[Senate Hearing 117-117]
[From the U.S. Government Publishing Office]
S. Hrg. 117-117
THE RELIABILITY, RESILIENCY, AND AFFORDABILITY OF ELECTRIC SERVICE IN
THE UNITED STATES AMID THE CHANGING ENERGY MIX AND EXTREME WEATHER
EVENTS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
MARCH 11, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
43-853 WASHINGTON : 2022
COMMITTEE ON ENERGY AND NATURAL RESOURCES
JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
MARTIN HEINRICH, New Mexico STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada JAMES LANKFORD, Oklahoma
MARK KELLY, Arizona BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado CINDY HYDE-SMITH, Mississippi
ROGER MARSHALL, Kansas
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
Brie Van Cleve, Senior Energy Advisor
Richard M. Russell, Republican Staff Director
Matthew H. Leggett, Republican Chief Counsel
Justin Memmott, Republican Deputy Staff Director for Energy
Darla Ripchensky, Chief Clerk
C O N T E N T S
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OPENING STATEMENTS
Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
Virginia....................................................... 1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from
Wyoming........................................................ 29
WITNESSES
Robb, James B., President and Chief Executive Officer, North
American Electric Reliability Corporation...................... 31
Gabriel, Mark A., Administrator, Western Area Power
Administration, U.S. Department of Energy...................... 45
Wood, III, Hon. Pat, Chief Executive Officer, Hunt Energy
Network, and Former Chairman, Federal Energy Regulatory
Commission..................................................... 57
Shellenberger, Michael D., Founder and President, Environmental
Progress....................................................... 76
Asthana, Manu, President and CEO, PJM Interconnection............ 89
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
American Public Power Association:
Statement for the Record..................................... 243
Asthana, Manu:
Opening Statement............................................ 89
Written Testimony............................................ 91
Responses to Questions for the Record........................ 218
Barrasso, Hon. John:
Opening Statement............................................ 29
Article entitled ``California's Shift From Natural Gas to
Solar Is Playing a Role in Rolling Blackouts,'' by Jeff St.
John for Greentech Media dated 8/17/2020................... 139
Brouillette, Hon. Dan R.:
Letter for the Record addressed to Senator Hoeven dated 3/11/
2021....................................................... 153
ERCOT:
Statement for the Record..................................... 3
Gabriel, Mark A.:
Opening Statement............................................ 45
Written Testimony............................................ 47
Responses to Questions for the Record........................ 180
Manchin III, Hon. Joe:
Opening Statement............................................ 1
Robb, James B.:
Opening Statement............................................ 31
Written Testimony............................................ 33
Responses to Questions for the Record........................ 171
Shellenberger, Michael D.:
Opening Statement............................................ 76
Written Testimony............................................ 78
Responses to Questions for the Record........................ 208
Wood, III, Hon. Pat:
Opening Statement............................................ 57
Written Testimony............................................ 59
Responses to Questions for the Record........................ 198
THE RELIABILITY, RESILIENCY, AND AFFORDABILITY OF ELECTRIC SERVICE IN
THE UNITED STATES AMID THE CHANGING ENERGY MIX AND EXTREME WEATHER
EVENTS
----------
THURSDAY, MARCH 11, 2021
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m. in
Room SD-106, Dirksen Senate Office Building, Hon. Joe Manchin
III, Chairman of the Committee, presiding.
STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. Let me begin by saying that I think that we
can all agree that reliable, affordable and dependable energy
is a hallmark of an advanced economy and critical for
businesses and residential consumers alike to thrive. Our North
American electric grid is a marvel of engineering and the envy
of the world. But ongoing and increasing changes in the
generation mix and outside forces like cyber threats and
weather events that test the grid also highlight the importance
of a resilient grid. This topic is squarely within the
jurisdiction of this Committee and it is critical that we,
state and local governments, and grid operators around the
country be two steps ahead in planning for these changes and
threats and how to ensure that we strike the right balance
between resilience, reliability and affordability.
At the top of everyone's mind is the recent winter storm
that brought Siberian weather to much of the country, and West
Virginia was not spared. We had over 100,000 people that lost
power, mostly due to downed distribution lines and poles
because of the ice. Of course, the impact on Texas has gotten
the most publicity with 4.4 million Texans without power for
days resulting in billions in damages and billions more in sky-
high energy bills and, tragically, dozens of deaths. I
understand the Texas legislature has held several hearings and
they are working to get to the bottom of why the Texas grid was
so unprepared to weather the storm as are NERC and FERC. And
the Texas grid operator, ERCOT, has provided us with a written
statement. I have the written statement here which I am going
to ask unanimous consent to enter into the record now and I
encourage all of our members, if you get a chance, to read it.
It's pretty interesting.
Do I have any opposition?
If not, so be it. We will enter it.
[The ERCOT written statement follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Let me be clear, today's hearing is not a
referendum on Texas. We have seen the impact of extreme weather
events to our electric grid across the country whether that be
the 2014 polar vortex, the extreme heat in California last
summer or the extreme cold around the country last month. We
need to incorporate all the lessons learned from those events
into our future planning, particularly as we can expect both
our energy mix and weather patterns to be different in the next
decade than they were in the last decade. As part of that
future planning, we need to take into account the need for a
diverse fuel mix with a broad array of emissions-reducing
technologies and include an honest assessment of where our weak
spots are and where we need to invest with an eye to balancing
the cost of reliability and the resilience with affordability.
I have said, time and time again, that we need to address
climate change, and we have to do it through innovation not
elimination. As a staunch proponent of an all-of-the-above
energy policy, I want to emphasize that we need to be thinking
about all of our fuel sources. We have to use all of the
resources we have in the cleanest way possible, but we need to
be ``eyes-wide-open'' that none of them are 100 percent immune
to weather disruptions, whether that be freezing wind turbines,
disruptions to our natural gas production and delivery systems
or frozen coal stockpiles--all of which we saw happen just last
month. That may take investment in weatherization and
infrastructure which, of course, comes with big price tags and
leads me back to affordability.
Reliable, resilient power does us no good if families and
businesses cannot afford it on a daily basis. While we
typically think about this in terms of the cost of a kilowatt-
hour, we also cannot deny the incredible costs associated with
major disruptions. By that I mean, not only the potential loss
of life but also the price tag that comes with scarcity and
rebuilding or repairing infrastructure, both energy and
otherwise. Although not labeled as such, those costs are passed
along to all of us whether through utility and service bills or
through our taxes. We truly cannot sacrifice reliability,
resiliency or affordability when it comes to our electricity if
we want to continue to thrive.
It is incredibly important that we strike the right balance
between all of these attributes as we look to the future. There
is not one answer to that equation, but you sure know when you
have gotten it wrong. I look forward to hearing from our panel
of witnesses about exactly what happened in recent grid outage
events, what lessons we should learn from them, and what we
should all be thinking about moving forward to strike the right
balance.
I want to welcome our panel, but right now we have a
quorum. So we are going to go to our vote and then we will go
right to Senator Barrasso for his opening statement, and I will
introduce our panel just a few minutes later.
[MOVE TO BUSINESS MEETING FOR VOTE.]
[HEARING IS RESUMED.]
The Chairman. Let me just finish up by welcoming our panel,
and then Senator Barrasso will give his opening statement.
We want to thank all of you for taking the time to be here
and bringing your expertise to our panel. We have Mr. Jim Robb.
He is President and CEO of North American Electric Reliability
Corporation (NERC). We have Mr. Mark Gabriel, Administrator and
CEO of Western Area Power Administration (WAPA). We have the
Honorable Pat Wood, III, CEO of Hunt Energy Network and former
FERC and Texas Public Utility Commission Chairman; Mr. Michael
Shellenberger, Founder and President of Environmental Progress;
and Mr. Manu Asthana, President and CEO of the PJM
Interconnection.
I want to thank you all for being with us today in person
and virtually, and I look forward to your expert analysis and
the discussion today.
I am going to now turn to Senator Barrasso for his
statement.
STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Well, thank you very much, Mr. Chairman,
and thank you for calling this important hearing.
We all agree that affordable, reliable and resilient
electric service is essential for every American. Electricity
is needed for virtually all aspects of our lives. That is why I
have been a strong advocate for generating electricity from a
diverse set of resources, including coal, uranium, natural gas,
hydropower, wind and solar. It is also why I have been
especially supportive of energy resources that are capable of
generating electricity at all times of the day and night, what
is known as baseload capacity and it is why we need to be
realistic about the limitations of energy resources such as
wind and solar that cannot generate electricity all the time.
Increasingly, the national discussion on electricity has
centered around a single metric, how much greenhouse gas does a
source of electricity produce? The discussion has failed to pay
sufficient attention to the questions of reliability,
resiliency and affordability. During last month's cold snap,
coal played a critical role in maintaining power in Oklahoma
and other states. In addition, nuclear power by one standard
outperformed all other energy sources in Texas, and hydropower
was essential to keeping the lights on in Western states. We
must ensure that our grids can provide electricity at all times
and at prices that American families and businesses can afford.
The American public deserves to know what policies and measures
are necessary to ensure that that happens. The public also
deserves to know what policies and measures make that objective
much more difficult to achieve. Today's hearing should help
address these important issues.
Electric systems in this country are among the best in the
world, and they are always evolving. The men and women who
built and operate them are tremendously capable. These
professionals must work with the grids we have today and not
with the grids that we wish we could have in 15 or 25 years.
The blackouts that we witnessed in California in 2019 and 2020,
as well as the blackouts across the central part of the country
last month, are unacceptable. What is also unacceptable are
proposals that would make blackouts more likely or more
devastating for the American people. For example, President
Biden has pledged to ``achieve a carbon pollution free power
sector by 2035.'' This is the goal no state, not even
California, has set for itself. President Biden has also
pledged to cut ``the carbon footprint of our national building
stock in half by 2035'' and to ``ensure 100 percent of new
sales for light- and medium-duty vehicles will be zero
emissions.'' In other words, President Biden wants to saddle
our electric grids with the additional burdens of powering our
transportation fleet and heating buildings currently served by
natural gas or oil.
As Bloomberg New Energy Finance report stated last month,
``the transition to electric heating and transport drives up
electricity demand while tremendous growth of wind and solar
strain the grid.'' So President Biden's proposals could
concentrate our nation's vulnerabilities to bad weather events,
terrorism or cyberattacks on the electric grid. Rather than
learn from the blackouts in California and the blackouts last
month, some in Congress are doubling down. Last week, House
Democrats introduced a bill to require that the country's power
sector be 80 percent carbon free in less than ten years and 100
percent carbon free by 2035. Now like President Biden's plan,
their legislation would also push additional burdens on
America's electric grids through the electrification of
buildings and vehicles that would otherwise rely on oil or
natural gas.
We should pursue ways to generate electricity that produces
less greenhouse gas emissions. We must not do so at the expense
of the reliability, resiliency or affordability of electric
services. That means supporting the continuation and expansion
of electricity generation from nuclear power, from hydropower,
natural gas and for coal.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Now we are going to hear from----
Senator Heinrich. Mr. Chairman?
Before we start, I am just curious. I noticed there is no
one from ERCOT on our list of witnesses today, and I am just
wondering why that is.
The Chairman. Senator Heinrich, it sure was not for a lack
of inviting them. We invited everybody from ERCOT and spoke to
everybody that is still left, which I am not sure anybody is
left.
Senator Heinrich. So ERCOT chose not to be here.
The Chairman. Well they needed to remain available to their
direct regulators, which is the Texas legislature, and they
have been in conversations with them. But I think you are going
to enjoy this panel and we have an experienced person in Mr.
Wood who knows it inside and out. So we are looking forward to
hearing from him too.
Let's get started now, if you don't mind, with our panel
and we will start with Mr. Robb, President and CEO of North
American Electric Reliability Corporation.
STATEMENT OF JAMES B. ROBB, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
Mr. Robb. Good morning, Chairman Manchin, Ranking Member
Barrasso and members of the Committee, thank you for having me
here at this very timely hearing.
The recent tragic loss of life and human suffering in Texas
and the middle South states starkly demonstrate the
essentiality of a reliable electric system. As you know, NERC
and FERC have begun to work on a joint inquiry into the root
causes of this event. We are committed to quickly getting to
the facts as to what actually happened, implementing
appropriate measures within our authority and communicating
other implied actions to policymakers and industry. There are
three major trends which are fundamentally transforming the
bulk power system and challenging our historic reliability
paradigms.
First, the system is decarbonizing rapidly and this
evolution is altering the operational characteristics of the
grid. Policies, economics and market designs are resulting in
significant retirements of traditional generation. New
investment is increasingly focused on developing carbon free
generation with variable production profiles and in this
resource mix, natural gas-fired generation is becoming ever
more critical, both for bulk energy to serve load and balancing
energy to support the integration of these variable resources.
Second, the grid is becoming more distributed. The improved
economics of solar is a key example. These smaller scale
resources have been deployed on both the bulk electric as well
as distribution systems and, in many cases, reside behind the
meter.
And third, the system is becoming increasingly digitized
through smart meters and digital control systems. These
investments greatly enhance the operational awareness and
efficiency of grid operators, but at the same time it heightens
our exposure to cybersecurity risk. And extreme weather, as we
have recently experienced this past month, stresses this
emerging electric system in new and different ways.
Our reliability assessments are one important way we
evaluate the performance of the grid, identify reliability
trends, anticipate challenges and provide a technical platform
for important policy discussion. With growing reliance on
variable and just-in-time resources, we are developing more
advanced ways to study energy supply risk. Our assessments
consistently have identified three regions of the country
particularly exposed to these dynamics--California, Texas and
New England. Last August, a massive heat wave across the West
caused an energy supply shortage in California in the early
evening. Solar energy was ramping down and the grid operator
was unable to import power as planned due to high demand
throughout the West. CAISO was forced to cut power to
approximately 800,000 customers. Among the lessons learned from
this event are: one, the critical need for reliable ramping
resources to balance load; and, second, the need for improved
ways to estimate resource availability when the system is under
stress.
In New England, cold weather exacerbates its dependence on
limited pipeline capacity and a handful of critical fuel
assets. An early January cold snap in 2018 led to natural gas
shortages and fuel oil was burned to preserve reliability. Had
that cold snap not abated when it did, the fuel oil inventory
would eventually be exhausted and ISO New England almost
certainly would have needed to shed load. It was a classic
near-miss event.
Insufficient and inadequate weatherization of generation in
Texas and the middle South states has been a growing concern
for us since 2012. After a cold weather event caused load
shedding for three million customers in Texas in 2011, we
developed a winter preparation guideline to focus industry on
best practices and started conducting significant outreach on
winter preparedness. Following additional extremes and
unplanned load shedding in that region in 2018, we concluded
that these events could no longer be treated as rare and that a
mandatory approach was warranted. As a result, NERC began the
process of adding mandatory weatherization requirements into
our reliability standards.
In addition to these weatherization initiatives, I'd like
to leave the Committee with four main points to consider.
First, more investment in transmission and natural gas
infrastructure is required to improve the resilience of the
electric grid. Increased utility-scale wind and solar will
require new transmission to get power to load centers.
Next, the regulatory structure and oversight of natural gas
supply for the purposes of electric generation needs to be
rethought. The natural gas system was not built and operated
with electric reliability first in mind. Policy action and
legislation will likely be needed to assure reliable fuel
supply for electric generation as the critical balancing
resource, natural gas, is the ``fuel that keeps the lights
on.''
Third, the electric and natural gas systems must be better
prepared for extreme weather conditions which are frankly
becoming more routine. Regulatory and market structures need to
support this planning and the necessary investment to assure
reliability.
And finally, investment in energy storage or alternative
technologies needs to be supported to have a viable alternative
to natural gas for balancing variable resources. A technology
which can be deployed cost-effectively and at massive scale
with adequate duration to deal with supply disruption lasting
for days rather than hours, is required.
Thank you again for the opportunity to be here today.
[The prepared statement of Mr. Robb follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, sir.
Now we are going to have Mr. Mark Gabriel, Administrator
and CEO of Western Area Power Administration.
I think we have him by video.
Mr. Gabriel.
STATEMENT OF MARK A. GABRIEL, ADMINISTRATOR, WESTERN AREA POWER
ADMINISTRATION, U.S. DEPARTMENT OF ENERGY
[Delayed audio feed.]
Mr. Gabriel [continuing]. The Western Area Power
Administration, a federal Power Marketing Administration
responsible for selling and delivering wholesale power from 57
hydroelectric dams to about 700 utilities, military bases,
Native American tribes, national laboratories and 15 Central
and Western states. WAPA's territory spans 1.3 million square
miles and our 17,236-mile transmission system, one of the
largest in the United States, is an integral part of the high
voltage power grid in the West that ensures reliable
electricity for more than 40 million Americans. A mentor once
told me early in my career that electrons follow the laws of
physics and electricity follows the law of the politics and
really, only one of these can be amended.
WAPA's system experiences 99.99 percent uptime and America
possesses the most reliable grid in the world thanks to our
professional utility industry overseen by industry and
government regulatory agencies and a common commitment to
keeping the lights on all while the competitive grid keeps
costs as affordable as possible. We also operate a resilient
system weathering disruptions like storms, wildlife
interactions, vehicle accidents, routine maintenance and
emergency situations and safely returning power to citizens.
However, when the system is pushed beyond its limits due to
extreme weather, such as Winter Storm Uri or the August 2020
heat wave in California, we experience the consequences of
operating and maintaining a competitive grid focused mainly on
low cost. On February 15th and 16th, SPP directed rolling
blackouts across much of its territory to protect the grid and
the communities that rely on it from damaging and prolonged
outages.
At WAPA, 21 customers experienced outages for an average of
55 minutes and up to 2 hours. Fortunately, WAPA and the Army
Corps of Engineers sent 27,150 megawatt-hours of additional
hydropower to SPP between February 15th and 18th, enough to
power nearly 800,000 homes. In the August 2020 heat wave, WAPA
did not lose power. But between August 14th and 15th, WAPA and
the Bureau of Reclamation supplied 5,400 megawatt-hours of
surplus federal hydropower to California to limit the effects
of the energy emergency without impacting our customers. In
both cases and then in Texas the markets worked according to
the design. The grid did not collapse, load shedding and
conservation appeals helped, all available resources were
generating and the prices increased when the megawatts were
scarce.
However, this also showed the system's weaknesses. First,
every form of generation can be disrupted by extreme
temperatures. Second, a competitive market can discourage long-
term capital investment in reliability and resilience measures.
And finally, costs move in both directions in competitive
markets and electricity will flow often at times at practical
prices. WAPA prepares for price fluctuations as well as drought
by maintaining a financial reserve at the Treasury, carefully
coordinated with our customers and this is really aimed at
avoiding rate shock.
Increasingly severe weather disasters are straining the
grid, including WAPA's, in the 2018 Carr Fire. We are
responding to more destructive ice storms, snowstorms,
tornadoes, wildfires and high wind events. We've deployed
personnel, equipment and materials to restore power after
hurricanes, typhoons and volcanoes. Looking forward, we
anticipate investing $1.3 billion in our system over the next
decade to assure reliability--reliability being the confidence
that the lights will turn on when we need them. Resilience is
the ability to prevent and withstand and recover from
destructive threats and events.
Ideally, we'd invest more in resilience emphasizing
defense-critical electric infrastructure, artificial
intelligence, hardening facilities, redundant services, black
start capabilities, replacing wood with steel and increasing
the movement of energy between the Eastern and Western grids to
the seven interties. Integrating AI, machine learning and
advanced technology solutions into grid operations can improve
real-time situational awareness, including knowing what is
losing power when electricity is proactively cut to protect the
grid, a shortfall today. Today's market structure, in some
ways, disincentives utilities from necessary resilience and
modernizing investments.
In conclusion, power and gas markets in the United States
are marvelously efficient at driving out inefficient generating
units, increasing financial liquidity and expanding the sale of
electricity. However, the real question is whether electricity
and to a lesser extent, natural gas, are logical commodities to
participate in open markets. Unlike pork bellies and orange
juice, trading electrons has consequences far greater than the
availability of bacon or a morning refreshment.
Thank you, Mr. Chairman. I'd be pleased to answer any
questions that you or the Committee may have.
[The prepared statement of Mr. Gabriel follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Gabriel.
Now we have the Honorable Pat Wood.
Mr. Wood.
STATEMENT OF HON. PAT WOOD, III, CHIEF EXECUTIVE OFFICER, HUNT
ENERGY NETWORK, AND FORMER CHAIRMAN, FEDERAL ENERGY REGULATORY
COMMISSION
Mr. Wood. Thank you. Thank you, Chairman Manchin.
[Mic was off.]
The Chairman. Do you have your--there you go.
Mr. Wood. All right, sorry about that. It's been a few
years since I've been here now, and I don't remember how to do
it.
Senator Heinrich, I'm the B Team. Sorry that ERCOT couldn't
be here, but I think I can----
Senator Heinrich. We are thrilled to have you.
Mr. Wood. Thank you, thank you, I appreciate being here.
I was a state and federal regulator, as Chairman Manchin
mentioned. Since y'all have saw me last, 16 years ago, as I
testified on the Energy Policy Act of 2005 as Chairman of FERC,
in support of the NERC's formalization and the formal role that
NERC and FERC would have over reliability of all the
continental U.S., I've been involved in a lot of things that I
think bear on what we are talking about today, so I'm happy to
share any perspective with the Committee during any questions.
But I've been a wind developer, developed LNG projects; I've
been Chairman of a company that had coal and gas operations
throughout the country, Dynegy; was a founding board member of
SunPower, I remain on that board, which is one of the top three
solar companies in the United States; also on the board of
Quanta Services, which is the largest utility construction firm
building telecom, natural gas and, importantly, power lines. We
are a joint venture operator with a Canadian utility of the
Puerto Rico grid. That handover will happen this summer. So I
get to talk about resilience. The people in the system of
Puerto Rico are a full hearing and a full case of their own.
Today I'm CEO of the Hunt Energy Network. We're building
storage, batteries, small batteries at the distribution level
around the State of Texas. I think the role of energy storage
in the future is going to be one that will be just nowhere to
go but up. As we bring on intermittent resources, I understand
members' concerns and lived through them as well, with
intermittent resources, our variable resources, that we've got
to do something to firm those up. Storage is that golden bullet
that as a regulator I didn't have 15, 20 years ago when we were
talking through market issues across from California to New
England. But storage is just beginning. It's got to scale up,
but it's a pretty interesting place to be.
So I don't speak for any of those companies, but yet, I'm
informed by my experience with all of them and I do think that
the years that have happened and, particularly these last three
or four across the country, that I personally lived through a
drought, two hurricane hits in Houston, this weather event in
Texas last week or last month, the President's Day freeze that
went to all 254 counties of the state with a winter weather
warning which we've never, ever had, statewide. It tells me the
world is changing and the modeling that we have done cannot
just look in the rearview mirror and say how we're going to
avoid the next pothole that we just ran through, but has to be
much more creative and much more imaginative about the world
that we see coming. It is the role of government, even for
right of center people like me, it is the role of government to
help marshal those resources and pull the right people and the
right visions together so that we do think about infrastructure
in a new way.
One of those ways that certainly came up was the events in
my home state last month. I think at the end of the day our
legislature is deeply involved in that review as we speak. In
fact, ERCOT is, in fact, testifying today as is my successor as
Chairman of the Public Utility Commission, working through the
financial issues. But the operational issues which Mr. Robb and
the NERC and the FERC will review under their mandate, will
probably include familiar ones as well as some new ones. The
failure of power plants to perform, which I think, in Figure 3
of my testimony might be a good place to look that it really
was across all energy resources. Some did better than others,
but all were, in fact, impacted below what we had expected them
to be. Failures in the natural gas system which feeds about
half of our power in Texas, failures on that system to perform.
The interplay between the two which was pointed out in the
NERC's 2011 report continues to be a large issue.
Commercial issues, market rule implementations, again
scenario planning, the public communication issues were big
issues for our legislature last month, that the lack of--we
know more about when Amber Alerts go out about somebody that
got kidnapped in the State of Texas than we knew about a
shellacking that was coming that would affect four and a half
million people. So that was a significant impact.
And then finally, the one that was most customer impacting
was the management of the outages by our local utilities, that
was a significant shortfall that is being remedied as we speak,
because it could happen again as soon as this summer. So we
always have to be ready, we have to be vigilant, but most of
all we have to be creative.
[The prepared statement of Mr. Wood follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Wood.
Now we are going to have Mr. Michael Shellenberger, Founder
and President of Environmental Progress.
STATEMENT OF MICHAEL D. SHELLENBERGER, FOUNDER AND PRESIDENT,
ENVIRONMENTAL PROGRESS
Mr. Shellenberger. Thank you and good morning, Chairman
Manchin, Ranking Member Barrasso and members of the Committee.
I'm grateful of the Committee for inviting my testimony.
In its 2017 report the National Academies of Science warned
that our electricity grids were becoming increasingly complex
and vulnerable due to restructured energy markets and the
increased use of variable energy sources. While all energy
sources failed to perform as anticipated in mid-February, some
performed better than others. The capacity factors for nuclear,
natural gas, coal and wind in Texas during the four days of
load shedding were 79 percent, 55 percent, 58 percent and 14
percent, respectively. Experts today agree that weather-
dependent energy sources over the last decade have made the
grid more sensitive to extreme weather. Last August,
California's grid operator attributed, on a conference call,
the lack of energy supply to the state's closure of nuclear and
natural gas plants and its overestimation of what renewables
could contribute. California's share of non-hydro renewables
increased from 14 to 39 percent of electricity from 2011 to
2020. The impacts on affordability were serious. Our cost of
electricity rose eight times more than the rest of the United
States. And today, Californians pay 50 percent, over 50 percent
more, than the national average.
Economists at the University of Chicago found that
electricity customers in 29 states had paid $125 billion more
for electricity than they would have in the absence of
renewable energy mandates. What makes electricity reliable,
resilient and affordable is the generation by a few large,
efficient plants with the minimal necessary wires and storage.
I think this is the most important conclusion. The basic
picture is that a simpler grid is more reliable, resilient and
affordable, creates more reliable, resilient and affordable
electricity. Industrial solar and wind projects require between
300 to 400 times more land than nuclear plants or natural gas
plants and the best available science calculates that if the
U.S. were to try to generate all of its energy with renewables,
we would need to increase the amount of land required for
energy from 0.5 percent to 25 or even 50 percent.
Opposition to significantly expanding transmission comes
from communities and conservationists across the U.S. For
example, a federal judge last year blocked a transmission line
at the behest of plaintiffs proposed to be built straight
through a whooping crane habitat in Nebraska because
transmission lines are the number one cause of mortality among
whooping cranes. Most of today's storage lasts for minutes, not
hours, not months, or seasons. We see the impact of this in
Germany. In January and February of this year, Germany's
renewables produced just two-thirds of the electricity they
produced in January and February of last year despite a four
percent increase in solar panel and wind turbine capacity,
simply because of annual variability of wind and sun. Germany
has only been able to manage the seasonal fluctuations from
intermittent renewables by maintaining diverse fleet of coal,
natural gas and nuclear power plants and at a very high cost.
France, today, spends just over half as much per kilowatt of
electricity that produces one-tenth of the carbon emissions of
German electricity and that's because France's grid is
preponderantly nuclear, whereas Germany is phasing out nuclear.
The most influential proposal for 100 percent renewable
energy in the United States relies upon a tenfold increase in
the power of existing hydroelectric dams in the United States,
but the real potential of pumped hydroelectric storage,
according to the Department of Energy, is just one percent of
that. California has a major network of dams but we haven't
converted them into batteries because you need just the right
kind of dams and reservoirs. It's a very expensive retrofit and
we need the water for our farms and cities. As a result,
California has had to curtail electricity coming from our solar
farms and pay Arizona to take excess electricity during sunny
days.
The U.S. has reduced its greenhouse gas emissions between
2011 and 2020 more than any other nation in history. But now,
emissions prices and resiliency risks are rising if the U.S.
closes the nuclear reactors in California, Illinois, Michigan,
Ohio, New York and Pennsylvania that prevented wider power
outages over the last three years. Although Texas lost one of
its four nuclear reactors after cold water affected a sensor
automatically shutting down a reactor, it returned to service
within 36 hours, helping to end the power cuts. Meanwhile,
nuclear reactors in other cold snap states operated normally.
The Senate can play a constructive role by taking action
now to prevent the closure of these nuclear plants which have
proven essential to maintaining a diversity, reliability and
affordability of supply as well as, I might add, the
sustainability of our energy mix.
Thank you very much.
[The prepared statement of Mr. Shellenberger follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Shellenberger.
Now we have Mr. Manu Asthana, President and CEO of PJM
Interconnection.
Mr. Asthana.
STATEMENT OF MANU ASTHANA, PRESIDENT AND CEO,
PJM INTERCONNECTION
Mr. Asthana. Thank you. Good morning, Chairman Manchin,
Ranking Member Barrasso, members of the Committee. My name is
Manu Asthana, and I'm the CEO of PJM Interconnection. On behalf
of PJM, it's a pleasure to be here with you today and to
participate in this hearing and share my perspectives on
reliability, resilience, and affordability of the bulk power
grid.
PJM is a grid operator. We're based in Valley Forge,
Pennsylvania, and our organization was formed in 1927. We have
grown over time to now serve 65 million people who live in 13
states and the District of Columbia. We serve one-fifth of the
nation's population.
I wanted to start today just by saying that the reliability
of the bulk power system is our organization's driving purpose.
Watching the human impact of the recent events in Texas has
been a sobering reminder of the importance of that purpose. I
can tell you that I personally feel the weight of the
responsibility that we, as PJM and our members, have to keep
the power flowing every day.
I wanted to really cover four points in my opening remarks
today.
The first point is that the PJM grid is strong and it has
performed well, including during the recent winter storm where
we were able to keep the power flowing and actually export
record amounts of electricity to support our neighbors in their
time of need.
The second point I wanted to make today was that resilience
is critical and it takes deliberate effort. We at PJM regularly
think about what could go wrong, but there are going to be
things that happen that we didn't anticipate. The COVID
pandemic is a good example. PJM has had a pandemic plan since
2006, yet so much about this event has been unexpected. We've
had to learn. We've had to adapt. We've taken significant steps
to preserve our ability to control the grid, including building
a third control room and having teams of operators live onsite
for up to ten weeks, in some cases, just so that we have a
backup plan to our backup plan. Our pandemic response is one
demonstration of how seriously we take resilience.
The third point I wanted to share with you today is,
notwithstanding the first two points, there is more work to be
done both on reliability and on resilience. We at PJM have
studied and responded to extreme events, including the 2011
Southwest blackouts as well as the 2014 polar vortex that hit
our system. And while we don't have all the facts yet about the
recent ERCOT event, there are at least three questions we
believe that we and our stakeholders and our regulators must
address in our own backyard. The first question is while our
approach to winterization has shown dividends, it is an
incentive-based approach and we're asking if we need to
implement more binding winterization standards and other
specific resilience standards for high-impact, low-probability
events, no matter if those events are caused by climate change
or otherwise. The second question we're asking is whether we
need to add circuit breakers to scarcity pricing for power, as
well as for gas, during extended periods of shortage or natural
disasters. And the final question we're asking is what
additional planning and coordination is needed to ensure that
inputs to power generation, like natural gas, are protected
during load shed events. I'm sure there are going to be more
questions, but those are the ones that are on our mind at the
moment.
Finally, the fourth point I wanted to share with you today
is that the development of renewable generation on PJM's grid
is accelerating, and we are committed to ensuring grid
reliability through this transition. Today, PJM has over
145,000 megawatts of generation in our interconnection queue.
Of this, 92 percent is wind, solar, battery or a hybrid of
these technologies. And renewables, while they're intermittent,
certainly can carry a portion of the grid reliability needs. We
saw that during the winter storm. I'm happy to share some of
that data later. However, we must ensure that our markets
support an adequate supply of dispatchable, backup generation
well into the future, if we're going to keep our grid reliable.
We are currently engaged with our stakeholders on this very
subject.
Thank you for your focus on these important issues. I look
forward to your questions.
[The prepared statement of Mr. Asthana follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, to all of you, thank you so much.
I will start the questioning now.
Mr. Wood, you have a very unique perspective having first
been Chairman of the Texas Public Utility Commission and then
Chairman of FERC. There has been a lot of discussion and blame
cast on Texas for the way the grid was designed to be self-
contained, seemingly to avoid federal oversight of the energy
market, and how the inability to import power made the
situation worse last month. My question would be, you have been
on both sides of this. So what is so bad about FERC oversight?
Mr. Wood. That's true, I have been.
[Laughter.]
I've chaired both sides of the river and I have tried to be
the voice of calm to both sides of it's not so bad on the other
team. There are some unique attributes of Texas that, and
particularly in the power market that when I went from that
role to the one at FERC, I would have lost. For example, as we
were setting up our power market in Texas, we ordered the
utilities to become part of the RTO, become the equivalent of
PJM up here.
Utilities still have that option to pull in and out and use
that power, I think sometime not in a great way, to undermine
the market. And I would love for that not to have been an
issue.
The Chairman. I think my question would be this. Since you
have seen both up close and personal, what is the objection?
Now, what? Is FERC over-reaching or is the Federal Government
over-reaching? Is it higher prices or less competitiveness or
what, what would be the objection from Texas about FERC
oversight?
Mr. Wood. I think the issue that mattered the most to me
was the ability to have a single regulator over the retail and
the wholesale market. We had the ability to put that vision in
place that Governor Bush and the bipartisan legislature said
they wanted for both wholesale competition and four years later
for a competitive retail market. We were able to plan our
transmission grid and pay for it in a simple way. We were able
to interconnect our generation plants in a straightforward and
simple way. So we didn't have to negotiate that with other
states or negotiate that with the Federal Government. It just
was an easier thing to do.
The Chairman. Sure.
Mr. Wood. I wish that the whole nation had that kind of
unified vision. We've got to look to the Congress for that and
I know it's been hard to get over past generation.
The Chairman. Mr. Asthana, as you know, my home State of
West Virginia is in PJM service territory, and 100,000 of my
constituents were without power last month as a result of the
winter storm, but it was a different story from what we saw in
Texas. In West Virginia it was because of downed power lines
and poles, for the most part. You mentioned in your written
testimony some of the lessons learned from the 2014 polar
vortex that impacted West Virginia and surrounding states.
Do you believe that lessons learned from 2014 were
implemented in a way that lessened the potential impact of the
winter storm last month? Because a lot of West Virginians do
not. So what are some of your early lessons learned from last
month that you would prevent the next time?
Mr. Asthana. Yes, Senator Manchin, thank you for the
question. And West Virginia is a very important part of PJM. I
do believe that the lessons from 2011, as well as 2014, were
learned and were implemented and I'll point to three. We
implemented a winterization checklist and reporting back to us
for our generators, we implemented underperformance penalties
for generators who didn't show up with their commitments, and
we implemented much more stringent gas to power coordination.
And as a result, we saw in 2014, forced outages of 22 percent.
We lost 22 percent of our fleet. Last month that number was
less than 10 percent, so there have been significant
improvements since 2014 directly as a result of the lessons
learned there.
The Chairman. Thank you.
Mr. Robb and then Mr. Wood could finish up on this, if he
would like to jump in. But Mr. Robb, just directly to you.
ERCOT is designed to have a minimal backup generation and a
high price cap that is intended to incentivize generators to be
available when needed. Several of the country's grid operators
operate a capacity market to pay generators to make more power
plants available years into the future, like PJM, for example.
These are two approaches to balancing reliability and
affordability. Can you shed some light on whether ERCOT's high
price cap approach, where power prices shot up to $9,000 per
megawatt-hour for days, worked? The bills consumers are
receiving sound like price gouging to me. Is a high price cap a
reasonable way to incentivize generators to be ready?
Mr. Robb. Senator Manchin, I appreciate that question.
I'm not a market design expert, so I can't really comment
on whether the price cap was appropriate or not. I think in any
way, it did not adequately incent generation to be online
during this past event.
The Chairman. Well, based on recent events, what do you
think is the best way to line up sufficient capacity to come
online when needed so we don't run into this lack of ability?
Mr. Robb. It either needs to be rewarded through a market
mechanism such as a capacity market or a very high price
opportunity as they've elected to do in Texas or
administratively determined through a regulatory proceeding at
a state commission.
The Chairman. So, Mr. Asthana, you have a much lower price
cap, coupled with the capacity market. Can you explain why PJM
took that approach and what the tradeoffs are?
Mr. Asthana. Yeah, absolutely.
We took that approach because we have a multi-state
jurisdiction that we serve and we wanted to make sure that we
had capacity available three years into the future and the
three-year figure is selective because that's roughly the
amount of time it took to build a generator that would have
made up that capacity.
I do want to say though, that I think the underlying
explanation is more complex. I think it's easy to think oh, if
only Texas had a capacity market, this wouldn't have happened.
I think Texas could have had a higher reserve market, perhaps,
but it's important to note that going into this winter Texas
had reported a reserve margin for this winter of 43 percent.
And so, it was not a shortage of capacity. It was this
incredibly cold weather for which the capacity was not
prepared. And you know, we think that could happen to us. We
have prepared a lot, but we're very focused on making sure that
we are continuing to be prepared.
The Chairman. Thank you very much.
Senator Barrasso.
Senator Barrasso. Thank you, Mr. Chairman.
Mr. Gabriel, you are the Administrator, the CEO of the
Western Area Power Administration and in that role the
territory that you serve includes California as well as parts
of Texas and other states affected by the cold weather we had
last month. So I have a series of very short questions for you.
Do you agree that we should produce electricity from a
diverse set of energy resources, including resources that are
capable of producing electricity at all times of day and night?
Mr. Gabriel. Yes, I do.
Senator Barrasso. Good. And with the blackouts that we
witnessed in California last August, would they have been
avoided if California had simply installed more solar panels?
Mr. Gabriel. I do not believe that that would be the case.
You need a diversity of generating resources, Senator.
Senator Barrasso. So with the blackouts that we witnessed
in Texas, Oklahoma and Kansas last month, would they have been
avoided if these states had simply installed, say, more wind
turbines?
Mr. Gabriel. Again, I think a diverse portfolio is required
to keep all of these grids operating. It's really one of the
foundational concepts for the grids in the United States.
Senator Barrasso. Would the impact of the blackouts that we
witnessed in Texas, Oklahoma, Kansas and elsewhere last month
have been worse if no one had access to natural gas and
everyone had to rely on electricity to heat their homes?
Mr. Gabriel. Well again, not operating the grid in Texas,
but certainly making sure that we've got diverse portfolios
which, certainly in this day and age, needs to include natural
gas.
Senator Barrasso. And would the impact of the blackouts
that we witnessed in California in 2019 and '20 and across the
middle of the country last month, would they have been even
worse if everyone, including emergency responders, had to rely
exclusively on electricity to power their vehicles?
Mr. Gabriel. Well again, we've got to make sure that we've
got sufficient supply and sufficient generation whether it's
vehicles, whether it's powering homes or businesses. It's
crucial to have a real diverse portfolio.
Senator Barrasso. Mr. Shellenberger, first, thanks for
making the trip coming here all the way from Berkeley,
California. You know, you have written and you say,
``California's big bet on renewables and shunning of natural
gas and nuclear is directly responsible for the state's
blackouts and high electricity prices.'' Could you expand upon
your comments for the Committee?
Mr. Shellenberger. Well, sure. There was a root cause
analysis published by the California Public Utilities
Commission and California Energy Commission and the California
grid operator, CAISO, which made a very similar point, though
in a more muted fashion. That point was made very dramatically
in the midst of the crisis last August in a conference call
with reporters where the grid operators specifically pointed to
the closure of San Onofre Nuclear Power Plant which was about
2,200 megawatts of power as well as the closure of natural gas
plants as the, really, the main factors that resulted in the
shortage of energy.
Senator Barrasso. You know, you have written and you said,
I quote, ``Some have long pointed to batteries as the way to
integrate unreliable renewables onto the grid. However,
batteries,'' you say, ``are simply not up to the task today.''
And you went on to explain, ``Indeed, for renewables to work,
batteries would need to be able to store the power for weeks
and, perhaps, even months.'' Can you expand upon the comments
for the Committee?
Mr. Shellenberger. Sure. Well, we have one of the largest
battery installations in the world in Escondido, California,
and it provides power for 16,000 Californians for about four
hours. That is almost 40 million Californians. The cost is
prohibitively high and, in fact, most advocates of renewables
now no longer think that lithium batteries are going to be an
important form of storage beyond, you know, managing minutes or
hours. But as I pointed out, the reason that Germany was able
to prevent similar power outages this year was simply that they
maintained a very large coal, natural gas and nuclear fleet to
be available when the sun is not shining and the wind is not
blowing.
Senator Barrasso. Thanks, Mr. Shellenberger.
Mr. Robb, if I could ask you. In your written testimony,
you made the following observation. You said, ``Over the years
NERC's assessments have continued to identify three areas of
primary concern: California, Texas and New England.'' While
recent events in the central, south and western parts of the
country have attracted national attention, New England is
another reason--a region that you have said is identified as
particularly vulnerable to extreme cold weather. You noted that
New England's problems include its limited pipeline capacity to
import gas and its dependence on a handful of critical fuel
assets.
So in light of the problem, should we discourage the
construction of new natural gas pipelines or retire power
plants that are capable of producing electricity at all times?
Mr. Robb. Thank you for that question, Senator Barrasso,
and we strongly believe that more natural gas infrastructure--
and natural gas infrastructure including storage, pipeline
capacity--needs to be a strong policy focus. New England
desperately needs more gas capacity to be resilient to the
winter.
Senator Barrasso. Mr. Chairman, finally, I have an article
that was in Greentech Media from last August, titled,
``California's Shift from Natural Gas to Solar is Playing a
Role in the Rolling Blackouts.'' The article quotes the CEO of
the California grid operator as saying, ``The situation we are
in could have been avoided.'' The article goes on to say that
the California grid operator has told California regulators for
years that there is inadequate power available during the hours
when the solar generation has left the system.
I ask unanimous consent, Mr. Chairman, that we include this
article in the record.
The Chairman. Without objection.
Senator Barrasso. Thank you, Mr. Chairman.
[Greentech Media article follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Next we have Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman. Thank you for
holding this important hearing. I am definitely for a smarter,
cleaner, more secure, more resilient grid. I personally think
that that takes a level of investment. We have had a couple of
big studies recently talk about this. There was an MIT study
and then a University of California study that found that
investing $100 billion in transmission expansion could achieve
a cleaner grid and help reduce wholesale costs. So I was
wondering if I could get you gentlemen to give me an assessment
of whether you think modernization of our grid is an investment
we should be seeking and do you think that the private sector
will make those investments or are we talking about some
federal cost share here and do you think that that is in the
tens of billions of dollars or hundreds of billions of dollars?
How would you characterize the modernization and the investment
that we need to make? And if you could just go quickly, that
would be great. So I am asking you, do you believe we need that
investment, at what level and what is the mix----
Mr. Wood. I'll jump in and----
Senator Cantwell [continuing]. Mix of federal and private
investment?
Mr. Wood. I'll jump in, Senator Cantwell, and it's a great
question. We do need the backbone. The vision from the
President and from many in the industry is going to need to be
enabled by a substantially stouter transmission grid that will
move the resources from where they are to where the people are.
And I think that's probably a nine-figure number. It's a lot of
money. But it's over time and it's, quite frankly, as we
learned in Texas, when you spend money on transmission, you
save a lot more than you spend on getting low-cost power into
your power system.
Mr. Robb. So, I'll go next. You know, this country has
remarkable natural resources all around the country. They're
not always near where people live, where the power needs to go
and this concept of a national transmission grid is something
that's very worthy of consideration. We've not studied the
reliability impacts of it, other than to note that diversity is
reliability's friend. So that's a good thing. I would probably
concur with your assessment as to the cost of it.
I think the gating factor, though, that I think this
Committee needs to be aware of is that it's probably not the
need for transmission or the desire to fund transmission but
the ability to site transmission that is the biggest obstacle
of the development of that system.
Senator Cantwell. Well, certainly----
Mr. Gabriel. Yeah, and I'm happy to comment as well,
Senator.
Look, I think the industry has done a pretty good job
investing in what I'll describe as traditional transmission. I
think what we also have to look at and understand is how can we
use the existing transmission system differently? For example,
there are seven ties between the Eastern and Western grid that
are perfect examples of 1980s technology which could clearly be
upgraded and, quite frankly, could be done within a two-to-
four-year timeframe. So we'd have some immediate benefit there.
I also think that in addition, obviously, permitting takes
time and funding is important, but right now there's a bit of a
challenge with getting people to agree to the offtake.
Transmission construction requires long-term, offtake
agreements. Folks are hesitant to get into that. So if
something can be done to clearly incent folks to agree to take
the power that would really, I believe, free up the entire
situation.
Senator Cantwell. Thank you. Thank you.
I am going to skip Mr. Gabriel because I actually think I
know what he thinks, just being the Western Power Grid. I think
I know what you have been up to.
I just want to point out though that in Texas, I
understand, that 96 percent of its projects in the ERCOT
pipeline are either wind or solar. With Texas being an ultimate
free market it tells me something, that people are going after
that.
But I would like to talk about where the money went in
Texas. Mr. Wood, it is good to see you again. Obviously, you
and I talked a lot about the Western energy crisis and where
the money went in that situation. But I want to understand
because according to watchdog firms, Texas power markets
overcharged energy users $16 billion. That left prices at
$9,000 per megawatt-hour, the grid emergency standard, for
longer than necessary. Are you familiar with this analysis and
do you agree with those conclusions?
Mr. Wood. I am familiar with the analysis. I think that the
conclusions quantify that as if every megawatt-hour had been
sold at $9,000. Of course, 90 percent of the business in Texas
is done bilaterally by contract. So I think a number of
customers were exempt from that. But----
Senator Cantwell. Do you--well, that is what I am actually
worried about.
Mr. Wood. Yeah.
Senator Cantwell. Like that, the consumer here.
Mr. Wood. Correct.
Senator Cantwell. Just like in the Western energy market.
Do you think consumers should be reimbursed?
Mr. Wood. That issue, the legislature is having a hearing
on it today. Were I in that seat, I would have agreed with the
Independent Market Monitor.
Senator Cantwell. Do you know of any Enron traders who were
involved in both the Texas and California markets that are
employed at ERCOT trading now?
Mr. Wood. I will have to check. I'm not aware of any.
Senator Cantwell. Mr. Chairman, I think we have seen what
happened here, at least in the detail. I am not talking about
the crisis itself, but the aftermath, and I think we just need
better tools to protect consumers and businesses from these
kinds of spikes in rate. Mr. Wood knows that I fought
diligently against our state having to pay 3,000 times the rate
in long-term contracts that were fraudulently manipulated, so
we passed laws here to try to protect people. Mr. Chairman, you
said it best, price gouging should not be tolerated in these
kinds of emergencies.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Now we have Senator Daines.
Senator Daines. Thank you, Mr. Chairman.
According to recent reports the Pacific Northwest,
including Montana, will face a shortage of power supplies to
meet peak load conditions. This means that while Montana and
the Northwest can currently meet day-to-day demand, there is a
real threat that during peak conditions we could face the same
issues that we have seen in places like California, Texas and
others most recently. It is my understanding that Montana
electricity distributors are worried about generation resources
to meet peak demand and the problem will only get worse if we
continue to shut down coal and other baseload and flexible
generation across the region.
I respect Senator Heinrich's comments earlier about him and
Texas. I can tell you in Montana, it was not because of natural
gas freezing up. We are used to cold weather and without the
baseload of coal, we would have had some serious issues here
last winter and even during the summer months of last year.
While in Montana we have a great balance with hydro and coal
providing baseload, a growing wind generation as well across
the state, if the Biden Administration moves blindly, which we
are seeing them doing today, to shut down all fossil fuel
generation, that balance will be threatened and reliability
concern turns into a stark reality.
Mr. Shellenberger, how does a rapid move away from
traditional baseload and flexible power sources without new,
equally flexible and stable generation affect the reliability
of the grid?
Mr. Shellenberger. Well, thank you, Senator. I think it's a
really important question and it also relates to the former
question by Senator Cantwell which is that if you're building
additional transmission the assumption would be that you're
bringing power from somewhere else, but if wind is already low
during the cold snap and you build more transmission to more
wind turbines, it's not going to increase, it's not going to do
much for you. Similarly, in California since peak demand was
occurring when the sun was going down, more transmission lines
from solar plants isn't going to help us. So there's really no
substitute for having baseload power. If we lose those baseload
plants, we're just going to see more and more episodes like the
ones that we saw last month and also in California last summer.
Senator Daines. So, Mr. Shellenberger, with Montana and
regional baseload influx with generation sources declining, it
is creating a scarcity of resources to meet peak demand, as you
articulated. As we have seen recently, what happens regionally
can also affect Montana communities so the need for balance, it
cannot just be focused on any one state, certainly for the
nation of the interconnectivity of the grid. What steps can we
take to ensure balance? I think that is a really key word right
now and missing in this dialogue in Washington, DC, is balance
and reliability throughout multi-state markets.
Mr. Shellenberger. Well, yeah, you're raising the right
concern, I think. And it's obviously up to the Senators to
understand how these issues relate to both state and local, but
what I would point out is that this rising complexity itself
poses a significant problem. I mean, in all three of the
National Academies of Science's reports from 2012, 2017 and
just recently last month, they pointed to complexity
overwhelming the regulators. And I have to say that when I read
the other witnesses' statements, I was struck by, that the
solution to the complexity is to add more complexity to the
system and that starts to become troubling, I think, when you
have a system that nobody seems to completely understand and
how problems emerge really counter to what experts have been
predicting.
Senator Daines. Question for Mr. Gabriel. There have been
recent calls to breach hydropower dams in the Columbia-Snake
River System. As you know, having spent years at WAPA,
hydropower provides strong baseload power for Western Montana
and much of the Pacific Northwest. My question is how would a
move to breach dams affect the supply of flexible, baseload
energy in the region? And by the way, zero carbon emissions as
well.
Mr. Gabriel. Thank you, Senator.
Obviously we are not widely in support of breaching dams
for all the reasons you said, in addition to things like black
start capability, resilience and reliability. You've got to
consider in the United States only three percent of the 90,000
dams have power capabilities to them and, if anything, I think
it's a valuable discussion to have to make sure that we are
thinking about increasing hydropower as it is a carbon free
resource and one that can help bolster a grid in times of great
stress.
Senator Daines. Thank you. I remember I was just struck
when it came to Congress, hydro is not classified as a
renewable source of energy. That was the political
incorrectness here at Washington, DC, and we finally got that
changed, but it is zero carbon emissions. It is about as
renewable as you can get as we watch what happens in a place
like Montana, a headwaters state, but thank you for that
answer.
Mr. Shellenberger, back to you. Instead of moving to shut
down coal and natural gas plants to meet carbon goals, we
should be focusing on innovation and working to expand the
carbon capture technology, that we have been talking about here
in the Committee, throughout the United States. The question
is, how can we use CCUS technology to keep and grow jobs in
rural Montana while at the same time protecting baseload power
and ensuring a reliable grid?
Mr. Shellenberger. Well, thank you, Senator.
I think it's, this is clearly an issue that matters to the
Senate, it should matter to the Senate. We've built these
carbon capture and storage demonstration projects and then we
become frustrated when they don't work out right away. I think
we need to have more patience than that. Certainly, in the case
of carbon capture and storage, also in the case of nuclear, too
often, I think, we build these projects and then we're
disappointed when they don't come to fruition. And I would just
add too that I think when we're thinking about our nuclear
plants, because it is such an important technology for national
security, we also need to be, I think, considering federal
action to protect those plants which are currently not being
valued for their contribution to reliability and resiliency and
affordability in different restructured energy markets.
Senator Daines. Thank you. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
And now we have Senator Heinrich.
Senator Heinrich. Thank you, Chairman.
I have heard some interesting things here today. One is
that coal is baseload generation, and I say that because the
average capacity factor for coal generation in the U.S. now
sits well below 50 percent. So the average offshore wind
capacity factor is higher in Europe than the U.S. coal capacity
factor. And we have to recognize that part of that is because
coal has become completely unaffordable as a power source. If
you look at Lazard or any of the independent analysis of what
wholesale costs are for various different generation sources--
you have solar at $0.03 to $0.04 a kilowatt and wind at $0.03
to $0.05 a kilowatt, and then you have coal at $0.07 to $0.16 a
kilowatt or nuclear at $0.13 to $0.20 a kilowatt--you
understand what some of the market pressures are here and why
we are being asked, for example, to subsidize nuclear power.
So moving from that to what we went through, and Mr. Wood,
I want to start with you and I will begin just by thanking you
for the work that you did to clean up the mess that Enron gave
us. I think the work that you did on the FERC was incredibly
important. But I would ask what policies you think would be
wise to accelerate the deployment of the storage that you
mentioned on the grid, both in Texas and nationally?
Mr. Wood. Well, I think getting diversity in the supply
chain. We clearly are dependent on China and a few other
countries in East Asia for the current technologies that, I
think Mr. Shellenberger pointed out correctly, that there are a
lot of things other than lithium-ion batteries, but those are
what are in all the EVs and certainly all the storage
technologies. So the cost upstream, if there could be some, you
know, American or at least North American, European supplies to
that.
The policies in the U.S. make it easy, make it as easy to
interconnect the battery, as we've made it to connect gas
plants and windmills.
Senator Heinrich. Yes.
Mr. Wood. We're, of course, version 1.0 talking with our
utilities. They haven't done it before, but it's not easy,
learning to get these things done one by one. I think the
market policies in most of the organized markets are very
friendly to batteries. So I think we've got that box checked.
Senator Heinrich. So interconnection is really a big
challenge.
Mr. Wood. Interconnection is important.
Senator Heinrich. I am going to skip over the pricing issue
which seems to be an enormously important thing if that $16
billion figure is accurate. Jumping forward a little bit, would
it have been helpful for Texas to be able to import power,
either from the East or the West in this recent episode?
Because I noticed that El Paso power, for example, did not have
the same rolling blackouts.
Mr. Wood. Correct.
Senator Heinrich. Because they were able to pull from the
Western grid.
Mr. Wood. And they're directly interconnected with it. We
do have some gates in the wall.
Senator Heinrich. You have DC connections, but you do not
have direct connections.
Mr. Wood. Correct. That's right. And there actually are
proposals to put more of the DC ties in both East and West. To
be honest, a few gigawatts wouldn't have hurt, but it wouldn't
have saved us from, really, what was a 20-gigawatt shortfall.
Senator Heinrich. Shortfall.
What was the single largest shortfall, from which
generation source if you look at----
Mr. Wood. Well, our largest supplier on a normal day is
gas, so the impact of gas dropping both at the supply level and
then at the power plant level. That's the interesting thing to
figure out is how much was related to the lack of winterization
which we should have learned from the 2011 experience, how much
was done from that and how much actually had to do with the
supply system or the upstream issues from the gas wells----
Senator Heinrich. Yes.
Mr. Wood [continuing]. All the way down to the power plant.
Senator Heinrich. Right.
So for Mr. Asthana at PJM, I am curious. We have talked
about the need for increased transmission, but there are also
technologies like power flow control that can help us use the
existing transmission much more effectively. Dynamic line
ratings, storage as transmission, and topology optimization as
well while other countries have started to really utilize those
things in order to, oftentimes, make an electron take the
longer way around so we can more effectively use our existing
grid. We have not done a lot of that in the U.S. What role
could those play in the future?
Mr. Asthana. Yeah, Senator Heinrich, I think that that's a
great question. At PJM we're involved in almost all of those
technologies, either in implementation or in piloting. So
dynamic line readings, you talked about carbon core conductors,
storage as a transmission asset. We're adding synchrophasors to
our system with the help of a DOE grant. And the purpose of all
of this is to squeeze more capacity out of the existing
transmission system, because it's hard to site new transmission
while increasing reliability. So you're going to see those
technologies on our system, you're seeing them already, but
you'll see them in larger deployment very soon.
Just one more point, if I could quickly make about your
earlier question about coal. You know, in this recent cold
snap, in PJM, coal was about 32 percent of the generation. Gas
was about 32 percent of the generation. Nuclear was 26 percent
of the generation. And so, just from a fuel diversity
perspective, as a grid operator, I do think as we go through
this transition, it's really important to make sure that we can
hold onto those dispatchable resources until we have something
to fill the gap with, whether that something is batteries or
something else.
Senator Heinrich. Thank you, Chairman. I apologize for
running over.
The Chairman. Thank you, Senator.
Now we have Senator Hoeven.
Senator Hoeven. Thank you, Mr. Chairman. I appreciate it.
Recently I asked former Secretary of Energy, Dan
Brouillette, to give me his thoughts in regard to the
importance of baseload energy, particularly as we saw the
weather event last month and its impact across the country,
particularly in Texas. Mr. Chairman, I would like to submit
that letter for the record.
The Chairman. Without objection.
Senator Hoeven. Thank you.
[Letter from Hon. Dan Brouillette regarding baseload energy
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Hoeven. I will just read a couple of excerpts from
it.
First, ``The Department of Energy's National Energy
Technology Lab conducted an exhaustive study following the
Polar Vortex in 2014 and the ``bomb cyclone'' of 2018 and found
that in each instance the generation used most reliably to meet
the increase in demand due to those weather conditions was
produced by nuclear, coal, oil and natural gas.'' And, quote,
``These reports illustrate the importance of maintaining
generation from sources at risk of closure.''
One other excerpt, the current market construct of the
various grid operators, quote, ``fails to recognize the value
of baseload electricity generation.'' And that's why these
markets should be better, quote, ``designed to adequately price
reliability and resiliency in addition to capacity and the cost
of energy'' so, quote, ``power is available to all when it is
needed most.''
Again, that is from the letter from former Secretary Dan
Brouillette which I just introduced into the record. I would
like to thank him for that response and his letter.
Mr. Robb, do you agree that baseload coal and nuclear are
essential to grid reliability during extreme weather events?
Mr. Robb. So we don't have authority over resource
selection and fuel type. We try to make sure that our work is
fuel agnostic. However, diversity of resource has been brought
up many times, is a great thing for reliability. And I think
until there's an alternative, those resources are going to
continue to play an important role in the reliability and
security of our electric grid.
Senator Hoeven. How do we incentivize that? How do we make
sure that we have that fuel diversity to give us that stability
on the grid?
Mr. Robb. Well again, I think that's up to local/state
policy that affects resource selection and/or market incentives
in market competitive states to ensure that those
characteristics are appropriately rewarded and the technology
continues to be developed to provide alternatives and/or to
make those resources more compatible with the energy vision we
have as a country.
Senator Hoeven. What is NERC doing to make sure that the
regional transmission operators, RTOs, ensure we retain the
baseload generation and the fuel mix that we are talking about
needing during weather events so that we have the reliability
that we need as well as affordability on the grid at all times?
Mr. Robb. So we do not get involved in market rule
determination or some of the questions that you raise there.
However, all of the market operators are subject to our
reliability standards which are mandatory and enforceable that
require them to produce contingency plans for all sorts of
unanticipated events and be prepared to take appropriate action
to preserve reliability of the system.
Senator Hoeven. Mr. Asthana, you referenced the importance
of the fuel diversity mix, including baseload for reliability
of the grid at all times and particularly through extreme
weather events, correct?
Mr. Asthana. Right, Senator Hoeven, although just with one
minor--I would say coal is no longer baseload on our system. It
has a capacity factor of 36 percent. So the only traditional
baseload resource we have is nuclear which runs 95 percent of
the time, but I think your point is spot on which is we do need
a diversity of resources.
Senator Hoeven. Mr. Wood, do you agree that generational
assets that can provide electricity in all weather events--hot,
cold, windy, calm, et cetera--should be fairly compensated for
their reliability?
Mr. Wood. I absolutely do.
Senator Hoeven. Okay, and then, how can we better ensure
that we maintain that mix and properly incentivize them so that
we have them in adequate proportion to the intermittent sources
as well?
Mr. Wood. I think that's the challenge and that means we've
got to specify that firmness and dispatchability is a resource
that we're willing to pay for. Different markets can do that in
different ways, but at the end of the day, I'm certainly one
who has sat in the dark for a few days last month. I can vouch
for the fact that I want every kilowatt regardless of how it's
generated to be on the grid on these stress days. And if we
aren't paying enough to make that happen, we've got to figure
out how to do it.
Senator Hoeven. And if we don't, then we will repeat what
happened last month with that extreme weather event, correct?
Mr. Wood. We will and certainly weatherization issues are
an important part of making the existing facilities we have.
I'm not willing to give up that we don't have a good portfolio.
I do think Texas had 100 gigawatts of nameplate capacity, but
it didn't show up when we needed it. And so, the operational
aspects of it are important too, Senator, and I want to make
sure that we cover, really, both.
Senator Hoeven. Right, very much so.
Thank you so much for your, all of you, for your responses.
I appreciate it very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Hoeven.
Senator Hirono.
Senator Hirono. Thank you, Mr. Chairman. I thank all the
panelists.
Mr. Robb, according to the Associated Press about 80 people
died as a result of the winter storms last month, and, as you
described in your testimony, after a winter storm in 2011
caused power outages and reduced gas production in Texas and
neighboring states, NERC and FERC issued recommendations to
state regulators to weatherize their power and gas systems.
Were those recommendations followed by regulators and elected
officials in Texas?
Mr. Robb. So we will know the answer to that when we
complete our inquiry into this most recent event. The
recommendations that were put in that report were not subject
to audit and compliance monitoring from our agency, so I really
don't know the answers to what actions were actually taken, but
we'll find out as we work through our inquiry.
Senator Hirono. Well, considering the massiveness of the
failure in Texas, I think that they probably did not follow
your recommendations very well.
In September 2019, NERC initiated development of new cold
weather requirements through enhancements to existing mandatory
reliability standards, standards which your testimony states
will be submitted for approval to NERC's Board of Trustees in
June. How do you think adoption of those mandatory standards
would have affected the response to this February storm?
Mr. Robb. There's no doubt that they would've helped. I
think one of the things that we don't yet know that we, again,
we will uncover through this inquiry, is whether the power
plants were weatherized adequately for the conditions that were
in place, whether the fuel system, basically the natural gas
system in Texas, would have been able to deliver fuel to those
plants. That's a major open issue and one we want to get to the
bottom of.
Senator Hirono. Well, considering that we have this kind of
massive power outage of 2011 and now in 2021, do you expect
these kinds of weather conditions to be recurring, and do we
need to make sure that we plan for them because to have
literally hundreds of thousands of people without power for
days on end is simply unacceptable?
Mr. Robb. Yes, there's no question in my mind that the
electric system and the natural gas system need to start
planning for more extreme weather events as more routine
occurrences, as opposed to treating these events as, you know,
one-off, high-impact, low-frequency events. They're happening
far too frequently.
Senator Hirono. So just say yes or no. Do the other
panelists agree that these are conditions that are going to
occur more frequently and they are not just once in a thousand-
year occurrences?
Anybody disagree with that kind of assessment?
Mr. Wood. Senator, I do not. As I said in my opening
statement, the impact on four and a half million people is
pretty arresting and it's not anything we need to be doing
every ten years.
Senator Hirono. Thank you.
Mr. Shellenberger. I agree as well.
Senator Hirono. Okay, so I think all of our panelists agree
we need to prepare, better prepare.
Commissioner Wood, as you know, Hawaii has six island power
grids so we are definitely not connected to any other state,
clearly, and not even to each island. And so, they cannot share
power with each other. Hawaii has hosted several DOE-funded
projects to evaluate how microgrids could, with local
distributed power supplies, help communities maintain power for
critical services while the larger electric grid is shut down
due to storms or possibly cyberattacks. You describe in your
testimony how Texas should consider creating smaller circuits
to allow grid operators to conduct more targeted outages in the
event of another extreme weather event. Do you think there are
benefits to microgrids to support critical services and, if so,
what more do regulators need to do to encourage their use?
Mr. Wood. You're right on, Senator. I mean, I'm doing that
for my day job. We're putting small batteries at the
distribution level and enabling those things to happen. There's
a lot more technology that is on the way that's part of the
open system we have in Texas that was intended to bring that
sort of innovation in, but microgrids are a big part of the
future. They would have been a real asset for us, as they are
for you in the islands for resilience purposes last month and I
think the future is nowhere but up for the microgrids.
Senator Hirono. I hope that, in fact, Texas will follow
that kind of assessment and recommendation because my
understanding of Texas is that basically the power there is in
a competitive, free marketplace model, and I do think that
there are some commodities such as electricity that are so
basic that I do not know if free market is the best system to
deliver those necessary commodities.
Thank you.
Mr. Wood. I'd love to continue that debate.
[Laughter.]
But I think we're all in service of the fact that we want
what's best for our customers at a good price, but we want the
electricity to stay on.
Senator Hirono. Thank you.
The Chairman. Senator Lankford.
Senator Lankford. Thank you, Mr. Chairman.
Mr. Gabriel, let me ask a quick question. I have several
questions to be able to go through with other folks here, but I
am tracking through the Biden team that they have announced
that they want the power sector to be 100 percent renewable by
2035. I would assume that is going to require some transmission
lines and trying to be able to connect places that have more
renewables to places that do not. Mr. Gabriel, would you make
that same assumption as well, that we are going to have to have
an increased number of transmission lines to be able to hit
that kind of goal by 2035?
Mr. Gabriel. Yeah, yes, I do and I also believe in work to
have to upgrade some of the existing transmission system that
we have.
Senator Lankford. Well, I noticed, just for what you are
dealing with, we started pulling through what, I love the name
of this, the TransWest Express Transmission Project. I love the
name ``express'' in there, the TransWest Express Transmission
Project. It looks like this project started in 2007 and still
has not commenced construction yet at this point based on
permitting, studies, rights-of-way, surveys. Is that correct?
Mr. Gabriel. That's correct. I've only been here since 2013
and I will say in 2015, I signed the Record of Decision for the
project to move forward. It was similar to the comment I made
earlier. Someone's got to agree to the offtake in order for
these lines to be built so that there can be transmission
agreements. And that's really been the hang-up thus far.
Senator Lankford. So this conversation about let's just
quickly do renewable power and we will send it all over the
country and get it done, begs the question of how are you going
to do transmission lines for that when we have a transmission
line project that started for you in 2007 and is still not
close to being complete at this point? Sometimes 2035 seems
like a long way away unless you are doing capital projects and
permitting and such and it is actually not that far away nor
realistic.
Mr. Shellenberger, let me ask you some serious questions.
You had a very intriguing line in your statement where you
talked about complexity and it being one of the challenges.
What I heard from you, basically, was just because we can do
that does not mean it is actually the right way to do it. There
seems to be a lot of work on--yes, this could be done, but it
makes it so incredibly complicated, it drives up the cost--as
you talked about before. If we are to clean the slate, as you
are looking at it with your studies, what is a clean,
straightforward way to be able to provide clean energy for the
United States? Less complex.
Mr. Shellenberger. Yeah, thank you, Senator. That's a great
question. I think that there's a lot of folks in the sector who
are good engineers and when they're asked the question of
whether they could do something they answer truthfully and say,
yes, they could, but they don't finish the sentence in the ways
that you just did which is that all of that additional
complexity brings challenges to resiliency, affordability and
reliability. And that's just very well established in the
literature that the more complex the system is, the more
expensive it is.
I interviewed the lead author of the National Academies of
Science's report, you know, they were very clear about this
issue. I mean, ideally you have--and we also know that larger
plants are more efficient--so what you want is a grid with the
least number of power plants that you need and the least amount
of associated wires and transmission and storage. Every time
you put energy into storage and you take it back out, you're
doing two energy conversions and so you're paying a very
significant penalty, even in pumped hydro which is currently
our most efficient form of storage. So yeah, I mean, I just
think, I think this kind of headlong pursuit into more
complexity and more transmission and more storage, you just
have to kind of ask, is that really in the best interest of the
American people?
Senator Lankford. It is a very interesting insight.
Mr. Robb, I want to ask a little bit about natural gas
because we have had a lot of conversation about that, whether
it is working, not working, the details. It is interesting to
me, if I look at the Southwest Power Pool that I happen to live
in and I had the wonderful experience of experiencing four
hours with no power a couple of weeks ago when it was kind of
chilly at night. So for all of us that looked at not only
reliability, but resiliency of it, natural gas has been in this
conversation. When I talk to folks in natural gas, they will
say it is a unique challenge that they are getting because they
are approaching a tipping point for them to say, natural gas is
quick to be able to turn on, but when you are not asked for
much for a long period of time, and then suddenly you ask for a
lot in a short period of time, especially in an extremely cold
weather event, then suddenly it is like, you know what? We
cannot turn it all on that fast, that much.
Is there a tipping point that you are seeing for providing
other fuels that are out there then, for instance, where 40,
50, 60 percent renewables and you have a very small portfolio
of natural gas and then the wind stops blowing and it is a
cloudy day and you suddenly do not have those and you ask
natural gas to turn on 50 percent suddenly that that is just
not realistic because what is upstream is not able to turn on
that fast? Is that a realistic conversation?
Mr. Robb. I think that is the conversation that needs to
take place. Natural gas, natural gas plants are the most
flexible that we have in the system to accommodate the
variability that we see with large amounts of variable
resources, and it is a real challenge for the natural gas
industry to provide that kind of capacity that quickly. It's
not designed to do that, but that's what the electric industry
needs. And this is the question that, I think, policymakers
and, probably, legislators are going to have to tackle which is
how do we create a construct for natural gas to be able to
serve these very unique needs of the electric system for which
it's not designed to do.
Senator Lankford. Right.
Mr. Robb. And that's going to require a fair amount of
investment and some important policies.
Senator Lankford. And that will require some storage and
other things we have talked about before.
Mr. Robb. Exactly.
Senator Lankford. Increased storage capacity for natural
gas can offset some of that as well.
Mr. Robb. Exactly.
Senator Lankford. I would love to get into a dialogue with
you, I just do not have time on this. But you had some really
interesting conversations about home heating oil versus natural
gas in the Northeast and some of the challenges there. I am
always fascinated when I talk to my friends from New England
who want to talk to me about carbon footprint when home heating
oil has a 40 percent plus higher carbon footprint than natural
gas does. In the Midwest we use natural gas. They use home
heating oil then lecture us about carbon footprints. Always a
fascinating conversation, but I would love to have that some
time.
Mr. Robb. We have a great dinner conversation ahead of us.
The Chairman. Senator Wyden.
Senator Wyden. Mr. Chairman, thank you for holding this
very important hearing. I will start this discussion by saying
your grandfather's power lines were fit for your grandfather's
weather events, and what we have to have is a modern system of
power lines to deal with today's weather events.
This morning I introduced legislation to begin the
modernization of America's power infrastructure so that we can
deal with these horrendous weather events that we have been
seeing around the country. Oregon saw a once-in-a-century
windstorm last fall that ignited horrible wildfires. We just
had massive power outages in our state. I spent days in a dark
basement. Members of Congress are able, after a few days, to
get up and get on with their lives, but we had a lot of
Oregonians who had been hurting even before this happened and,
now, they are in even worse shape. So this is a huge matter of
public safety as well as a jobs issue and a climate issue. My
legislation creates incentives for the private sector to step
up and put in place those more modern systems so that we can
deal with today's blackouts and wildland fires and this means
everything from spring cleaning utility poles and power lines,
undergrounding equipment when possible and cleaning brush and
hazard trees.
So my question is for Mr. Wood, the former Chairman of the
Federal Energy Regulatory Commission. Mr. Wood, as you heard me
say, ``grandfather power lines'' okay for ``grandfather
weather'' are not fit for today. And so I introduced
legislation to update the system. It would make available funds
for agencies like Power Marketing Administrations, like
Bonneville Power Administration, to install some of the changes
that I am talking about--underground power lines and
strengthening overhead lines and installing equipment to
monitor the grid during the serious weather. What do you think
of something like this and what kind of additional funding do
you think would be necessary to harden the power grid,
especially in rural areas?
Mr. Wood. Nice to see you again, Senator Wyden. I cannot
emphasize enough how important robust infrastructure is, at
both the local distribution level and up at the transmission
level, for the future. The impact of severe changes in the
weather that we have all lived through and actually I was so
busy with our own outages in Texas, I wasn't aware of what you
all had gone through in Oregon. That was quite substantial.
I think that the hardening of the infrastructure has a
cost, from my regulatory mindset. With the larger utilities
it's easier to recover that cost over a large area. And I've
been a big fan of recovering transmission costs over the RTOs
or the larger areas. I know we don't have those in the West
yet, but that's been a great way to pay for big transmission.
But the rural areas are oftentimes in co-ops or small utilities
that don't have the ability to really internalize the broad
costs just within their company.
And so I understand that your bill attempts to address some
of that through cost sharing mechanisms. I think that we can't
leave rural America behind. I think we learned during COVID, we
can't do it on broadband, but we have never been able to do it
on electrification since we fixed that issue a century ago. And
it's no different today. You're right. Your grandfather's lines
aren't what we need for the 21st century and starting with the
rural aspects that you're talking about in your bill make a lot
of sense to me.
Senator Wyden. Well, thank you. We have appreciated your
input over the years and that is the whole point of the $10
billion matching grant program for organizations like Power
Marketing Administrations such as Bonneville. Because there are
going to be some costs associated with this, but to me, there
are also huge costs if we do nothing and we saw that all over
the country, whether it is Texas, whether it is Oregon, we have
seen it all over the country.
Same question for you, Mr. Gabriel, with respect to funding
for the types of activities that I just outlined, do you think
that would be useful? Is that something we could build on?
Mr. Gabriel. Absolutely. Certainly any type of non-
reimbursable funding that we could get to help bolster the
system. Keep in mind, we already put $160 million or so every
year in the WAPA system. Of course, the challenge, as Mr. Wood
said, is most of WAPA's customers, many like BPA are very small
municipalities, co-ops and rural folks. So adding a significant
burden to them would be a challenge, but with any money that's
available we'd want to add more sensors. We want to make sure
that we're bolstering lines, and something as simple as
switching from wood poles to steel is a huge expense but
something that would clearly help grid resilience.
Senator Wyden. Well, thank you both and we are going to
want your counsel on this. As with a lot of issues, people are
going to say, can we afford it? I think when you look at the
other side of the coin, you cannot afford not to do this and I
appreciate both of you.
Thanks for the time, Mr. Chairman.
The Chairman. Thank you.
Senator Marshall.
Senator Marshall. Thank you, Mr. Chairman, good to be here
today. Thanks to all the witnesses.
I want to focus on the financial aspect of this, just for a
second. I feel like I am here with the weight of three million
Kansans who are waking up to utility bills which are just
through the roof. I feel like I have the weight of 90, 100
different municipalities who were buying natural gas on the
spot market. Municipalities who, in three days' time, spent
more than they were planning on spending in the next five
years. And the questions I am going to ask you are questions I
have been asked dozens of times that I do not have an answer on
yet. So please do not take them personally, but somehow I have
to get answers to figuring out what happened financially.
I am certain we saw on the spot market the rates went up at
least ten, you know, multiples of ten, sometimes more than
that. I understand what happened to the supply. I understand
that the wind turbines froze, the gas heads froze, the natural
gas plants were affected, that some of the coal was frozen
together by snow and all those things happening, but one thing
that has been pointed out to me is, as we saw this spike in the
price of it go up and stay up for three days, it went down so
quickly. If it was just supply/demand, Mr. Wood, how would you
answer that? Why would the price go down so quickly if there
was truly a supply shortage? How did it go down quickly in
three days? And if there was anything nefarious where would you
look?
Mr. Wood. Senator, on gas or on power?
Senator Marshall. Let's talk on natural gas, yes, sir.
Mr. Wood. On the gas issue, clearly once constraints are
overcome, whether that's wellheads come back online, you're
right, that would generally be something that would be phased
in. I mean, we went from 20 BCF coming out of Texas, for
example, down to about 10, over that full week. So through the
15th through the 19th, Monday through Friday, it went down. And
I don't, so you're talking about the price going back down to
10 from 900?
Senator Marshall. It went down really quickly.
Mr. Wood. It was an issue when we looked in the California
energy crisis that Senator Cantwell referred to earlier. It is
always, it is a very open and transparent market. Scarcity
pricing and market manipulation sometimes are two sides of the
same coin. It depends what a jury thinks about it. But when
you've got a scarce supply of something, you want to charge for
it. In Texas, for example, I think probably in most of the
states, our attorney general is pursuing actions now looking at
gas and power trades because it is illegal to price gouge in an
emergency.
Senator Marshall. Well, you see, you brought up the term
``price gouging.'' Who would have profited from this? Would it
have been on the markets, people that are playing the markets?
Was it the producer that owned the gas well? Who profited in
this scenario?
Mr. Wood. Whoever has, I think in general economics,
whoever has a precious commodity at a time it's most precious.
And so, that could be the person that has it in storage, the
person who is flowing it from a wellhead, whoever has title to
that gas at that time. It could be anybody. It could be, you
know, a landowner in the middle of Kansas or Oklahoma or Texas
that has title or royalties to the gas.
So it honestly depends on where you are at the moment and
where the gas is, where the title to the gas is at that moment.
Senator Marshall. How can we figure out who had it then?
How can we follow the money?
Mr. Wood. It took us years in the California----
Senator Marshall. Are you convinced that we used all the
storage up that we had?
Mr. Wood. I do not have any data that tells----
Senator Marshall. Does anybody know if we used all the
storage up? Any other witnesses?
Mr. Robb. I do not.
Senator Marshall. Who can explain to me--am I past my time?
No, I still have a minute left.
The Chairman. You are right, you have one minute.
Senator Marshall. One minute left.
You know, I am going to guess it is Mr. Wood. How could
FERC investigate, if there was anything nefarious, what does
that process look like? And I am not saying there is. It is
just hard for me to imagine just, prices going up
exponentially. And again, I think about, you know, my parents
on fixed income, what is happening to their electric bill and
their heating bill coming up right now as well. How would FERC
investigate this?
Mr. Wood. FERC does have authority over market
manipulation, just markets in general, in the interstate
markets, of course, interstate natural gas pipelines serve
Kansas, Oklahoma and parts of Texas as well. We have an
intrastate, that's separate, but the Commodity Futures Trading
Commission, they were certainly involved with us 20 years ago
when we unpacked issues in the California crisis. The state
attorney's general, as I mentioned, the one in Texas, is
already investigating this issue. Those three camps, FERC,
CFTC, for the futures----
Senator Marshall. And your experience is, that takes
decades to go through that process.
Mr. Wood. Well, no, it doesn't. I mean, you can unpack, in
this digitized age, we have a lot more capability in 2021 than
we did in 2001 to review trades in this matter or in any matter
much more expeditiously.
Senator Marshall. Thank you. I am past my time. I yield
back.
The Chairman. Thank you, Senator.
And now we have Senator King.
Senator King. Thank you, Mr. Chairman.
I spent a good deal of my professional life in energy. I
have developed hydro projects, biomass projects, wind projects
and energy efficiency and I want to add--the watch word of
today's hearing seems to be diversity is good--I want to add
another phrase: there is no free lunch in energy; everything
has costs and benefits and they need to be carefully calculated
and weighed as we are moving through. Of course, one of the
costs is contribution of CO2 to climate change.
First, Mr. Wood, a somewhat facetious question, but can you
tell us, unequivocally, that wind turbines did not cause the
problem in Texas?
Mr. Wood. They did not cause the problem. They were,
honestly, the only thing was like gas and coal and----
Senator King. Everything.
Mr. Wood. Everything could've helped solve it faster, but,
you know, wind was slow to get back and so was coal and so was
gas.
Senator King. And I want to mention that the wind project
that I worked on in Maine has been online ten years, in Maine.
Mr. Wood. There you go.
Senator King. And has never been down because of the cold
that I know of. It was a question of they are not weatherizing
their turbines.
Mr. Wood. Absolutely, right.
Senator King. So there is nothing intrinsic in wind power
that cannot survive cold weather.
Mr. Robb, and I don't want to dwell on this. I think you
said something important in your earliest testimony. I consider
the gas pipeline infrastructure part of the grid because of the
dependency in New England. It is 60 percent, as you know, of
our electric supply. And we have to treat it that way and we
have to be sure that it is regulated and protected. I am
surprised in this hearing nobody has talked about cyber because
after an immediate weather event, cyber is our next most
dangerous problem and I am particularly worried about the gas
pipeline system.
Mr. Robb, I realize you do not have that in your
jurisdiction. It is not even in FERC's jurisdiction, but we
have to remedy that.
Mr. Robb, on cyber, do you pen test your utilities? Do you
do red teaming on your utility's cybersecurity?
Mr. Robb. We do not, but the Department of Energy does.
Senator King. Okay. I would urge you to do so too. I don't
think it would hurt to have multiple, because the grid is
probably one of the primary targets in terms of a catastrophic
cyberattack.
My friend from PJM, Mr. Asthana, what are we going to have
to do in terms of modifications to the grid to accommodate the
growth of electric vehicles? Obviously it is going to be an
additional strain on the grid, most of it will probably come at
night, but can you give me just a short answer on what you
anticipate?
Mr. Asthana. Yeah, it's a really thoughtful question,
Senator King. In terms of electric vehicles, part of the
benefit of them is that the charging does come at night and
both the transmission grid and the distribution grid is built
for peak load. And so, load is less at night and so some of
this electric vehicle load will just, sort of, fit in under the
existing grid. I do think there are going to have to be
reinforcements.
Senator King. It would actually have the impact of lowering
transmission and distribution costs for all consumers because
you would be using more kilowatt-hours on the same
infrastructure. Is that correct?
Mr. Asthana. Yeah, it might lower the unit cost. It
wouldn't lower the total cost.
Senator King. Right.
Mr. Asthana. But I think the really exciting part of
electric vehicles--and PJM did a study with the University of
Delaware on vehicle to grid. We actually piloted having
vehicles provide regulation services off of their batteries
and, you know, people were able to earn $100 a month in the
pilot. So I think there's a lot of capability that will come to
the grid that hopefully can add resilience through EVs as well.
Senator King. Great, thank you very much.
Mr. Shellenberger, I am not going to spend a lot of time, I
think I disagree with pretty much everything you have said and
I would like to spend some time with you offline to discuss it.
But you did a calculation, which you announced, of how much it
costs to do renewables. Do you remember that? You said $116
billion or something like that. I would like you to do that
calculation again, for this Committee, if all of that capacity
and energy came from new nuclear power. I would like to see
that calculation.
Mr. Shellenberger. Yeah, we did two calculations actually.
We did a calculation that found out that Germany had spent the
$580 billion that its plants ran on renewables, nuclear not
only would have 100 percent zero emissions energy----
Senator King. I would like you to do the calculation that I
asked you to do because nuclear is unbelievably expensive,
multiples of anything else. So if you would please do that
calculation of--just take exactly the capacity and energy that
you used for the renewables and pretend that instead of
renewables it would come from newly franchised nuclear plants
and let's see what the comparison is. Can you do that?
Mr. Shellenberger. Yeah, and we have done those. What gets
misleading is when you're counting the electricity cost from a
solar panel when the sun is shining and imagining that that's
the cost that you're paying for a solar-powered grid. All of
the transmission and storage and all of the additional costs
associated with having variable renewables are externalized
onto the grid.
Senator King. Did you include those in your calculation?
Mr. Shellenberger. We did and----
Senator King. Yes, so give it to me for nuclear. This is a
simple question.
Mr. Shellenberger. Sure.
Senator King. Just take the number of megawatts and the
production and calculate it if it were new nuclear and give me
the number. Can you do that?
Mr. Shellenberger. Sir, you didn't let me finish the answer
which was that we did California----
Senator King. I don't want you to give me the answer now. I
am running out of time. I want you to give me the answer in
writing. If you could do that, I would appreciate it.
Mr. Shellenberger. Yeah, and I just need you to specify
what the question is. Is it for the entire United States?
Senator King. I just want you to do the same. You announced
a calculation in your testimony that was some big number, $160
billion was the incremental cost of renewables for this amount
of power for--I don't know whether it was a year or five years.
That was in your opening statement. I just want you to do the
same calculation for the same amount of power as if it was
generated by new nuclear plants.
Mr. Shellenberger. Oh, I see, you mean the University of
Chicago study that found that renewables cost $125 billion
across 29 states?
Senator King. Yes, that is it. That is it. Yes.
Mr. Shellenberger. Senator, I would be delighted to do that
and send it to you.
Senator King. Thank you.
And one other, well, I think I am out of time.
I would like, Mr. Gabriel, for the record, if you could
give me an answer as to whether you consider the grid
instability problems a wires problem or a technology software
problem. In other words, do we have to rebuild all the wires
and towers or do we have to modify the way the grid is managed?
I am out of time so if you could supply that for the record for
the Committee, I would appreciate it.
Mr. Gabriel. Happy to do so.
Senator King. Thank you, Mr. Chairman.
The Chairman. Senator Cortez Masto.
Senator Cortez Masto. Thank you. Thank you for this
conversation today. I so appreciate the Chair and Ranking
Member holding this hearing.
Let me just say from the outset, I also agree with my good
colleague, Senator King, on electric vehicles. There is
potential there. We saw the benefits, particularly in what
happened in this winter storm, on President's Day in Texas, and
so I have a lot of legislation around this space. It is the
future, and we should not ignore it.
But let me jump back to the issue of winterization and
weatherization and what we were seeing in some of these winter
storms and with the infrastructure. So, Mr. Asthana, let me ask
you this. In your written testimony you noted that PJM
instituted incentives and penalties which prompted your power
generators to winterize. And as a result, you said you have
seen improvements in generator performance in the face of
extreme weather. So in your opinion, would these necessary
improvements have been made if PJM did not institute those
incentives and penalties?
Mr. Asthana. Senator Masto, I can give you my opinion. It's
impossible to know for sure because we didn't run that kind of
factual. What we did was we did implement performance penalties
after the 2014 Polar Vortex. And what we saw happen, and I
believe that the performance penalties certainly helped it
happen, was that the forced outage rate went from 22 percent
back in 2014 to less than 10 percent in this most recent winter
event. And so, there's certainly an improvement, a significant
improvement. And I think the performance penalties and the
incentives have helped.
Senator Cortez Masto. Well and thank you for that because
that is the question I have then for the rest of the panelists.
Is there a role for Congress to play here to ensure that we are
addressing the needed winterization and weatherization across
the country? And if there is a role for Congress, what is the
most effective incentive to compel those needed investments?
That is what I am looking for.
Mr. Robb, let me start with you.
Mr. Robb. Sure.
Senator Cortez Masto. Do you have any ideas for how or what
role Congress could play?
Mr. Robb. So, I think with the existing authorities that we
have, that Congress has already given to FERC and to NERC, we
can address the weatherization issue within the power
generation sector. I think the area that Congress should
reflect on and potentially take action on is to think about how
that extends into the natural gas and fuel sectors because
having a great winterized plant with no fuel in front of it
isn't very valuable and that's where our authorities, right
now, stop. And I think that's an important thing to work on.
Senator Cortez Masto. Thank you.
Mr. Gabriel, your thoughts?
Mr. Gabriel. Well, I couldn't agree more than with Jim.
Natural gas is really the fuel that we use in these emergency
situations. Of course, running hydropower, we're fairly well
winterized, other than, obviously, there's times when the
rivers freeze and we've got some challenges. But it's really,
what do we need for backup fuel and that line of natural gas is
absolutely critical.
Senator Cortez Masto. Thank you.
Mr. Wood.
Mr. Wood. I would say, Senator, that the Texas example
being, of course, the one I'm coming from, the legislature
here, our legislature in Austin, has bills before it that would
require weatherization for both the natural gas and the power
industry. And I expect in light of what happened last month,
those will be adopted and they will be stout. And that's, to
me, akin to the airline industries is you don't have standards
and good ideas, you have rules or you don't say anything at
all. And so, this is the rule and it didn't work after 2011. So
it'll work now because it'll be compulsory, and there will be
performance penalties.
Senator Cortez Masto. That is what I want to verify. I know
Mr. Robb talked about there is an investigation underway right
now with respect to what happened in Texas. At the end and in
conclusion of that investigation, how can we be assured that
Texas will take the appropriate action? And what I am hearing
from you is that there will be penalties associated with their
failure to take any appropriate action?
Mr. Wood. Yes, ma'am. Unfortunately, due to the short
timeframe of the Texas legislature I think the remedy will come
before the analysis is through. But there is broad consensus
that there--that this weatherization issue, again, as the
weather events become more extreme, if we don't do it now,
we'll have to do it again in the future. So let's just do it
now. Other states may already have this authority. So I would
probably check to make sure that states can't do it. If they
can't do it, then the feds certainly should. But let the state
closest to the people handle that problem.
But obviously, mine did not. So we got the message from our
citizens last month to fix the problem and bipartisan bills
have been filed in that regard.
Senator Cortez Masto. Thank you. I notice my time is up.
Thank you, everyone.
The Chairman. Our final Senator to grill our panelists is
going to be Senator Kelly.
Senator Kelly. Well, thank you, Mr. Chairman. When you are
at the end of the line here, a lot of the questions you have
have already been asked and answered. I appreciate all of you
for being here in person and virtually.
I want to start with Mr. Gabriel. So I want to expand a
little bit on what Senator Cortez Masto was getting at and
expand on how climate change is affecting water supplies and
hydropower generation in the Colorado River Basin. We are going
to transition for a second from Texas to California. During
last year's extreme heat wave in California, energy from the
Glen Canyon Dam and the Hoover Dam and Parker Davis Dam that
could have been delivered to Arizona customers was called upon
to keep the California grid from completely collapsing.
So against the backdrop of some climate change and
increasing population growth in the State of Arizona and in the
Colorado River Basin, in general, do you think hydropower is
going to become a more valuable resource in years to come and
should WAPA and its ratepayers be compensated for supporting
black starts when power grids in other areas go down?
Mr. Gabriel.
Mr. Gabriel. Yeah, thanks for the question, Senator Kelly.
Certainly WAPA's customers are compensated in terms of
sales but hydropower is going to become more and more valuable
as we add more renewables to the grid because of its baseload
characteristics. Certainly in an emergency situation,
hydropower has got serious advantages in that we don't need
electricity to make electricity which is, kind of, a typical
situation in many power plants. One of the real challenges
though that we have is hydropower is not necessarily
compensated for its black start capability. And of course,
that's the capability of rebuilding the grid should the lights
go out.
And I think it's something that really needs to be dealt
with over time and I know it's sort of an embedded question in
there. We always work to replace the power for our customers in
Arizona and other states by buying it on the market. But
remember, first and foremost, physics beats philosophy. So we
want to keep the physics of the system alive and work
diligently to make sure that we do whatever we can to keep the
grid up and operating. Thank you for the question.
Senator Kelly. What would it take to put that compensation
in place? How would that work?
Mr. Gabriel. Well, I think there's several models that can
be used. In several of the markets, hydropower is compensated
for its black start and for its reliability and for its
capacity. Given the fact that we really don't have a market yet
in much of the West, I think that's going to be one of the
critical issues that has to be determined as the West decides
what its future is going to do, what it's going to look like in
the market.
Senator Kelly. All right, thank you.
And for Mr. Wood, I know we talked a lot about Texas here
already today. This weather event recently curtailed about 40
percent of the gas that gets delivered to Southwest Gas which
has a service territory across Southern Arizona. During the
event the price of gas for Southwest Gas went up from about
$2.50 for a dekatherm to about $300. More than an order of
magnitude. Fortunately we have some pretty good storage in the
state that allowed us to weather the storm in Texas but the
effect on Arizona customers might not be fully known because
the way Southwest Gas does their billing on a 12-month rolling
average.
I know we talked about this a little bit and we only have a
little bit of time left, but I understand that Texans are
hesitant to embrace federal energy regulation. But what
assurances do Arizona customers have that Texas will move
quickly to address the vulnerabilities to extreme weather?
Mr. Wood. Well, I wish I could be the one to guarantee
we're going to do it. But I mean, there are elected people back
home working on this issue today. It was an emergency item
added by Governor Abbott immediately after the event last
month, Senator Kelly. And again, very strong bipartisan
hearings last week on these issues. I think the bill is in
markup probably in the next seven days, so----
Senator Kelly. And so, the Texas legislature is in session
right now. Do you know when that session ends?
Mr. Wood. Memorial Day.
Senator Kelly. Memorial Day. So if it does not get done
before Memorial Day, it will be another two years.
Mr. Wood. Or a special session which is possible because of
the energy issues being so important, those will, perhaps, if
not resolved by the end of--I think this is done before then
though, Senator. I mean, the dynamics are too intense.
Senator Kelly. Has Governor Abbott committed to a special
session to get this done if it goes beyond Memorial Day?
Mr. Wood. I have not heard that. I honestly think he
expects it to be done before they even do the budget.
Senator Kelly. Okay, thank you.
The Chairman. Thank you, Senator.
I want to thank all the witnesses for being here with us
this morning and for your insight and responsiveness to all of
our questions on this extremely important topic. It is truly
timely and we appreciate very much the effort you made to be
here.
Members will have until 6 p.m. tomorrow to submit
additional questions for the record.
The Committee stands adjourned.
[Whereupon, at 12:17 p.m. the committee adjourned.]
APPENDIX MATERIAL SUBMITTED
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