exploring our nation's past. sign-up today. week, the house energy and commerce subcommittee on energy reviewed activities of the electric transmission sector. witnesses discussed ways to improve the grade including new transmission lines. they talked about federal laws and regulations on the sector. this is about one hour and 20 minutes.

>> good morning. they we take a look at electric transmission system. visionaries such as addison and tesla argue the merits of direct current versus alternating current, the means by which electricity is delivered is a controversial topic. we depend on our high-voltage network to power everything from our iphones to our economy. uninterruptedy of electricity is possible to ensure health and safety and quality of life we have come to expect. parts of our country,

our transmission infrastructure, roads andation's bridges is aging, congested, and in need of repair and replacement. we cannot avoid the vital role in the infrastructure place in connecting the producer to the consumer. a reliable transmission grid is no less important. infrastructure does not come cheap and the planning of new lines often takes years due to permitting and environmental reviews. public utilities and transmission developers in the past couple of years have transmitted over $20 billion annually to upgrade or replace our existing transmission infrastructure.

while that is good news, sustained investment will be critical to ensure americans have a modern grid that can deliver reliable power at a reasonable cost. a predictable regulatory essential tos reduce financial risk and attract new capital. after we attract -- after we passed to the energy bill of reduceerc was tasked to injections on the grid. ferc responded by giving financial incentives that met certain criteria and ferc issued landmark rules to regulate how transmission projects are developed. order 1000 is the agency's most recent attempt to regulate

interregional transmission planning, while encouraging competition between transmission developers. however, as we heard from witnesses and earlier hearings, while some regional planning processes have become more effective, order 1000 has all but failed to develop new lines among and between rto's in planning regions. allowing new rule developers to compete against traditional utilities have been ineffective. we will explore these challenges associated with transmission planning, cost allocation and construction. while high-voltage wires form the backbone of our smart grid technologies, demand response, energy storage and micro-grids can also provide benefits

similar to traditional transmissions, since these may improve reliability while reducing environmental impacts and costs to consumers. we should explore whether any regulatory barriers are in the way blocking electric transmission from reaching its full potential. i would like to take a few seconds to introduce a witness, a fellow i have known since grade school, and fraternity brothers in college and on through life, that would be mr. twitty. welcome, john and thank you for lending your expertise to the steering. welcome to d.c..

congressman: thank you. statewe will examine the of electric transmission infrastructure. there have been many developments in the nations energy portfolio since ferc issued order number 890 promote2007 as a way to open access transmission services. this rule outlined a planning process for transmission consisting of nine includingrinciples, coordination, openness, transparency, information regional resolution,

studiestion, planning and cost allocations. ferc issued order number 1000 as way to further improve the planning process within and among geographic to tos, and also determine how transmission costs were distributed to customers. 1000 was also issued to provide additional opportunity for nonincumbent transmission -- topers to come be compete for real projects within the service territory of incumbent utilities. mr. chairman, in reviewing this wascy it appears that there

no regard to how successful it has been. we are in the midst of a rapidly changing energy landscape, reflected in part by the emergence of renewable energy sources, low-cost natural gas, state-led renewable portfolios, as well as an increase in energy efficiencies and overall reductions in energy demand. since consumer behavior is driving many of these changes as customers demand clean, affordable energy along with new tools to more responsibly use the energy they consume, both as a way to save money and to save the environment. the traditional method of buying

and selling energy is being and emerging energyogies such as storage and distributed energy systems allow consumers to reduce energy and sele back to the grid. based on the testimony we were hearing today, it appears there are real concerns with order 1000, and modifications may be needed to help meet its objective. provide an was to planning process to share cost allocations in order to spur additional competition and increased investment in grid

infrastructure projects, then it is necessary to have that objective achieved. while most witnesses believed changes should be made, there is less consensus on what the changes should look like. the challenges and opportunities surrounding order 1000, we need to recognize the changes to improving this act. thank you. chair: the chair now calls on pallone. president -- the

utility president ralph izzo here today and i appreciate the services he provides to my constituents in the state of new jersey. the network of transmission lines of the backbone of the power system. these transmission lines are critical to providing reliable electricity. conspicuousy large, transmission -- infrastructure project, transmission lines are free from controversy. allocating space for new infrastructure is often a challenge. the electricity sector is going through tremendous change and at the same time, demand for power remains relatively flat. there are new challenges from the weather and security threats as long as making sure the grid is more responsive. this requires us to evaluate the policy tools for is using.

we hear opinions about the degree to which for orders are helping or hindering investments and electric transmissions. it is a challenge to get this right. stakeholders will have diverse opinions on how to improve these policies. if you look at the map of existing transmission lines across the country, it is hard for me to believe we need new transmission. this is a mature network. but it is also a good debt that it needs to be upgraded and modernized. something companies must consider when pursuing transmission project. a project in my district proposed by firstenergy is one example where there were no serious considerations given to non-transition options that could make the system more resilient and reliable. it was only through diligent efforts through a group of constituents of mine that this

project is not moving forward. group provided expert analysis that transmission alternatives could be accomplished with an upgrade to the grid at a far lower cost to , but these alternatives were never seriously considered. the judge who reviewed the case agreed with that assessment. this project in my home district illustrates that there remains a biased a bias to building transmission rather than using new tools. it is in the financial interest of transmission companies to build, when they are allowed to recoup those investments. determining if new transition is needed must involve all stakeholders and be evaluated without bias. if lines needed -- if new are needed the project could go forward. but if technology could provide a cheaper and less disruptive solution, we should ensure those options are used. the rapidly changing environment we are in is both exciting and

challenging. ferc efforts have been admirable but far from perfect. there will be missteps that require correction and perhaps serious revision in some areas. i am hoping these hearings provide all of us with an opportunity to better understand where the greatest challenges remain. i want to thank all our witnesses including ralph izzo for appearing. >> is the cochair of the grid innovation caucus i'm pleased to be part of this hearing, i think the witnesses and look forward to working with them to create what both parties have called a 21st century electric grid congress needs to address the any evolvingof grid including technology, consumer adoption of distributed generation, increasing cyber

threats, that fits the backbone of american industry. yesterday, to bills focused on cyber security tasks. this hearing is an important corollary to those efforts. what investments should we be making? what regulatory regime should be reviewed? what more should we do to modernize our grid? i look forward to working with each of you to develop a practical, commonsense proposal to creating advanced transmission systems. i yield back. chair: thank you. no more opening statements, so now our witnesses will have five minutes to give presentations. i will work this from your right to your left. make sure you hit the button that comes on with the green light. we have a former commissioner

from clerk -- from ferc. >> thank you mr. chairman. i'm a seniork, partner at a law firm that has offices in denver, colorado. i served on the federal energy regulatory commission and prior to that i served 12 years as a commissioner and chairman of the north dakota public service commission. recognize myr to former colleague, congressman cramer, a good friend of many years. my testimony centers on a white paper recently authored your it reflects -- authored. my feelings on order 1000 and where it may go from here. order 1000 was promulgated not

long before i got on the commission, so i did not participate in that. but i did participate in many compliance filings that came forward in the wake of the order. however well-intentioned the order is, it is falling short of the lefty goals that it set. with the better part of a decade is a its adoption, now good time to engage in a meaningful assessment of the order. paradoxical results of the rule has been that major transmission projects many of us thought might come out of order 1000 actually came out of a pre-order 1000 world and since order 1000 was promulgated, there have not been a lot of tangible the paper concludes that if we were to better tailor the roles, especially recognizing significant regional differences

across the industry, it might have more efficacy. when we today find ourselves in a position of having a role that insurers significant costs without demonstrable benefits, it is perhaps ironic that many of the most impactful transmission projects i have arose from that preorder 1000 world that i talked about. i suggest that the reason for this is multi-full. those whoarticularly are ready certified utilities were doing work in the region before the order. process00 replaced this with a top-down process where there is a fair amount of bureaucracy and the name of the game is making sure your checking compliance checklists as opposed to bringing projects to fruition. creating a federal mandate on

top of what was already has added complexity in some cases we've seen legislation. electricity landscape has changed radically in terms of resources, technology and state policies that drive transmission decisions. since order its 90 which pursuit -- order 890 which pursuit -- 1000.preceded order short, even amongst those who are broadly supportive of order 1000, there seems to be a widespread sense that something is amiss in terms of the underwhelming results that have come out of it. i would argue that it is appropriate for policy members -- makers to consider the policies future given its track record.

my paper offers suggestions to streamline it across the board. i would add there may be some benefit when talking about were-regional project maybe not as much conversation has happened in the past. there may be a way to do it while repealing some of the more prescriptive aspect. i think there are a number of regulatory policies coming up in impact on how transmission infrastructure will be developed. we have work ahead of us dealing with issues like rates of return for jurisdictional rates, issues related to transmission incentives built into the right structure and one of the big , it ists in the room is very difficult to get these projects cited and brought to bureaucracycause of

and red tape that can be brought. with that i conclude my testimony. >> right on time. thank you. our next witness is dr. edward cripples -- dr. edward craples. .> thank you anm the founder and ceo of independent transmission developer.storage we are funded by institutional investors but we are not your typical utility. we like to think that we build electric businesses of the future in the future is very different from the past as other members have indicated. we helped spearhead to high-voltage lines between new jersey and new york. the high-voltage direct