could be ultimately in the thousands of megawatts if it's built out completely but there'll be an issue there of getting that electricity down into the population areas but nonetheless it's contained within new england that have had historic relationships and worked through all the reliability cost allocation and siting issues over on the years but you'd be concerned that if there was some super imposed decision made to build transmission lines in from other parts of the country, that that would then change the economics of developing the renewables that are indigenous to massachusetts and new england, whether it be in maine or off the coastline of new england. i think and i'll add this as well, one of the things that is not well understood about the east coast of the united states is that when you go out 10 miles, 20 miles, 30 miles, 40 miles, you're still only in 200

feet of water. when you go out that far on the west coast, you're out -- you're miles deep in the ocean. and so in terms of the siting issues along the east coast for wind especially you can go out miles and miles and still be just hundreds of feet from having to site these wind facilities and then with superconducting technologies and bring them in from the shore and hook them into the preexisting grid that already is there in new england with the states having to work out, of course, what the cost allocation is, but knowing that all of new england for example and acknowledge and maryland are committed to resolving and cooperating in the production of new renewable energy resources. so just opening up this whole question of the remote areas of maine for example most people don't know that 95% of maine is forest. it's woods.

it's rural. there's a lot of opportunity there as well and it's a huge state as well. so i just raise that issue because we have to strike a balance here because we do want each region's indigenous resources to be developed as well. let me stop there and recognize the gentleman from california, mr. mcnerny for his questions. >> thank you, mr. chairman, i thought you would recognize mr. inslee. >> first i want to thank chairman wellinghoff for his testimony this week. i think your testimony was rational. i noticed one thing, though, you're seeming to advocate that the fed has a significant large role and the state regulators were all saying, well, the states should have a larger role and the fed should have a little role so i guess that's not too surprising. i wanted to ask you, though, do

you think that the u.s. faces significant technical hurdles sore do you think it's mostly political hurdles to improving our national grid? >> thank you, congressman. first, on the issue of the federal role, i really believe that we should primarily defer to the states. i mean, i think what we need is is to have federal pressure to ensure that the states can move forward with interconnect wide, regional planning citeing and cost allocation but i largely agree with commissioner azar and her testimony. i think it really needs to be primarily informed bit by -- by the state to ensure that the national goals are incorporated into -- >> and i like ms. azar's suggestion that we lock all the state people in one room until some decisions are made but i don't know that's really going to happen.

>> but on your second question with respect to whether it's technical or political, i think it's a good mix of both and on the technical side, i think it's important to understand that -- and i know that new england and the eastern seaboard states are very interested in offshore wind and i support offshore wind. i think that's a great resource but what we have to understand they're not an island either. they are interconnected to the entire eastern north connect. so, for example, if we had offshore wind from rhode island, new jersey, new york, all the way up through new england put in place, developed it say 10 gig watts, put east coast we could not from my reliability engineers simply interconnect that into the existing grid. if we, in fact, had that happened and we had as the as perhaps 2500 or 3,000 megawatts of that go offline we could block off florida so we need to ultimately look at how we strengthen the entire

interconnect so all the regions, in fact, can meet the regional goals and can do it with their local renewable resources and through distant renewable resources if necessary. >> thank you, mr. chairman. mr. halvey, i certainly appreciate your work toward the western region. i understand your desire to streamline the permitting process, do you have any specific recommendations along those lines? >> yes. i think a couple of -- a couple of recommendations. one, because of the work that we're doing with regard to the western renewable energy zones project, we think it'll become very clear very quickly which areas represent the most desirable, the richest and the most developable renewable resource zones given that identification, we think that there's the opportunity to prioritize those areas. where they exist in concert with federal lands, we believe that there should be a priority given

to the permitting on those areas. same thing with the transmission lines that would be necessary to move that power from those renewable energy zones to the market centers where it's needed. we will identify conceptually at least where the transmission lines need to be in order to use that power. >> so you're really addressing the prioritization, not the actual process of -- >> well, we think it's both. one recommendation is the prioritization. the second is that to look at the requirements and certainly limit the number of requirements that agencies have to go through that have no value added in terms of that permitting process. that there's a way to protect wildlife. that there's a way to address environmental values and there's a way to go through those processes and not take the kind of times that we're seeing with many of these applications. >> okay, i agree. and i just want to remark on

mr. hibbard's optimism that offshore ward and it's proximate to load centers as opposed to of putting in a lot of transmission. i appreciate that. and also the observation about just putting in large transmission capacity can have a negative impact on renewalables. so those are appreciated. those comments are appreciated and with that you'll yield back. >> great. the gentleman's time has expired. the chair recognizes the gentleman from washington state, mr. inslee. >> thank you. i wanted to read just a little portion of commissioner azar's testimony and ask a couple of questions to the three of you about it. commissioner azar said congress can and should play an important role in bolstering in state efforts for strict deadlines for regional planning efforts. if we's planning efforts fail to meet these mandates or

deadlines, congress can set up additional back-stop authority for federal agencies to take action and ensure that projects identify in the regional planning efforts move forward. i'm paraphrasing the examples of the type of leadership that would be helpful include the following and the commissioner lists four things and the fifth thing is clear and powerful back-stop authority for federal action to plan for, approve and site transmission lines that are identified as vital in the state-led transmission planning process. i agree essentially with that statement. and i think in a bill that i've introduced, i think heads in that direction. the question i'd like to ask mr. hibbard, commissioner azar and chairman wellinghoff is, mr. hibbard has identified this issue that he doesn't want to see offshore wind intruded by say coal coming in from ohio or somewhere else. and i believe if we do have this

back-stop authority we can and should build something in that would make sure that we preserve our goal of enhancing low carbon-based fuels as part of what you might think of as bonus back-stop federal authority. is there a way to do that and if you could give us your thoughts on the best way to do that, i'll just start with mr. hibbard. if we were to adopt this back-stop federal authority, what would you encourage us to do to prevent the certain aerial that you fear? >> well, let me start by saying i think that the legislation as it stands contains that backstop authority. by setting a cap on carbon and by setting a floor on renewable resource development, you're providing competitive markets, the market signal they need to spur the development. the question you're posing is, what if that's not enough? what if at some point we look and we see that for whatever reason we're not getting the level of development of renewable and low carbon

resources to meet our clear caps and our clear floors? my -- what i would urge all of you to consider is to try to come up with a framework that does so while maintaining the importance of competitive market solutions. again, we under ferc's leadership, our wholesale competitive markets in new england are critical for keeping prices low to consumers. and not violating that is extremely important. now, are there ways to do that? the one example i can give you in massachusetts we recently enacted legislation that requires our distribution utilities to enter into long-term delivered price contracts with renewable power sources. so that the utilities themselves would issue solicitations and would select the lowest cost option for meeting that goal of the massachusetts state legislature. you could consider something along the same lines where at some point you could evaluate

whether or not the country is heading towards meeting its carbon cap and its renewable power floor and if there is a deficiency identified, have ferc step in in essentially a back-stop planning mode and require that regions, rtos, utilities or interconnecting transmission owners issue solicitations for long-term contracts for renewables on a delivered -- >> i want to make sure i have the other two -- if you can wrap up i want to make sure i get the other two witnesses. thank you. >> thank you, congressman. i am optimistic that if congress sets the goals and sets the process and has a strong back-stop authority, that we'll be able to get this done. if we don't get it done, i think that's when the role of ferc steps in. if ferc, for instance -- if the states came up with a specific plan and the plan did not meet the objectives of congress that congress set, i think there

needs to be essentially an overseer and i personally would be fine with that being the federal government saying, yeah, this plan actually meets those objectives. but the plan itself has to be designed by the states. >> mr. chairman? >> thank you, congressman inslee. just to respond to mr. hibbard, i want to make very clear that ferc is very committed to competitive market solutions. we wouldn't choose to do anything that would be contrary to that. there's some nonmarket barriers and that includes the issues of siting and cost allocation and i think it's necessary to allow the states to move forward in those areas to see if they, in fact, can do some interconnected wide planning collectively that they're moving forward both in the eastern and western interconnects and then see from that the siting and cost allocation can be agreed upon.

we need to have that federal pressure behind it to inform that process, to make sure that it moves forward, to ensure that we meet our national goals. >> thank you. >> the gentleman's time has expired. the chair recognizes the gentlelady from wisconsin. >> thank you, mr. chairman. when i hear the discussions about connecting dakota wind generation through transmission to load centers on the east coast, i sort of feel like wisconsin could become a state that has an extension cord just running through it. maybe i should use the swimming pool analogy instead. that's the image that it conjures up for me. i worry that it disincentivizes distributed generation and as i pondered in my opening statement

earlier this morning, how we propose to pay for the transmission upgrades that are coming down the pike is a critical question. will those who do not receive the extensive benefits of this transmission have to pay for the cost of traversing lines across the country? the rate payors that i represent as you've already heard have supported their share of more than $2 billion of new investments in the wisconsin transmission system. clearly, there are transmission technology decisions that need to be made and there are cost allocation decisions that need to be made but i guess i would ask the whole panel and anyone who wants to comment, you know, how we best protect those rate payors, how we set up the system in a way to best protect those rate payors who will not be receiving the huge benefits of this transmission buildup?

>> if i may jump in, congressman, i think the model of -- that i've been discussing here this morning of requiring that the cost of transmission associated with moving generation from the generation source to the market be included in the price that's offered to the consumers that will be purchasing it is our first line defense on that so that if transmission were coming from the dakotas and being put into new england, the price of that would include not just the cost of developing the generation but also the cost of the transmission we can then compare that price to other generation prices available to us within the new england market for local renewables, for demand resources or for more traditional generation. in that ultimately the projects that will go forward will be the ones that benefit rate payors. >> as far as cost allocation, i don't think we can actually

speak what would be the best cost allocation at this point in time. it should be tailor-made to the grid that is essentially planned. as i mentioned in my initial comments, if you pick a specific cost allocation right now, it's likely to steer the plan in a specific direction. and i'd rather have the physics drive the -- the physics and the economics drive the plan and then we can figure out how to pay for it after the plan is designed. so that's my recommendation. >> as a vermont commissioner, i would concur with my colleague from massachusetts as to -- where we would be looking to take a position case by case as it comes forward. >> and again, i would agree with commissioner azar. we should not dictate a particular method, number one. but number two, you know, my preference would be to have the states try to work it out

ultimately and if those states that were involved in the line, the line went across the state but that state could make a case that there wasn't real benefits to that state but hopefully that solution could be worked out. and ultimately resolved in a collaborative way but ultimately at the end of the day if the decision had to be made and it couldn't be made by the states and the region collectively i think it would be appropriate for ferc to determine that allocation and the allocation, in fact, may decide that a particular state like wisconsin did not benefit depending upon the definition and breadth of the term benefit from a particular line. and as such may not be allocated costs. but again, you have provide the flexibility for that kind of a decision to be made. you can't restrict specifically or dictate in a rule how that

has to be done. it has to be in a very broad way that allows ferc to meet its mandate to ensure that rates are just and reasonable. >> let me now turn and recognize once again the gentleman from california. for another round of questions. >> thank you, mr. chairman. i had a question for commissioner azar. you had some recommendations for congressional action to facilitate projects, transmission projects. do you feel those recommendations are widely shared across the country by state commissioners? >> i have not had the opportunity to float that idea by my colleagues so i can't speak to that. >> okay. thank you. well, that's my only question and i yield back. >> i thank the gentleman. the chair will recognize himself and just to pursue a few questions here.

mr. hibbard, perhaps you could deal -- mr. wellinghoff said that if there was 3,000, 5,000 of megawatts of wind brought in from offshore up in new england that it could cause problems in florida but the converse could also be true, huh? what florida power and light and hopefully today the southern company is doing in florida to generate renewable electricity could cause reliability problems up in new england. how do we resolve that issue? thank you, mr. chairman. the issue -- the engineering issue that the chairman refers to is really one of the size of the transmission and the associated capacity being put onto the transmission network in the region. so, for example, if as commissioner azar was referring to you have a 765kv line and --

>> you know, can you imagine the audience right now, okay? what is that? what is that? >> if you have a really extra high voltage line -- >> what does that mean. no, what does it mean. dropping? what does that mean? >> think of it this way. >> okay. try again. >> when the transmission line interconnects or hooks up with the transmission system in new england, it looks like a generating facility so if you have a really high voltage line it looks like like a really big power plant. >> so when people are rioting down the street or out on the highway and they look off and they see something -- explain to those in those terms so they could understand why people's sensibilities kilovolts means nothing to people. >> what they would really see is a really big tower but from the standpoint of how it affects the grid, it just puts a lot of

electricity onto the grid in a single location and if that were suddenly to disappear, then there could be problems if the transmission system can't withstand it and cause the type of widespread outage that he was referring to. the value i see in offshore wind technology in the eastern seaboard completely overcomes that problem and it can be built out incrementally at lower voltages that hook onto individual lines along the east coast so that we can build it out without the need for increasing the reliability, the potential reliability risk on the underlying transmission system so that while i think if we were to take the path of interconnecting 3,000 megawatts in a single point, that would be the problem that the chairman is referring to. but that offshore wind has the potential to be dispersed on a much more widespread geographic basis and potentially enhance the grid. >> would that solve your florida grid or from our perspective our

new england problem? >> i'm not sure that it would, mr. chairman. >> could you explain why. >> i'm not sure it would, mr. chairman. ultimately, even though you may disperse the 3,000 megawatts over a number of locations, the issue is going to be the variability of that wind and the affect of that variability of reliability on that interconnect with respect to frequency and i have actually directed our reliability division to commence a study that will look at this issue and determine how that incursions and frequency can affect the reliability on the eastern and western interconnects. >> mr. hibbard you're back at a ferc hearing and what are you going to say to mr. wellinghoff, when they say that issue. >> first i will commend the chair and ferc -- >> good, good. [laughter] >> and i would encourage them to consider in that study the difference between variability

of three or four or 5,000 megawatts being connected and the impact of it being spread over a wide geographic region and whatever the outcome is, i'm certain it will be the right answer. >> and would you agree that there could be a distinction made between a concentrated renewable source and something that is dispersed over hundreds or thousands of miles? >> mr. chairman, i try to not practice electrical engineering without a license. but i would agree there's a difference between the two. >> thank you. by the way, would those same issues exist in a western state, for example, that might want to produce three or four or 10,000 megawatts of renewable in their state and try to move that, for example, into a metropolitan area in another state or several other states? would it create the very same issue. >> yes, it could be applicable in either interconnect. >> uh-huh. so it's an issue that we

ultimately have to resolve here. going back to this 765 kilovolt issue is a very important thing to understand because in my experience, at least on this committee for 33 years, there are -- there are corporate entities that really think big, the bigger the facility, the bigger the plant, the better it is and then there are others who think well, maybe we can disperse, you know, the way in which we generate electricity. maybe we can do this in a way and here it's going to be increasingly important to generate solar and wind and other renewables for more dispersed sources. and that's to a certain extent where the smart grid comes in so we're doing. we not only need a smart grid but we need smart people planning a smart grid so we don't overbuild it and put those burdens back on to the consumer and we saw all of that happen

back in the 1970s and early '80s where all of these nuclear power plants that were guaranteed to be needed, if we didn't need the nuclear plants by the year 2000 we would have blackouts all over america so we need to think big, put all these costs on the shoulders of rate payors all across america. in the new england region we really suffered from the overenthusiasm, i'll say of these big central planners and so we got to be careful here that those types of -- what we'll call it planners don't control this process. because it's just the opposite era that we hope that we're entering in terms of the development and i can just feel the hoofbeats of the large central planners, you know, moving towards this whole concept, right?

and if after 33 years i'm kind of aware of what can happen, you know, there's an old saying that a smart man learns from his own mistakes and a wise person learns from other people's mistakes. but at my age in service in congress i'm an expert in both areas of mistakes. and so i just don't want to see that happen again. and that overbuilding issue is really something that's quite important to me. if you could, mrs. azar, could you go to the question of ac/dc and first of all explain to our viewing audience that is and why different results occur depending upon the decision which is made. >> yes, the alternating current system is the primary transmission grid we have right now and it's completely interconnected. so when you put an electron on that ac grid, it's going to go to the path of least resistance. with models you can predict where it's going to go but you can't direct it. the electron goes where it wants

to go. on a dc line, it is actually very directed. it has one direction. >> dc means directed >> direct current, thank you. the direct current line you have a lot of current in it. the electron goes in one direction. you known, for instance, when you drop an electronic on one end of the dc line. you know where it's going to end up. whereas in an ac grid if you drop an electron at the same point you're not quite sure what path it's going to take. the only thing you know you're pulling power off at certain locations. so they are two very different models. >> so for the purposes of our discussion today, how does this instruct this discussion in terms of the goals that we're seeking to achieve? >> you know, i can give two answers to that. one we need to know what the goals are from congress and then we're going to be able to decide which of those or the combination of both of them will solve the problems that you're

going to put forth to us. i can tell you from a personal perspective that the dc lines -- if your problem is trying to get power from a fairly localized location, let's just say in the dakotas, and you're trying to get it far east, as long as you're over 400 miles long, dc lines will likely be a very good solution to that problem >> are they more or less expensive? >> that's a good question. as a general rule, i would say they are less expensive but it depends on what kind you're building. >> and that should be a decision on in your opinion made by the regions? >> that is correct. >> and that could actually turn on how much burden is placed upon consumers in terms of their electricity bill each month? >> that is correct. >> mr. wellinghoff, if i may, you heard mr. hibbard and others

talk about what the impact would be of the waxman-markey bill on the marketplace. the signal will be sent to move away from carbon-producing electrical generation. there'll be a national renewable electricity standard as a result encompassing several states and he said it will force states because of these national goals to reach accommodation on these new lines. and that the federal government is actually going to be less needed in the future. perhaps with the exception of the federal lands issue. to resolve these issues. what is your response to that in terms of the -- because we are trying to create a market-based response and i'll just give you an analogy and perhaps -- or an analogous situation and perhaps you can reflect upon it. an analogous situation and perhaps you can reflect upon it. after we passed the 1996