>> my name is 20 part-time as senior adviser at the law firm that has offices in d.c. and in

denver colorado. i had the honor of serving on the energy predator commission. prior to that i served 12 years as the commissioner and for part of the time as chairman of the north dakota public service commission. the particular and to recognize my former colleague congressman kramer and a good friend of many years. my testimony today centers on a white paper that i recently authored entitled order number 1000 at the crossroads. it reflects, it offers my reflections on the order of the status of that and where it might go from there. i've attached a copy of the paper. as way of background it was promulgated promulgated before i got on the commission not long before i got on the commission so i didn't participate in that but it did participate in many compliance filings but the main thesis of my reflection is however well-intentioned the order is practicing it is

following short of the lap of the lofty goals as separate as suggestive of the passage of the better part of a decade now is the appropriate time for congress's oversight authority to engage in a meaningful assessment of european paper concludes one of the paradoxical result of the rule has been the major transmission projects that many of us thought might come out of order 1000 next we came out of the pre-order 1000 world and at that time span since was promulgated there really haven't been a lot of tangible products that have come through or impair good data to support the success of the order. the paper concludes that if ferc were to better tailor the rule especially recognizing significant regional differences across the utility industry it might have more efficacy but since singly we may today find ourselves in the position of having a rule that ensures significant compliance cost without a lot of demonstrable benefits coming out on the other side. it's perhaps ironic many of the

most impactful transition products in the multivalue projects arose from that pre-order 1000 were by talked about it to the reason for this is multiple. some of it is their regions particularly those that were survived vertically integrated utilities were already doing a fair amount of planning within their regions prior to the order. for those regions the order 1000 replaced that sub process with a federal top-down process where it's a fair amount of bureaucracy involved with the in the name of the game is making sure that you are checking compliance checklist as opposed to actually bringing projects to fruition. ..

even amongst those who are broadly supportive of order 1,000 there seems to be a widespread sense that something is amiss with it in terms of the underwhelming results that have come out of it. in light of this, i would argue that it is appropriate for policymakers to consider order 1,000's future given its track record. my paper encourages industry conversations about ways that order one thousand could be streamlined across the board. while regional planning conversations may result in some benefits and i would add there may be some benefit especially when talking about interregional projects where maybe not as much conversation that happened in the past. there may be ways to do it -- while repealing some of the more

prescriptive aspect of the or r order. i would offer i think there are a number of regulatory policy calls coming up that could have a significant impact on how transmission infrastructure will be developed, significant decisions ahead of it, dealing with issues like rates of return on transmission projects for jurisdictional rates, issues related to transmission incentives that builds into its rate structure and finally one of the big elephants in the room on transmission development is as it is with pipeline development it's very difficult to get infrastructure projects through the construction phase because of multiple levels sometimes bureaucracy and red tape that can block some of those permitting decisions. with that i conclude my testimony. thank you. i look forward to my questions you might have. >> right on time, thank you, commissioner clark. our next witness is dr. edward.

>> thank you. >> five minutes, doctor. >> thank you, mr. chairman and distinguished members of the energy subcommittee. my name is ed kraples i'm the founder and ceo of an independent transmission microgrid storage and smart energy campus developer. we are funded by institutional investors. we are not your typical utility. we like to think we build the electric businesses of the future and the future is very different from the past as other members have already indicated. we help to spearhead two high voltage direct current buried transmission lines between new jersey and new york. the high voltage direct technology is common worldwide but not widely used yet in the united states. as a person who has developed interregional transmission projects i have taken an opportunity to bring an article that is part of my prepared testimony that's just published in the electricity journal

called triple jeopardy and it reviews why even though everyone agrees these kinds of interregional transmission links are useful and more are needed, both existing and new interregional projects are being choked off by well-intentioned bun productive regulations -- but unproductive regulations, some stem from order 1,000 and the inability to implement order 1,000 in a way that's officially prescriptive to handle the many issues that arise when interregional transmission projects are proposed. i'm here however to discuss a really important new opportunity in our power industry. federal energy and environmental policy can accelerate what promises to be a once in a generation chance to launch a new domestic industry, and that is offshore wind. if we do it smartly and thoughtfully from the start, the key to success is to plan design and build shared independent offshore transmission, ocean grids in a thoughtful way in a

participating coastal states. the federal government obviously has a huge role in this through the boem and procedures that have to be implemented as part of this plan. why are these planned and independent ocean grid so important? because after years of development in europe, technology has pushed the price of offshore wind to super competitive levels. with that american offshore wind is now a natural component in the administration's energy dominance strategy. it is indeed fuel from heaven and its time has come. however, as with all large scale energy resources, indeed with any important new industry, the business, financial and physical platform on which it is built must be carefully designed and developed. unfortunately, some ideas about offshore wind would jeopardize the ability to realize its full potential. early policy proposals in massachusetts, new york, and new jersey explicitly would give

generators the exclusive ability to own the transmission lines that take offshore wind to market. these proposals have been promoted by giant largely european wind developers that would get america's offshore undertaking off on an anticompetitive and wrong footing. it is obviously in the interest to control as much access to the grid as possible. if we allow that to happen, we will lose the kind of competition that will further lower offshore wind prices. we will lose more fishing because of more cables. we will lose control of substantial portion of our own coast. proliferation of cables would distress marine life during construction operations and make it hard to avoidest -- avoid

estuaries. we are proposing gathering the electricity from multiple wind farms and bringing it to shore via the minimum number of transmission cables buried in the seabed. these cables would be buried under the ocean floor and sized for multiple wind projects and it could be either direct current or alternating current depending on the distance to shore. if we do it right, we will create an industry and tens of thousands of 21st century jobs. we will create competition between generators and it is that competition that will bring the price of offshore wind down to market levels. i will close by saying that in europe today offshore wind auctions are yielding prices of 4 to 5 cents per kilowatt hour which is pretty close to the marketplace. -- market price. thank you very much. >> thank you, mr. kraples. our next witness is jennifer

kern, the vice president and assistant planning at mid continent but most importantly a graduate of rice university, my alma mater. five minutes, ma'am. >> good morning, vice chairman olson, ranking member rush and the members of the subcommittee. as noted i'm jennifer kern vice president of system planning for the mid continent independent system operator or miso. i appreciate the opportunity to be here with you today as you examine the state of the nation's electric transmission system, and i hope the insights into how miso plans transmission are useful to you as you work to shape u.s. energy policy. miso is a 501-c 4 not for profit social welfare organization with the responsibility of ensuring reliability of the high voltage electric transmission system to deliver low cost power to customers. that mission is reflected in our approach to transmission

planning. we seek not to minimize the cost of transmission, but rather to identify transmission which maximizes value to customers in the form of overall lower total energy costs. the system that miso manages is geographically the largest in north america. it spans from manitoba in canada down through all or parts of 15 states to the gulf of mexico. as you might imagine, a geography that wide presents a lot of diversity in resource types, weather, state policies, and consumer preferences as it relates to electric supply. transmission is a key tool to optimize that diversity for the benefits of customers. that diversity also presents challenges as we seek to design transmission plans and probably most importantly determine who will pay for them. even prior to order one thousand, miso was planning not

just for reliability but also for economics and public policy. of the 30 billion dollars of transmission investment that has been enabled through the miso planning process, approximately 20% of that is associated with a long-term regional planning effort to address the changing resource mix, known as the multivalue projects. the multivalue project portfolio is a set of 17 projects that are distributed widely across the north and central regions of miso. they provide benefits of two to three times the cost predominantly in the form of access to existing and new low cost energy resources and reliably enable the renewable portfolio standards in the midwest. transmission like the multivalue projects is a longer term view. we are about halfway through the implementation of the multivalue

projects with the final project scheduled to go into service in 2023. in the meantime, as has been noted, we continue to see a great deal of change in the electric industry. so where do we go from here? i think the challenge in front of us is probably best described by the two questions i get most frequently about transmission planning. miso, why have you not developed the next set of regional and even interregional transmission? and miso, why are you thinking about additional transmission that we clearly won't need? so that dichotomy is clearly represented of the diversity that i mentioned, and that diversity becomes even broader as we expand beyond the regional boundaries and plan with our neighbors. but it's also reflective of the uncertainty of the future as it relates to electricity. the miso planning process uses a scenario-based approach. we try to bound the potential

outcomes of the future and then look for transmission projects that will be valuable in all of those futures. if we can find transmission that is valuable, across that wide range of objectives, then we can feel comfortable the benefits will continue to accrue to customers and that we can continue to recommend that transmission. we often refer to these as no regrets projects. we have a lot of planning to do to determine whether there is a future set of transmission that has benefits in excess of costs and probably most critically to come to consensus on who will pay for that transmission, who sees the benefits and believes that the cost they will bear will be in line with those benefits. nonetheless, i believe that regional and interregional transmission will be a critical part of the overall solutions that as we seek to ensure the reliability, the efficiency, and the resilience of the electric

grid into the future. thank you. >> thank you, ms. kern. we will talk about bakery 13 off line. our next witness is dr. ralph iso, the ceo of public service enterprise group. you have five minutes, doctor. >> good morning, mr. chairman, ranking member rush and members of the subcommittee as well as full committee ranking member palone, had a long exemplary career. today i will highlight one federal policy that stands as an impediment to a goal and should be repealed, that being order one thousand. i'm here representing pse and g, a 114-year-old company that's new jersey's largest electric gas and utility.

despite the fact that pse and g has been named the mid-atlantic's most reliable electric utility for 16 years in a row, much of our infrastructure is old. while it's helped power the industrial northeast for nearly a century, in recent years we have had to work to replace, upgrade, modern size and sometimes move -- modernize and sometimes move parts of the grid in order to ensure our system can withstand extreme weather events and other threats. for even as our customers are using less electricity, the reliance on it has never been greater. of course we don't have a blank check. our investments must be prudent. over the past ten years, we have made improvements that have reduced unplanned transmission outages by over 80%. so the customer benefit is clear. transmission investment has been helped by federal policies that have recognized the importance of transmission and the risk in building large projects.

however, order one thousand stands out as a policy that undermines these efforts. enacted in 2011, order one thousand was touted as landmark reform that would promote efficient and cost efficient transmission planning and remove barriers to development. but in the seven years that we've been living under order one thousand, the promised efficiency looks more like confusion, controversy and chaos. regional grid operators have begun to voice their views. last year it was called and i quote a solution in search of a problem that is creating more of a challenge. nick brown said it created quote more overhead and more uncertainty. our main experience with order one thousand has been through a competitive solicitation launched in 2013 for a project to solve voltage issues in southern new jersey. to call the process a mess would be generous.

pgm made an initial decision and then reversed itself. disputes cropped up between states and stake holders that the ceo had to mediate. pgm found itself having to make judgments outside its expertise, for example which alternatives might secure environmental permits or how to interpret the fine prints and exclusions when a developer says it will cap construction costs. five years into the planning process, we still don't have a constructive project to address the major need on this part of the grid. across the country other red flags continue to appear. no region outside organized markets have even attempted to administer an order one thousand bid. the southwest power pole spent 5 million dollars on a competitive process for an 8 million dollars project that was deemed unneeded and never built. the california iso awarded a project to a partnership between a foreign developer and another entity only to see the developer go bankrupt. mr. chairman, if the seven years these can no longer be called growing pains, but even beyond

the chaotic implementation of order one thousand, there's a more fundamental concern. order one thousand tends to drive short-term band-aid fixes for the grid. projects that solve multiple problems and provide long-term value tend not to move forward because they are ruled out as being too costly. competition is a positive force. but the goals must be set to achieve the outcomes we want. people in businesses depend on an efficient electric system that is resilient for the long-term against an array of very real threats, leaving order one thousand in place risks our ability to achieve that end. thank you. >> thank you. the chairman calls upon as was mentioned by my colleague missouri. -- by my colleague of missouri. you have five minutes.

>> good morning, mr. chairman and members of the subcommittee, i'm executive director of taps, the transmission access policy study group. our association has been active here in the capitol and for protecting the interest of transmission dependent utilities. we represent municipal utilities, joint action agencies, rural electric cooperative and investor owned utility serving about 12,000 -- 1200 utilities with retail customers in 35 states. as dependent upon the transmission facility of others, tap members recognize the importance of robust grid and have long advocated policies to get needed transmission built but are keenly aware that expansion must be achieved at reason bl cost. by enacting section 217 b-4 of the federal power act in 2005, congress gave clear instructions on transmission planning and expansion. they are directed to facilitate planning to meet the reasonable needs of load serving entities

and enable load serving entities to secure long-term firm physical or equivalent financial rights or long-term power supply arrangements made or planned to meet their service obligations. these directives translate into steps they can and should take regarding transmission planning and investment. but that's not happening to the degree necessary to meet congressman date -- congress mandate. first they have to meet the needs of load serving entities. although there's a transmission planning process, even they have recognized this is not happening consistently. we are particularly concerned that transmission dependent load serving entities do not have a seat at the table the way they would if they shared ownership in the grid. joint transmission ownership arrangements where all load serving entities share ownership of the grid which have occurred in many states have a long history of ensuring that the transmission needs of all load serving entities are met

consistent with section 217. they also facilitate state sighting process and spread investment risk and responsibility and provide an opportunity for small load serving entities to offset their increasing transmission rates against transmission revenues thus reducing costs to ultimate customers. second, we need to be sure our investment in new transmission is appropriate. consistent with section 217's focus on the reasonable needs of load serving entities. taps members have experienced rapid increase in transmission costs. while a portion of the increase is no doubt justified, transmission has become an investment magnet. potential for guaranteed incentive elevated returns on equity on low risk transmission assets may spur investment that is not necessary. while we support the ground up consideration of grid resilience, it should not become a blanket justification for excessive investment. third, they have fallen short in fulfilling section 217

directives regarding long-term transmission rights, particularly as to the capacity associated with long-term power supply arrangements on which load serving entities rely for resource adequacy. this exposes load serving entities to increase costs especially if the choices of large transmission owners have left them with loads and resources in multiple rto's. it also makes new investments riskier. fourth, above cost incentives are not needed to attract investment. there is no shortage of entities seeking to invest in low risk transmission asset at the base equity return that is intended to reflect the cost of attracting capital. no need for incentive rates of return much less to expand their availability beyond opportunities provided under the current policy. those seeking transmission incentives should not be permitted to turn away load serving entities in the footprint seeking to make their load ratio investment in the grid. finally, the transmission planning process can also be a more effective vehicle for

inclusive transmission investment. not incumbent transmission developers especially those that accommodate participation by small load serving entities should have have a fair of needed transmission. there should be a competitive transmission development process in a manner that would promote joint transmission ownership as well as to use competitive discipline to curb rising transmission costs. at taps we want to be part of the solution so long as the needs of our customers are met and i look forward to this discussion. thank you, mr. chairman. >> thank you. our final witness is the president of grid strategies llc. you have five minutes for opening statement, sir. >> thank you very much, vice chairman olson, ranking member rush, members of the subcommittee. i appreciate the opportunity to be here today to talk about the important issue of the state of

transmission. there's no infrastructure more important than transmission which is essential to the reliable and affordable electricity service we depend on for almost every modern commercial activity. the industry has succeeded in building a lot of transmission. the transmission benefits have exceeded the costs by factors of 2 to 3.5 in the major investments in the central region you have heard about in miso and the southwest power pool. transmission investment has enabled over 100 billion dollars of generation investment in rural communities. transmission investment is needed for both a distributed future and a large utility scale generation future, either one or both. we've learned a lot about what works. regional planning and cost allocation in particular have worked well. we should build on that success. in my written testimony, i provide nine ideas for expanding

transmission and improving its performance. however, none of these ideas matter if there's no leadership at the department of energy. i think we are waiting for that leadership. i fear the agencies are too distracted by misguided proposals to provide life extensions to old power plants. we're all wasting our time comparing different dictionary definitions of reliability and resilience when we should be updating policies for transmission. if resilience is a code word for propping up uneconomic plants, that effort needs to sink on its own poor merits as my former boss and chairman pat wood said recently. turning to transmission, to improve transmission most of my recommendations are for doe and congress as well. doesn't matter if it is under the heading of order 1,000 890, 2,000 or an entirely new vision called 2020. we need to update transmission

policy to create the grid we know we will need in future. i recommend congress reserve and build upon the policies i mentioned of broad regional planning and beneficiary pays cost allocation. that's what worked in texas. that's what worked in sbp. that's what worked in miso. that's what dr. kraples described should be done in the northeast. number one, should align transmission owner incentives for advanced transmission technologies. i didn't say more incentives, not asking for a subsidy i say align the incentives so transmission owners have incentive to employ cost effective technologies. number two, they should incorporate advance transmission technologies into transmission planning. i don't like to call it nonwires alternatives. i think they are just other transmission options. they should all be considered along with new lines and other assets. number three, they should fix

interregional planning and cost allocation. clearly no improvements have been made since order 1,000's attempt to improve that. number four, congress, the department of energy should all improve federal backstop sighting. i think it is important for the future grid that we need and we should make it works and is used where appropriate. number five, they should require proactive planning that captures all of the values of transmission. too often it gets compartment alized and not all of the benefits are include. number six, the administration should improve federal coordination and transmission permitting on federal lands. number seven, the department of energy should harness the authority and capabilities of power marketing administrations. they can be involved in transmission. they can utilize section 12-22 of energy policy act of 2005 and

help in other ways. number eight, the administration should couple department of energy's planning and support for planning and corridor designation with the department of interior's efforts to identify renewable energy zones and transmission corridors. finally, congress should consider public financing to right size transmission. too often we underbuild for the resources that we know will be there when our children, their children, and their children's children will benefit from. those resources are there. we know they will be there even in texas where we built a lot of transmission, we've essentially used up that capacity, and looking back, we would have done better to build it the right size. i will stop there and look forward to your questions. >> thank you.

for the panel, within the next 10 to 15 minutes, we will have to basically go in recess but until then we will try to get as much member questions as possible. we have five minutes to ask questions. being the chasirman, i'm first. y'all know i'm a texan. y'all know that texans love to brag about fellow texans. we say they done something good. they say that in texas. the home of our former governor, our current secretary rick perry, he did something good with these competitive renewable energy zones. we used those to fix a problem we had in texas, a big problem. we have a lot of wind power, but we have the most power out west, rural texas, where it's not needed. we need it in eastern texas, central texas, houston, dallas-ft. worth, austin san

antonio. this is part of why as dr dr. kraples said texas leads the nation in wind power. in fact one day a couple years ago almost half our energy was provided by wind. offshore corpus christi texas that wind whips almost 300 days a year. we're making progress on that. my question is for you, can you talk about how the model worked, and whether that's something we can do elsewhere? >> sure. and you're absolutely right, congressman, the texas model as well as the market structure overall is a model for the country. i think we'd be doing a lot better in all of the jurisdictional areas if we essentially had the market model throughout the northeast and the rest of it the rtoi areas as well as its proactive transmission planning model that has access to all of that wind and gas resources and other

served gas resources and others out in that western texas and panhandle. so essentially it's a simple formula of identifying where the generation resources are and proactively building to those resource. the alternative that is too often used in many other places is to wait one by one for all the projects to connect and one of them will build the transmission that are needed so you need to proactively build and right size the lines to the resource area. >> thank you. doctor, would you like to add anything? how the model worked out in texas? >> totally agree. in the northeast we're looking at a wind resource offshore that could be 10 to 20,000 megawatts, texas size, mr. chairman, texas size. and yet -- >> it's very big. >> it is very big. >> huge. >> it represents a capital investment opportunity of 30, 40 billion dollars, big even by texas standards. and yet our transmission policy

in the northeast is the opposite of that of texas. it is let the generators build and own the transmission which seems almost insane to me. we should do what texas did. we should learn from texas and build the transmission and plan the transmission first and then let the generators compete like hell to get access to that transmission. that's what you did and it works great. >> this is a great hearing so far. last question for you, you recently wrote a paper about new technologies that can optimize the transmission system in a much lower cost than building new transmission lines. can you briefly describe how that will work and to compare that for the costs to the consumer, what the benefits are of your plan? >> yes, thank you, congressman, for the question. i formed a coalition called the watt coalition, working for advanced transmission technology, and we put out a white paper where we were thinking in part about wholesale

customers and thinking we do need more transmission, but we shall also make sure that the existing grid is used as efficiently as possible. and many of these new technologies actually weren't really commercially available when the energy policy act directed to promote them back in 2005. there's an unfinished chapter in the implementation of congress's act, and that is on the operational side, the utilization of the existing wires. a whole lot was done on incentives for new transmission, but nothing was done on utilization, and so again, we're not asking for more incentives necessarily. just alignment of incentives and inclusion into the planning process. >> thank you. one question, mr. clark, i would be curious to know if you think regulators are doing a good job of keeping up with emerging technology in transmission or

distribution space. grade a, b, c, d or something below that. >> i'd say it is incomplete, if that's an answer. part of the challenge is you are looking at multiple jurisdictions of regulatory authority. so unlike the case of texas, where you have a wholesale regulator that is both the retail regulator and the wholesale regulator, for most of the rest of the country, it's very difficult to bridge some of those divides. it's just the way jurisdictional nature plays out. there's wholesale authority and interstate transmission authority but many of those other decisions regarding resource adequacy, integrated resource planning, retail decisions are made at the state level, so it is tough to give an overall grade because of the natural jurisdictional divide that sometimes creates tension >> thank you. time in has expired. it is time for mr. rush ranking member to ask his five minutes of questions. >> thank you, mr. chairman. as i mentioned in my opening

statement, we're moving into a new energy paradigm where advanced technologies such as energy, microgrids and energy source are increasingly being developed. and coming on-line. in your opinion, is order one thousand as constructed the best way to increase the deployment of these types of low cost clean energy resources? >> sure. thank you for the question. we are indeed moving toward that future of a more distributed network with many small sometimes retail or state jurisdictional resources. i think the planning processes need to incorporate that. i do not agree with those who

say that means we're not going to need as much of the bulk power grid. in fact, resources are still often variable and remote, and we need to move the power around geographically, as well as over time, which storage can do. so we're going to need the big grid, so to speak, and we're also going to need much more coordination, which at the local level which is really where state regulators to handle. i think reliability and efficiency can improve, however, if we bring those distributed resources into the wholesale markets, there are going to be a lot more resources available, and if there are any short-falls, for example, if we give them access to the wholesale markets, we will have a lot more reliability. >> commissioner, in your testimony, you stated the reasons -- integrated utilities,

already a fair amount of regional planning before order one thousand, you maintain that order one thousand actually replaced a collaborative model approach to transmission planning and compliance -- that may not necessarily result in additional transmission development. what recommendation would you suggest that would help on order one thousand to better achieve the better process planning and increase competition, including incumbent transmission

developers? >> thank you for the question, ranking member rush. what i would do for those especially those regions of the country where -- which is still the majority of the states -- where the states maintain vertically integrated utilities i would orderer that order one thousand -- i would order that order one thousand should be on a diet. you referenced my testimony where i talk a little bit about this. a lot of the compliance obligations with regard to things like competitive bidding and the process that each of these regions have to go through through that don't fit very well in regions of the country that are still vertically integrated and the reason is because utilities working with their state utility commissions had always done that sort of regional planning in the past and miso projects was referenced earlier as a good example of how that worked well.

those types of projects we're not seeing coming forward anymore because now the name of the game is well we have to comply with order one thousand so it really just becomes a compliance exercise as opposed to the more organic process that happened bottoms up. i think there are different issues maybe in parts of the country that have restructured where you might have natural tension between generation and transition as it relates to the marketplace. even there i don't think order one thousand is working perfectly as indicated by some of the examples the doctor talked about. in the vertically integrated regions of the country i think it could be slimmed down from a compliance standpoint maybe focus on the good aspects of regional planning and collaboration and maybe on interregional projects where there may not have been as much conversation going on as there was after order one thousand.

>> thank you. five minutes for questions sir. mr. long? >> i'm ready to start now. thank you, mr. chairman. i appreciate you yielding to me. and order number one thousand that's being discussed was an effort to introduce market concepts to transmission development with the scope of transmission completion to date has been severely limited during implementation forcing american businesses and households to overspend for transmission projects. why is competition in this area so important? >> well, i guess congressman first thank you for the question. we all believe that competition brings lower prices and better services. whether that can happen in a

commodity like transmission or for that matter other aspects of the electric business i think is still a question out for debate. i think it's clear that we have to pay more attention to how transmission gets built, how its ownership share is divvied up, what the rates of return are that are provided to the people who are building it, and as i have suggested, there are lots of folks out there who don't have the opportunity to participate in the ownership and in some cases even the planning for these projects, i would suggest that if you really believe in competition, you really believe in having a grid that's right sized, that everybody should be at the table, whether we like order one thousand, the way it was written or the way it's been implemented is a good question.

>> clearly you think it should be reexamined or repealed all together? yeah -- no, no, i think there are some good aspect of order one thousand, but i think it's not working the way it was intended. and if more people were part of the planning process, really a part of the planning process, really a part of the ownership structure, i think we would have a better outcome than we do today. >> according to your testimony, taps members in the southwest power pool have seen an average annual increase rate increase of 17% for the last five years. that's annually. a few weeks ago the commissioner sat at the same table where you are sitting today and i told him that your former employer city utilities of springfield have studies that show that costs are substantially higher than other customers in the spb. what needs to be done either by congress to fix this trend of such high annual rate increases for my constituents in springfield where you live?

>> well, i think i mentioned in my testimony the rates of return that are offered today are pretty attractive. i think we probably all agree that if we had our 401(k)'s and our ira's invested at those guaranteed rates of return we would be pretty happy. so i think that needs to be addressed. as i suggested, i don't think there's any need for incentives on top of those guaranteed rates of return. so i think that's a big piece of it. and the bottom line as you mentioned, real customers paying real utility bills like everybody in the room pay these increases and i would suggest that if it wasn't for abnormally low natural gas prices today that are masking lots of these problems, people would be at your doorsteps wanting solutions and they'd want them pretty dog gone quickly. >> talking about transparency for a moment here. how would greater transparency in the planning process of transmission building impact the cost of those transmission

services? >> well, i guess i think that by transparency we're including a number of things. if we have more people at the table who are actually using the transmission grid, i think it is going to help the right sized grid be built. i think it is going to impact the siting process. i think commissioner clark mentioned earlier the siting process is probably the most critical aspect of building any of these kinds of projects. i have knocked on people's doors asking for rights of way, if you have mayors, you have elected members of boards of public utilities for instance that are part of that process, it is going to be a better process. it is going to get the right thing built. it is going to be done as quickly as possible and all of that translates into lower cost. >> you mentioned in your testimony that grid resilience should not be justification for excessive investment. in our recent hearings, the concept of grid resilience has been described as a crucial characteristic our energy system needs. can you explain what you mean by

that? >> well, resilience seems to be the word of the day in our business, and there are so many risks, many of them presented through cyber threats, where we need to think about how the grid gets built and how the grid gets put back after an outage. we probably all agree pretty easily on what resilience is particularly those people who have been like dr. iso running a utility today. but we shouldn't let it be the end all be all to build something that you can't cost justify. i used to say to our customers, look, we can guarantee your availability 100% of the time, but you couldn't afford the service. and then later the engineers would say we probably can't guarantee it 100% of the time. so it needs not to be an effort to gold plate the system in the name of it will never go down. >> okay, thank you. it's good to see chris here also today. thank you all for being here. >> thanks. >> i yield back.

>> thank you, five minutes for questions, sir. >> i thank the chair on this. your ocean grid collector stations proposal for offshore wind is pretty interesting. what types of proposals have you seen outside of the new york new jersey area including the west coast where we have deep water out there? >> thank you, congressman. i've seen and studied very carefully what the european countries have done. so both germany, the netherlands are the leaders in offshore wind deployment, and in both of those countries, the idea of an ocean grid that's separately owned has been part of the policy for some time, and it works very very well. in california, i think it would be wise to look at the offshore in the same way that texas looked at the up state. it's a region with unlimited wind energy potential, floating storage, wind turbine technology is evolving is quickly i think

it will be economic within the next few years and thinking about this from a grid standpoint, build a grid that maximizes the benefits to consumers would be the right way to go. >> thank you. do we in congress need to do something such as pushing the offshore federal land leasing to be structured so that neighboring wind farms could be used a shared infrastructure? >>i think that would be extremely helpful. right now each wind generator can build its own transmission line to shore but once they do that, that place on shore is occupied by that generator for the rest of time. so thinking it a little bit more holistically would be very wise. >> thank you. you mentioned earlier that more incentives don't need to be granted but to better align the incentives we already have. what are your suggestions on how to go about doing that? >> thank you, congressman.

there are examples from other countries that we're currently looking at and trying to work with a number of transmission owners on as well as the staff and others. in the u.k., for example, when there's congestion, the transmission owner has an incentive to reduce that congestion. so thereby, the savings are shared between customers and shareholders. so that concept i believe could be applied here in the u.s. it's not an easy task to implement these forms of performance-based regulation, but i'm optimistic that with a lot of the best minds from the transmission industry and regulators, we can figure it out. >> i'm kind of interested in the dc overlay idea. what would be the next steps to get that to happen? >> number one, having people like you say that's an important thing to do. so thank you for that. having the department of energy take interest. i do think there's a very interesting study that i cited

in my written testimony called the seams study that a number of national labs are working on that has been partially released but not fully released and that will be a great model. so when that comes out, i think facilitating a dialogue on how do we get that type of grid would be very worthwhile. >> right. you mentioned there's a lack of private market interest in the public -- in financing high capacity versions such as the texas competitive renewable energy zones, public financing to the right size may be appropriate. can you discuss more about how such would be structured so that we don't build excess capacity needlessly? >> thank you for that. yes, there's always a risk in regulated industries of overbuilding and you need to think about that. but in this case, we know where the resources are; right? the wind resources, solar resources, geothermal, you name it. these are location restrained

resources that haven't moved over generations and aren't going to move over generations. i submit we shouldn't be that worried about overbuilding to access to those resource areas. our great great great grand kids will benefit from whatever we do to build out that network. >> nest interesting -- interesting. i will yield back, mr. chairman. >> thank you. as a reminder, until we have to go vote, we will recess for maybe half hour, 45 minutes and come back. what? next member to ask questions is from virginia. >> thank you very much, and in the interest of time, i'm going to send some questions afterwards as we're allowed to do within the next ten business days, and i will do that, but i'm going to ask one question, live because i represent aep country in southwest virginia. you mentioned that the

transmission rate has significantly increased about 15% per year over the past six years. i'm wondering if you can explain that to the folks back hope and answering the question that's obviously a significant increase for customers in my area. first explain why it is going up so much. and then if you can do it quickly, and then what do we need to do protect folks? >> i would answer it congressman by saying as i did to congressman long, it is too rich an investment for the people who own and build new transmission. it is too rich. we need to reduce returns on equity. we need to make sure we're not providing incentives on transmission investment for a run of the mill standard transmission line. that's certainly number one. number two, as i've said, i think we need more people at the table from the very beginning. owners of transmission need to

let those of us who need the transmission to get their generation to load to be at that table and to own a load ratio share. these are the people who represent customers, real customers. and if they are at the table, i think they are going to do a lot of good work to make sure that there's no gold plating, there's not even overbuilding, that we build exactly what it is we need to get generation to load. that's a long process. it requires your influence. it requires lots of people talking about these issues. it's easy to say we want somebody at the table, if you're a transmission owner, you want to be a transmission owner and do exactly what you want. if there's other voices at that table, it gets a little bit messier. i think you get a better product if that's what happens. >> i appreciate that. with that mr. chairman i will yield back so somebody else can get a question in. >> mr. thompson, mr. long,

mr. kramer, mr. johnson, you're recognized. your rights have been yielded to mr. johnson. mr. griffin, thank you. >> thank you, mr. chairman. i will make these quick. mr. clark, you know one of the primary objectives of order one thousand was to promote interregional transmission development, but there is broad consensus that order one thousand failed to achieve that goal. so in your opinion, how could this objective be achieved? >> sure. i think part of it is, congressman, thank you for the question, part of it is as i said attempting to focus in on what you're actually trying to accomplish in the rule. the rule itself is expansive. it ran several hundred pages long. the compliance filings are probably thousands of pages on top of that. and i think part of the reason that it -- you get that result is the order tried to do a lot of things all at once.

it was partly competition policy. it was partly an investment policy. it was partly a regional planning policy. it was partly a cost allocation policy. some of it dealt with intraregional things. some of it interregional things. when you push that much out in a rule and expect the regions to do something with it, you end up with in my opinion just a lot of bureaucracy and checking compliance boxes. that's why i say i think putting the order on a diet and trying to focus in on what you're really looking at doing is probably would be the most helpful thing. some of it may be reinforcing some of the planning conversations that happen, but without the more prescriptive elements of it. and i think part of it might be focusing more on the issue of interregional projects as opposed to spending a lot of time within these regions having to vet through and try to manage the type of intraregional projects that were happening organically prior to the order itself. >> okay. what would be the advantages of greater interregional

transmission? >> because you have an interconnected grid, both in the west and then in the eastern interconnect, there may be certain projects that survey broad regional benefit, that have benefit that accrues to many times over. but if you're only looking within your region, you might not see the value of the benefit of those particular lines. some of them could be reliability lines. some could be market efficiency lines, but some sort of process to have a yardstick to compare the interregional type of projects might be valuable, and that may not have been captured in earlier orders such as 890. >> all right. thank you, i yield back. five minutes, ma'am. >> thank you mr. chairman. thank you to all the witness who are here today. recently in oversight and investigation subcommittee had a hearing on the state of the grid in puerto rico. i want to thank the committee

for continuing to focus on our neighbors in puerto rico. unfortunately right after the army corps of engineers and doe testified that they thought they had things on track, they had a major outage again. so i'd like to ask you all, after to supplement the record with any recommendations moving forward there. clearly there's an issue on transmission and the need for micro grids and more resiliency there. but as we work to modernize the grid everywhere and deal with the cost of the changing climate and build in greater resiliency, we need to make sure we're taking advantage of nontransmission alternatives such as micro grid distributed energy resources and energy storage. nontransmission alternatives not only have significant environmental benefits, but they can help prevent long-term area wide blackouts after natural disasters, like we saw in texas and florida and puerto rico this

summer. we also need to be focusing on the needs of consumers and be a lot smarter. these nontransmission alternatives can be a great benefit to consumers. orders 890 and 1,000 recognize the benefits of nontransmission alternatives requiring regional transmission plans to consider whether nontransmission alternatives can more efficiently cost effectively meet the needs of the region. despite all these benefits, these alternatives are not being utilized to the extent they should be especially given how these advanced technology such as energy -- how advanced the technologies have become. so do you think that if there was a stronger order that required more than just consideration of alternatives we would see greater use and what are the barriers to broader deployment and utilization? >> i do. thank you for the question. for reliability and resilience,

you can improve -- you can improve both by better monitoring and control of the infrastructure. it seems obvious we do it for just about every other form of infrastructure, with better monitoring and control systems and computing power all throughout our economy. we have these opportunities to monitor and control better, and that helps with reliability as well as efficiency. so transmission is no different. the only problem is it's a regulated industry. the incentives as i said are misaligned, and the planning requirements are not up to date with the new opportunities we have. >> congresswoman, thank you for the opportunity to respond to that. i would certainly agree with those comments, and i would suggest to somebody who used to have responsibility for keeping lights on, at the end of the day, that's the most important thing that all of us are after.

and technology is a wonderful thing. it marches along. and yet implementing it in the real world getting the right kind of investment at the right time is always going to be critical. and making sure it works as it relates to the total grid -- total grid. one of the challenges today of intermittent resources. wind and solar are wonderful. we are all trying to figure out ways to harness them properly, but when the wind doesn't blow or the sun doesn't shine, it is a real challenge so you have to have a system designed that can take this intermittent resource and in the case of micro grids sort of turn over control of a part of your grid to others and for people, again, like the doctor who have responsibility for keeping lights on today, that's a pretty nervous thing because if it doesn't work properly, if the technology isn't fully -- lights go out. >> the importance of planning and investment.

>> exactly. >> thank you very much. >> thank you. seeing there are no further members wishing to ask questions, i'd like to thank our witnesses again for being here today. thank you. thank you. thank you. much obliged. before we conclude, i would like to consent to submit the following documents for the record, a letter from grid alliance and a letter from wires. without objections so ordered. in pursuant to committee rules, the members have ten business days to submit additional questions for the record. i ask that the witnesses respond within 10 business days upon receipt of the questions. without objection, this subcommittee is adjourned. >>.

. >> both tv and prime time looks at memoirs. anthony ray hinton discusses his wrongful imprisonment in "the sun does shine." then scott tongue reviews his village in my name. human rights campaign sara mcbride talks about tomorrow will be different. after that, former special assistant to president george w. bush on his book madison park.

and later editor of the new york review of books on living in japan. his book is a tokyo romance. next, anthony ray hinton discusses his wrongful imprisonment, spending nearly 30 years on death row. and his release in 2015. he's interviewed by brian stevenson. it's just over an hour. . >> good evening. good evening. i'm jake. on behalf of our entire staff, great folks here at the historic federal reserve building. and it's our pleasure to welcome you to this historic