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

                        EXAMINING THE STATE OF ELECTRIC
     TRANSMISSION INFRASTRUCTURE: INVESTMENT, PLANNING, CONSTRUCTION, AND
                                  ALTERNATIVES

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

                                     HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON ENERGY

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 10, 2018

                                   __________

                               Serial No. 115-127

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                                   __________

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                        COMMITTEE ON ENERGY AND COMMERCE

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

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     1
        Prepared statement...........................................     3
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................     4
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     5
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, prepared statement.....................................   112

                                   Witnesses

    Tony Clark, Senior Advisor, Wilkinson Barker Knauer, LLP.........     7
        Prepared statement...........................................    10
        Answers to submitted questions...............................   118
    Edward Krapels, CEO, Anbaric Development Partners................    32
        Prepared statement...........................................    34
        Answers to submitted questions...............................   124
    Jennifer Curran, Vice President, System Planning, Midcontinent
      ISO............................................................    45
        Prepared statement...........................................    47
        Answers to submitted questions...............................   130
    Ralph Izzo, CEO, Public Service Enterprise Group, Inc............    60
        Prepared statement...........................................    62
        Answers to submitted questions...............................   137
    John Twitty, Executive Director, Transmission Access Policy Study
      Group..........................................................    70
        Prepared statement...........................................    72
        Answers to submitted questions...............................   142
    Rob Gramlich, President, Grid Strategies, LLC....................    86
        Prepared statement...........................................    88
        Answers to submitted questions...............................   152

                               Submitted Material

    Statement of GridLiance..........................................   114
    Statement of WIRES...............................................   116

         EXAMINING THE STATE OF ELECTRIC TRANSMISSION INFRASTRUCTURE:
              INVESTMENT, PLANNING, CONSTRUCTION, AND ALTERNATIVES

                                  ----------

                             THURSDAY, MAY 10, 2018

                      House of Representatives,
                                Subcommittee on Energy,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:46 a.m., in
    room 2123, Rayburn House Office Building, Hon. Fred Upton
    (chairman of the subcommittee) presiding.
        Present: Representatives Upton, Olson, Latta, Griffith,
    Johnson, Long, Bucshon, Flores, Hudson, Cramer, Walberg,
    Duncan, Rush, McNerney, Peters, Green, Castor, Welch, Schrader,
    Kennedy, and Pallone (ex officio).
        Staff Present: Samantha Bopp, Staff Assistant; Daniel
    Butler, Staff Assistant; Kelly Collins, Legislative Clerk,
    Energy/Environment; Wyatt Ellertson, Professional Staff,
    Energy/Environment; Margaret Tucker Fogarty, Staff Assistant;
    Elena Hernandez, Press Secretary; Drew McDowell, Executive
    Assistant; Brandon Mooney, Deputy Chief Counsel, Energy; Mark
    Ratner, Policy Coordinator; Annelise Rickert, Counsel, Energy;
    Jason Stanek, Senior Counsel, Energy; Austin Stonebraker, Press
    Assistant; Jeff Carroll, Minority Staff Director; Jean Fruci,
    Minority Energy and Environment Policy Advisor; Jourdan Lewis,
    Minority Staff Assistant; John Marshall, Minority Policy
    Coordinator; Tim Robinson, Minority Chief Counsel; C.J. Young,
    Minority Press Secretary.

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

        Mr. Upton. We are going to get started on time. I just want
    to let folks know that our committee has a pretty major bill on
    the House floor this morning, a bill that passed out of
    committee 49 to 4, on nuclear waste.
        I know that debate there has started. A number of us have
    been there already to speak. And our colleague, John Shimkus,
    is helping to manage that bill. So I am not sure that he will
    be back. But we are expecting votes about 10:45, so I am going
    to try to be quick with the gavel. And we will continue after
    that, but it will be a series of votes.
        Good morning. Today we are continuing our Powering America
    series by taking a closer look at a very important but often
    underappreciated component of our power sector: the electric
    transmission system. Ever since visionaries such as Edison,
    Tesla, and Westinghouse argued the merits of using direct
    current versus alternating current, the manner and means by
    which electricity is delivered has been a complicated and, yes,
    controversial topic.
        We depend on our high voltage network of wires and cables
    to transmit electricity long distances to power everything from
    our iPhones to our economy. A stable and uninterrupted supply
    of electricity is critical to ensure the public's health and
    safety, as well as the quality of life that we have come to
    expect. However, in many parts of our country our transmission
    infrastructure, like our Nation's roads and bridges--
    particularly if you are in Michigan--is aging, congested, and
    in need of repair or replacement.
        Joining us today is a distinguished panel of experts to
    help us better understand the challenges that the electric
    transmission sector is facing, as well as the opportunities
    that may be within reach.
        While much of this debate in the industry is currently
    focused on generator resilience and fuel security, we cannot
    ignore the vital role that the Nation's electric transmission
    infrastructure plays in connecting the electricity producer to
    the end-use consumer. And as such, I would argue that a
    resilient and reliable transmission grid is no less important.
        Transmission infrastructure, however, does not come cheap,
    and the planning and construction of new lines often takes
    years due to permitting and environmental reviews. Over the
    past couple of years, public utilities and independent
    transmission developers have committed over $20 billion
    annually to upgrade or replace our existing transmission
    infrastructure. And while that is good news, creating jobs, et
    cetera, sustained investment at similar levels will be critical
    to ensure that Americans have a modern electricity grid that
    can deliver reliable power at a reasonable cost.
        In addition, a predictable regulatory environment and
    consistent policies regarding how transmission projects are
    approved and paid for is essential to reduce financial risk and
    attract new capital. After we passed the Energy Policy Act of
    2005, FERC was directed to encourage investment in transmission
    infrastructure projects that reduce the cost of delivered power
    by reducing congestion on the grid. FERC responded by granting
    financial incentives to transmission proposals that met certain
    criteria. And in subsequent years FERC began to issue a series
    of landmark rules to oversee and regulate the details of how
    transmission projects are planned, paid for, and ultimately
    developed.
        Order 1000 is the agency's most recent attempt to regulate
    regional and interregional transmission planning, while also
    encouraging competition between transmission developers.
    However, as we heard from witnesses in our earlier Powering
    America hearings, while some regional transmission planning
    processes have become more effective, Order 1000 has all but
    failed to develop new lines between and among RTOs and other
    planning regions. Moreover, FERC's rule allowing merchant
    developers to now compete against traditional utilities to
    build transmission projects has been criticized as ineffective
    for a number of reasons. With the help of our witnesses, we
    will explore these and other challenges associated with
    transmission planning, cost allocation, and competition.
        Finally, I hope that we can discuss how alternatives to
    transmission lines factor into the conversation. While high-
    voltage wires form the backbone of our smart-grid technologies,
    demand response, energy storage, distributed generation, and
    microgrids can also provide benefits similar to traditional
    transmission. Since these alternatives may improve reliability
    while reducing environmental impacts and cost to consumers, we
    should explore whether any legal or regulatory barriers stand
    in the way to prevent energy innovation from reaching its full
    potential.
        So we look forward to hearing from our witnesses.
        I yield the balance of my time to my good friend and
    colleague on the subcommittee, Mr. Long from Missouri.
        [The prepared statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        Good morning. Today, we are continuing our Powering America
    series by taking a closer look at a very important, but often
    under-appreciated component of our power sector: the electric
    transmission system. Ever since visionaries such as Edison,
    Tesla, and Westinghouse argued the merits of using direct
    current versus alternating current, the manner and means by
    which electricity is delivered has been a complicated and
    controversial topic.
        We depend on our high voltage network of wires and cables
    to transmit electricity long distances to power everything from
    our iPhones to our economy. A stable and uninterrupted supply
    of electricity is critical to ensure the public's health and
    safety, as well as a quality-of-life that we have come to
    expect. However, in some parts of the country, our transmission
    infrastructure, like our nation's roads and bridges, is aging,
    congested, and in need of repair or replacement. Joining us
    today is a distinguished panel of experts to help us better
    understand the challenges that the electric transmission sector
    is facing, as well as the opportunities that may be within
    reach.
        While much of the debate in the industry is currently
    focused on generator resilience and fuel security, we cannot
    ignore the vital role that the nation's electric transmission
    infrastructure plays in connecting the electricity producer to
    the end- use consumer. As such, I would argue that a resilient
    and reliable transmission grid is no less important.
        Transmission infrastructure, however, does not come cheap,
    and the planning and construction of new lines often takes
    years due to permitting and environmental reviews. Over the
    past few years, public utilities and independent transmission
    developers have committed over $20 billion annually to upgrade
    or replace our existing transmission infrastructure. While this
    is good news, sustained investment at similar levels will be
    critical to ensure that Americans have a modern electricity
    grid that can deliver reliable power at a reasonable cost.
        In addition, a predictable regulatory environment and
    consistent policies regarding how transmission projects are
    approved and paid for is essential to reduce financial risk and
    attract new capital. After we passed the Energy Policy Act of
    2005, FERC was directed to encourage investment in transmission
    infrastructure projects that reduce the cost of delivered power
    by reducing congestion on the grid. FERC responded by granting
    financial incentives to transmission proposals that met certain
    criteria. In subsequent years, FERC began to issue a series of
    landmark rules to oversee and regulate the details of how
    transmission projects are planned, paid for, and ultimately
    developed.
        Order 1000 is the agency's most recent attempt to regulate
    regional and interregional transmission planning while also
    encouraging competition between transmission developers.
    However, as we heard from witnesses in our earlier Powering
    America hearings, while some regional transmission planning
    processes have become more effective, Order 1000 has all but
    failed to develop new lines between and among RTOs and other
    planning regions. Moreover, FERC's rule allowing merchant
    developers to now compete against traditional utilities to
    build transmission projects has been criticized as ineffective
    for several reasons. With the help of our witnesses, we'll
    explore these and other challenges associated with transmission
    planning, cost allocation, and competition.
        Finally, I hope that we can discuss how alternatives to
    transmission lines factor into the conversation. While high-
    voltage wires form the backbone of our grid--smart
    technologies; demand response; energy storage; distributed
    generation and microgrids can provide benefits similar to
    traditional transmission. Since these alternatives may improve
    reliability while reducing environmental impacts and costs to
    consumers, we should explore whether any legal or regulatory
    barriers stand in the way to prevent energy innovation from
    reaching its full potential.
        There's no question that as the nation's electric industry
    changes, the demands placed upon our existing transmission
    infrastructure will only increase with time. Today, our focus
    will be on how the industry and government can plan for the
    future to ensure that our power grid is ready to meet the needs
    of the 21st century. Thank you to the witnesses for agreeing to
    be with us today and I look forward toyour testimony.

        Mr. Long. Thank you, Mr. Chairman.
        I just want to take a few seconds here to personally
    introduce one of the witnesses that is here today with us, a
    fellow that I have known since grade school, and fraternity
    brothers in college, and on through life. And that would be one
    Mr. John Twitty.
        John is the former CEO of City Utilities in Springfield, in
    my home district, and he now serves as executive director of
    the Transmission Access Policy Study Group, TAPS.
        Welcome, John. And I want to thank you for lending your
    expertise to this hearing. Welcome to D.C.
        Mr. Upton. The gentleman yields back.
        I recognize for an opening statement my friend and
    colleague, the ranking member of the subcommittee, Mr. Rush
    from Chicago, Illinois.

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

        Mr. Rush. I want to thank you, Mr. Chairman.
        And I want to welcome the witnesses to the hearing today.
        Today we will be examining the state of electric
    transmission infrastructure.
        As you know, Mr. Chairman, there have been many
    developments in the Nation's energy portfolio since FERC issued
    Order No. 890 back in 2007 as a way to promote open-access
    transmission services. This rule outlined a planning process
    for transmission providers consisting of nine planning
    principles, including coordination, openness, transparency,
    information exchange, comparability, dispute resolution,
    regional coordination, economic planning studies, and cost
    allocation.
        In 2011, Mr. Chairman, FERC issued Order No. 1000 as a way
    to further improve the planning process within and among
    geographic regions and also to determine how transmission costs
    were distributed to customers. Order 1000 was also issued to
    provide additional opportunity for non-incumbent transmission
    developers to compete to build projects within the service
    territory of incumbent utilities.
        Mr. Chairman, in reviewing this policy it appears that the
    results have been mixed in regards to how successful it has
    been in achieving its goals. We are in the midst of a rapidly
    changing energy landscape, reflected in part by the emergence
    of renewable energy sources, low-cost natural gas, State-led
    Renewable Portfolio Standard goals, as well as an increase in
    energy-efficiency initiatives and overall reductions in energy
    demand.
        Mr. Chairman, shifting consumer behavior is driving many of
    these changes as customers demand cleaner forms of energy along
    with new tools to more responsibly use the energy they consume,
    both as a way to save money and as a way to save the
    environment.
        Traditional methods of buying and selling energy are being
    disrupted by demand response programs where emerging
    technologies, such as energy storage and distributed-energy
    systems, allow consumers to produce energy and sell it back to
    the grid.
        Mr. Chairman, based on the testimony that we will hear
    today, it appears there are some real concerns with Order 1000,
    and modifications may be needed to help meet its objectives. If
    the goal was to provide a clear and collaborative inter- and
    intraregional planning process, with transparent and fair cost
    allocations, in order to spur additional competition and
    increased investment in grid infrastructure projects, then it
    is less clear if that objective had been achieved.
        While most of the witnesses believe that changes should be
    made, there is less consensus on what those changes should look
    like.
        So I look forward to engaging the panel today, Mr.
    Chairman, regarding the opportunities and the challenges
    surrounding Order 1000, as well as recommendations for
    improving this policy.
        With that, I yield back.
        Mr. Olson [presiding]. Thank you.
        The chairman of the full committee, Mr. Walden, is not
    here. So the chair now calls upon the ranking member of the
    full committee, Mr. Pallone, for a 5-minute opening statement.

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

        Mr. Pallone. Thank you, Mr. Chairman.
        I want to welcome our excellent panel of witnesses.
        In particular, I am pleased we have Ralph Izzo, the
    President and CEO of PSE&G here today. Ralph and I have worked
    together and known each other for many years, and I value his
    opinion and appreciate the service that PSE&G provides to my
    constituents and to our State of New Jersey.
        The network of transmission lines are truly the backbone of
    the power system, and these transmission lines are critical to
    providing reliable electricity. But just like any large,
    conspicuous infrastructure project, transmission projects are
    rarely free from controversy. And in densely populated areas,
    such as we have in the Northeast, allocating space for any new
    infrastructure is often a challenge.
        The electricity sector is undergoing tremendous change.
    There are new technologies in growth and distributed
    generation. At the same time, demand for power has remained
    relatively flat. And there are new challenges of extreme
    weather and cybersecurity threats, along with increasing demand
    for the grid to be more flexible and responsive. And all these
    things require us to evaluate the policy tools that FERC is
    using to manage its evolution.
        We will hear a variety of opinions today about the degree
    to which FERC's orders are helping or hindering investments in
    electric transmission. It is a challenge to get this balance
    right, so it is no surprise that stakeholders in this arena
    will have diverse opinions on how to improve these policies.
        If we look at the map of existing transmission lines across
    the country, it is hard for me to believe that we need a lot of
    new transmission. This is a very mature network. But since much
    of that network has been in place for decades, it is also a
    good bet that it needs to be upgraded and modernized.
        This is something that companies must consider when they
    are pursuing a transmission project. And a project in my own
    district, the Monmouth County Reliability Project proposed by
    FirstEnergy, is one example where there was no serious
    consideration given to nontransmission options that could make
    the area's system more resilient and reliable.
        It was only through the diligent efforts of a group of my
    constituents called the Residents Against Giant Electric, or
    RAGE, that this expensive, unnecessary project is not moving
    forward. RAGE provided expert analysis demonstrating that
    transmission alternatives could be accomplished or an upgrade
    to the grid at a far lower cost to ratepayers and that these
    alternatives were never seriously considered. The
    administrative law judge who reviewed the case in Monmouth
    County agreed with that assessment.
        This project in my home district illustrates that there
    remains a bias to building transmission rather than using new
    tools. It is in the financial interest of transmission
    companies to build, especially when there are clear rules that
    allow them to recoup those investments.
        Determining if new transmission is needed must involve all
    stakeholders and be evaluated without bias. If, in fact, new
    transmission lines are needed, and in some cases they will be,
    then the project should go forward. But where new technology
    can provide a cheaper solution that is less disruptive to other
    businesses, existing infrastructure, and communities, we should
    ensure that those options are used.
        So, again, the rapidly changing environment we are in right
    now is both exciting and challenging. FERC's efforts to address
    transmission challenges have been admirable but far from
    perfect. There have been and will continue to be missteps along
    the way that require adjustment and correction, perhaps even
    serious revision in some areas.
        And so I am hoping, Mr. Chairman, that this series of
    hearings is providing all of us with an opportunity to better
    understand where the greatest challenges remain.
        And, again, I want to thank all of our witnesses, including
    Ralph Izzo, for appearing today. I look forward to your
    testimony.
        I would yield back the balance of my time to the gentleman
    from California, Mr. McNerney.
        Mr. McNerney. Well, I thank the ranking member for
    yielding. And as a cochair of the Grid Innovation Caucus, I am
    pleased to be part of this hearing.
        I thank the witnesses for their testimony and look forward
    to working with them to create what the Presidents of both
    parties have called the 21st century electric grid.
        Congress needs to address the requirements of an evolving
    grid, including advances in technology, consumer adoption of
    distributed generation, and increasing cyber threats to this
    backbone of American industry.
        Just yesterday two bills sponsored by Congressman Latta and
    myself focused on cybersecurity passed the full committee. This
    hearing is an important corollary to those efforts. What
    investments should we be making? What regulatory regime should
    we be reviewing within FERC or otherwise? And what more should
    we be doing to modernize our grid?
        I look forward to working with each of you to develop
    practical, commonsense proposals to creating an advanced
    transmission system.
        And I yield back.
        Mr. Olson. Thank you.
        And there are no more opening statements by members, so now
    it is the fun time. Our witnesses will have 5 minutes to give
    their brief presentations. I will work this from your right to
    your left. And make sure you hit the button and it comes on,
    and speak into the mic.
        We have a former commissioner of FERC, Mr. Tony Clark, who
    is now a senior adviser at Wilkinson Barker Knauer.
        You are up, Mr. Clark, for 5 minutes.

      STATEMENTS OF TONY CLARK, SENIOR ADVISOR, WILKINSON BARKER
    KNAUER, LLP; EDWARD KRAPELS, CEO, ANBARIC DEVELOPMENT PARTNERS;
    JENNIFER CURRAN, VICE PRESIDENT, SYSTEM PLANNING, MIDCONTINENT
      ISO; RALPH IZZO, CEO, PUBLIC SERVICE ENTERPRISE GROUP INC.;
      JOHN TWITTY, EXECUTIVE DIRECTOR, TRANSMISSION ACCESS POLICY
     STUDY GROUP; AND ROB GRAMLICH, PRESIDENT, GRID STRATEGIES LLC

                        STATEMENT OF TONY CLARK

        Mr. Clark. Thank you, Mr. Chairman, members of the
    committee, and Ranking Member Rush. My name is Tony Clark. I am
    a Senior Advisor at the law firm of Wilkinson Barker Knauer,
    which has offices here in D.C. and in Denver, Colorado.
        From 2012 to 2016, I had the honor of serving on the
    Federal Energy Regulatory Commission. Prior to that, I served
    12 years as a commissioner and for part of the time as chairman
    of the North Dakota Public Service Commission. It is a
    particular honor to recognize my former colleague, Congressman
    Cramer, and a good friend of many years.
        My testimony today centers on a white paper that I recently
    authored entitled ``Order 1000 at the Crossroads.'' It offers
    my reflections on the order, the status of it, and where it
    might go from there. I have attached a copy of the paper as an
    appendix to my testimony.
        As way of background, Order 1000 was promulgated before I
    got on the Commission, not long before I got on the Commission,
    so I didn't participate in that. But I did participate in the
    many compliance filings that came forward in the wake of the
    order.
        The main thesis of my reflection is that, however well-
    intentioned the order is, in practice it is falling short of
    the lofty goals that it set. I suggest that with the passage of
    a better part of a decade since its adoption, now is an
    appropriate time for FERC and for Congress, through its
    oversight authority, to engage in a meaningful assessment of
    the order.
        The paper concludes that one of the paradoxical results of
    the rule has been that the major transmission projects that
    many of us thought might come out of Order 1000 actually came
    out of a pre-Order 1000 world. And in the time spent since
    Order 1000 was promulgated, there really haven't been a lot of
    tangible projects that have come through or empirical data to
    support the success of the order. The paper concludes that if
    FERC were to better tailor the rule, especially recognizing
    significant regional differences across the utility industry,
    it might have more efficacy. Put succinctly, we may today find
    ourselves in the position of having a rule that ensures
    significant compliance costs, but without a lot of demonstrable
    benefits coming out the other side.
        It is perhaps ironic that many of the most impactful
    transmission projects that I mentioned, such as in my home
    region the MISO Multi-Value Project, arose from that pre-Order
    1000 world that I talked about. I suggest that the reason for
    this is multifold. Some of it is that regions, particularly
    those that were served by vertically integrated utilities, were
    already doing a fair amount of planning within their regions
    prior to the order. For those regions, Order 1000 replaced that
    collaborative bottoms-up process with a Federal top-down
    process where there is a fair amount of bureaucracy that is
    involved with it. And the name of the game is making sure that
    you are checking compliance checklists as opposed to actually
    bringing projects to fruition.
        Creating a Federal mandate on top of what was already
    previously happening with many regions has added time and
    complexity. And we have seen in some regions a lot of
    litigation with respect to the transmission projects. The
    electricity landscape has changed dramatically in terms of the
    resources, technology, and State policies that drive
    transmission decisions, both since EPAct 05 and Order 890,
    which preceded Order No. 1000. And then finally, certain
    implementation decisions, such as how cost allocation is
    handled within regions, has altered transmission development
    models that were previously broadly accepted within a number of
    the regions.
        In short, even among those who are broadly supportive of
    Order 1000, there seems to a widespread sense that something is
    amiss with it in terms of the underwhelming results that have
    come out of it. In light of this, I would argue that it is
    appropriate for policymakers to consider Order 1000's future
    given its track record. My paper encourages industry
    conversations about ways that Order 1000 could be streamlined
    across the board.
        While regional planning conversations may result in some
    benefits--and I would add there may be some benefit especially
    when talking about interregional projects where maybe not as
    much conversation had happened in the past--there may be ways
    to do it while repealing some of the more prescriptive aspects
    of the order.
        Briefly, moving beyond Order 1000, I would offer that I
    think there are a number of regulatory policy calls coming up
    that could have a significant impact on how transmission
    infrastructure will be developed. FERC has significant
    decisions ahead it, dealing with issues like rates of return on
    transmission projects for jurisdictional rates, issues related
    to transmission incentives that FERC builds into its rate
    structure.
        And, finally, one of the big elephants in the room on
    transmission development is, as it is with pipeline
    development, it is very difficult to get infrastructure
    projects sited and brought through the construction phase
    because of multiple levels of sometimes bureaucracy and red
    tape that can block some of those permitting decisions.
        With that, I conclude my testimony. Thank you. I look
    forward to any questions you might have.
        [The prepared statement of Mr. Clark follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olson. Right on time. Thank you, Commissioner Clark.
        Our next witness is Dr. Edward Krapels.
        Mr. Krapels. Perfect. Thank you.
        Mr. Olson. CEO of the Anbaric Development Partners.
        Five minutes, Dr. Krapels.

                      STATEMENT OF EDWARD KRAPELS

        Mr. Krapels. Thank you, Mr. Chairman and distinguished
    members of the Energy Subcommittee.
        My name is Ed Krapels, and I am the founder and CEO of
    Anbaric, which is an independent transmission microgrid storage
    and smart energy campus developer. We are funded by
    institutional investors, so we are not your typical utility.
        We like to think we build the electric businesses of the
    future, and the future is very different from the past, as
    other members have already indicated. We helped to spearhead
    two high-voltage direct current buried transmission lines
    between New Jersey and New York. The high-voltage direct
    current technology is common worldwide, but not widely used yet
    in the United States.
        As a person who has actually developed interregional
    transmission projects, I have taken the opportunity to write an
    article that is part of my prepared testimony that was just
    published in The Electricity Journal called ``Triple
    Jeopardy.'' It reviews why, even though everyone agrees these
    kinds of interregional transmission links are useful and that
    more are needed, both existing and new interregional projects
    are being choked off by well-intentioned but unproductive
    regulations.
        Some of these stem from Order 1000 and the inability to
    implement Order 1000 in a way that is sufficiently prescriptive
    to handle the many issues that arise when interregional
    transmission projects are proposed.
        I am here this morning, however, to discuss a really
    important new opportunity in our power industry. Federal energy
    and environmental policy can accelerate what promises to be a
    once-in-a-generation chance to launch a new domestic industry,
    and that is offshore wind, if we do it smartly and thoughtfully
    from the start.
        The key to success is to plan, design, and build shared
    independent offshore transmission, OceanGrids, in a thoughtful
    way in each of the participating coastal States. The Federal
    Government obviously has a huge role in this through the BOEM
    and FERC procedures that have to be implemented as part of this
    plan.
        Why are these planned and independent OceanGrids so
    important? Because after years of development in Europe,
    technology has pushed the price of offshore wind down to super-
    competitive levels. With that, American offshore wind is now a
    natural component in the administration's energy dominance
    strategy. It is indeed fuel from heaven, and its time has come.
    However, as with all large-scale energy resources, indeed with
    any important new industry, the business, financial, and
    physical platform on which it is built must be carefully
    designed and developed.
        Unfortunately, some ideas about offshore wind would
    jeopardize the ability to realize its full potential. Early
    policy proposals in Massachusetts, New York, and New Jersey
    explicitly would give generators the exclusive ability to own
    the transmission lines that take offshore wind to market. These
    proposals have been promoted by giant, largely European wind
    developers that would get America's offshore undertaking off on
    an anti-competitive and wrong footing. It is obviously in their
    interest to control as much of the access to the onshore grid
    as possible. If we allow that to happen, we will lose the kind
    of competition that will further lower offshore wind prices. We
    will lose more fishing grounds because there are more subsea
    cables than necessary. We will lose control over a substantial
    portion of our own coast. A proliferation of cables would
    displace and distress marine life during construction and
    operations and make it hard to avoid estuaries and navigate
    sensitive shoreline points of entry that will undermine an
    industry in a vital period of its growth.
        We are proposing in our OceanGrids a smaller number of
    large collector stations that are placed at the edges of the
    offshore wind farms, gathering the electricity from multiple
    wind farms and bringing it to shore via the minimum number of
    transmission cables buried in the seabed. These cables would be
    buried under the ocean floor and sized for multiple wind
    projects, and it could be either direct current or alternating
    current, depending on the distance to shore.
        If we do it right, we will create an industry and tens of
    thousands of 21st century jobs. We will create competition
    between generators. And it is that competition that will bring
    the price of offshore wind down to market levels.
        I will close by saying that in Europe today offshore wind
    auctions are yielding prices of 4 to 5 cents per kilowatt hour,
    which is pretty close to the market price.
        Thank you very much.
        [The prepared statement of Mr. Krapels follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olson. Thank you, Mr. Krapels.
        Our next witness is Jennifer Curran. Jennifer is the vice
    president, system planning, at Midcontinent ISO. But most
    importantly, she is a graduate of Rice University, my alma
    mater.
        Ms. Curran. Go, Owls.
        Mr. Olson. Go, Owls.
        Five minutes, ma'am.

                      STATEMENT OF JENNIFER CURRAN

        Ms. Curran. Good morning, Vice Chairman Olson, Ranking
    Member Rush, and members of the subcommittee.
        As noted, I am Jennifer Curran, Vice President of System
    Planning for the Midcontinent Independent System Operator, or
    MISO, as we are more commonly known.
        I appreciate the opportunity to be here with you today as
    you examine the state of the Nation's electric transmission
    system, and I hope the insight into how MISO plans transmission
    are useful to you as you work to shape U.S. energy policy.
        MISO is a 501(C)(4) not-for-profit social welfare
    organization with responsibility for ensuring the reliability
    of the high-voltage electric transmission system to deliver
    low-cost power to customers. That mission is reflected in our
    approach to transmission planning. We seek not to minimize the
    cost of transmission, but rather to identify transmission,
    which maximizes value to customers in the form of overall lower
    total energy costs.
        The system that MISO manages is geographically the largest
    in North America. It spans from Manitoba in Canada down through
    all or parts of 15 States to the Gulf of Mexico. As you might
    imagine, a geography that wide presents a lot of diversity in
    resource types, weather, State policies, and consumer
    preferences as it relates to electric supply. Transmission is a
    key tool to optimize that diversity for the benefits of
    customers. That diversity also presents challenges as we seek
    to design transmission plans and, probably most importantly,
    determine who will pay for them. Even prior to Order 1000, MISO
    was planning not just for reliability, but also for economics
    and public policy.
        Of the $30 billion of transmission investment that has been
    enabled through the MISO planning process, approximately 20
    percent of that is associated with a long-term regional
    planning effort to address the changing resource mix, known as
    the Multi-Value Projects.
        The Multi-Value Project portfolio is a set of 17 projects
    that are distributed widely across the north and central
    regions of MISO. They provide benefits of two to three times
    the cost, predominantly in the form of access to existing and
    new low-cost energy resources, and reliably enable the
    renewable portfolio standards in the Midwest.
        Transmission like the Multi-Value Projects is a longer-term
    view. We are about halfway through the implementation of the
    Multi-Value Projects, with the final project scheduled to go
    into service in 2023. In the meantime, as has been noted, we
    continue to see a great deal of change in the electric
    industry. So where do we go from here?
        I think the challenge in front of us is probably best
    described by the two questions I get most frequently about
    transmission planning: MISO, why have you not developed the
    next set of regional and even interregional transmission? And,
    MISO, why are you thinking about additional transmission that
    we clearly won't need?
        So that dichotomy is clearly representative of the
    diversity that I mentioned, and that diversity becomes even
    broader as we expand beyond the regional boundaries and plan
    with our neighbors. But it is also reflective of the
    uncertainty of the future as it relates to electricity.
        The MISO planning process uses a scenario-based approach.
    We try to bound the potential outcomes of the future and then
    look for transmission projects that will be valuable in all of
    those futures.
        If we can find transmission that is valuable across that
    wide range of objectives, then we can feel comfortable that the
    benefits will continue to accrue to customers and that we can
    continue to recommend that transmission. We often refer to
    these as no-regrets projects.
        We have a lot of planning to do to determine whether there
    is a future set of transmission that has benefits in excess of
    costs and, probably most critically, to come to consensus on
    who will pay for that transmission, who sees the benefits and
    believes that the cost they will bear will be in line with
    those benefits.
        Nonetheless, I believe that regional and interregional
    transmission will be a critical part of the overall solution
    set as we seek to ensure the reliability, the efficiency, and
    the resilience of the electric grid into the future.
        Thank you.
        [The prepared statement of Ms. Curran follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olson. And thank you, Ms. Curran. We will talk about
    Beer Bike and Baker 13 offline.
        Our next witness is Dr. Ralph Izzo. He is the CEO of the
    Public Service Enterprise Group.
        Dr. Izzo, you have 5 minutes.

                        STATEMENT OF RALPH IZZO

        Mr. Izzo. Good morning, Mr. Chairman, Ranking Member Rush,
    members of the subcommittee, as well as full committee Ranking
    Member Pallone, who has had a long and exemplary career serving
    the people of my home State, New Jersey.
        I am pleased to provide my point of view on the importance
    of continuing to strengthen and modernize electric
    infrastructure. Today I will highlight one Federal policy that
    stands as an impediment to that goal and should be repealed,
    that being FERC Order 1000.
        I am here representing the Public Service Enterprise Group
    and our subsidiary, PSE&G, a 114-year-old company that is New
    Jersey's largest electric and gas utility. PSE&G owns around
    1,600 circuit miles of transmission operated by PJM
    Interconnection.
        Despite the fact that PSE&G has been named the mid-
    Atlantic's most reliable electric utility for 16 years in a
    row, much of our electric infrastructure is old. While it has
    helped power the industrial Northeast for nearly a century, in
    recent years we have had to work to replace, upgrade,
    modernize, and sometimes move parts of the grid in order to
    ensure our system can withstand extreme weather events and
    other threats, for even as our customers are using less
    electricity, their reliance on it has never been greater.
        Of course, we don't have a blank check. Our investments
    must be prudent. Over the past 10 years we have made
    improvements that have reduced unplanned transmission outages
    by over 80 percent. So the customer benefit is clear.
        Transmission investment has been helped by Federal policies
    that have recognized the importance of transmission and the
    risk in building large projects. However, Order 1000 stands out
    as a policy that undermines these efforts.
        Enacted by FERC in 2011, Order 1000 was touted as landmark
    reform that would promote efficient and cost-efficient
    transmission planning and remove barriers to development. But
    in the 7 years that we have been living under Order 1000, the
    promised efficiency looks more like confusion, controversy, and
    chaos.
        Regional grid operators have begun to voice their views.
    PJM CEO Andy Ott last year called Order 1000, and I quote, ``a
    solution in search of a problem that is creating more of a
    challenge.'' Southwest Power Pool CEO Nick Brown said it
    created, ``more overhead and more uncertainty.''
        Our main experience with Order 1000 has been through a
    competitive solicitation launched by PJM in 2013 for a project
    to solve voltage issues in southern New Jersey. To call the
    process a mess would be generous. PJM made an initial decision
    and then reversed itself. Disputes cropped up between States
    and stakeholders that the RTO had to mediate.
        PJM found itself having to make judgments outside its
    expertise, for example, on which alternatives might secure
    environmental permits or how to interpret the fine print and
    exclusions when a developer says it will cap construction
    costs.
        Five years into the planning process, we still do not have
    a constructed project to address a major need on this part of
    this grid. And across the country, other red flags continue to
    appear. No region outside organized markets have even attempted
    to administer an Order 1000 bid. The Southwest Power Pool spent
    $5 million on a competitive process for an $8 million project
    that was deemed unneeded and never built. The California ISO
    awarded a project to a partnership between a foreign developer
    and another entity, only to see the developer go bankrupt.
        Mr. Chairman, after 7 years these can no longer be called
    growing pains. But even beyond the chaotic implementation of
    Order 1000, there lurks a more fundamental concern. Order 1000
    tends to drive short-term, Band-Aid fixes for the grid.
    Projects that solve multiple problems and provide long-term
    value tend not to move forward because they are ruled out as
    being too costly.
        Competition is a positive force. But the goals must be set
    to achieve the outcomes we want. People and businesses depend
    on an efficient electric system that is resilient for the long-
    term against an array of very real threats. Leaving Order 1000
    in place risks our ability to achieve that end.
        Thank you.
        [The prepared statement of Mr. Izzo follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olson. Thank you, Dr. Izzo.
        The chair now calls upon John Twitty. As was mentioned by
    my colleague from Missouri, he is Executive Director of the
    Transmission Access Policy Study Group and a dear friend of Mr.
    Long.
        So offline, you probably have some stories that about him
    that we would all like to hear. You have 5 minutes.

                        STATEMENT OF JOHN TWITTY

        Mr. Twitty. Chairman, indeed, I do.
        Well, good morning, Mr. Chairman and members of the
    subcommittee. I am John Twitty, Executive Director of TAPS, the
    Transmission Access Policy Study Group. Our association has
    been active here in the Capitol and at FERC protecting the
    interests of transmission-dependent utilities. We represent
    municipal utilities, joint action agencies, a rural electric
    cooperative, and an investor-owned utility, serving about 1,200
    utilities with retail customers in 35 States.
        As load-serving entities dependent upon the transmission
    facilities of others, TAPS members recognize the importance of
    a robust grid and have long advocated policies to get needed
    transmission built, but are keenly aware that expansion must be
    achieved at reasonable cost.
        By enacting Section 217(b)(4) of the Federal Power Act of
    2005, Congress gave FERC clear instructions on transmission
    planning and expansion. FERC is directed to facilitate planning
    to meet the reasonable needs of load-serving entities and
    enable load-serving entities to secure long-term firm physical
    or equivalent financial rights for long-term supply power
    arrangements made, or planned, to meet their service
    obligations.
        These directives translate into steps FERC can and should
    take regarding transmission planning and investment. But that
    is not happening to the degree necessary to meet Congress'
    mandate. First, the grid has to meet the needs of load-serving
    entities. Although FERC has established rules for an open and
    transparent transmission planning process, even FERC has
    recognized that this is not happening consistently.
        We are particularly concerned that transmission-dependent,
    load-serving entities do not have a seat at the table the way
    they would if they shared ownership in the grid. Joint
    transmission ownership arrangements where all load-serving
    entities share ownership of the grid, which have occurred in
    many States, have a long history of ensuring that the
    transmission needs of all load-serving entities are met
    consistent with Section 217. They also facilitate the State
    siting process and spread investment risk and responsibility
    and provide an opportunity for small load-serving entities to
    offset their increasing transmission rates against transmission
    revenues, thus reducing cost to ultimate customers.
        Second, we need to be sure our investment in new
    transmission is appropriate, consistent with Section 217's
    focus on the reasonable needs of load-serving entities. TAPS
    members have experienced rapid increase in transmission cost.
    While a portion of the increase is no doubt justified,
    transmission has become an investment magnet. The potential for
    guaranteed incentive-elevated returns on equity on low-risk
    transmission assets may spur investment that is not necessary.
    While we support FERC's ground-up consideration of grid
    resilience, it should not become a blanket justification for
    excessive investment.
        Third, FERC has fallen short in fulfilling Section 217's
    directives regarding long-term transmission rights,
    particularly as to the capacity associated with long-term power
    supply arrangements on which load-serving entities rely for
    resource adequacy. This exposes load-serving entities to
    increased cost, especially if the RTO choices of large
    transmission owners have left them with loads and resources in
    multiple RTOs. It also makes new investments riskier.
        Fourth, above-cost incentives are not needed to attract
    investment. There is no shortage of entities seeking to invest
    in low-risk transmission assets at FERC's base equity return
    that is intended to reflect the cost of attracting capital.
    There is no need for incentive rates of return, much less to
    expand their availability beyond opportunities provided under
    current FERC policy. Those seeking transmission incentives
    should not be permitted to turn away load-serving entities in
    the footprint seeking to make their load ratio investment in
    the grid.
        Finally, the transmission planning process can also be a
    more effective vehicle for inclusive transmission investment.
    Non-incumbent transmission developers, especially those that
    accommodate participation by small load-serving entities,
    should have a fair opportunity to develop needed new
    transmission.
        Congress should encourage the Commission to reinvigorate
    the Order 1000 competitive transmission development process in
    a manner that will promote joint transmission ownership, as
    well as to use competitive discipline to curb rising
    transmission cost.
        At TAPS, we want to be part of the solution so long as the
    needs of our customers are met. And I look forward to this
    discussion.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Twitty follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olson. Thank you, Mr. Twitty.
        Our final witness is Mr. Rob Gramlich.
        Mr. Gramlich. That is right.
        Mr. Olson. Rob is the President of Grid Strategies LLC.
        You have 5 minutes for an opening statement, sir.

                       STATEMENT OF ROB GRAMLICH

        Mr. Gramlich. Thank you very much, Vice Chairman Olson,
    Ranking Member Rush, members of the subcommittee. I appreciate
    the opportunity to be here today to talk about the important
    issue of the state of transmission.
        There is no infrastructure more important than
    transmission, which is essential to the reliable and affordable
    electricity service we depend on for almost every modern
    commercial and individual activity.
        Since this subcommittee was involved in passing the Energy
    Policy Act of 2005, the industry has succeeded in building a
    lot of transmission. Transmission benefits have exceeded the
    cost by factors of 2 to 3.5 in the major investments in the
    central region you have heard about in MISO and the Southwest
    Power Pool.
        Transmission investment has enabled over $100 billion of
    generation investment in rural communities. Transmission
    investment is needed for both a distributed future and a large
    utility-scale generation future, either one or both.
        We have learned a lot about what works. Regional planning
    and cost allocation in particular have worked well. We should
    build on that success. In my written testimony, I provide nine
    ideas for expanding transmission and improving its performance.
        However, none of these ideas matter if there is no
    leadership at the Department of Energy or FERC. I think we are
    waiting for that leadership. I fear the agencies are too
    distracted by misguided proposals to provide life extensions to
    old power plants. We are all wasting our time comparing
    different dictionary definitions of reliability and resilience
    when we should be updating policies for transmission. If
    ``resilience'' is a code word for propping up uneconomic
    plants, that effort needs to sink on its own poor merits, as my
    former boss, FERC Chairman and Texas PUC Chairman Pat Woods,
    said recently.
        Turning to transmission. To improve transmission, most of
    my recommendations are for FERC, but I have some for DOE and
    Congress as well. It doesn't matter if it is under the heading
    of Order 1000, 890, 2000, or an entirely new vision they could
    roll out called Order 2020. We need to update transmission
    policy to create the grid we know we will need in the future.
        I recommend that FERC and Congress preserve and build upon
    the twin policies I mentioned of broad regional planning and
    beneficiary-pays cost allocation. That is what worked in Texas,
    that is what worked in SPP, that is what worked in MISO. That
    is what Dr. Krapels described should be done in the Northeast.
        Number one, FERC should align transmission owner incentives
    for advanced transmission technologies. I didn't say more
    incentives. I am not asking for a subsidiary. I said align the
    incentives so that transmission owners have an incentive to
    deploy cost-effective technologies.
        Number two, FERC should incorporate advanced transmission
    technologies into transmission planning. I don't like to call
    it nonwires alternatives. I think they are just other
    transmission options. They should all be considered, along with
    new lines and other assets.
        Number three, FERC should fix interregional planning and
    cost allocation. Clearly, no improvements have been made since
    Order 1000's attempt to improve that.
        Number four, Congress, the Department of Energy, and FERC
    should all improve Federal backstop siting. I think it is
    important for the future grid that we need, and we should make
    sure it works and is used where appropriate.
        Number five, FERC should require proactive planning that
    captures all of the values of transmission. Too often it gets
    compartmentalized and not all of the benefits are included.
        Number six, the administration should improve Federal
    coordination and transmission permitting on Federal lands.
        Number seven, the Department of Energy should harness the
    authority and capabilities of power marketing administrations.
    They can be involved in transmission, they can utilize Section
    1222 of the Energy Policy Act of 2005, and help in other ways.
        Number eight, the administration should couple the
    Department of Energy's planning and support for planning and
    corridor designation with the Department of Interior's efforts
    to identify renewable energy zones and transmission corridors.
        Finally, Congress should consider public financing to
    right-size transmission. Too often we underbuild for the
    resources that we know will be there when our children, their
    children, and their children's children will benefit from it.
        Those resources are there. We know they will be there even
    in Texas where we built a lot of transmission. We have
    essentially used up that capacity. And looking back, we would
    have done better to build it the right size.
        I will stop there and look forward to your questions. Thank
    you.
        [The prepared statement of Mr. Gramlich follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olson. Thank you, Mr. Gramlich.
        And for the panel, we are having votes called within the
    next 10 to 15 minutes, floor votes. We will have to basically
    go into recess. But until then, we will try to get through as
    many member questions as possible. We have 5 minutes to ask
    questions.
        Being the chairman, I am first.
        And you all know that I am a Texan. And you all know that
    Texans love to brag about fellow Texans. We say they done
    something good. They said that in Haskell, Texas. Haskell is
    the home of our former Governor, our current Energy Secretary,
    Rick Perry. He did something good with what is called
    Competitive Renewable Energy Zones. He used those to fix a
    problem he had in Texas, a big problem.
        We have a lot of wind power, but we have most power out
    west, rural Texas, where it is not needed. We need it in
    eastern Texas, central Texas, Houston, Dallas-Fort Worth,
    Austin, San Antonio.
        But that CREZ initiative is part of why, as Dr. Krapels
    said, Texas leads the Nation in wind power. In fact, one day a
    couple years ago almost half our energy was provided by wind.
    Offshore Corpus Christi, Texas, that wind whips almost 300 days
    a year. We are making progress on that.
        My question is for you, Mr. Gramlich. Can you talk about
    how the CREZ model worked and whether that is something we
    could do elsewhere?
        Mr. Gramlich. Sure. And you are absolutely right,
    Congressman, the Texas CREZ model, as well as the ERCOT market
    structure overall, is a model for the country.
        I think we would be doing a lot better in all of the FERC
    jurisdictional areas if we essentially had the ERCOT market
    model throughout the Northeast and the rest of the RTO-ISO
    areas, as well as its proactive transmission planning model
    that has access to all of that wind and gas resources and
    others out in western Texas and the Panhandle.
        So essentially it is a simple formula of identifying where
    the generation resources are and proactively building to those
    resource. The alternative that is too often used in many other
    places is just to wait one by one for all the little projects
    to connect, and no one of them are going to build the
    transmission that are needed. So you need to proactively build
    and right-size the lines to the resource area.
        Mr. Olson. Thank you.
        And, Doctor, would you like to add anything, Dr. Krapels,
    you are the wind expert, about the CREZ model in Texas, how
    that worked out?
        Mr. Krapels. I totally agree. And in the Northeast, we are
    looking at a wind resource offshore that could be 10,000 to
    20,000 megawatts. Texas size, Mr. Chairman. Texas size.
        Mr. Olson. That is very big.
        Mr. Krapels. That is very big.
        Mr. Olson. Huge.
        Mr. Krapels. It represents a capital investment opportunity
    of $30 billion, $40 billion, big even by Texas standards. And
    yet our transmission policy in the Northeast is the opposite of
    that of Texas. It is let the generators build and own the
    transmission, which seems almost insane to me.
        We should do what Texas did. We should learn from Texas and
    build the transmission and plan the transmission first, and
    then let the generators compete like hell to get access to that
    transmission. That is what you did, and it works great.
        Mr. Olson. This is a great hearing so far.
        The last question is for you again, Mr. Gramlich.
        You recently wrote a white paper about new technologies
    that can optimize a transmission system in a much lower cost
    than building new transmission lines.
        Can you briefly describe how that will work and compare
    that for the cost to the consumer, what the benefits are of
    your white paper, your plan?
        Mr. Gramlich. Yes. Thank you, Congressman, for the
    question.
        I formed a coalition called the WATT coalition, Working for
    Advanced Transmission Technology. And we put out a white paper
    where we were thinking, in part, about wholesale customers and
    thinking we do need more transmission, but we should also make
    sure that the existing grid is used as efficiently as possible.
        And many of these new technologies actually weren't really
    commercially available when the Energy Policy Act directed FERC
    to promote them back in 2005. And so there is an unfinished
    chapter in the implementation of Congress' act, and that is on
    the operational side, the utilization of the existing wires. A
    whole lot was done on incentives for new transmission, but
    nothing was done on utilization.
        And so, again, we are not asking for more incentives
    necessarily, just alignment of incentives and inclusion into
    the planning process.
        Mr. Olson. Thank you. I am running out of time here.
        One question for you, Mr. Clark. I would be curious to know
    if you think regulators are doing a good job of keeping up with
    emerging technologies in the transmission or distribution
    space. Grade A, B, C, D, or something below that.
        Mr. Clark. I would say it is incomplete, if that is an
    answer.
        Part of the challenge when we talk about regulators is you
    are looking at multiple jurisdictions of regulatory authority.
    So unlike the case of Texas where you have a wholesale
    regulator that is both the retail regulator and the wholesale
    regulator, for most of the rest of the country it is very
    difficult to bridge some of those divides. It is just the way
    the jurisdictional nature plays out.
        FERC has wholesale authority and interstate transmission
    authority. But many of those other decisions, regarding
    resource adequacy, integrated resource planning, retail
    decisions, are made at the State level.
        So it is tough to give an overall grade because of the
    natural jurisdictional divide that sometimes creates tension.
        Mr. Olson. Thank you. My time has expired.
        It is now time for Mr. Rush, the ranking member of the
    subcommittee, to ask his 5 minutes of questions.
        You are up, sir.
        Mr. Rush. I want to thank you, Mr. Chairman.
        Mr. Gramlich, as I mentioned in my opening statement, we
    are moving into a new energy paradigm where advanced
    technologies, such as distributed energy, microgrids, and
    energy storage are increasingly being developed and coming
    online.
        In your opinion, is Order 1000, as constructed, the best
    way to increase the deployment of these types of low-cost,
    clean energy resources?
        Mr. Gramlich. Sure. Thank you for the question.
        We are, indeed, moving toward that future of a more
    distributed network with many small, sometimes retail or State
    jurisdictional resources. I think the planning processes need
    to incorporate that.
        I do not agree with those who say that means we are not
    going to need as much of the bulk power grid. In fact,
    resources are still often variable and remote, and we need to
    move the power around geographically as well as over time,
    which storage can do.
        So we are going to need the big grid, so to speak, and we
    are also going to need much more coordination at the local
    level, which is really for State regulators to handle.
        I think reliability and efficiency can improve, however, if
    we bring those distributed resources into the wholesale
    markets. There are going to be a lot more resources available.
    And if there are any shortfalls, for example, if we give them
    access to the wholesale markets, we will have a lot more
    reliability.
        Mr. Rush. Commissioner Clark, in your written testimony you
    stated that regions that are still served by vertically
    integrated utilities were already doing a fair amount of
    regional planning before Order 1000. And you maintain that
    Order 1000 actually replaced a collaborative, bottoms-up
    approach to transmission planning with more bureaucracy and a
    compliance checklist that may not necessarily result in
    additional transmission developments.
        Briefly, what recommendations would you suggest that would
    help improve Order 1000 to better achieve the goals of better
    process planning, better cost allocation, and increased
    competition, including for non-incumbent transmission
    developers?
        Mr. Clark. Thank you for the question, Ranking Member Rush.
        What I would do for those, especially those regions of the
    country where--which is still the majority of the States--where
    the States maintain vertically integrated utilities, I would
    argue that Order 1000 should be put on a pretty severe diet so
    that it is slimmed back in terms of trying to leverage those
    things that were working in the past. And you had indicated or
    referenced my testimony where I talk a little bit about this.
        A lot of the compliance obligations with regard to things
    like competitive bidding and the process that each of these
    regions have to go through, through that, don't fit very well
    in regions of the country that are still vertically integrated.
    And the reason is because utilities working with their State
    utility commissions had always done that sort of regional
    planning in the past. And MISO's MVP suite of projects was
    referenced earlier as a good example of how that worked well.
        Those types of projects we are not seeing coming forward
    anymore because now the name of the game is, well, we have to
    comply with Order 1000, and so it really just becomes a
    compliance exercise as opposed to the more organic process that
    happened, bottoms-up.
        I think there are some different issues maybe in parts of
    the country that have restructured where you might have some
    natural tension between generation and transition as it relates
    to the marketplace. Even there I don't think Order 1000 is
    working perfectly, as indicated by some of the examples that
    Dr. Izzo talked about.
        But at the very least in those vertically integrated
    regions of the country, I think it could be slimmed down from a
    compliance standpoint. Maybe focus more on some of the good
    aspects of regional planning and collaboration, and maybe
    especially on interregional projects where there may not have
    been as much conversation going on as there was after Order
    1000.
        Mr. Rush. I yield back.
        Mr. Olson. Thank you.
        Mr. Long, 5 minutes for questions, sir.
        Mr. Long. Thank you, Mr. Chairman, I appreciate you
    yielding to me.
        Mr. Twitty, FERC Order No. 1000 that is being discussed was
    an effort to introduce market concepts to transmission
    development. But the scope of transmission completion to date
    has been severely limited during implementation, forcing
    American businesses and households to overspend for
    transmission projects.
        Why is competition in this area so important?
        Mr. Twitty. Well, I guess, Congressman--first, thank you
    for the question. We all believe that competition brings lower
    prices and better services. Whether that can happen in a
    commodity like transmission or, for that matter, other aspects
    of the electric business I think is still a question out for
    debate.
        I think it is clear that we have to pay more attention to
    how transmission gets built, how its ownership share is divvied
    up, what the rates of return are that are provided to the
    people who are building it. And as I have suggested, there are
    lots of folks out there who don't have the opportunity to
    participate in the ownership and in some cases even the
    planning for these projects.
        I would suggest that if you really believe in competition,
    you really believe in having a grid that is right-sized, that
    everybody should be at the table. Whether we like Order 1000,
    the way it was written or the way it has been implemented, is a
    good question.
        Mr. Long. You think it should be reexamined or----
        Mr. Twitty. Well, yes. I don't think there is any----
        Mr. Long [continuing]. Repealed altogether?
        Mr. Twitty. Yes. No. No. I think there are some good
    aspects to Order 1000, but I think it is not working the way it
    was intended. And if more people were part of the planning
    process, really a part of the planning process, really a part
    of the ownership structure, I think we would have a better
    outcome than we do today.
        Mr. Long. According to your testimony, TAPS members in the
    Southwest Power Pool have seen an average annual rate increase
    of 17 percent for the last 5 years. That is annually.
        A few weeks ago the FERC Commissioner sat at the same table
    where you folks are sitting today, and I told him that your
    former employer, City Utilities of Springfield, has studies
    that show that costs are substantially higher than other
    customers in the SPP.
        What needs to be done, either by Congress or by FERC, to
    fix this trend of such high annual rate increases for my
    constituents in Springfield, where you live?
        Mr. Twitty. Well, I mention in my testimony the rates of
    return that are offered by FERC today are pretty attractive. I
    think we would probably all agree that if we had our 401(k)s
    and our IRAs invested at those guaranteed rates of return we
    would be pretty happy.
        So I think that needs to be addressed. As I suggested, I
    don't think there is any need for incentives on top of those
    guaranteed rate of return. So I think that is a big piece of
    it.
        And the bottom line, as you mentioned, real customers
    paying real utility bills, like everybody in the room, pay
    these increases. And I would suggest that if it wasn't for
    abnormally low natural gas prices today that are masking lots
    of these problems, people would be at your doorsteps wanting
    solutions and they would want them pretty doggone quickly.
        Mr. Long. Talking about transparency for a moment here. How
    would greater transparency in the planning process of
    transmission building impact the cost of those transmission
    services?
        Mr. Twitty. Well, I guess I think that by transparency we
    are including a number of things. If we have more people at the
    table who are actually using the transmission grid, I think it
    is going to help the right size grid be built. I think it is
    going to impact the siting process. I think Commissioner Clark
    mentioned earlier, the siting process is probably the most
    critical aspect of building any of these kinds of projects.
        I have been somebody that has knocked on people's doors
    asking for rights of way. And I can tell you that if you have
    mayors, you have elected members of boards of public utilities,
    for instance, that are part of that process, it is going to be
    a better process, it is going to get the right thing built, it
    is going to be done as quickly as possible, and all of that
    translates into lower costs.
        Mr. Long. You mention in your testimony that grid
    resilience should not be justification for excessive
    investment. In our recent hearings, the concept of grid
    resilience has been described as a crucial characteristic our
    energy system needs.
        Can you explain what you mean by that?
        Mr. Twitty. Well, resilience seems to be the word of the
    day in our business. And there are so many risks, many of them
    presented through cyber threats, where we need to think about
    how the grid gets built and how the grid gets put back after an
    outage.
        We would probably all agree pretty easily on what
    resilience is, particularly those people who have been, like
    Dr. Izzo, running a utility today.
        But we shouldn't let it be the end-all be-all to build
    something that you can't cost justify. I used to say to our
    customers, look, we can guarantee your availability 100 percent
    of the time, but you couldn't afford the service. And then
    later the engineers would say, well, we probably really can't
    guarantee it 100 percent of the time.
        So it needs not to be an effort to gold-plate the system in
    the name of ``it will never go down.''
        Mr. Long. OK. Thank you.
        And it is good to see Chris here also today.
        So I thank you all for being here. I yield back.
        Mr. Olson. Thank you.
        Mr. McNerney, 5 minutes for questions, sir.
        Mr. McNerney. I thank the chair on this.
        Mr. Krapels, your OceanGrid collector stations proposal for
    offshore wind is pretty interesting. What types of proposals
    have you seen outside of the New York-New Jersey area,
    including the West Coast, where we have deep water out there?
        Mr. Krapels. Thank you, Congressman.
        I have seen and studied very carefully what the European
    countries have done. So both Germany and the Netherlands are
    the leaders in offshore wind deployment. And in both of those
    countries, the idea of an OceanGrid that is separately owned
    has been part of the policy for some time, and it works very,
    very well.
        In California, I think it would be wise to look at the
    offshore in the same way that Texas looked at the upstate. It
    is a region with unlimited wind energy potential.
        Floating storage wind turbine technology is evolving so
    quickly, I think it will be economic within the next few years.
    And thinking about this from a grid standpoint, build a grid
    that maximizes the benefits to consumers, would be the right
    way to go.
        Mr. McNerney. Thank you.
        Do we in Congress need to do something such as pushing the
    BLM's offshore Federal land leasing to be structured so that
    neighboring wind farms can use the shared infrastructure?
        Mr. Krapels. I think that would be extremely helpful. Right
    now each wind generator can build its own transmission line to
    shore, but once they do that, that place on shore is occupied
    by that generator for the rest of time. So thinking it a little
    bit more holistically would be very wise.
        Mr. McNerney. Thank you.
        Mr. Gramlich, you mentioned earlier that FERC does not need
    to grant more incentives, but to better align the incentives
    that we already have. What are your suggestions on how to go
    about doing that?
        Mr. Gramlich. Thank you, Congressman.
        There are examples from other countries that we are
    currently looking at and trying to work with a number of
    transmission owners on, as well as FERC staff and others. In
    the U.K., for example, when there is congestion, the
    transmission owner has an incentive to reduce that congestion,
    so thereby the savings are shared between customers and
    shareholders.
        So that concept, I believe, could be applied here in the
    U.S. It is not an easy task to implement these forms of
    performance-based regulation, but I am optimistic that with a
    lot of the best minds from the transmission industry and
    regulators we can figure it out.
        Mr. McNerney. Well, I am kind of interested in the D.C.
    overlay idea. What would be the next steps to get that to
    happen?
        Mr. Gramlich. Number one, having people like you say that
    is an important thing to do. So thank you for that. Having FERC
    and the Department of Energy take interest.
        I do think there is a very interesting study that I cited
    in my written testimony called the Seams Study that a number of
    national labs are working on that has been partially released,
    but not fully released.
        That will be a great model. So when that comes out, I think
    facilitating a dialogue on how do we get that type of grid
    would be very worthwhile.
        Mr. McNerney. Right. Well, you mentioned that there is a
    lack of private market interest in financing high capacity
    versions of the line, such as the Texas Competitive Renewable
    Energy Zones. Public financing to the right size may be
    appropriate. Can you discuss more about how such would be
    structured so that we don't build excess capacity needlessly?
        Mr. Gramlich. Thank you for that.
        Yes, there is always a risk in regulated industries of
    overbuilding, and you need to think about that. But in this
    case we know where the resources are, right? The wind
    resources, the solar resources, geothermal, you name it. These
    are location-constrained resources that haven't moved over
    generations and they are not going to move over generations.
        I submit we shouldn't be that worried about overbuilding to
    access those resource areas. Our great, great, great, great
    grandkids are going to benefit from whatever we do to build out
    that network.
        Mr. McNerney. Interesting.
        I am going to yield back in the interest of time, Mr.
    Chairman.
        Mr. Olson. Thank you.
        As a reminder, votes are about to be called. My intention
    is to alternate between Republican and Democrat until we have
    to go vote. We will recess for maybe a half an hour or 45
    minutes and come back.
        The next member to ask questions is Mr. Griffith from
    Virginia, 5 minutes.
        Mr. Griffith. Thank you very much. And in the interest of
    time, I am going to send some questions afterwards, as we are
    allowed to do within the next 10 business days, and I will do
    that.
        But I am going to ask one question live, Mr. Twitty,
    because I represent AEP country in southwest Virginia. And you
    mentioned that AEP's zonal transmission rate has significantly
    increased, about 15 percent per year over the past 6 years.
        I am wondering if you can explain that to the folks back
    home. And then answer the question: That is obviously a
    significant increase for customers in my area. Are there
    sufficient consumer protections in place to prevent unnecessary
    investments in the future?
        So first explain why it is going up so much, if you can do
    it quickly, and then what do we need to protect folks.
        Mr. Twitty. Well, I would answer it, Congressman, by
    saying, as I did to Congressman Long, it is too rich an
    investment for the people who own and build new transmission.
    It is too rich. We need to reduce returns on equity. We need to
    make sure we are not providing incentives on transmission
    investment for a run-of-the-mill, standard transmission line.
    That is certainly number one.
        Number two, as I have said, I think we need more people at
    the table from the very beginning. Owners of transmission need
    to let those of us who need the transmission to get their
    generation to load to be at that table and to own a load ratio
    share.
        These are the people who represent customers, real
    customers, and if they are at the table, I think they are going
    to do a lot of good work to make sure that there is no gold-
    plating, there is not any overbuilding, that we build exactly
    what it is we need to get generation to load.
        It is a long process. It requires your influence on the
    FERC. It requires lots of people talking about these issues. It
    is easy to say we want somebody at the table.
        If you are a transmission owner, you want to be a
    transmission owner and do exactly what you want. If there are
    other voices at that table, it gets a little bit messier. I
    think you get a better product if that is what happens.
        Mr. Griffith. Well, I appreciate that.
        And with that, Mr. Chairman, I will yield back so somebody
    else can get a question in.
        Mr. Olson. Mr. Johnson, Mr. Long, Mr. Cramer, anybody want
    to question, yield, take the time?
        Mr. Johnson you are recognized.
        Mr. Johnson. Thank you. Thank you, Mr. Chairman. I will
    make these quick.
        Mr. Clark, one of the primary objectives of Order 1000 was
    to promote interregional transmission development. But there is
    broad consensus that Order 1000 failed to achieve that goal.
        So in your opinion, how could this objective be achieved?
        Mr. Clark. Sure. I think part of it is, Congressman, and
    thank you for the question, part of it is, as I said,
    attempting to focus in on what you are actually trying to
    accomplish in the rule. The rule itself is expansive, it ran
    several hundred pages long, the compliance filings are probably
    thousands of pages on top of that.
        And I think part of the reason that you get that result is
    the order tried to do a lot of things all at once. It was
    partly competition policy. It was partly an investment policy.
    It was partly a regional planning policy. It was partly a cost
    allocation policy. Some of it dealt intraregional things, some
    of it interregional things.
        And when you push that much out in a rule and expect the
    regions to do something with it, you end up with, in my
    opinion, just a lot of bureaucracy and checking compliance
    boxes. That is why I say I think putting the order on a diet
    and trying to focus in on what you are really looking at doing
    probably would be the most helpful thing. Some of it may be
    reinforcing some of the planning conversations that happen, but
    without the more prescriptive elements of it.
        And I think part of it might be focusing more on the issue
    of interregional projects as opposed to spending a lot of time
    within these regions having to vet through and try to manage
    the type of intraregional projects that were happening
    organically prior to the order itself.
        Mr. Johnson. OK. What would be the advantages of greater
    interregional transmission?
        Mr. Clark. Because you have an interconnected grid, both in
    the West and in the Eastern Interconnect, there may be certain
    projects that serve a broad regional benefit that have benefit
    that accrues to many times over.
        But if you are only looking within your region, you might
    not see the value of the benefit of those particular lines.
    Some of them could be reliability lines. Some could be market
    efficiency lines.
        But some sort of process to have a yardstick to compare the
    interregional type of projects might be valuable, and that may
    not have been captured in earlier FERC orders such as 890.
        Mr. Johnson. All right. Thank you. I yield back.
        Mr. Olson. Thank you, Mr. Johnson.
        Ms. Castor, 5 minutes, ma'am.
        Ms. Castor. Thank you, Mr. Chairman.
        Thank you to all the witnesses who are here today.
        We recently in the Oversight and Investigations
    Subcommittee had an oversight hearing on the state of the grid
    in Puerto Rico. I want to thank the committee for continuing to
    focus on our neighbors in Puerto Rico.
        Unfortunately, right after the Army Corps of Engineers and
    DOE testified that they thought they had things on track, they
    had a major outage again. So I would like to ask you all after
    to supplement the record with any recommendations moving
    forward there. Clearly, there is an issue on transmission and
    the need for microgrids and more resiliency there.
        But as we work to modernize the grid everywhere and deal
    with the cost of the changing climate and building greater
    resiliency, we need to make sure we are taking advantage of
    nontransmission alternatives, such as microgrid, distributed
    energy resources, and energy storage.
        Nontransmission alternatives not only have significant
    environmental benefits, but they can help prevent long-term
    area-wide blackouts after natural disasters, like we saw in
    Texas and Florida and Puerto Rico this summer.
        We also need to be focusing on the needs of consumers and
    be a lot smarter. These nontransmission alternatives can be a
    great benefit to consumers. FERC Orders 890 and 1000 recognize
    the benefits of nontransmission alternatives, requiring
    regional transmission plans to consider whether nontransmission
    alternatives can more efficiently, cost-effectively, meet the
    needs of a region.
        But despite all these benefits, these alternatives are not
    being utilized to the extent they should be, especially given
    how advanced the technologies have become.
        So, Mr. Gramlich and Mr. Twitty, do you think that if there
    was a stronger FERC order that required more than just
    consideration of alternatives, we would see greater use? And
    what are the barriers to broader deployment and utilization?
        Mr. Gramlich. I do. Thank you for the question.
        For reliability and resilience, you can improve both by
    better monitoring and control of the infrastructure. It seems
    obvious. We do it with just about every other form of
    infrastructure with better monitoring and control systems and
    computing power. All through our economy we have these
    opportunities to monitor and control better, and that helps
    with reliability as well as efficiency.
        So transmission is no different. The only problem is, it is
    a regulated industry, the incentives, as I said, are
    misaligned, and the planning requirements are not up-to-date
    with the new opportunities we have.
        Ms. Castor. Mr. Twitty, short answer.
        Mr. Twitty. Congresswoman, thank you for the opportunity to
    respond to that. I would certainly agree with those comments.
        And I would suggest, as somebody who used to have
    responsibility for keeping lights on, at the end of the day
    that is the most important thing that all of us are after.
        Technology is a wonderful thing. It marches along. And yet
    implementing it in the real world, getting the right kind of
    investment at the right time, is always going to be critical,
    and making sure it works as it relates to the total grid.
        It is one of the challenges today of intermittent
    resources. Wind and solar are wonderful, and we are all trying
    to figure out ways to harness them properly. But when the wind
    doesn't blow or the sun doesn't shine, it is a real challenge.
        So you have to have a system designed that can take this
    intermittent resource, and in the case of microgrids turn over
    control of a part of your grid to others. And for people,
    again, like Dr. Izzo, who have responsibility for keeping
    lights on today, that is a pretty nervous thing, because if it
    doesn't work properly, if the technology isn't fully baked,
    lights go out and----
        Ms. Castor. Highlights the importance of planning and
    investments. Thank you so much.
        Mr. Twitty. Exactly.
        Mr. Olson. Thank you. And seeing there are no further
    members wishing to ask questions, I would like to thank our
    witnesses again for being here today. Thank you. Thank you.
    Thank you. Much obliged.
        Before we conclude, I would like to ask unanimous consent
    to submit the following documents for the record: a letter from
    GridLiance and a letter from WIRES. Without objection, so
    ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Olson. And pursuant to committee rules, I remind
    members that they have 10 business days to submit additional
    questions for the record. I ask that the witnesses respond
    within 10 business days upon receipt of the questions.
        Without objection, this subcommittee is adjourned.
        [Whereupon, at 11:04 a.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

                     Prepared statement of Hon. Greg Walden

        Good morning and welcome to our witnesses. Today's hearing
    on transmission infrastructure is another important topic in
    the Energy Subcommittee's Powering America series. I want to
    thank our witnesses for participating and I look forward to
    hearing your perspectives on the state of our nation's electric
    transmission infrastructure.
        The United States' electricity system is one of our
    nation's more impressive engineering feats--with its
    interconnected network of power plants, poles, and wires that
    delivers uninterrupted electricity from producers to consumers.
    Transmission is an integral component of our electricity
    system. Often called the bulk-power system, transmission
    infrastructure enables the movement of electricity across
    states, regions, and the country as a whole. However, as time
    passes and transmission infrastructure ages, upgrades and
    replacement of existing infrastructure, as well as capital
    investments in new projects are necessary to ensure electricity
    is delivered in a reliable, efficient, and cost-effective
    manner.
        Like many energy infrastructure projects, the construction
    of new transmission infrastructure can face difficulties, in
    part due to lengthy delays in permitting and siting processes.
    Energy infrastructure projects such as natural gas pipelines
    and LNG facilities are subject to Federal Energy Regulatory
    Commission (FERC) permitting processes. On private lands,
    utilities, grid operators, or states make the decision on
    whether a new transmission line needs to be built and whether
    to upgrade existing transmission infrastructure. However, when
    it comes to siting and building transmission lines across
    Federal lands, the Department of Energy is the lead agency in
    coordinating all applicable Federal authorizations and related
    environmental reviews of electric transmission facilities, with
    some authorities delegated to FERC.
        Consistent with the intent of the Administration's recently
    announced MOU on implementing One Federal Decision, agencies
    must work together to provide a more predictable, transparent,
    and timely Federal review of infrastructure projects.
        Through the Federal Power Act, Congress gave FERC the
    authority to regulate the sale and transmission of electricity
    in interstate commerce. Under this authority the FERC issued a
    series of rules to oversee and regulate the regional and inter-
    regional planning of transmission projects while at the same
    time encouraging greater competition between transmission
    developers. FERC's most recent rule on transmission was in
    2011, with Order 1000. Today's hearing will explore these rules
    and the related challenges of transmission planning.
        This Committee has discussed at length the importance of
    utilizing digital and information technologies for a more
    dynamic and innovative electricity system. Through previous
    Powering America hearings, we have focused on energy
    technologies located at the distribution level of the electric
    grid. However, new technologies have the potential to optimize
    the Nation's electricity system at the bulk-power level.
        Advanced grid technologies can modernize transmission
    infrastructure to ease congestion, allow for increases in
    demand, and provide greater security. These smart technologies
    include sensors for measuring system conditions, electric power
    equipment that regulates power flow, and computerized
    monitoring equipment that enable system operators to view the
    electric grid in real time and make necessary adjustments.
        For example, these technologies can optimize the flow of
    electricity by automatically routing power around overloaded or
    congested lines--allowing for greater line capacity. High
    voltage direct current transmission lines can be a less
    expensive alternative and have less electrical losses compared
    to traditional alternating current lines in transmitting
    electricity over long distances. I look forward to hearing more
    from our witnesses today on how these advanced technologies
    have the potential to optimize transmission infrastructure at
    the bulk-power level.
        The Nation's transmission system is a vital component in
    the safe, reliable, and affordable delivery of electricity to
    consumers across the country. We must ensure that the electric
    grid works in ways that integrate new technologies within
    existing transmission infrastructure, and siting new
    infrastructure when needed. Thank you to our witnesses for
    joining us today and I look forward to your testimony.

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