>> mr. hibbard. >> thank you, mr. chairman. i would say certainly from our perspective in the commonwealth, we completely agree with the goal of the legislation. we absolutely have to address the carvin issue and we have to address it now. what i would urge you to consider from the standpoint of transmission is to try to retain the competitive market structure that delivers benefits to the ratepayers and the designs you implement going forward. the carvin cap that provides a value of cost and additional marginal cost associated with allowance purchase for fossil generating resources and renewable portfolio floor that provides a different additional revenue to renewable resources should provide financial incentives needed to get the renewables and associated transmission belt and we want to maintain the distinction between who is responsible paying for the transmission if it is a generating facility and who is

responsible if it's needed for reliability. >> commissioner azar. >> number one, define the goals we need to be on the transmission grid. member to come to define a statement process we can meet the schools. one of the primary aspects of that needs to be the decision maker must be beholden only to the public interest. number three, in short there's federal backstop authorities so that we get the job done. member for, don't do harm and with regard to that, don't define a specific technology and please don't define a cost allocation process. >> thank you. mr. coen? >> thank you. very briefly i want to reiterate the states are here to help. we would like to work closely with your committee in developing transmission planning and federal preemption of transmission shall only be used as a last resort. >> thank you. mr. wellinghoff. >> i would suggest that awfully

you come away with this number one that we are not as far apart as we initially seemed to be. i think we saw that in the testimony. we have the goal to reduce carbon and to allow this much renewables as possible to do that but we need to remember there are non-market barriers we need to look at how to get the decline done and as part of those barriers i think we need to put a construct together that would allow the states to initiate of planning, citing and costa location to have the transmission developed to deliver renewables and we also have to have the back pressure of the federal government standing there being able to step in if necessary to make it happen and get it done. >> thank you, mr. wellinghoff. in the spirit with mr. wellinghoff said we may not be as far apart as the statements indicated. let's work towards that goal. time is of the essence so all of these conversations now continue

outside of this room over the next week or so would be helpful. thanks to the committee this panel is dismissed and we will ask the next panel to come up to the table. [inaudible conversations] [inaudible conversations] >> thank you very much please sit down and if someone could distribute these cards with the name of the witnesses and do so in a way that reflects where they will be sitting on the panel would very much appreciate it and then they will know where they should sit. sit wherever you want and then

we will recognize you. [inaudible conversations] >> sit wherever you want and i will recognize you in the order of was going to recognize regardless of your seats. we have enough chairs for each of you and if you can find the open one it will be very helpful to us. [inaudible conversations]

>> thank you very much for being here. and we apologize for the delay. this is obviously a very important issue here. we may be riding the transmission rules for the next generation of electricity generation in the country over the next couple of weeks. we will see if that can be accomplished. perhaps it can about your testimony essential to accomplishing that goal and we couldn't do it without your participation and we apologize to you for the delay and your panel being a recognized and being friday afternoon getting leader as the minute transpires. we will begin with ralph, exit

to officer of the public service enterprise group incorporated. he is a leader within the utility industry and public policy area. thank you once again for being here. whenever you are ready, please begin. >> mr. chairman, members of the committee, thank you -- islamic could you move the microphone closer? >> thank you for the opportunity to appear before you today to testify. p.s. eg dustin its electricity and natural gas to more than 2 million customers in new jersey and owns and operates electric generating capacity in the northeast and mid-atlantic and texas. pscg has supported policies to promote renewable generation. we are planning major investments in solar, offshore wind generation, and energy storage technology that will make renewable energy more competitive. the question today is not whether we should vigorously promote renewable generation but how. specifically, how should we use

transmission policy to promote renewable generation at the lowest possible cost. this would include not just federal citing authority but decisions about transmission planning and cost allocations at a fundamental to determining how much transmission is built and where. there are two competing views on this. one view i strongly favor is government should establish prices for externalities' such as cost of that meeting greenhouse gases. and let market forces determine which technologies and which locations are most promising for investment. this is the approach taken in the landmark legislation. it establishes a price for carbon through cap and trade program and market-based subsidy toward renewable generation through the removal electricity standard. with these price signals, developers can compare the cost of renewable generation in different locations including

the associated transmission cost. the alternative view is central entities should plan and site transmission that will connect areas with strong renewable resources to areas of high electric demand via corrine transmission superhighway. paid for by a broad group of taxpayers. under this model, government what essentially pick winning renewable technologies and locations and build transmission to facilitate them. i have several concerns about this approach. first it could lead to on necessarily expensive outcomes. all business owners know if they established a factory distant location to keep production costs down they have to weigh that against shipping costs. but if we socialize the shipping costs of renewable generation we skew the decisions away from locally based options that may have a lower total cost. that is why a bipartisan coalition of ten northeastern governors wrote to congress

morning this policy would undermine their efforts to grow renewable industries. moreover, building thousands of my old transmission lines in anticipation of the arrival of renewable generation may lead to inexpensive access of capacity. transmission planning is a deliberate process meant to respond to long-term reliability and economic concerns and it is not intended to predict and facilitate dynamic markets. second, as has been said so many times already there is no such thing as a corrine transmission line. a transmission lines carry all electrons without regard to the carbon footprint of the generator. in fact the dispatch ability of renewable resources would suggest you would have a significant underutilization of the transmission line unless you filled it with other forms of generation. so, green transmission line will give market advantage to any power plant fortunate enough to

be close to the new line. third, creating a new planning process across regions is on necessary. we already have regional planning process these that are effective to local concerns. cross regional issues should be addressed to improve coordination between regional planning bodies which is exactly the approach taken in the committee passed bill. finally, existing tools can help renew a book projects connected agreed without distorting the occasional price signals and without potentially burdening customers with access expensive transmission. for example, if the cost of connecting to the grid getting power to market are too much for one developer tabare, multiple developers can share costs among the projects. or ferc can require payers initially bear the costs provided they are reimbursed by developers after the projects become operational. in closing i believe we will meet our long-term carbon

reduction goal but sitting here today i cannot tell you what renewable technologies and more importantly and what locations it will take to get us there to serve the customers of the lowest possible cost. and neither can the government. that is why i strongly support policies such as our es and carbon pricing the sampras signals to the market and on leash creativity and entrepreneurial spirit of the american people. thank you. >> thank you, mr. izzo. the next witness is joe nipper for governmental affairs of the american public power association representing the nation's more than 2,000 community owned electric utilities. thank you for being here and whenever you are ready please begin. >> thank you and members of the subcommittee i appreciate the opportunity to be here. we represent the interest of 2,000 publicly owned state and locally owned utilities across the country collectively serving

45 million americans. american utilities collectively own about 8% of the nation's transmission lines of 138 kilovolts or greater and the great majority is members of transparent that is dependent on facilities owned by oberst require of the electricity they need for their retail customers. our members report more transmission is needed in almost every area to serve a variety of purposes including increased use of renewable energy reliability and enhanced competition. in our view the single most significant impediment to getting new transmission belt continues to be cited and we urge the congress to clarify and continue to support the authority included in each pack of five. deciding authorities for a major step forward but have been called into question by the recent court decision in the fourth circuit court of appeals. as intervenor on the side of ferc in this case, appa believes

they should clarify and epac 05 by providing ferc authority to applications when hasty demise and application. it's important to note for us that as the units of state government public power utilities are not typically supportive of the federal policy that diminish the state authority and we have certainly had concerns about congressman ferc's attempt in other areas however the importance of citing the interstate transmission lines cannot be understated and thus continued support of the compromise called crafted in epac of life. there is a misconception that higher voltage lines are always better and act well, the interconnected nature of the greatest such that the lower voltage line if located strategically could have a greater ability to relieve congestion and enhanced reliability than higher voltage and could experience less local resistance and cost less than a higher voltage line. of course there are situations where higher voltage lines are

preferable and necessary but want to make it clear bigger isn't always better when it comes to the grid. this is one reason regional planning is so important. the impact of proposed higher voltage facilities on existing transmission networks need to be fully considered so that the optimal mix of the facilities can be determined. encouraging proportional joined on our ship of transmission facilities by load serving entities including public power utilities in a given region is another way to get more transmission belt. if the responsibility for building to the conning the grid is more broadly among entities serving customers in the region than join transmission planning will be facilitated simply because there are more project participants at the planning tables supporting the media projects. if network customers of the dominant regional transmission provider our interest to own the load ratio share of the transmission system, transmission usage and ownership will be more closely aligned and friction between transmission dependent utilities and

transmission of errors can be reduced. there's many examples where that is the case. with respect to planning, appa supports the provisions including committee passed version of the american queen energy security act. as we believe they would also bolster rather than duplicate or further complicate the existing and extensive transmission planning process under ferc ordering 900 corrine at the regional and subregional levels across the country. the manner in which transmission facilities costs are allocated among generators transmission owners come transmission depending utilities and other stakeholders is one of the most controversial topics related to transmission. appa strongly supported the language included the underscores ferc flexibly determining the transmission pricing methodology. we don't always agree with the decisions made by ferc on costa vacation but continue to believe congress had a right in these decisions with the diprete stakeholder input and administrative to process to

ferc to determine under sections 205 and into 06 of the federal power act. the issue of who pays for transmission facilities provides the regional benefits of a difficult one, such facilities can provide president's future system benefits and extend beyond specific entities for the facilities and constructive therefore appa urges ferc to provide better guidance on cost allocation for the major transmission facilities that afford regional benefits. appa doesn't support allocations cost of the facility to and subregions or entities that will receive little or no benefit from therefore oppose the dole statutory requirement to allocate such costs on an interconnection wide basis. last, mr. chairman, appa has concerns with respect to ferc application provided under epact 05. ferc re section 219 as a statutory requirement to offer a variety of transmission

incentives to applicants and appears these entities have been helping themselves to those incentives and the commissioner has a stake in it sufficiently disciplined approach to the incentives. we appreciate your long held concern of the area and recent letter to ferc asking for an explanation of the use of incentives and we look forward to their response and working with the chairman of the issue. thank you. >> thank you, mr. nipper, and i appreciate the way they used the word in the testimony. the next witness is bland and english, she fixative officer of the national role electric cooperative association. but more significantly, he served in the united states congress for ten terms as one of our most distinguished members and it is our order to have you back before the subcommittee. whenever you are ready please begin. >> thank you. i appreciate that. i'm not sure why border

directors would agree with the more significantly but i appreciate that and understand where you are coming from on that. >> i think the one thing the board and all i can share in common is while each reserved which of us believes you have a more important job i appreciate both of you thinking i have -- >> the factor are so important to both of us -- >> you're kind mr. chairman. i appreciate that. i think the conveyed to the committee knows we are in 40 states across the country and we serve however 7% of the population through about three-quarters of land mass in the united states. so when we talk about transmission and when we talk about the fact that you're talking abut generating a renewable energy in this country is most likely going to come from areas served by electrical cooperatives we have a stake in that and we plan to have a big part of the future as we move

forward in the general direction. >> repeat that number, 7% -- >> three-quarters of land mass. and it is all owned by the individual consumers throughout the 47 states, mr. chairman. also i think we could all agree the signing of the american queen energy security act of 2009 is going to bring about a profound change in the way that not only energy is generated in the country but the way the we use energy in the country is going to change our lives. and with that understanding, i hope that we could also recognize that we have got to be prepared for that kind of dramatic change. the transmission system as it exists today was certainly not designed for this kind of change in fact it wasn't designed for the 1992 energy act with the deregulation of the wholesale level so we are still trying to adjust to that.

what we would suggest, mr. chairman, is we need a sense of urgency. certainly we need transmission as a part of this act. it needs to be addressed in this and as a result of that, we think that there is very basic principles that need to be incorporated as you move forward with any kind of legislative language is that why to this new transmission system, new transition policy that the country is going to be following. as i think you know, mr. chairman, we have established now national cooperative so each cooperative and every one of the 47 states can participate in any renewable project and in any part of the three-quarters of land mass of the united states, so a wind project in south dakota for instance may be invested by people from wisconsin, co-ops from wisconsin or maybe from alabama were georgia or

wherever. they can own a piece of that, and what we are looking for is a way in which we can generate that powered through renewables and the most efficient way possible no matter where it is located. we should be looking for the most cost-effective way we can do that. and just as we know that certain wind corridors exist that will provide us with a great amount of production of wind energy throughout the great plains nada free form is the same, not every state is the same that we also then have got to make sure when we locate that kind of generation in the areas that we can move the power out of the region's swedish system to do it but also i think have to be very aware of the fact and it has been our experience bottom-up planning works the best. so you need local regional planning. local folks putting the plan together to determine what is the best way to move forward and

so that is the principle i think we need to adhere to, bottom-up rather than top-down as far as planning the chance mission system of the country. i would also suggest under these conditions and given the fact we are going to have to move in more in efficient transmission system we are going to have to move the transmission across the state lines that we may run into difficulties and we may run into delays and quite frankly the national best interest isn't being served. so i think we have got while we are having the local planning we have got to also make sure we don't have impediments put in the way that is going to prevent that local planning from being implemented. we've got to make sure the overall national policy of moving across the state lines is dealt with. and for that reason we do think that there is quite have to be some 40 on the federal level as far as siding is concerned. but again, it should be a focus

on certain qualifiers as we look at that authority. first of all, it should be facilities only identified on a regional planning. should be facilities that are interested projects, it should be in fact the owners of those facilities shouldn't be eligible for enhanced rates or any other financial incentives as far as where they are building the transmission. and the cost of the facility should be fairly and broadly allocated along with the use of facilities shouldn't be limited to just one kind of power. it shouldn't be renewables only and that is being because the fact law of physics as we have heard today doesn't distinguish between electrons. they are the same once they get into the transmission system and we would also suggest the law that we are proposing has become part of what in fact itself

dictate the direction we would be manufacturing or generating those particular electrons. also we would suggest their needs to be broad and fair costa locations. we think that is a very important point obviously those of us who are electric cooperatives are sensitive about that. we would have a few people and all the costs being dumped on those few people would be unbearable so it should be allocated on the basis of whose getting the benefit and who are the folks receiving the benefits of that energy that is being generated and produced. also, we would suggest, mr. chairman, that we move forward and recognize the fact there's more benefits to building such transmission systems across the country in different areas of the country than just the movement of the power. the right of ways for any

transmission like that would become extremely valuable. and it will also be a way in which it would in fact become a new technology right away in ways of which you could move new technology and i know the you are interested in the grid and obviously there are many uses that could be incorporated into the new transmission system along those lines. fiber between the towers is another way in which we can make good use of that transmission system. so mr. chairman i would suggest to you that we need a new transmission system to go along with the legislation that is the proposed. >> thank you. the next witness is mr. detchon at the nonprofit organization that seeks to reform u.s. energy policy. we welcome you, sir, whenever you are ready please begin.

>> mr. chairman, thank you for inviting me to testify on this timely topic. i find a great deal of agreement across the table and particularly with mr. english. in partnership with the center for american progress and energy foundation, the energy future colish and undertook a series of listening sessions with a diverse group of stockholders including federal agencies, duraid operators, transportation companies, utilities and environmental groups and we found broad support for changes in the federal law to facilitate the transmission needed to bring stranded renewable resources to market. went in the great plains, the desert southwest and yes offshore wind in the east. the vision statement for the national clean energies margaret which is attached to my statement was endorsed by 55 organizations including afl-cio, council on competitiveness and digital energy solutions campaign along with many

renewable energy advocates and environmental groups including the sierra club who are not usually prone to supporting new transmission capacities. what brought these environmental groups to the table and ultimately to agreement was the imperative of action to address with urgency the growing climate crisis. time is running out for the world to avoid serious harm from climate change. mr. chairman you understand this very well and we are a great debt of gratitude to you and chairman waxman for your leadership on advancing age of 2454, the american queen energy security act. you have set the appropriate long-term target for emissions reductions more than 80% by 2015. the changes in the energy system needed to reach this goal are profound. we need to begin planning today to reach the reductions by 2015 and one thing is clear, we cannot deliver that much low carbon energy without changes to the parade. looker of electricity would be

expected to power not only the homes and businesses but also increasing portion of the vehicle fleet. the system we have today for planning, permitting and financing transmission lines was not designed to respond quickly to a challenge of this magnitude. moving thousands of megawatts of renewable energy from remote areas to load centers. our discussions with those who must deliver on this promise renewable energy developers and transmission companies quickly focused on the obstacles of planning, citing and costa location that we have heard repeatedly today. of these planning turned out to be the linchpin as the group concluded the better planning could reduce the difficulty of siding and financing new lines. we recommended enlarging the scale of the planning process to the two principal power grids of the united states eastern and western interconnections for two reasons. first long-distance transmission is needed to support development

of major renewable energy resources necessarily will cross state and regional boundaries. for example, almost three injured thousand megawatts and enormous amount of wind, 300,000 megawatts of proposed wind project which is more than enough to meet 20% of the electricity needs are awaiting to connect to the coded because there is inadequate transmission capacity to carry the electricity they would produce. second, planning for transmission to support the renewable energy standards in state and federal legislation must occur on a broader regional basis just as the benefits of such investments will be shared on a broad regional basis. the discussion of the impact of wind resources is a good illustration of the need for planning across the entire interconnection. and enhanced regional planning process of this kind should build on and not replace the current engagement of stakeholders includita