including federal agencies, grid operators and transmission companies, utilities and environmental groups and we found broad support for changes in federal law to facilitate the transmission needed to bring stranded renewable resources@@@

for your leadership and acumen, with the american clean energy and security act. you is set the appropriate long-term target for emissions reductions more than 80% by 2050. the changes in our energy system needed to reach this goal are profound. we need to begin planning today to reach those reductions by 2050 and one thing is clear, we didn't deliver that much low-carbon energy without changes to the grid. low carbon electricity will be expected to power not only our homes and businesses, but also an increasing portion of our vehicle fleet. the system we have today for planning, permitting and financing transmission line was not designed to respond quickly to a challenge of this magnitude, moving many thousands of megawatts of renewable energy from load areas to load centers.

our discussion with those who must deliver on the promise, transmission companies quickly focused on the obstacles of planning siding and cost allocation that we've heard repeatedly today. of these planning turned out to be the lynchpin. as our 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 principle power grids of the united states and the eastern and western interconnections for two reasons. first, long distance transmission is needed to support development of some major renewable energy resources and necessarily will cross state and regional boundaries. for example, almost 300,000 megawatts and an enormous amount of wind. the wind projects which is more than enough to meet 20% of our electricity needs are waiting to connect the grid because there's inadequate transmission capacity

to carry the electricity they would produce. >> second, planning for transmission to support the renewable energy standards and state and federal legislation must occur on a broad regional basis just as they will be shared on the basis. their discussion on the impact of wind resources is a good illustration of the need for planning across the entire interconnection. >> an enhanced regional planning process of this kind should build o not replace, the current engagement of stakeholders including grade operators, land owner interest and land owner groups. this would's main a state, not a federal process. siding authority would rest with ferc, but the states collectively would have more power, not less, than they do now because their plans would government exercise of that federal authority. only if the planning process

breaks down would ferc have the ability to resolve disputes and get transmission built to bring renewable energy to market. we've been gratified to see many of the recommendations in hr2211. a system of interconnection wide transmission planning supported by broad-based cost allocation and underpinned by federal siding authority, and we would be pleased to work with the committee onning for thor legislative language if you think that would be helpful. mr. chairman, u and your colleagues have taken an enormous step forward of transforming our nation's energy system to deal with the threat of global climate change. expanding and modernizing our transmission grid is essential to that transformation. by addressing transmission directly and comprehensively, you can address the common goal of the future become a reality and not be left stranded by reg

lat our impediments. they deserve no less. thank you very much. >> thank you so much for your testimony. our next witness is joseph welch, chairman, president and chief executive officer of itc holdings. that is the nation's first independent transmission company. we welcome you, sir. please begin. >> thank you and good afternoon. >> could you move that microphone in a little bit closer and turn it on. >> thank you and good afternoon, chairman marky and members of the subcommittee. as chairman said, my name is joseph welch. i'm chairman, ceo and president of itc holdings, the nation's first and only independent transmission company in the united states being independent means we are not affiliated with any market participant. we have no deal negligence energy transactions. our job is to facilitate the market and to facilitate the interconnection of any sources

of generation that are put before us and to make sure that we connect the loads and reliably do so. we own and operate about 15,000 miles of high-voltage lines in iowa, minnesota, illinois, missouri, michigan and our developing regional transmission projects in kansas and oklahoma. as we have worked through these various states. each come to the point we need to build transmission for whatever reason, we've come against a set of obstacles, each one different in every state. probable they is as it should be, but when we get to the outcome of when we want to go in this country, this is going to become a major impediment for us to move forward as a country who dearly and necessarily needs to seek energy independence. i brought with me today a report from the council on competitiveness and energy sustainability which i believe is a good framework, and i will leave it with you -- all for you

to read. i think it offers a lot of information which is very consistent with the very principles and items that you're considering here, but going to the fundamental principles that we need and at the top of the list, and i want to go right to the top of the list, we need a policy for energy in this country. we've talked about the things underneath and we debate about whether it's right or wrong, but the fundamental issue is that we need a policy and something to plan to. with that policy in place, the rest of the items become a lot clearer and a lot more succinct and a lot of the debates that we hear from all of us that are really closer than further apart really start to come together. for instance, with a policy and then the planners. when i say the planners and we've talked about this in the item they support and my company supports is that we need independent planning authority. we need to take the policy and get the policy implemented in a very clear and succinct way.

secondly, if you have the policy and then the doft allocation can be dictated by the policy itself meaning that from that policy we now know where we want to go. we now know who are the benefactors and what those benefactor issues are. so that policy sits at the top and we need that and last, but not least when we get down to the very bones, i always tell people being in a transmission business it's a great business until i do one of two things and the first item is build new transmission lines. the minute we start to build them, it becomes a nightmare and the process is hard and it's long and what we snead true federal back-stopped siding authority that is not meant to cut the states out of the process. the state should be involved in the process and they're the most knowledgeable about local issues, but at the end of day we need to get a regional transmission grid built. as you heard here, there are literally, thousands upon thousands of renewable energy that the country needs to deploy

and we need to deploy it now. if we start now, we are years and years away from our goal line. so, please, let's have this conclusion and bring it. i thank you very much for my opportunity to speak here today. >> thank you, mr. welsh. >> our next witness is christopher miller. he is president of the piedmont environmental council and the environmental organization focused on conservation issues in the piedmont region of virginia. we thank you for being here, sir. >> thank you congressman markey. i appreciate to testify on behalf of the piedmont council and land trust and land conservation certains across the country. we're working hard on this issue with them and they've asked us to express some of their concerns. i have a couple of maps which i hope the staff can put up because i think it will help instruct this conversation we

appreciate the time and attention this committee is taking to take the concepts associated with the transmission. it is part of a broad are energy policy and not as an end in itself. from our perspective, transmission is only a tool for moving electricity from the source of generation to the end user and much more important are the policies that will reduce demand for electricity and modified peak demand so that the need for generation and transition structure is minimized and encourage close to load center which is would reduce the centers caused by transmission. in the end the high voltage transmission lines with powers that can exceed 180 feet in height are part of an energy -- are the part of the energy system with the largest footprint and almost the most dram attic impact on communities. the transition system has the

potential for substantial land use impact including impacts that directly conflict with federal, state and local policies to protect and enhance important natural and cultural resources. in the brief amount of time i have i want to focus on a couple of issues that have not been raised yet. the first is the assertion that the only way we can meet national and state goals to reduce greenhouse gas emissions and to increase the role of renewable energy is to build a transmission grid. one example of this grid is up here. this is the grid proposed by ap for the 765 kv system that would link resources. it was originally overlayed with wind resources, but, in fact, the correspond with coal resources is actually higher when you actually go and see wheres to lines are laid out. that's one of the causes of concern that, in fact, what would you be doing by doing a transmission loaded set of incentives is, in fact,

encouraging greater transmission of coal fired generation than, in fact, of renewables. the reason for that is that nowhere in the legislation do we recommend a change in the economic dispatch rules that govern which generation is brought online first. of all the renewables goals not with standing we dispatch energy by price. the auctions are by price and we've heard lots of calls for competitive pricing. the potential that will, in fact, increase the amount of transmission that is carrying coal fired emissions and, in fact, from the dirtiest and oldest plants is very real. unless this committee can also ensure that before that transmission is made available, we are, in fact, putting in the carbon cuts through the carbon and cap and trade and otherwise governing the emission of grandfathered coal plants that have never reduced their emissions there's a real possibility in the eastern end

to connect that the gains that have been made by reggie, the 45 million tons of carbon emissions reductions could be offset. a second issue that has not been address sod far is the issue of peak versus average demand. peak, the transmission and generation system is being designed to meet peak loads, and the more we can do to reduce peak loading the less we have to build across our landscape and so, it's very important that this committee address the fact that transmission planning that has been done to this point really hasn't addressed the full incorporation of some of the policies that are in the legislation. it did not take into account the amount of demand site management that's recommended and, i fact, assumes a level of per capita electric uses that increases over time rather than reduced. the final thought is this.

to the competent that transmission is necessary and obviously connecting some renewables will require transmission, it's very important to respect the other public policy values that are out there in particular related to lands that have to be crossed by transmission. we should be seeking to avoid wherever possible the natural resources, the historic resources, the cultural resources and yes even the land skaps that america values so much. current legislation draws a distinction between publicly owned lands and privately owned lands and that's something i think that this committee needs to look at hard. east of the mississippi most natural resource lands, most historic lands are privately owned but protected through public/private partnerships. whether through designation of historic districts or conservation of historic he's easements.

the same is true in the state of virginia. they are due, all of the respect that a national park, national wildlife refuge, state park would do. as you think forward on those transmission lines that hav á/å7 rr

afternoon. consumers energy our principal subsidiary serves 1.8 million electric customers, and gas customers in the lower peninsula of michigan. i would suggest we have a bit of a unique opportunity having developed, own and operated transmission assets along with distribution and generation assets for a century consumers energy now no longer owns transmission assets, we sold our transmission system in 2002 and now independently operated. we, therefore, appreciate the difficulty in citing new transmission and support federal backstop authority for new interstate lines as a last resort. we also see a need for new transmission in michigan to interconnect new wind resources that are being developed in the thumb and particularly along the lake michigan shore line as part of the new portfolio standard compliance standard in the state

of michigan. new transmission development should meet three common sense principles. number one, benefits of proposed project should exceed the cost by a reasonable margin. number two, proposed project should be similar or should be superior to other alternatives which would include distribution solutions, perhaps lower voltage thanks mission and generation absolutions. cost should be fairly allocated to the beneficiaries of the project as determined through the planning process. i would concede that these principles are complex to apply and, therefore, need an independent planning authority of some sort to apply them, a regional transmission organization or a group of rtos, for example, to conduct the evaluation. now, they cannot be objectively performed by market participants including independent transmission owners that have a vested interest in new

transmission. in our view overly generous incentives have created a rush to create transmission often not justified on a cost benefit basis. i provide some specific michigan examples within my written testimony and won't go over those now. fortunately for new intrastate projects in michigan we have had a certificate of need that vets these projects before allowing condemnation. i suggest that might an model that's appropriate at the federal level as a federal backstop. now there are proposals to build massive new high voltage infrastructure over the entire eastern interconnect, the so-called overlays. part of that a $3.2 billion, 765 kb project largely in michigan has been evaluated by the midwest system independent operator and determine not to meet the cost benefit test for the state of michigan. a number of independent system operators and planning authorities in the eastern interconnect recently studied a joint coordinated system plan

that was referred to earlier involving a $56 billion high voltage overlay. some have referred to it as equivalent of constructing the interstate highway system. that study concluded state of michigan would receive no benefit at fairly large cost. looking at consumer customer s were spread on a postage stamp we're seeing an increase for a 2.5 billion annual benefit. michigan can't afford that. another $10 to $12 billion project that's been proposed to bring wind power from the dakotas to as far east as chicago but doesn't reach michigan but further when the cost of that transmission is included in the equation michigan based generation is less expensive to develop. on that score we agree with the northeastern mid-atlantic governors with regard to the potential implications on

developing renewable resources locally. let me be clear, we don't object to such projects if the benefits exceed the cost by a reasonable margin, reasonable alternatives have been considered and the costs are spread appropriately to the beneficiaries. that might be, for example, the code of wind developers or purchasers of that power who need to meet their own standard. michigan transmission rates are four times what they were in 2002 with we sold the testimony. even without these overlay projects we're seeing an increase for another 50% of today's rates. transmission investment is occurring in the state of michigan. we don't feel that rate making oversight is sufficient in states where transmission is inially owned and therefore not subject to state regulatory oversight. that situation along with overly rich incentives are causing in our view transmission development that is sometimes not in the best interests of our

customers. in summary we think target transmission investment is needed, both in michigan and nationally, we believe that planning and evaluation by rtos or groups of rtos that are independent from market participants is a proper way to pursue that. and three key principles need to be followed. reasonable alternatives have been considered. and three, the costs are appropriately allocated to the beneficiaries. thank you again. >> thank you. we thank our entire panel. i'm going to recognize the gentleman from washington state. >> thank you. first, i would like to put in the record a white paper which is quite instructive. it's called title green power super highways. mr. chair, if i may.

>> without objection. >> thank you, mr. chair. i appreciate that. this white paper does confirm what some of the witnesses talked about which is that we've got 300,000 megawatts of wind projects waiting in line, essentially to connect to the grid and they point out that the lack of transmission capacity is also hindering states' ability to meet multiple renewable energy goals and it just confirms what several of the witnesses have said today. i want to ask about the greenhouse interconnection standard that your proposal has incorporated. basically it would essentially allow federal backstop authority and would encourage in relationship to those sources that are low and zero greenhouse gas emitting generators. you could tell us how you envision that working, and by the way, would it help in at

least some sense some of the concern of the northeast states who don't want to see their offshore wind projects intruded by, say, if we can call it dirty source from far away intruding on their corridor? >> thank you for the question. i think there's a lot of confusion about how a greenhouse gas interconnection standard would work. in the first place it's an interconnection standard. it doesn't govern what electrons are on the line because as everybody has pointed out you can't distinguish between grown and brown electrons. if we're going to provide some additional authority to cite and pay for special new transmission lines to benefit renewable energy, let's make sure that the generation that's hooked up to it is not conventional coal. and so what we've suggested is

that since you're going to need probably gas to balance renewable energy on these lines, that up to a single cycle gas turbine, emission level would be acceptable to connect to these lines. above that would be not. that seems to be a straightforward way to approach that. with regard to the question of competition with local resources, i think what should be important and i think inevitably would happen if the states are driving this planning process even on an interconnection wide basis is that they take into consideration state policies considering local resources and use delivered prices as was mentioned in the last panel as the basis for comparing different resources. i think that's a very straightforward way to make sure that the competition is fair.

>> i'll ask you what i hope is a rhetorical question. in the bill i've introduced we tried to preserve the bottom up planning so that the states and regions do the planning rather than a cram down from the federal government. do you think that's a fair characterization of the proposals that we've made? >> absolutely. and i think that there's been a lot of talk about top down or federal intervention here. but i think the legislation that you've proposed, congressman, establishes a mechanism for states to work collaboratively, addressing these regional issues and those decisions will be executed with the assistance of ferc but ferc can only step in if states can't reach a plan. >> could you suggest any other solutions to the concern that the gentleman from massachusetts expressed about this offshore

wind being crowded out, if you will. i perceive that this greenhouse gas interconnection standard would help solve that problem. because it would essentially allow the use of the federal backstop authority for clean sources, green sources of energy, and i think that would help solve that problem. do you agree with that and is there anything else you could suggest that would help solve that concern? >> well, i think that a stronger step which mr. miller suggested would be to have federal intervention on the loading orders for the use of different kinds of resources, i doubt that that would be politically saleable right now. so i think within the context ever what's doable, i think that the approach that you've outlined is about as strong as it can be. i might add that i think that the greenhouse gas standard to a certain extent over time gets overtaken by the requirements of the cap and trade legislation,

assuming that's enacted. but i think your legislation reflects that as well. >> thank you. thank you, mr. chair for your cooperation. >> the gentleman's time has expired. the chair will recognize himself for a round of questions. let's go down the line. if each of you could answer yes or no. do you support giving ferc the authority to modify any transmission plans that are established through bottom up region alplanning processes? >> i would not. >> you would not. >> nor would i. >> no, sir. >> no. >> no. >> no. >> i think that if the plans are developed by a broad array of states in the way we're describing, i would agree, no. >> bottoms up is each state brings it up or how do you envision that? >> regional planning process. yeah. that's agreed to by the state.

should the ferc be able to modify a regionally agreed upon plan? >> the planning process is not independent, yes. if so, yes. >> independent meaning? >> influenced by market participants and other political entities. the planning process, to me, being -- >> even if the state governor, the state governments agree to it? snibl that all the transmission within the state that is not regional in nature should, the state should have as much authority over it as they want. when we develop regional transmission which is for the good of the region or the good of the country -- >> should the ferc be able to override that regional plan agreed by the states? >> i stand by what i said. if done by an independent planning authority, yes. no. if not then yes. >> mr. miller? >> think one of the concerns we would have if ferc were involved

is that the right of appeal ought to be not only limited to transmission proposals but also those with other perspectives. >> under those circumstances you would give ferc the authority to modify a transmission plan? >> i think there are legitimate federal issues with anything involving interstate transmission, but if you are going to create that it out to be equally available to both the proponents and those that have concerns. >> let me get on the line again. how many of you would support a greenhouse gas interconnection standard of the type proposed by mr. insly. can we go down and ask how many would support that? >> i would not for the simple reason that the standard does not speak to existing carbon intensive generation being able to piggyback. >> thank you. mr. jost? >> i have to qualify my answer.