[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
                           

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      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:]
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    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:]
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    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:]
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    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:]
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    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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