[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
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__________
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio DAVID LOEBSACK, Iowa
BILLY LONG, Missouri KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana JOSEPH P. KENNEDY, III,
BILL FLORES, Texas Massachusetts
SUSAN W. BROOKS, Indiana TONY CARDENAS, California
MARKWAYNE MULLIN, Oklahoma RAUL RUIZ, California
RICHARD HUDSON, North Carolina SCOTT H. PETERS, California
CHRIS COLLINS, New York DEBBIE DINGELL, Michigan7
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
TIM MURPHY, Pennsylvania GENE GREEN, Texas
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
GREGG HARPER, Mississippi KATHY CASTOR, Florida
DAVID B. McKINLEY, West Virginia JOHN P. SARBANES, Maryland
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
BILL JOHNSON, Ohio DAVID LOEBSACK, Iowa
BILLY LONG, Missouri KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana JOSEPH P. KENNEDY, III,
BILL FLORES, Texas Massachusetts
MARKWAYNE MULLIN, Oklahoma G.K. BUTTERFIELD, North Carolina
RICHARD HUDSON, North Carolina FRANK PALLONE, Jr., New Jersey (ex
KEVIN CRAMER, North Dakota officio)
TIM WALBERG, Michigan
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
----------
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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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.]
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