"the neuroscientist who lost her mind." the addiction solution treating our dependence on opioids and other drugs. former attorney annemarie -- andan, author of " phillip padgett with his book "advocating overlord: the d-day strategy and the atomic bomb." watch live coverage of the ninth annual gaithersburg book festival in maryland saturday at 10:00 a.m. eastern on c-span two's book tv. at a house hearing on the electric grid, witnesses talked ways to improve reliability of electricity transmission and the effect of current regulations on electric utilities. fred upton chairs the energy subcommittee of the house energy and commerce committee. this is one hour and 20 minutes.

>> our committee has a pretty major bill this morning. the house bill on nuclear waste. a number of us have been there to speak and our colleague is helping manage that bill. i'm not sure he'll be back, but we expect votes by 10:45 so i will try to be quick. there will be a series of votes. good morning. today, we are continuing our "power of america" series by looking at an important component of our power sector, the electric transmission system. ever since visionaries like tesla and edison argued the

merits of using direct current versus alternating current, the manner and means by which electricity is delivered has been a controversial topic. we depend on our high-voltage network of wires to transmit electricity to power everything from our iphones to economy. it is critical to make sure the public's health and safety and the quality of life we have come to expect. in many parts of our country, our transmissions infrastructure is aging, congested, and in need of repair or replacement. today is a panel of experts to help us better understand the challenges the sector is facing as well as the opportunities that may be in reach. while much of this debate in the industry is focused on generator resilience, we cannot ignore the vital role that the electric infrastructure plays in

connecting the producer to the end-use consumer. i would argue a resilient and reliable grid is no less important. transmission of infrastructure does not come cheap. the construction of new lines often takes years due to environmental reviews. for the past couple of years, developers have committed over $20 billion annually. to upgrade and replace our existing infrastructure. while that is good news, sustained investment at similar levels will be critical to make sure americans have a modern grid that will deliver reliable power at a reasonable cost.

a predictable regulatory environment is essential to reduce financial risk and attract new capital. after we passed to the energy bill of 2005, ferc was tasked to reduce 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 planned, paid for, and ultimately, developed. order 1000 is the agency's most recent attempt to regulate regional and interregional transmission planning, while also encouraging competition between transmission developers. however, as we heard from witnesses in our 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 -- and other planning regions. moreover, the rule allowing new developers to compete against traditional utilities have been

criticized as ineffective for a number of reasons. 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 alternatives may improve reliability while reducing environmental impacts and costs to consumers. we should explore whether any regulatory barriers are in the to electrication transmission from reaching its full potential. >> i would like to take a few seconds to personally introduce

one of the witnesses that is here today with us, a fellow i have known since grade school and fraternity brothers in college, and on through life. that would be one mr. john twitty. executive director of the transmission access policy group. welcome, john and thank you for lending your expertise to the hearing. welcome to d.c. >> the gentleman yields back and recognizes the opening statement. my friend and colleague from chicago, illinois. you, mr. chairman, and i want to welcome the witnesses to the hearing. today, we will be examining the transmissiontric infrastructure. as you know, mr. chairman, there have been many developments in the nation's energy portfolio since ferc issued order number 890 back in 2007 as a way to

promote open access transmission services. this rule outlined a planning process for transmission providers, consisting of nine planning principles, including coordination, openness, transparency, information exchange, comparability, resolution, regional coordination, planning studies and cost allocations. in 2011, mr. chairman, ferc issued order number 1000 as way to further improve the planning process within and among geographic regions, and also to determine how transmission costs were distributed to customers.

order 1000 was also issued to provide additional opportunity for nonincumbent transmission developers to compete for real projects within the service territory of incumbent utilities. mr. chairman, in reviewing this policy, it appears that there -- results have been mixed with successful it has been in achieving its goal. 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 efficiency initiatives and

overall reduction in energy demand. mr. chairman, since consumer behavior is driving many of these changes as customers demand plentiful 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. traditional methods of buying and selling energy are being disrupted and emerging technologies such as energy storage and distributed energy systems allow consumers to produce energy and sell it back to the grid. on theirman, based testimony we will here today, it appears there are real concerns

with order 1000, and modifications may be needed to help meet its objective. if the goal was to provide an -- a clear and collaborative interregional planning process to transfer and share cost allocations in order to spur additional competition and increased investment in grid infrastructure projects, then it not clear if that objective had been achieved. while most of the witnesses believe changes should be made, there is less consensus on what the changes should look like. i look forward to engaging the panel today, mr. chairman, regarding the opportunities and challenges surrounding order 1000, as well as recommendation

for improving this policy. with that, i yield back. >> thank you. the chairman of the full committee, mr. walden is not here, so the chair calls on the ranking chair. >> i want to welcome our panel of witnesses. we have the president and ceo of psc&g. i value his opinion and the service provided to my constituents and the state of new jersey. the network of transition lines are truly the back bone of the power system. these transition lines -- transmission lines are critical to providing reliable electricity. just like any large, conspicuous infrastructure project, transmission lines are rarely free from controversy.

in densely populated areas, 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 has remained relatively flat. there are new challenges from extreme weather to cyber and security threats, as well as demands for the grid to be more responsive. this requires us to evaluate the policy tools for managing this evolution. we hear opinions about the ordersto which ferc's 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 we look at the map of existing transition lines across the country, it is hard for me to believe we need a lot of new transmission. this is a very mature network. hase much of that network been in place for decades, it is a good bet that it needs to be modernized.

this is something that companies must consider when they are pursuing a transition -- transmission project. a project in my district proposed by firstenergy is one example where there were no serious considerations given to non-transmission options that could make the system more resilient and reliable. it was only through diligent efforts of a group of my constituents called the residents against giant electric, or "rage" that this project is not moving forward. the group provided expert analysis that transmission alternatives could be accomplished with an upgrade to the grid at a far lower cost to ratepayers, but these alternatives were never seriously considered. the administrative lower judge in the county 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, especially when they are allowed to recoup those investments.

determining if new transmission is needed must involve all stakeholders and be evaluated without bias. if, in fact, 's are needed -- and in some cases they will be -- the project could go forward. but if technology could provide a cheaper and less disruptive solution, we should ensure those options are used. so again, the rapidly changing environment we are in right now is both exciting and challenging. ferc's efforts have been admirable but far from perfect. there have been, and will continue to be, missteps that require correction and perhaps serious revision in some areas. i am hoping these hearings are providing us with all of the not -- all of us with an opportunity to better understand where the greatest challenges remaining. i want to thank all our witnesses including ralph izzo for appearing. i yield the balance of my time to the gentleman from california. >> thank you, ranking member,

for yielding. as the cochair of the grid innovation caucus, i'm pleased to be part of this hearing, i think the witnesses and look -- i thank 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 requirements of any evolving grid including technology, consumer adoption of distributed generation, increasing cyber threats, that fits the backbone of american industry. just 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 within ferc, and what more should we be doing to modernize our grid? i look forward to working with each of you to develop a practical, commonsense proposal to creating advanced

transmission system, and i yield back. chair: thank you. openinge no more statements by members, so now it is the fun time. our witnesses will have five minutes to give brief presentations. ,rom your right to your left and make sure you hit the button. on, the speak in light. , you arer supervisor up, mr. clark for five minutes. >> thank you mr. chairman. my name is tony clark, i'm a senior partner at the law firm of wilkinson barker 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 for part of the time as chairman of the north dakota public service commission. it is an honor to recognize my former colleague, congressman

cramer, a good friend of many years. my testimony centers on a white paper i recently authored. reflections on the order, the status of it and where it might go from there. i have attached an appendix to my testimony. by way of background, 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. the main thesis of my reflection is that, however well-intentioned the order is, in practice it is falling short of the lefty goals that it set. -- the lofty goals that it set. with the better part of a decade since its adoption, now is a good time to engage in a meaningful assessment of the order. you the paper concludes that one of the paradoxical results of the rule has been that the major

transmission projects that 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 products that have -- projects that have come through, or empirical data to support the success of the order. the paper concludes that if ferc were to better tailor the rule, recognizing regional differences across the utility industry, it might have more x -- efficacy. when we today find ourselves in a position of having a role that insures significant compliance cost without demonstrate all benefits on the other side. it is perhaps ironic that many of the most impactful transmission projects i have mentioned arose from that preorder 1000 world that i talked about. i suggest that the reason for this is multi fold.

regions, particularly those who are ready certified utilities doing a fair amount of planning within their regions prior to the order. 1000hose regions, order replaced that collaborative bottoms up process with a federal top-down process where there was a fair amount of pure rocker c involved and the name of the game is making sure your -- you are checking compliance checklists as opposed to bringing projects to fruition. creating a federal mandate on top of what was already happening with many regions is complexity in some cases we've seen legislation with respect to the transmission process. electricity landscape has changed radically in terms of resources, technology and state policies that drive transmission decisions. since order 890, which proceeded order number 1000. finally, certain implementation decisions like how cost

--ocation is handled, even those who are broadly supportive, there seems to be a sense something is amiss with it in terms of the underwhelming results that have come out of it. in light of this, i would argue it is important for policymakers to consider order 1000's future given its track record. i've encourage conversations about ways it could be streamlined across the board. add, there may be some benefit when talking about interregional projects, though maybe not as much conversation had happened in the past. there may be ways to do it, while repealing more prescriptive aspects of the order. 1000, ieyond order would offer there are a number of regulatory policy calls coming up that could have a impact on how transmission infrastructure will be developed

. like ratesh issues of returns on projects for jurisdictional rates, issues related to incentives built into its structure and finally, one of the big elf -- elephants in the room on transmission development is as it is with pipeline development, it is very difficult to get infrastructure projects through the construction phase because of multiple levels of bureaucracy and red tape that can block some of those decisions. with that, i conclude my testimony. >> our next

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 current technology is common worldwide but not commonly used in the united states. as a person who has developed interregional transmission projects, i have taken the opportunity to write an article that is part of my prepared testimony.

it reviews why even though everyone agrees these kinds of links are useful and more are needed, both existing and new interregional projects are being choked off by well-intentioned but unproductive regulations. the policy can accelerate what promises to be a once in a generation shift. if we do it smartly from the start, the key to success is to plan and build independent offshore transmission ocean grids in a thoughtful way in each of the participating coastal states. the federal government has a huge role in this 30 be oem. why are these planned independent ocean groups so important? technology has pushed the price of officer went down to super

competitive levels. without, offshore wind is a component in the administration's energy dominance strategy. it is indeed fuel from heaven and it's time has come. as with all large-scale energy resources, the platform must be carefully built and it develop. some ideas about offshore wind would jeopardize the ability to realize its full potential. early policy proposals 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 take us to an anti-competitive and wrong footing. it is in their interest to control as much of the access to the grade 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 offshore fishing ground. we will lose control over a fortune -- a porch and -- portion of our own coast. it will undermine an industry in a vital. of its growth. we are proposing in our ocean grids a smaller number of large collector stations that are placed at the edges of the offshore wind farms. gathering electricity from offshore wind farms and bring it offshore. the minimum number of offshore cables.

these cables would be buried under the wind floor and size for multiple projects. either direct or alternating current depending on the distance from shore. if we do it right, we will create an industry and tens of thousands of jobs. we will competition between generators and that competition will bring the price of offshore wind down to market levels. in europe today, offshore wind options are yielding prices of four cents to five cents per kilowatt hour which is close to the market price. thank you very much. >> thank you mr. krapels. our next witness is jennifer curran who is a graduate of rice university, my alma mater, most importantly. >> go owls. >> go owls. five minutes five minutes ma'am. >> members of the subcommittee, i am jennifer curran, vice

president of system planning for the midcontinent independent system operator. more m iso -- or miso as we are more commonly known. i appreciate the opportunity to be here with you today as you examine the state of the electric transmission system and i hope that the insight on how we plan are useful as you work to shape your energy policy. we are a 501(c) for not-for- profit social welfare organization with responsibility for 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 transition but to identify transmission which maximizes value in the form of overall

lower total energy costs. the system is geographically the largest in north america and spans from manitoba through 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 the diversity for the benefits of customers. that diversity also presents challenges as we seek to design transmission plans and determine who will pay for them. even prior to order 1000, miso was planning not just for reliability but also for economics and public policy of the $30 billion of transition -- transmission investment that has been enabled through the

planning process and 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 distributed widely across the north and central regions and provide benefits of 2 to 3 times the cost predominantly in the form of access to existing and low cost energy resources and 33reliably enable the new portfolio standards in the midwest. transmission like the multivalue project is a longer-term view. we are halfway through the implementation of the multivalue projects with the final project scheduled to go into service in 2023. in the meantime, 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 best described by the 2 questions that i get most frequently about transmission planning. miso, why have you not developed the next set of regional or interregional transmission , and miso, why are you thinking about additional transmission that we clearly will not need? that dichotomy is clearly representative of the diversity that i mentioned and that diversity becomes more broad as we expand beyond the regional boundaries and plans with our neighbors. it is also reflective of the uncertainty of the future as it relates to electricity. the miso planning process uses a scenario-based approach. we tried to balance the potential outcomes and look for projects that will be valuable in all of those futures. if we can find transmission that is valuable then we can feel comfortable that the benefit will continue to accrue to customers and we can continue to

recommend that transition. we -- that transmission. we 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 cost and probably most critically to come to consensus on who will pay for that transmission. who sees the benefit and believes the cost they will bear will be aligned with those benefits. nonetheless, i believe that regional and interregional transmission will be a critical part of the overall solution set as we seek the resilience and efficiency of the electric grid into the future. thank you. >> thank you. we'll talk about some of those things off-line. our next witness is dr. ralph izzo.

you have five minutes. >> good morning mr. chairman, members of the subcommittee as well as full committee ranking member. i've had a long career serving the people of my home state of new jersey. i am pleased to present my view on the need to strengthen electric infrastructure. today i will federal -- i will highlight one federal policy that stands as an impediment, order 1000. i am here representing a 114-year-old company that is new jersey's oldest electric and gas utility. it owns around 100 -- 1600 miles of circuits. despite the fact that we have been named in the atlantic's

most reliable electric utility for 16 years in a row, much of our infrastructure is old. while it has helped power the industrial northeast for nearly a century, in recent years, we have had to work to replace, upgrade, modernize and sometimes move parts of the grid to make sure our system can withstand extreme weather events and other threats. even as our customers are using less electricity, their reliance on it has never been greater. we do not have a blank check. our investments must be improved. we have made improvements that of reduced unplanned transmission outages that over 80%. the benefit is clear. transmission investment hasn't helped by policies that recognized the importance of transmission and the risk of large projects. order 1000 stands out as a

project that undermines these efforts. order 1000 was touted as landmark reform that would promote efficient and cost effective transmission planning and remove barriers to development. in the seven years that we have been living under order 1000, it looks like confusion, controversy and chaos. pjm ceo last year called order 1000 a solution in search of a problem that is creating more of a challenge. nick brown said it created more overhead and more uncertainty. project to solve voltage issues in southern new jersey. to call the process ms would be generous. pjm made an initial decision and then reversed itself. disputes cropped up between stakeholders that we had to mediate. pjm had to make judgments outside its expertise for watch alternatives might secure environmental permits or how to

interpret the fine print and exclusions way developer says it will cap construction costs. five years into the process, still do not have a constructive process to address a major need of the grid. no outside markets have even attempted to offer a bid. one group offered and $8 million project for a project that was never built. a partnership between a foreign developer and another entity saw the developer go bankrupt. after seven years, these can no longer be called a growing pains. behind order 1000 clerks another concern, projects that solve multiple problems in -- and provide long-term value are being rolled out as too costly.

competition is a positive force but the goals must be set to achieve the outcomes we want. people depend on inefficient electric system that is useful for the long-term. leaving order 1000 in place risks our ability to achieve that end. >> the chairman calls upon john twitty . his executive director of the transmission axis policy study group. offline, you probably have some stories we'd all like to hear. >> morning mr. chairman and members of the subcommittee. i am john twitty, executive director of the transmission axis policy study group.

our association has been active in the capital protecting the interest of transmission dependent utilities, we represent municipal utilities, a rural electric cooperative and an investor-owned utility serving about 1200 utilities with retail customers. they depended on the transmission facilities of others, taps members recognize the importance of a robust grid and have long advocated policies to get transmissions built but are keenly aware that expansion must be achieved at reasonable cost. by enacting section 217 of the federal power act of 2005, congress gave clear instructions on transmission planning. they are directed to facilitate planning to meet reasonable needs of the load serving entities and enable load serving entities for long-term power supply arrangements made or planned to meet service obligations.

these directives translate into steps that should be taken regarding transmission planning and investment but that is not happening to the degree necessary to make congress mandate. the grid has to meet the need of load serving entities. although rules have been established for an open and transparent planning process, even ferc has recognized this is not happening efficiently. these load serving entities do not have a seat at the table the way that they would if they shared ownership. joint transmission ownership arrangements where they all share ownership of the grid which have occurred in many states, have a long history of ensuring that the transmission needs are met consistent with section 217. they also facilitate the siting process and spread investment risk and responsibility and provide an opportunity for small

load serving entities to offset increasing transmission rates against transmission revenues thus reducing costs to customers. second, we need to ensure that investment is appropriate, consistent with 217's focus on the reasonable needs of the reasonable needs of load serving entities. members have experience rapid increase in transmission costs, while a portion is no doubt justified, transmission has become an investment magnet. the potential for guaranteed returns on equity on low risk transmission assets, may spur investment, that is not necessary. while we support the consideration of grid resilience it should not become a blanket justification for excessive investment. third, ferc has fallen short of fulfilling to 17's -- 217's directives of long-term transition rights particularly after the capacity associated with those on which load serving entities rely on which exposes entities to increase costs especially of choices of large

transmission owners have left them with resources and multiple rto's. it also makes new investments riskier. above cost incentives are not needed to attract investment. there is no shortage of entities seeking to invest in the base equity return that is intended to reflect the cost of attracting capital. there is no incentive rates for return. those seeking permissions seeking to make load ratio investment in the grid. finally, the planning process can also be a more effective vehicle for inclusive transmission investment. nonincumbent transmission developers, especially those that accommodate participation by small load serving entities should have a fair opportunity to develop needed new transmission. congress should encourage the congress to reinvigorate the development process in a manner that will promote transmission

ownership as well as the -- use competitive discipline to curb the rising costs. we want to be part of the solution and so long as the needs of our customers are met. i look forward to this discussion. >> our final witness is mr. rob gramlich . you have five minutes for an opening statement. >> thank you very much, ranking member rush and 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 that we depend on for almost every modern commercial and individual

activity. since this subcommittee was involved in passing the energy policy act of 2005 the industry has succeeded in building a lot of transmission. benefits have exceeded the cost by factors of 2-3.5 in major investments that you've heard about. transmission investment has enabled over $100 billion a -- of generation investment, transition 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 have worked well. we should build on that success. in my testimony i provide 9 ideas for expanding transmission and improving performance but none of these ideas matter if there is no leadership at the department of energy or ferc.

we are waiting for that leadership. i fear the agencies are too distracted by misguided proposals to provide life extensions to all power plants. we are 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 plans, that needs to sink on its own merits as my old boss pat woods turning to transmission. to improve transmission most of my recommendations are for ferc but i have some for congress as well. it doesn't matter if it's under the heading of order 1000, 2000 or in entirely new one they could roll out, we need to update transmission policy to create the grid that we know that we need in the future. i recommend that ferc and congress build upon the twin policies of broad regional planning and beneficiary paid cost allocations. that is what worked in texas,

miso, and what dr. krapels described should be done. they should align incentives for advanced technologies. i did not say more incentives. i'm not asking for a subsidy, i said align incentives so that transmission owners have an incentive to deploy cost- effective technologies. ferc should incorporate advanced transmission technologies into planning. i don't like to call it non-wires alternatives. they are just other transmission options and 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 1000's attempt to improve that. congress, the department energy and ferc should improve siting. it is important for the future grade that we need and we should make sure that it works and is used where appropriate. ferc should require proactive planning that captures all of the values of transmission . too often it gets compartmentalized and not all of the benefits are included. the administration should improve federal coordination and transmission permitting on federal lands. the department of energy should harness the authority and capabilities of marketing administrations. they can be involved in transmission, utilize section 1222, and help in other ways. the administration should couple the department of energy's planning and support for corridor designation with the department of interior efforts to identify renewable energy zones and transmission corridors. finally, congress should

consider public financing to right size transmission. too often we under build for 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 when we built a lot of transmission we have essentially used up that capacity. looking back we would have done better to build at the right size. i will stop there and look forward to your questions. >> thank you, and for the panel we will have votes called within the next 10-15 minutes. we will have to go into recess but until then we will get through as many member questions as possible. we have 5 minutes to ask questions. being the chairman, i am first. you all know that i'm a texan. and y'all know that texans love

to brag about fellow texans. we say they've done something good. that is the home of our current governor -- over former governor and excuse me former secretary rick perry. he did something good with these competitive renewable energy zones. he used them to fix a problem that we had in texas. we have a lot of wind power but

we have more power in rural texas where it's not needed. we need it in eastern texas, central texas, houston, dallas, austin and san antonio. we need it in eastern texas, central texas, houston, dallas, austin and san antonio. but that's part of why, as dr. krapels said, texas leads the nation in wind power. one day a couple of years ago half of our energy was provided by wind. offshore corpus christi, texas, that wind whips 300 days a year. my question is for you, can you talk about how the model worked and if that's something we can do elsewhere? mr. gramlich: you are absolutely right. that model as well as the market structure overall as a model for the country. and we would be doing a lot better if we had the market model throughout the northeast and the rest of the areas as well as proactive transmission planning model that has accessed all of that wind and gas resources and serve gas resources out on western texas in the panhandle. it is a simple formula of identifying where general \identifying where general resources are and proactively

building to those resource. the alternative that is often used in the other places is to wait one by one for all the little projects to connect and know one of them are going to build the transmissions that are needed. so you need to proactively build to the resource area resource area. >> dr. krapels, do you know how that worked out? >> i totally agree. in the northeast we are looking at a wind resource offshore that could be 10,000 to 20,000 megawatts, texas sized mr. chairman, and yet that is very big. it represents a huge investment opportunity of $30 billion or $40 billion which even by texas standards, yet our transmission policy is the opposite of that of texas. it is building and owning transition which seems almost insane. we should do what texas did. we should learn from texas and

build and plan the transmission first and let the generators compete like hell to get access to that transmission. that is what you did and it works great. >> this is a great hearing so far. the last question, mr. gramlich, you recently wrote a white paper of new technologies that can optimize transition systems at a much lower cost. can you describe how that will work and how to compare that to the cost of the consumer? what the benefits are of your plan? mr. gramlich: yes, thank you, congressman, for your question. i formed a coalition working for advanced transmission technology and we put out a white paper. we were thinking part of our wholesale customers and that we do need more transmission, but we should also make sure that the existing grid is used as efficiently as possible. and many of these new technologies were not really

commercially available when the energy policy act directed folk to promote them in 2005 so there's an unfinished chapter in the implementation of congresses act, and that is on the utilization of the existing wires. a lot was done on incentives for new transmission but nothing was done on utilization. we are not asking for more incentives, just alignment of incentives and inclusion into the planning process. >> one question. i would be curious to know if you think regulators are doing a good job of keeping up with those transmissions of distribution space. grade a, b, c, d, or something below that? >> i would say incomplete. part of the challenge when we talk about regulators is that you are looking at multiple jurisdictions of authorities. so unlike the case of texas

where you have a wholesale regulator that is both retail and wholesale regulator, for most of the rest of the country it's difficult to bridge some of those divides. it is just the way the jurisdictional nature holds out. ferc has authority, interstate transmission authority, but many other decisions regarding resource adequacy, planning or retail decisions are made at the state level. it's tough because of the natural divide that sometimes -- > now his five minutes of questions. >> thank you, mr. chairman. as i mentioned in the opening, we are moving into the new energy with advanced .

are increasingly being developed and come online. in your opinion, in order 1000, does this lead to an increase of these types of low-cost clean energy resources? mr. gramlich: sure, thank you for the question. we are indeed moving toward the future of a more distributed network with many small sometimes retail or state jurisdictional resources. the planning process need to incorporate that. i do not agree with those who say we are not going to need as much as the bulk power grid. in fact, resources are often variable and remote and we need to move around the power geographically as well as over time, which storage can do.

we are going to need the big grid and much more coordination which at the local level for state regulators to handle. i think reliability and efficiency can improve. however, if we bring those resources into the wholesale markets, there are going to be a lot more resources available and if there are any shortfalls for example if we give them access to wholesale markets we will have a lot more reliability. >> commissioner, in your testimony, you stated the reasons and we already know a fair amount of planning before order 1000. you maintained that order 1000 actually replaced a collaborative model -- approach to transmission planning.

and the compliance checklist that may not necessarily result in additional transmission developments. briefly, what recommendation would you suggest that would help improve order 1000 to better achieve better process planning and cost allocation? and increase competition or not incumbent transmission developers? >> thank you for the question. what i would do for those regions for the majority of the states they maintain vertically integrated utilities, i would argue that order 1000 should be put on a pretty severe diet so

that it's slimmed back in terms of trying to leverage and what we are working on in the past. you had indicated to reference my testimony when i talked about this. a lot of the compliance obligations in regards to things like competitive bidding in the process that each of these regions have to go through don't fit very well in regions of the country that are so vertically integrated, and the reason is because utilities working with state utility commissions had always done that sort of regional planning in the past and order -- miso's project is a good example of how that worked well. those type of projects we are seeing -- we are not seeing coming forward because now the name of the game is now we have to comply with order 1000 so it really just becomes a compliance exercise as opposed to the more

organic process that happened bottoms up. i think there were different issues and parts of the country that have restructured or that may have natural tension between generations and transition as it relates to the marketplace. even there i don't think order 1000 is working perfectly as indicated by some of the examples that dr. izzo talked about. but at the very least in those vertically integrated regions, it would be slowing down from a -- it could be slimmed down from a compliance standpoint and focus more on good aspects of regional planning and collaboration and maybe especially on interregional projects where there may not have been as much conversation going on as there was after order 1000. >> thank you. mr. long, five minutes for question, sir. representative long: i am ready to start now. thank you, mr. chairman.

i appreciate you yielding to me. mr. twitty, work order 1000 has been discussed but the scope of transmission development, but the 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, first, thank you for the question. we all believe the 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 on her -- return our provided to the people who are building it, and as i suggested, there are lots of folks out there who do not 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 and you really believe in having a grid that is right sized, that everybody should be at the table, whether we like order 1000 the way it was written with the way it has been implemented is a good question. >> you think it should be re-examined? mr. twitty: i think there are good aspects of order 1000, but it is not working way it was intended. and if more people were part of the planning process, really a part of the ownership structure,

i think he would have a better outcome than we have today. >> according to her testimony, members and the southwest power pool have seen an average annual rate increase of 17% of the last five years. at the same time -- and i told them that your former employer has studies that show the costs are substantially higher than other customers in the spp. what needs to be done by congress or by ferc fix this trend of high annual rate increases in springfield, where you live? mr. twitty: i mentioned in my testimony the rates of return that are offered by ferc today are pretty attractive. we could agree that if we had our 401(k)s and our ira's invested at those guaranteed rates, we would be happy.

i do not think there is a need for incentives on top of this guaranty greats of return. that is a big piece of it. the bottom line is as you mentioned, real customers paying real utility bills like everybody in the room, pay these increases, and i've suggest if it is not for abnormally no natural gas prices today that are masking lots of these problems, people would be at your doorsteps, wanting solutions, and they would want them pretty doggone quickly. >> if we have more people, it . will aid the siteing process.

the siteing process is the most critical aspect of building any of these kinds of projects. i have been somebody who has knocked on people's stores, asking for rights of way, and if you have mayors, elected members of boards of public utilities, that are part of that process, it is going to be a better process. it will get the right thing built. it would be done as quickly as possible. and all that translate into lower costs. >> you mentioned that grid resilience should not be justification for excessive investment. recent hearing some of the concept of grid resilience has been described in a crucial test as a crucial characteristic the energy system needs. mr. twitty: resilience is to be the word today. there are so many risks, many presented through cyber threats, where we need to think how about that great gets built and how it

gets put back after an outage. we agree on what resilience is, particularly those who have been running a utility today. but we should not let it be the end all be all to build something that you cannot cost justify. i used to say to our customers we can guarantee your availability 100% of the time. but you could not afford the service. later, the engineers would say, we cannot guarantee it 100% of the time. so it needs not to be an effort to go place a system in the name of it will never go down. >> thank you, and i thank you for being here. i yield back. >> thank you. five minutes for questions. >> i thank the chair on this. your ocean grid collector station's proposal for partial wind -- offshore wind is pretty interesting. what puzzles have you seen outside the new york-new jersey

area, including the west coast, where we have deep water out there? >> thank you. i have studied carefully with the european countries, sublette germany, the netherlands are the leaders and offshore wind deployment, and in both of those countries, the id of an ocean grid that is separately owned has been part of the -- the idea of an ocean grid that is separately owned has been part of the policy, and it works very well. in california it would be wise to look at offshore the same way texas looked at the upstate. it is a region with unlimited wind potential. storage wind turbine technology is evolving so quickly, i think it will be economic within the next few years, and thinking about this from a grid and build a grid that exercises the benefits to consumers be the right way to go. >> thank you.

do we in congress need to do something such as pushing the blm's offshore federal land leasing of the structures? >> i think that would be extremely helpful. right now each wind generator can build its own transmission lines for, but once that is done, that place onshore is occupied by a generator for the rest of time. thinking holistically would be wise. >> you mentioned earlier that ferc does not need to grant more incentives, but better aligned incentives that we already have. what are your suggestions about how to do that? >> thank you, congressman. there are examples from other countries that we are currently looking at and trying to work with a number of transmission of -- owners on an other set. in he u.k., when there is congestion, the owner has an incentive to reduce that

congestion. thereby, the savings are shared between customers and shareholders. that concept could be applied here in the u.s. it is not an easy task to implement these forms of performance-based regulation, but i am optimistic with some of the best minds of the transmission industry, we can do that. >> what would be the next steps to get that to happen? >> having people like you say that is an important thing to do. so thank you for that. having ferc and the department of energy take interest. i think there is an interesting study that i cited in my written testimony called the scenes study -- seams study, that a -- a number of national labs have been working on, and that will be a great model. when that comes out,

facilitating a dialogue on how we get that type of grid would be very worthwhile. >> you mentioned there is a lack of private rocket interest in the public in financing high-capacity versions of the lines, such as the texas competitive renewable energy zones. public financing may be appropriate. you discussed about how such would be structured so we do not build excess capacity needlessly. mr. gramlich: thank you for that. yes. there is 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. the wind, solar, geothermal resources. these are resources that will not move over generations. we should not be that worried about overbuilding to access those resource areas. our great-great game kids will benefit from whatever we do to build out that network. >> interesting.

i will yield back in the interest of time. >> thank you. votes are about to be called. we will for maybe a half an hour, 45 minutes, and come back. ok, mr. griffith from virginia. representative griffith: i was in questions afterwards as we are allowed to do in the next 10 days, but i will ask one question life, mr. twitty, because i represent aep country in southwest virginia. you say there transmission rate has increased 15% over the past six years. there's efficient consumer protections in place to prevent

a necessary business in the future? explain why it is going up so much from and if you can do it likely, and then what do we need to protect folks? >> i would answer it rising as i did to congressman long, to rich and investment for people who own and build new transmission. it is too rich. we need to make sure we are not providing incentives on transmission investment for a run-of-the-mill standard transmission line. that is certainly number one. number two, as i have 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 to 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 is no gold plating, no overbuilding, that we build exactly what we need to get generation to load. it is a long process. regarding more influence on the ferc, it requires lots of people talking about these issues. it is easy to say we once up at the table, but if you are a transmission owner, want to be a transmission owner, do exactly what you want. if there are other voices, it gets messier. get a better project that happens. >> i appreciate that. i yield back. >> mr. cramer -- jonathan, you are recognized. we yield to mr. johnson. mr. griffith, thank you. >> thank you, mr. chairman.

mr. clark, one of the primary objectives of order 1000 was remote interregional transmission development. but there is broad consensus that order 1000 failed to achieve that goal. in your opinion, how will this objective he achieved? mr. clark: part of it is attempting in on what you are trying to a college in the rule. the rule is expensive. the compliant filings are thousands of pages on top of that. part of the region you get that result is the order tried to do a lot of things all once. it was part of the competition policy, partly an investment policy, partly a regional planning possibly, a cost outpatient policy. some of the dealt with interregional, intraregional. when you push that much out in a rule and expect regions to do

some good it, you end up with a lot of bureaucracy and checking compliance boxes. that is why i say i think putting the order on a diet and focus on what you're looking at doing would be the most helpful thing. some of it may be reinforcing some of the planning conversations that happened, without the more prescriptive elements of it, and part of it might be focusing on war on the issue of interregional projects as opposed to spending a lot of time within these regions having that through and manage the type of intraregional projects that were existing prior to the order. >> what would be the advantages of greater interregional transmission? mr. clark: because you have an interconnected grid in the west and the eastern interconnected, the beast or projects that serve

a broad regional benefits to have been a benefit that the crews many times -- that accrues many times over. if you are only looking in the region, when i see the benefit of those particular lines. of can be reliability lines. some could be market efficiency lines. but some yardstick to compare the interregional types of projects to be valuable, and that may not have been captured in previous ferc quarters. >> thank you to all the witnesses who are here. in a subcommittee we recently 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. after the army corps of engineers and doe testified they thought they had things on track, they had a major average again. so i would like to ask all to

supplement the record with any recommendations moving forward. clearly, there is an issue on transmission and the need for micro-grids and more resiliency there. 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 take advantage of non-transmission alternatives, such as micro-grids, distributed energy resources, and energy storage, on transmission. they have not only environmental benefits, it can prevent blackouts after natural disasters like we saw in texas and florida and puerto rico this summer. we need to be focusing on the needs of consumers and be smarter. non-transmission -- can be of great and if it concerns.

recognize benefits of alternatives requiring regional plants -- but these alternatives are not being utilized the extent they should be come especially given how these advanced technologies such as how advanced the technologies have been. do you think if there was a stronger order that required more than just consideration of alternatives, he would see greater use, and what are the barriers to broader deployment and utilization? >> i do. thank you for the question. for reliability resilience, you can improve both by better monitoring the infrastructure. we do it with every form of infrastructure, with better

monitoring and control systems and computing power all through our economy. we have these opportunities to monitor and control better. that helps with reliability as well as efficiency. transmission is no different. the only problem is is it is a regulated industry. the incentives are misaligned and the planning requirements are not up to take with the new opportunities we have. >> thank you for the opportunity to respond. i would agree with those comments, and i would suggest as somebody who used cap responsibility for keeping lights on, at the end of the day that is 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 direct time is always going to be critical -- investment at the right time is always good to be critical, and making sure it works as it relates to the code -- total grid. when an solar are wonderful, and we are agreeing out ways to harness them properly. when the wind does not blow and it is a challenge. you have to have a system designed that can take this intermittent resource, and in the case of micro-grids, turn troll of your great others, and for people like dr. izzo who have responsibility for judith light on today, that is a pretty nervous thing because if it does not work early, if the technology is not fully -- lights go out. >> importance of planning and investment. thanks very much. >> thank you. seeing there are no further members wishing to ask questions, i want to thank you for being here. thank you, thank you, thank you. much obliged.

i would ask witnesses to submit a letter from reliance and wires. so ordered. pursuant committee rules, members have 10 business days to submit additional questions. i asked witnesses respond within 10 business days upon receipt of the questions. without objection, this subcommittee is adjourned. [indiscernible] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

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the bill being considered would require those receiving benefits through the supplemental nutrition assistance program to work at least 20 hours a week. here is part of the debate on the bill. it is 15 minutes. thank you mr. chairman. it is with deep disappointment that i stand in opposition to the bill. i ed