mentioned in the previous question, in the form of reading an
    article, something in the newspaper and well, can we get that
    here? And I think that is forcing a pace of innovation on
    America's cooperatives that really needs to be tempered by the
    local needs of the communities that we serve and their
    willingness to pay, their ability to absorb risk, and that is
    the challenge of cooperative boards all throughout the country
    is to make sure that we strike that balance appropriately.
        Mr. Latta. Ms. Lamb, if I could ask you. In this past
    Congress, Peter Welch of this committee and I had the Internet
    of Things Working Group, but what other potential applications
    exist for the internet of things within the electricity sector
    and how would this lead to greater benefits for the consumer?
        Ms. Lamb. Well, distributed energy marketplaces that is
    enabled by the internet of things through blockchain will allow
    customers to choose, you know, based in response to market
    signals that are generated from that marketplace allow them to
    choose the source of their energy and time when they use that
    energy and to choose how much they are willing to pay for it.
        So for example, imagine a community energy marketplace
    where a neighborhood resident might choose to run their
    dishwasher or washing machine at a time when the peer-to-peer
    market has the lowest cost of energy, or a department store
    might dial back on air conditioning when a local utility
    transformer is overloaded because that local market is sending
    them the accurate price signal just making the entire local
    grid function more efficiently.
        Mr. Latta. Well, thank you very much.
        Mr. Chairman, I yield back the balance of my time.
        Mr. Griffith. I thank the gentleman and recognize the
    gentleman from New York, Mr. Tonko.
        Mr. Tonko. Thank you, Mr. Chair. Certainly I want to thank
    our witnesses for testifying. We have heard some great examples
    of how technology has tremendous potential to improve
    efficiency, resiliency, reliability, and flexibility while
    empowering our consumers and our businesses out there, so I
    think this is the hallmark of a modernized grid.
        Before I ask questions I do want to associate my voice with
    the comments heard earlier today about Puerto Rico, Virgin
    Islands, and the territories in general and the need to have a
    sense of urgency that addresses this issue. Waiting until
    October until we perhaps agree on a bill is one thing, but
    there needs to be, I think, a spin-up immediately coming from
    this administration from the President. Focus on this as a high
    priority. People will be dying without the assistance here,
    literally. And so I underscore that with those comments made by
    my colleagues earlier.
        Mr. Ganesan, how much has consumer preference and in
    particular corporate consumer preference contributed to
    innovation and deployment of advanced energy technologies?
        Mr. Ganesan. Significantly. I think that we have seen just
    as an example data centers and of driving huge amounts of
    renewables coming on the grid. We see other large corporations
    doing other types of microgridding on more distributed
    resources. It is a major function. It is a major reason why
    there is such an increasing amount of advanced energy on the
    grid.
        Mr. Tonko. Thank you. My district is home to a high-tech,
    precision manufacturing that needs not just reliable power but
    quality power. Even a flicker of the lights can throw off their
    processes and cost them significantly. One solution they
    obviously reach to is exploring the microgrid.
        So Mr. Ganesan and Ms. Lamb, can you explain the potential
    for microgrids to ensure power for facilities where an outage
    is not an option, whether it is a military installation, a
    hospital, or this sort of precision manufacturer?
        Ms. Lamb. Sure. So again as several of my colleagues have
    mentioned, a grid that relies on a wide variety of energy
    resources is much more reliable. And those distributed
    resources can be distributed generation, active demand
    management, or microgrids that can function in isolation. And
    to the extent that a local marketplace enables these energy
    resources to be developed and deployed and to function in real-
    time in a self-executing way so that the different loads and
    generation on the grid can respond in real-time, you know, that
    is exactly the sort of energy future that we are hoping to
    enable.
        Mr. Ganesan. If I could just answer that, I think there is
    a reason why data centers are going, or use advanced energy
    technologies and that is because they care about green, but not
    green environmentally. One minute of data center outages costs
    about $10,000, so having a multitude of advanced energy
    technologies helps hedge the risk of local reliability
    problems.
        Mr. Tonko. All right. When I was at NYSERDA--before this
    job I headed NYSERDA and data centers were a prime focus
    because of the energy usage. Mr. Ganesan again, do you believe
    that all the benefits of advanced energy resources, the reduced
    emissions and air pollution, increased reliability and
    resiliency amongst others, are adequately compensated by the
    market currently?
        Mr. Ganesan. I think the simple answer is no. I think that
    there are a whole host of services that advanced energy
    provides in terms of resiliency, reliability, not even going
    into the environmental sphere, that are not compensated in the
    market. When you price in other environmental attributes, it is
    a very State-by-State issue.
        Mr. Tonko. Are there other incentives that could ensure
    that these technologies are being property valued?
        Mr. Ganesan. Well, I think a lot of this is a State issue,
    but when you are talking about wholesale markets or competitive
    markets that Congress oversees, I think ensuring that some of
    the attributes of advanced energy are eligible for compensation
    is the key way to get there.
        Mr. Tonko. And Ms. Butterfield, cost-competitive storage
    resources are going to build much more reliability and
    resilience into a modernized grid, but I would like you to
    clarify something. We often think of storage in conjunction
    with wind and solar since it is a nice complement to those
    variable resources, but storage for the most part is fuel
    neutral, is it not?
        Ms. Butterfield. Absolutely fuel neutral. You can connect
    it to a storage system, but you can just have it connected to
    the grid.
        Mr. Tonko. OK. And so is storage able to provide
    significant benefits to the grid even in areas of the country
    without high penetration of renewable resources?
        Ms. Butterfield. Absolutely.
        Mr. Tonko. Well, I thank you for that. I just wanted to
    clarify that. It should be clear that advanced energy
    technologies are not being supported or adopted because of some
    environmental policy agenda. They provide tremendous benefits
    to the grid in all areas of our country and are desired by
    consumers especially businesses that know reducing their energy
    bill is going to save them money and in the case of the private
    sector make them more competitive. So as we go forward I hope
    we keep that in mind.
        And with that I yield back, Mr. Chair.
        Mr. Griffith. I thank the gentleman and recognize the
    gentleman from West Virginia, Mr. McKinley.
        Mr. McKinley. Thank you, Mr. Chairman. Unfortunately, Peter
    Welch is not here and he and I have been co-chairing, for the
    last 5 years we have been co-chairing the Energy Efficiency
    Caucus.
        So Mr. Jensen, we agree with the potential of $4 billion in
    savings with that, something we have been advocating for some
    time, and so I applaud your comments that several of you have
    made about energy efficiency with that. But I would like to
    spend the bulk of my time dealing with the issue of the
    microgrids as it relates to rural America.
        Oddly enough, I haven't heard that term used here with you
    all when we are talking about rural areas. I have heard about
    Brooklyn, St. Louis, Boston, New York and elsewhere about the
    microgrid, but I want to see, I would like to understand more
    about how that would work in rural areas. Because we don't have
    a good track record in West Virginia that the aversion and the
    lack of cost-effectiveness we can't get broadband into every
    community. We can't get good cell phone service.
        So I am curious about how we might be able to incentivize,
    or what are the advantages or incentives that might be
    necessary to develop microgrids in some of these little
    communities that we have, if there is--if I guess the framework
    would--the advantages of having a microgrid system? So would
    someone--I would think--I would think it would be cost-
    effective to have a thousand-megawatt facility operating
    keeping my cost down as low versus a 50-megawatt facility, I
    have got to think the cost is going to be higher.
        And in West Virginia despite what Mr. Ganesan said earlier,
    I think in that PJM market when the polar vortex hit I don't
    know of, I am unaware of any coal-fired power plant that went
    down in West Virginia. I am aware of gas-fired facilities that
    shut down. So if someone could tell me a little bit about the
    advantages or what would we need to do congressionally to help
    if this microgrid system could work in rural areas.
        Dr. Hannegan. Congressman, I would be happy to take that
    one on. We serve rural areas. That is what rural cooperatives
    do and there are a number of examples where microgrids or
    microgrid-like activities are already creating great value for
    our members.
        One of them in New Mexico, a rural part of New Mexico, the
    cooperative there installed a solar-fueled microgrid on the
    community college campus that was nearby and did so in a way
    where that generation resource, when it wasn't serving the
    needs of the community college, provided energy supply to the
    surrounding community. And the resulting economics were
    comparable with what you would get from bringing this community
    into the grid. Extending the lines out there which are
    significantly costly and time-consuming in a lot of
    jurisdictions, instead of doing that they decided on a local
    set of resources because the economics were comparable and they
    were also able to provide a service, not just the community,
    the college, but to the community.
        The same is true in places like Alaska and other parts of
    the country that have rural-like features where you are
    improving resilience and reliability of supply at a comparable
    cost point without having to extend the infrastructure in an
    expensive way.
        The other area where we look at it in our service territory
    is for natural hazards. So we don't have hurricanes, but we
    have snowstorms and other severe weather events in Colorado,
    places where there are tornadic activities in the Midwest and
    increasingly up and down the East Coast. And they also want to
    harden their infrastructure and Mr. Jensen can speak to that.
    And there a microgrid solution helps in addition to the grid
    supply, because you can have the power plants generating in
    bulk and certainly the economy of scale helps there, but if you
    have no way to get that power to the consumer then a local
    solution is the better option.
        Mr. McKinley. If you would, please, I don't think you have
    it here today, but I would like to understand maybe a listing
    of some of the microgrid systems in rural America. Because
    again I am working under the premise if we can't get broadband
    why do we think we are going to have a microgrid system?
        Dr. Hannegan. We would be happy to provide that for the
    record.
        Mr. McKinley. Provide some examples of that so we can learn
    from that.
        Dr. Hannegan. Absolutely.
        Mr. McKinley. OK. Mr. Chairman, I yield back the balance of
    my time.
        Mr. Griffith. I thank the gentleman and recognize the
    gentlelady from Florida, Ms. Castor, for 5 minutes.
        Ms. Castor. Thank you, Mr. Chairman. And thank you to our
    witnesses today for an outstanding hearing.
        I think the transformation of electric power generation and
    the modernization of the grid is one of the most exciting areas
    of public policy right now. And there are extraordinary
    benefits to distributed energy, microgrids, smart meters,
    storage, and management. They include cost savings to
    consumers, higher paying jobs in these new sectors, and greater
    resiliency for the grid overall.
        Last Congress I sponsored the Clean Distributed Energy Grid
    Integration Act. I am updating that bill right now based upon
    because the technology evolved so quickly. And I recommend you
    take a look at that bill and give me some recommendations on it
    because we have to do better here in America and I heard what
    you said, it is inevitable. The technology is moving quickly.
    We have to think about the architecture of how we--of our new
    grids.
        And now we have an opportunity, one we didn't ask for, but
    one that is upon us with as we begin to understand the
    devastation from Hurricane Irma, from Hurricane Maria, it
    appears that we have never had an electric grid as decimated as
    we do now, in Puerto Rico especially. And I was reading a
    little bit from Bloomberg that said that in Puerto Rico the
    power plants are clustered along the southern coast and they
    have large transmission lines across the country. The fact that
    they will be without electricity from 4 to 6 months, just put
    yourself in the shoes of the people that live there and how
    they recover.
        So I appreciate the comments of Chairman Upton, Mr. Olson,
    Mr. Rush, and my colleagues here today. We need to harness
    everything we know about the modern grid to put it to work now,
    especially in Puerto Rico. The electric utility leaders in
    America need to help us do this. Usually in emergency aid
    packages, you know, they are focused on repairs, but now they
    are more and more focused on resiliency for the future.
        In the past, and I know in Superstorm Sandy in that
    emergency aid package there was no line item, really, for the
    Department of Energy. It seems like it is time now to begin to
    really focus on rebuilding the grid there in a modern way. And
    we need to do it right because you are asking taxpayers all
    across America to fund these emergency aid packages and why
    would we rebuild the grid? It was already known as Bloomberg
    reported, it was kind of an aging, outdated grid. It had
    already the Puerto Rico Energy Commission and Puerto Rico
    Electric Power Authority already were in great debt owing
    billions of dollars to bond holders.
        So if you are going to ask American taxpayers to help
    rebuild the grid, we need to do it so that it is resilient for
    the future so that you don't keep calling upon emergency aid
    packages, that this is going to work to help rebuild the
    island, the economy there, serve the people for the future. Can
    you all comment on that? Can you give us, get into a little
    more granularity on what you would recommend as an emergency
    process to focus on?
        We have FEMA with some DOE personnel and electric utility
    operators there now, but who would like to explain what would
    be needed in the near term? Is this a competition type of
    thing? Is the DOE in the lead based upon the technological
    tools they have? Who can make some specific recommendations for
    us?
        Dr. Hannegan. Congresswoman, I think you hit on it with
    your last point. There is a tremendous growth in capacity of
    our grid design and planning tools now to integrate both the
    traditional utility solutions--the power plants, the
    transmission lines--with these new distributed energy
    technologies that are emerging onto the scene.
        Under the Grid Modernization Initiative there is a series
    of projects that DOE is supporting with the national labs and
    utility partners that are employing these new tools. One
    suggestion, just off the cuff, might be to inquire with the
    Department and the labs as to would they be able to deploy
    these new tools in support of redesigning the Puerto Rican grid
    for much more resilience to this kind of activity going
    forward. It is now sadly a blank sheet of paper.
        So can we rebuild and rebuild better as we have done in
    other communities that have been hit by tornadoes or winter
    storms or Superstorm Sandy as you mentioned?
        Ms. Castor. Who else can make some specific recommendations
    for us as we move forward? Mr. Jensen, I see you thinking it
    over.
        Mr. Jensen. Yes, I am thinking. I am not sure I am coming
    up with a great response. I think Dr. Hannegan sort of hit it
    on the head. We have the know-how and the resource in the
    continental United States to do this is in the right way in a
    way that will make that system much more resilient. I think the
    challenge is how do you marshal those resources and provide
    some assistance in the near term? I think the concern is that
    we will be overwhelmed with just the problem of getting some
    basic power back up to those folks.
        But I think we have learned lessons in places like Haiti
    with the earthquake and so forth where rather than trying to
    come in and solve the big problem all at once, by solving
    smaller problems you can actually build a more sustainable
    solution for the long run.
        Ms. Castor. Very good. Thank you and I yield back.
        Mr. Griffith. I thank the gentlelady and recognize the
    gentleman from Michigan, Mr. Walberg.
        Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
    witnesses for being here today.
        Ms. Butterfield, recently this subcommittee held a hearing
    to examine the issues relative to PURPA reform. I have been
    very interested in that myself feeling that there is
    potentially some significant modernization we can do in reform
    with PURPA. Do you believe that your storage technologies
    should qualify under PURPA as a qualifying facility?
        Ms. Butterfield. Probably not. We are sited behind the
    meter and we typically do not export to the grid. You know, in
    the changing policy landscape it is possible that a system
    sited at a customer's facility could export to the grid. At
    this time it is the paperwork and the registration is just too
    cumbersome.
        Mr. Walberg. I appreciate that. It is good to know where
    people are positioned in the field as we look toward that, so
    thank you.
        Mr. Jensen, in your testimony you state the electric
    industry has a choice, either innovate or go the way of the
    Rolodex and the pay phone. I know of both of those.
         Mr. Jensen. So do I, yes.
        Mr. Walberg. So do you feel there are some within the
    electric industry hesitant to innovate even despite all the
    benefits it could bring consumers, and if so, why?
        Mr. Jensen. I don't know that I would characterize it as
    hesitant to innovate. I think everyone recognizes the need to
    do that. I think depending on the structure of your company
    given the jurisdiction that you operate in you will have
    different incentives to put that innovation into place and
    offer it to customers versus use it on the grid.
        We have the advantage of being in a competitive State. We
    don't own any generation at Commonwealth Edison, and so it is
    much easier for us to align with what our customers are trying
    to do and to try and deploy that information for their benefit.
        Mr. Walberg. Mr. Sandford, in your testimony you explain
    that one of the primary trends driving consumer behavior is
    digitization. How does moving from the analog world to a
    digital world affect the way consumers interact with the grid?
        Mr. Sandford. Yes. So I think it is about empowering
    customers to understand that they have choices and give them
    actual signals to act on their choices. I think in the
    traditional analog world our customers were, you know, largely
    data ignorant and they didn't know exactly how they were using
    it. It wasn't something that they chose and, you know, it is
    really exciting to see at both the residential and business
    level when given the tools and the insights and the visibility
    to see customers positively engaged and for their own benefit.
         Mr. Walberg. What causes them to do that more
    significantly?
        Mr. Sandford. I think, I mean I come back to for the
    business customers it is all about cost savings and reliability
    and if you can show me a way to learn more about how to run my
    business more efficiently either by using less energy or
    changing my process I am going to do that.
        I think for residential customers, the Power-to-Go example
    I have cited earlier today in my testimony, it is really about
    a customer who, you know, that next dollar that he or she is
    spending on energy is a precious, scarce dollar, and if they
    can do anything in their power to go put that to a better use,
    they are going to do that. And so I think you are going to have
    people driven by different factors.
        Mr. Walberg. Thank you. Mr. Chairman, I yield back.
        Mr. Griffith. I thank the gentleman. And, seeing no Members
    on the other side of the aisle, I recognize myself for 5
    minutes. And thank you all very much. It has been a very
    interesting hearing.
        I have been really interested in some of the comments about
    rural areas and Puerto Rico because I think as we rebuild that
    grid system we may learn some things for the rural areas as
    well. I represent a district somewhat like Mr. McKinley's who
    brought that issue up earlier. Mountainous areas of western
    Virginia as opposed to West Virginia, but I do think we may be
    able to learn some things and hopefully we will be able to help
    the folks in the U.S. territory of Puerto Rico as well as
    learning some things that might help my district.
        I was, you know, it was interesting when we asked and I am
    not going to ask you all to give it to me today necessarily,
    but if you can think of some other aspects for rural microgrids
    that would be helpful. Because, you know, I have some small
    areas that might be 30 to 45 minutes, maybe even an hour from
    the nearest community college. That was one of the examples.
        And you have a mountain or two in between the two, which is
    why I think Puerto Rico makes sense because all the production
    is one side of the mountain apparently, or most of it, and they
    are shipping it to the other side. But let me ask you about
    that in another way, because we are looking at some projects in
    my district where we create maybe a hydro pump storage inside
    of an existing or prior use coal mine using that for peak
    production.
        Could that also be used to shore up the grid as a microgrid
    within the region in the event that there was some, a snowstorm
    was mentioned. That is certainly a problem for us from time to
    time. Occasionally windstorms where trees come falling down or
    in the snowstorms, you know, sometimes you lose, a piece of the
    mountain comes falling down onto your grid.
        So anybody want to comment on those thoughts or any
    thoughts that you all might have that you would like to add to
    your previous comments on rural?
        Dr. Hannegan. I am happy to jump in, Congressman. We at
    Holy Cross have actually three megawatts of our generation
    coming from capturing the methane, the natural gas coming out
    of a no longer operational coal mine. And so, for your part of
    the State as well as Congressman McKinley's State of West
    Virginia, there is a lot of hidden generation opportunity there
    that also by the way does a fair amount of environmental good.
        We also have cooperatives all throughout the West that are
    using irrigation ditches that run at the top of the hill. They
    are diverting some water down through a micro-hydro turbine
    that is anywhere from 10 to 100 kilowatts in size and that
    provides the local generation for that part of their community.
        Mr. Griffith. So it doesn't go to the general grid, it
    stays in that area most of the time.
        Dr. Hannegan. And that is one of the principles you may
    look at for those microgrids that are completely self-
    contained, if a combination of distributed solar, if they have
    access to local resources like a coal mine methane or hydro,
    you design around that and ask how do we then pair that
    generation with energy efficiency and smart design and the
    things you are hearing from my colleagues to make supply and
    demand equal out in that area.
        Mr. Griffith. So what would you do though, because what we
    are looking at and nobody has signed on the dotted line yet is
    a closed-loop hydro system inside of a mine. But right now the
    plan would be is that that storage that we are using that power
    storage would be for peak periods in the more urban areas in
    PJM, not for my folks in southwest Virginia.
        So how would you hook that in because--and let me throw
    another wrinkle in this--most likely it would be, the people
    who might build this facility are not the people who provide
    the electricity in that particular area of the world. And we
    are still predominately a controlled State, regulated State.
        Dr. Hannegan. As any of my co-panelists will tell you, it
    is always about where can you have the most economic value for
    the resource that you are building. And I think in the case of
    the developers of the project, you reference they are looking
    at that peak market in PJM and saying that is where the
    profitability may exist. The question is do they get a similar
    value of profitability by providing services to the local
    community, and if not, are there changes in the design of that
    local microgrid that may encourage that profitability?
        So when I referred earlier to the design and planning tools
    that the labs are developing, our typical design and planning
    tools don't look at both sets, both the bulk power grid and the
    microgrid. We are getting there now and that would be something
    that your local communities might want to look into with the
    help of one of the national labs that happens to be nearby.
        Mr. Griffith. All right. I appreciate that very much. Thank
    you all so very much. I will now yield back my time, and it
    appears that it is time to close the hearing as well.
        So, pursuant to committee rules, I remind Members they have
    10 business days to submit additional questions for the record,
    and I ask that witnesses submit their responses within 10
    business days upon receipt of those questions. And without
    objection--no objection--the subcommittee is adjourned. Thank
    you all so very much.
        [Whereupon, the subcommittee was adjourned at 12:18 p.m.]
        [Material submitted for inclusion in the record follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                                     [all]