[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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                    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.]
    [Material submitted for inclusion in the record follows:]
   
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