 Good afternoon everyone. Welcome to our briefing this afternoon. My name is Carol Werner. I'm the executive director of the Environmental and Energy Study Institute and we are delighted that you are all here this afternoon for this important discussion. And it is and is always a pleasure to be working with Jim Hecker who is the general counsel of Wires and a former chairman of FERC and this briefing is another part of a whole series that we are doing this year that is looking at how we can build a more resilient and secure infrastructure. And certainly you're being part of this important Wires University is a critical critical element in that which hopefully is going to help us all learn more, know how to ask better questions and help us all to do our job in a more informed and better way. So we are delighted to be able to sponsor this briefing with Wires, the House Grid Innovation Caucus, the National Electric Manufacturers Association. So now I'm going to turn our discussion over to Jim Hecker who will introduce our members of the Congress who are we're delighted that they are with us today so that we can kick off our briefing and also get them to their vote on time. Thank you Carol. I know the congressman have a vote coming up in about 10 minutes. So thank you all for coming. I think I think you're going to enjoy this. We've we've we've tried to to add some meaning to the big I word that's around town, which is infrastructure and one of those critical infrastructures perhaps in some ways the most critical is transmission and the two congressmen joining us today as co-chairs of the Grid Innovation Caucus also believe in intelligent transmission, smart transmission, and deploying the best technology for the for the future. Let me introduce them briefly and and let them let them tell you more about it, but Connorsen Jerry McNerney represents the 9th district in California, which includes a big section of the San Joaquin County and Central Valley. He's he's appeared at other and spoken to other wires university meetings for which we are deeply grateful. He of course is on the House Committee on Energy and Commerce and and as a background and scientist, he's also on the Veterans Affairs Committee and we appreciate his being here the the newest co-chair is representative Bob Lattif from Ohio he represents Ohio's 5th and is also I think a member of the Energy and Power subcommittee of the of the Energy and Commerce Committee both of them have great interest in the subject matter and I very much appreciate them being here, so I'll turn it over to you gentlemen. Thank you Well, good afternoon. It's a really pleasure to be here. It's an issue. I feel a lot of passion about I'm gonna tell you a little bit about my background. I spent about 25 years developing wind energy technology and and projects Part of that I also developed a smart meter for residential use At EPRI so I've been in the industry for many years. It's an injury. I I sort of developed passion for in college when the when the oil embargo hit us in the 70s and Energy has always seemed like a great field. There's a lot of opportunity. There's a lot of money And it's just it's just a very exciting place to be the caucus the grid innovation caucus in the house was started two years ago by my Republican colleague Renee Elmers and we accomplished a few things and including the strategic transformer reserve in the In the fast act Which establishes transformers or will establish transformers for for use in emergency situations? The Bob Letta joined me as a co-chair this year, and I'm really glad to have Bob along Gord I'll say a little bit more later, but Bob is a friend of mine, and he's someone actually work with And that's maybe a rarity. Maybe not, but it's good to know that there's some bipartisan potential in the in Washington now the caucus was formed because It's an underappreciated issue that the transmission is a very underappreciated issue. We have It's one of our critical pieces of infrastructure The United States has developed a tremendous manufacturing and all these Capabilities we have a large part due to our transmission of electric power We also have so the point is that we want to we want to sort of educate our Colleagues about this issue. We're talking about Investing in infrastructure here in Washington I think we want to make sure that this is front and center people know how important this is and The return on investment that they'll get for the investment that's made in transmission We also have cyber and physical security to consider And we have again our own what what what is Congress going to do? Or we what are we going to do to? invest what are we going to do to Make investments seem like a good idea for for the private sector so The challenges we have of course are the natural gas and transmission nexus as we see Generating power depends on natural gas more and more we have situations where we could have shortages of natural gas And that would affect our transmission. It would affect our generation. So that's one of our big challenges We have renewables which bring a whole another set of challenges in terms of intermittency How can we provide? renewables from the great renewable resource areas of our country for example The Dakotas have a tremendous tremendous wind resource. How do we get if we put in windmills? How do we get that power to the load centers across the country? The different states have their renewable portfolio standards, which put again another set of constraints and other Challenges to our our national grid. How do we model this they're going to be sufficient? computer models and mathematical models to to be able to tell us how to operate and how to run this and how to invest our money There's also Security, there's congestion our lines. There's distributed generation And there's a sort of challenge of a flat load growth now That doesn't mean that we're not growing because certain sections of the country have a growing load in some sections are Diminishing their load. So these are all big challenges that transmission is facing over the next decade And it's time that we have organizations like wires that understand these draw investors into the right areas Communicate with their members of Congress and senators the importance of these issues So we have a lot on our plate and it's it's great to have those of course the opportunity out is out there with with technology We see all kinds of technology taking place. We see storage. We see fast-switching And all the modeling technologies out there So we have a real a set of real big challenges and we have the technology that can meet those challenges So it's an exciting time to be in the business There's a lot of state dynamics going on as I mentioned different states have different Renewable portfolio standards We have the different PUCs We have the ISOs out there that are they're in control of the local area a distribution We have different states trying different experiments in terms of of these challenges So it's a great time. I just want to say about transmission transmission even though we have distributed generation And all the sort of that the the transmission is really the backbone of our national electoral system We have to again. We have to figure out how to get power from where it's produced to where it's needed We have to be able to provide when there's shortages or outages in some parts of the country So transmission is really going to form the background without a good solid a reliable Effective transmission system. We're going to see a lot of problems. And so that's That's our that's our that's our challenge and that's why wires is here I I believe so we want to make sure we have the right congressional approach to these problems And our our grid caucus our grid innovation caucus is going to help us get there now I have the honor of Introducing my good friend Bob Ladder. I just want to say one thing Bob has spent 27 years in public service starting in the in the County Commission, so that's a man that has really dedicated himself to our needs And I really appreciate that and anybody because public service is a challenge Well, thanks very much and and to my good friend, you know, it is true you can find a lot of things You can work together on here and this is one of those very important issues We have to make sure that as we go forward as a nation This is something that's at the top of the list and as Jerry pointed out a little bit talking about Kind of his background and also his where he's from. I'm from Northwest Western Central, Ohio And let me give you a little bit of idea what my district looks like. I have 60,000 manufacturing jobs in my district In those manufacturing jobs, I had the largest food processing plant in the world in my district I had the largest pre-manufactured furniture Manufacturer in my district. I have central founding from General Motors. I have float glass. I have steel mill I have steel coating and then you go down right down the line to everybody else's out there that needs and reliable electricity I have far I have the largest farm in producing district of the state of Ohio What's that mean? I've got a lot of folks out there that would have livestock well in the middle of the winter Last thing you want to do is have unreliable power and going out to your barns because again your livelihood counts on it So it's when you start looking around our all of our districts We can all find things we have something unique, but we all have one thing We always know that we have we all need electricity and it's not that we need less We need more and we need it to be reliable. And so when you're talking about the grid It's so important that we have that When we were talking about things like that especially in the private sector again We're the innovation that's going on out there is tremendous and if I could just touch on a little bit of that a little bit I think it's important the other things especially that Jerry and I see being on energy in commerce We talk about a lot of things cyber attacks What would we have to do to make sure that our our system out there is protected that we make sure that it can be Delivered so that that's also very very important on the security aspects and how vulnerable it is because again You know in our country we have lines running everywhere and it's important that we have those lines operating all the time yesterday we had a hearing in energy in commerce and in the Energy subcommittee and one of the witness I at I pose this question too because for some of you might not remember this But we had a huge power outage that occurred in 2003 from Ohio Pennsylvania, New York up in Ontario And it was very I can say you know I can remember that like it was yesterday because the reason I can remember it My wife said you know, maybe we should take a short family vacation that weekend guess where we went well to Ontario So we followed everything all the way through that there was no power We thought you know when we get up down to Toronto we could be in trouble when we get there that we won't have any lights But the one thing I posted one of our witnesses yesterday Especially when you're talking about smart grid smart smart technology How could that be avoided or how could that been corrected quicker than the time that took to get everybody up at that time? So, you know the technology that we have today is is so important That's one of the things that as we look at things in committee is making sure that we can advance us and I know that Jerry Tended quite of our internet of things meetings that we had in the last Congress Peter Welch and I are the co-chairs of that working group But we just look at the internet of things and how the technology especially on the energy sector how important it is today and how that's moving things along that's where we need to go and That's one of the one wonderful things about serving on the energy and commerce committee is when you're sitting there You're not looking at where you are today You're not looking in a rearview mirror as where you've been But you're seeing people come before us in committee talking about not where they are today but where they're going to be in five years and ten years and that's one of the things that's a challenge to us on the legislative side and Also when you talk about on the regulatory side to make sure that we're not putting Things roadblocks up in front of people as they advance the technology They have to have to get for and that's one of the things when we had our working group last year on the internet of Things is listening to folks talking about what they need to have from us to make sure that they can go out and innovate They get that technology to you in the future and that future is coming much faster than you think So that's really really important because again like I said, it's not in the rearview mirror We're talking five and ten years out and sometimes where we are in government That's where we're stuck is right where we're in the present But you look where the other everyone else's they've moved on and they're out there already in front of us Jerry touched on a little bit especially when we were talking about you know getting this power to folks is that you know I've advocated for years and all the above energy, you know being from Northwest Ohio You know we have a you talk about the complete mix because Ohio until a few years goes about 73% co-generated We've had the Utica shale in Ohio. There's a Marsalis in Pennsylvania, but now you're looking at natural gas Right used to be my old state Senate district now. It's just only a few miles out But it's the Davis-Bessie nuclear power station We have hydro on the Ohio River and then of course the renewables There's more wind turbines in my district than any place else in the state of Ohio Now if you come to my district people say what's it look like? Well, it's kind of like the top of that table right there and it's green too But it's it's pretty flat and so when kids come to the University of Bowlingroom where I'm from they say boy This is the windiest place they that they could ever be from and that's where we have the wind turbines But we need that all the above energy policy to make sure that we can move it along Just going back to talk about on the energy security making sure that we don't have the outages because it's cost Americans average annually about a hundred and fifty billion dollars Just because of outages and so that's why Jerry and I are working on legislation to make sure that we don't have that So people when they get up in the morning and they go to the turn on those machines every day that those everything's running and You know again in my area with all the manufacturing you can't have plants shutting down because when you're talking about float glass or steel That that has to be a continuous flow of energy or you got a real problem if you have to have if you have an outage So that's that's what we're looking at making sure that we don't have those things happen Again, as I said yesterday when we're talking about wanting to make sure we have a smarter grid And so again, that's why we have the hearings that's where we want to advance this especially and and our caucus to make sure that we're advancing these things forward because You know, we don't want to be stuck in the past and we want to make sure that the United States is on That cutting edge making sure that we advance things forward that we have it for the people that not only are here But also you can encourage other people from around the world saying you know what the United States has a very secure grid We can come here We can manufacture and they bring more jobs to this country. So we need to be as Jerry'd mentioned a little bit. We have to talk about building new transmission lines and looking at the business models for utilities on that new technology So the these there's a lot of answers These answers give us a lot of great to place the start and for in the weeks ahead as we start going forward But one of the things that I know that we both really want to hear from we need to hear from everybody in this room We need to hear from folks out there as to how can we do our job here in the house? even we're in the Senate right now But we have to really make sure we hear from you So I always tell folks is my door is always open I need to hear from you because we don't want to miss anything We want to make sure that what we're doing is the right thing and sometimes, you know You might be in hearings and through the years you might go in there with this one thought thinking You know what? This is the way you ought to do it You start hearings to the testimony out there and you start thinking about different applications And you say you know what may we ought to rethink this a little bit, but it all comes down to one thing It's the delivery of that energy to the people of this country So I want to thank you very much for the opportunity to be here I look forward to working with my good friend as we go forward But again, if you ever have questions, please give us a call because we need to hear from you. Thank you Well, thank you very much. This is a great great favor you've done for us let me Let me give you a little background before and ask our panelists to come up while they're doing that I'd like to Acknowledge that their emphasis congressman's that emphasis on improved technology is is very appropriate and Digital technology will carry us to the future now if we can just find somebody to fix that door Okay. Well wires is an international nonprofit trade association Made of a very diverse membership of companies that promotes investment in transmission And and the pertinent technologies that go with it We believe that that technology Will be will have a critical role as the congressman said Getting us to that more electrified more energized economy of 2035 and 2040 and So We're going to be talking about wires today, but we're going to also be talking about what I called the grid of things There are a lot of things that we're going to be hanging on those wires To get the system more animated more efficient in the future And that's what wires does we do a lot of a lot of talking to a lot of studies do a lot of helping people to understand Why this investment is critical the National Electric Manufacturers Association that's also sponsoring this is a is a tremendous and and much older Group and we appreciate their support EESI and Carol Werner correct, of course Everyone knows Carol on the hill so But I'd also like to mention a grid-wise alliance, which is a group of technology companies with that the congressman also support and Ledeen Freeman would kill me if I forgot to mention that so They are very much a part of What we're what we're doing today? We have a we have an exceptional panel and And we're going to begin with what I call transmission 101 our Good friend from smart wires Andy McCoy Is going to take some extra time to kind of walk us through for those of you Who are not who don't live eat and breathe and dream about at night the grid She's going to tell us a little bit about what it is how it operates kind of the nuts and bolts and I I would think you're going to want to Gonna want to Hang on her every word because this is this is important This is important stuff if you can understand what the grid is and how integrated it is and how much it means To our standard of living you're halfway there the rest of our panels Andy by the way as a is an engineer she works for smart wires and And for formerly burns and Mac burns and McDonald in Kansas City and Both those firms are exceptional We we she will be followed by some And I've urged them. I said, you know you guys are the smartest guys in the room, but please keep it short So we have opportunity to ask questions But Claire Moller Is from the Midcontinent ISO He is an executive leader of the office of the chief operating officer And responsible for my so's transmission planning functions and transmission services He has done so many things and he is one of those gifted people who can talk in engineering and talk in policy And everybody sort of understands the connection and and so I'm delighted. He's here. He's He's a graduate of Iowa State University and the Oxford Advanced Management and Leadership course and It doesn't sound like he's from Oxford, but Well, okay Our At the far end is is Mike Ross Mike Many of you probably recognize because he was in Congress for 12 years for 12 years and Also, I think a member of the Energy and Commerce Committee Mike is now a Senior vice president in For for government affairs and public relations For the Southwest Power Pool, which is headquartered in Little Rock, Arkansas but from From Little Rock great things expand and now the Southwest Power Pool is gathering under its operational wing Transmission systems going all the way to the Canadian border and possibly further west almost to California It's a it's a great story and Mike is a Is a is a great person to tell it? and last Is Craig laser who's the VP of federal government policy for the PJM interconnection in which we are Situated today This is the I think the biggest electrical interconnection on the planet Isn't that in terms of in terms of megawatts or numbers of customers anyway Craig is the former chairman of the Ohio Public Utility Commission He's been around this game for a long time and a graduate of Penn and Vanderbilt Law School He is he's one of the smartest guys in the room and Because they're all smartest guys in the room I'm going to ask them to try and keep it simple and try to keep it Short so that you have a chance to ask some questions about why transmission is important And why it's going to can the investment in the grid is going to continue to be important for years So why don't we start with Andy McCoy and and then we will will go on to the rest of our presenters Good afternoon everybody. I'm going to get a timer going real quick so that I can be respectful of everybody's time Happy to be here as you mentioned. My name is Andy McCoy. I am electrical engineer by degree and Today I'm gonna step through some of the very basics of how Electricity works how the power grid works how power moves around and hopefully peel back some of the layers We had a great kind of overview from the representatives earlier I'm going to step it back before I do. I did want to make one point though while we're still at the higher level of thinking here and I think it's very easy to think about the grid in terms of function and Convenience everybody wants to see their lights turn on when they flip the switch And I think it's easy to talk about how dependent we are becoming on Electricity again from a functional standpoint, but I do think it's important to think of the economics of it And how it keeps us as a nation competitive in the international market It is I actually very recently some of our international clients smart wires international clients were in California visiting us for some meetings and with them came the development agency for their country They were coming to Silicon Valley to try to court many of the Data centers or the tech companies there to have them bring their data centers to their country one of the main Considerations and citing where a data center might go is energy and that's not uncommon same with manufacturing The cost of energy is the number one O&M costs that that those data centers have and so finding Places where they can find clean and cheap energy is more and more important to these businesses as they make these business decisions So anyways, I just wanted to highlight that I think it is you know beyond function and convenience There's certainly an economic tie that should be forefront on your mind with that All right And I'm gonna I'm gonna breeze past a few slides because I recognize that the gentleman to my left Will be better to cover a few of these as they actually are grid operators and planners So I'm going to breeze past some of that and instead try to focus on again the very high level What is the grid so in short the grid is a network of wires and Electrical devices that move power around from generation to load And we'll talk a little more about the components of the grid But first in terms of electricity This is a very popular analogy so thinking of Electrons as water molecules rather than electrons. It's very hard. In fact, my husband's a mechanical engineer He has no idea why I would do electrical engineering because it's something you can't see so that really bothers people sometimes I can't see electricity so it's hard to conceptualize it if you put it into the water analogy it works much better So just some of the basic definitions that you'll hear in the industry starting with voltage So if you were to compare this to the water Analogy this would be like pressure So if you have let's say a tank of water of reservoir and you have a pipe coming out of the bottom of it The pressure that's coming out of the the bottom of that pipe how how pressurized that Flow is that would be like voltage then the actual measure of that flow So number of molecules passing any point at any given moment. That's your current So that's actually as we talk more. I think current will be the Probably the definition that you're gonna hear me reference more often than not because as we talk about how the grid operates We're talking about how electrons flow around on it and why that's important power then would be equivalent to The rate at which the electricity is being transferred So this is in watts and then the thing that you would see on your bill would be You know megawatt hours kilowatt hours. That's actually energy. So that's the amount So that's how you get charged is based on the amount of power or energy that you're using So to further illustrate then a 115 watt light bulb used five hours per day for 30 days If you multiply that out one by the next Would be 2.25 kilowatt hours so again just to step through how how you get that number on your bill It's based on how many items you're turning on what wattage those items require and how long you're using them So again for scale. What can you power with one megawatt hour? Here's just a few examples all of these things listed here So you could cool a refrigerator for three months. You could download over a hundred and thirty thousand songs You can brew over two thousand pots of coffee You can power a traffic signal for three months and you can charge over five thousand phones And then you can host six hundred Super Bowl parties. So again, this is just a sense for scale here What I would note here though is you'll hear energy efficiency people talk about energy efficient Appliances so when you're when you're buying a energy efficient appliance What you're doing is you're you're finding something that's using less watts that provides the same output So in the end that lowers your bill So components of the grid the four base components that you'll hear people talk about a generation Transmission distribution Load so we'll quickly talk through each of those Generation this is where the electricity is generated as as indicated So this traditionally it was a lot of fossil fuel power plants More and more when we talk about new technologies in the generation space, that's the wind turbines the solar power There's tidal so using waves for energy harnessing that energy out of out of the ocean So a growing list now of of technologies on the generation front But in order to actually use that energy you have to get it to where people are at Where is it going to be used? So that's the load side so the opposite end So we as consumers when we flip the light on we are increasing the load when we turn that light on But there's a lot of a lot of stuff that has to happen on the in-between And that's where we where we talk about the importance of transmission Nobody wants to have a power plant in their backyard So you're gonna sight those some are far away from your load centers traditionally Or with solar or wind or these renewable resources They're dependent on the resource. So you're you don't have the flexibility of picking where that's gonna go You have to put wind where it's windy you have to put solar where it's sunny and so on and so forth So in order to get the the trend or the energy to those consumers You then have to build this network and it really is the backbone. It's like the spine without it You're not gonna get anything. So the trend transmission when we talk about transmission We're talking about hundreds of thousands of volts So we talk about voltage. It's like the pressure So most of you probably know then what comes out of your outlet depending what continent you're in Is the scale of hundreds of volts either hundred twenty two and three so When we're talking about transmission, we're we're actually talking hundreds of thousands So you'll hear us talk about it in kilovolts instead And actually I think I have some slides that we can talk in more detail on these but Distribution then is what you see around your neighborhood. So that's actually the lines that bring it to your house and to your meter So that's the distribution system Talk a little bit more about each of these. So again, I mentioned the generation is the part where you create the electric energy But I want to focus on Skip paths this and go to transmission So this is important because of a thing called power loss. So Ohm's law the most basic law of electric electrical engineering or electricity is called Ohm's law V equals IR. It's a relationship between voltage and current and Then that are in there is resistance. So when you add resistance, which is You know a natural component of elements of again The the current is actually the flow of electrons and they like some materials more than others So there is a difference between conductor. So those are molecules that that more easily transfer electrons from one molecule to the next and Then there's insulators. So they do not transfer the the electrons from a molecule to the next So this is important because as The electrons try to move across there are losses what we call losses and ultimately that comes down to money So the amount of energy that you can transfer from your your generation to your load Depends on your ability to decrease your losses along the way. So you don't want to lose the energy You know a thermal way or a number of other ways So what we do is we step up the energy is what we'll call it will step it up to a high Voltage because as you do that you decrease your losses So if you were trying to move electrons around on the system and you're doing it all at a distribution level Like the what comes out of your outlets you would have massive losses So you step it up to a higher voltage to decrease the amount of loss that you have and then it allows you to move it around more Effectively more efficiently and then when you get close to the homes you step it back down to a distribution level So there's we call it There's a sub transmission level in the middle there around like 69 kilovolts 32 kilovolts But just to give you a sense transmission is typically 60 kilovolts or higher You know in the US, you know, we typically have to 500 kilovolts And then distribution can go down to all the way down to again. What comes what comes out of your wall? Maybe a couple things I'll say here as well. So the interstate system for electricity, so it really is like the highways of The electric grid and then the distribution would be like your off roads or your side roads So you can get more throughput So it's important because it allows us to build more clean renewable Generation so it enables us enables us to meet our ps goals It also allows us to as I mentioned get power to remote areas with lower losses so grid operation So this is a this is a map. This is a Highly simplified map. There are thousands and thousands of transmission lines all over all over the US And what you see there? There's actually three different interconnections in the US the light green on the on the left there It's the Western interconnection The red is the eastern interconnection and the yellow is Texas because Texas always does everything different So they are that's ERCOT. That is the Texas section of the grid. So they are relatively Islanded from the rest, but as you can see everything's interconnected and so that's really important this regional concept is very important because again, this is where You're able to rely on as they mentioned earlier clean energy from other parts of the country And if you have transmission then you can bring your wind from up in the north out You can bring your sunny, California power Further inland you can you can move this power around more effectively more efficiently and at a lower cost point So I just wanted to run through a little example. We were talking about everything's very inner interconnected. So When you think about Building new clean generation. It's really important to keep top of mind that to do that You also have to invest in your transmission grid. So I have just a very oversimplified example here that we'll run through this is If you look the ones that look like cities, those are consistent Those would be like your load centers. So that's where all the power is trying to get to and then you have some plants around the Around the system and some wind down in the south side So in this scenario, we're gonna say that we want to bring in more wind or there's more wind wanting to be Generated in the south what that does in this situation Is that may cause this line here with the red lightning bolt here to what we call overload? And when we talk about overloading and in the transmission system, it's actually a Component of how much current can flow through that line before the line From a thermal standpoint may start to sag And of course, you don't want that from a safety standpoint You don't want your high voltage conductors to sag into a place where they can hit trees that causes outages Obviously, you don't want it low enough to where anybody could touch it and be hurt from a safety standpoint So it's both a matter of safety and reliability keeping your keeping your conductor up off the ground So you don't want to put more current through that line than what that conductor is rated for So what you would need to do is you would need to upgrade that line or build a new line or Divert the power another way Happy to talk more about that is that is what my my company does but we'll talk more I think on that later in the technology section So you would need to invest again in that transmission line there Another example then as you all know, there's a number of in fact just this week There was announcement the largest coal power plant in the West is going to be shut down the Navajo plant So let's take the example here where that that coal plant in the upper part of the system is shutting down So what that's likely going to mean is to serve those load centers that was once being supplied by That coal plant you're probably going to need to bring in more generation from The Northeast up there that that line in the top right When you do that bring in more power there that could similarly overload that line or put stress on that line so again, you would need to invest in the system to Be able to bring in more of that power from elsewhere And just another example here we now added another natural gas facility in the top left same concept You may now cause overloads here how we need to Invest in those that infrastructure. So I just I wanted to run through this because I think it's important It's really common or what I see at least it's very common for people to talk about You know the interest in the changing generation mix But it's not always connected to then the fact that you have to invest in that backbone Infrastructure to be able to actually utilize and make the most of that new generation So quickly we'll talk about grid operation So it's a tricky it's a tricky balance that the gentleman to my left and and their counterparts have in balancing generation and load I think a lot of people don't realize that Every moment there is somebody out there that is looking at the system figuring out how much load is going to be required and then Matching that on the generation side. It's a balancing act. They are literally called grid balancing And it's important because if you don't do that your your system will Move away from the 60 Hertz that it's the frequency that it's supposed to be kept at and when that happens You could lose major components of your grid They come out function or if anything you have plugged in consumer appliances could fry them completely So it's it's a delicate balance to make sure that you are you're keeping the balance between generation load So this is the primary task of the grid operators And so there's a number of ways that they do it so they forecast Interesting to me when I first entered the industry was that I'm sure most of these folks they have Meteorologists and weathermen on staff people looking at what the weather is going to be for a number of reasons One if it's going to be a cold day, then they know that there might be more people turning on their heat Which means that the load is going to be higher. So that means they have to go and schedule their generators Or more generators to supply more generation. So again, they can keep that balance And more and more now the the impact of weather is more important as we are now Relying on it for the generation resource. So knowing if it's going to be sunny or not. So knowing whether or not you can count on that solar Knowing if it's going to be windy if you can count on the wind Wind is obviously a little bit harder to forecast with then then solar would be but These are all considerations that the grid operators have to keep in mind Yes, the other thing I would note is similarly consumer behavior. So we mentioned the Super Bowl earlier big events cause typically more especially things like big sporting events Will cause more people to turn on their TV Similarly in the UK a lot of times it means more people turn on tea kettles So the things that you have to think about when you're trying to do your forecasting It's becoming harder and harder for people to forecast therefore the need for a robust transmission system That allows you flexibility and operational Convenience is really important So when you hear smart grid typically what that's referring to then is a lot of these new devices that are coming on that give more Visibility to the operators of what's happening on their system and it also In most cases means some form of of indirect control So the ability for an operator to go turn off a switch or go do something remotely As opposed to the days of old where you would normally have you would actually have to send an operator or Alignment out to flip a switch and take a breaker turn a line off essentially So again the two-way digital control and this is this is newer so you know there's still so much room for innovation Which again it still takes investment though But room for innovation to be able to make operations smarter to be able to make the grid smarter It's I think another common misconception is that you can just easily Control where and how these electrons are moving around the grid, but it really is a path of least resistance function So They are going to take the path of least resistance whether that's a line that has more capacity on it Whether that whether that's a shorter line. So going from a to b versus going from a to c to be And So that the electrons flow at their at their will but there aren't technologies now Then that can allow you to actually control that power and move it where you want it Which again just brings more value to the grid and I'll squeeze past some of these Didn't want to talk a little bit about transmission planning and I assume that again some of these gentlemen will Will hit on this a little deeper So Transmission planning it takes a long time to do projects in our industry It's not uncommon to hear about transmission line projects that took 10 12 years From the time that they were conceptualized to the time that they went into service And this is different in any area depending on the permitting and how long that the permitting process takes if it's running through an environmentally sensitive area a Number of factors that can go into that so Planning 10 20 years out is is common or at least was common getting more and more difficult It's really hard to look out in a 10 and 20 year horizon and be able to say exactly where your generation is going to be Because a coal plant could go down in 60 days notice It's very hard to know where this new you know wind and solar is going to go Though you could take a guess and similarly as consumer behaviors are changing It's really hard to figure out You know how they're changing where they're changing are people going to start going more to rooftop solar or not So it just makes it very difficult to plan the grid so Something else just to keep in mind in terms of policymaking and the way that that we do this planning Is important to be able to get these projects across the line and to reap the benefits of having the transmission there And I'll probably breeze past a number of these things Did you want me to come back to technology later or do a quick overview now? We'll hit out a couple things so storage. I'm sure everybody hears about storage a very cool technology the ability to You know take that solar power during the day and store it until you know mid-evening when peak happens So when we talk about peak that is the point of the day where the most load is being basically requested from the consumer So typically in the evenings when people come home from work and they're turning on their TV They're turning on their appliances to cook dinner So being able to take the solar power from the sunny afternoon Store it and then use it during that peak is really important Again though connecting this storage you have to have transmission to do that Uh synchro phasers and PMUs all I'll skip past this but again, this is really a sophisticated monitoring device We talked about smart grid so devices that can monitor and provide information back to the grid operators so that they can make effective decisions conductors so Interesting conductor is obviously the the one of the basic elements of the transmission grid But even conductors coming along ways I mean there's a lot of new conductor technologies out there super conductors that can You know help transfer more power with less power loss. We talked about that power loss factor and low sag high capacity conductors So the these are ones that can get more throughput Without having that sag issue that we talked about so you can You can get more power across more power transferred Before you have to do the investments and upgrading those lines And smart wires, of course, I would be remiss not to put my own technology into the deck Of course these are so it's power flow control So what we talked about before being able to actually direct power from one line to another So if you have a line that's at capacity, but you have two lines right next to it that are not at capacity You can effectively tell those electrons to go over to those other lines say hey go it's kind of like ways I actually I'm not positive that this is how ways functions for those that aren't familiar with ways It's kind of like Google Maps, but It's it's sensing all of its users at any given time, and I'm confident that at any moment It's telling me to take this this road over here Well, it's telling me to take that road over there because it's less used But I actually think in some ways that they're purposely distributing all of us across the roads Similarly smart wires is the same thing just with electrons. So you can actually direct it and control it around your system so with that all all step back and Move on to the next person. Happy to answer any questions here at the end I think I know This is Mike Ross is gonna Don't explain something. I think that Andy touched on it's really critical and that is the regionality of Electricity operations Thanks, Jim or maybe I should say mr. Chairman is many of you know He's a former chairman of the Federal Energy Regulatory Commission and serve the United States quite well in that in that role As Jim mentioned, I had the privilege been 12 years in the Congress and member of the House Energy and Commerce Committee I'm now senior vice president for government affairs at Southwest Power Pool Which is one of the seven regional transmission organizations independent system operators in the US One of nine in North America and Jim's asked me to just kind of give you an overview of really what an RTO Is and what they do and how we fit into the big Picture and so that's what I'm going to attempt to do here in the next 10 to 12 minutes And I got my timer going so you won't have to pull me Pull me back But I also want to thank all the energy related Staffors on Capitol Hill who are here having served in the Congress I can tell you that I know who gets the work done and who makes the members look good and Thank you for there's a million things you could be doing today So thank you for spending some time with us here at Wires University as we attempt to to educate folks on on the grid and the wholesale electric markets and and what's going on out there So thank you for your participation and it means a means a lot to us. So here we go I'm gonna breeze through a lot of these these will be available as I understand it on the on the website And so bear with me, but I wanted you to have access to these to refer back to a little bit later, but So there's seven RTOs. They all basically do similar things They just do them slightly different from one another, but there's not that much difference and anyway So I'm gonna speak from an SPP perspective but but the other RTOs ISOs Operate in a very similar manner as us. That's our mission statement working helping our members work together to keep The lights on today and in the future RTO membership is voluntary Utilities transmission companies they find value and belonging to an RTO And we're proud to to have them and to work with them and that's exactly what we do We work with them so it everybody has a different story on out of the seven RTOs in the US about how they got started The way we got started was World War two and the water Harbor and President Roosevelt saying we need 50,000 airplanes built Which required a lot of aluminum and the resource for aluminum is bauxite the greatest deposit at the time was in Arkansas So the federal government literally constructed this massive aluminum factory in central Arkansas And they wanted to put it near the bauxite because at the time they actually thought the war might come to America and Wanted to be able to have access to the raw material to make the aluminum Not unlike government today back 75 years ago About halfway through the process they had an uh-oh moment where they realized they needed more power To to power that aluminum factory that was available for the entire state of Arkansas at the time And thus nine days after the bombing at Pearl Harbor Southwest Power Pool was created After the war member companies the utilities that hadn't worked together in the past found a lot of value and information sharing collaboration and we continue to work together and after each major event the government Extended more authority more responsibility to us For example the blackout in 1965 Which led to the Electric Reliability Act of 67 and that was the founding of NERC The North American Electric Reliability Corporation and then in 03 Most of you remember that the blackout in the Northeast Which led to the and that's what it looked like from space at night And you can see it the Northeast really was blacked out and that led to the Energy Policy Act of 2005 I was here in on the Energy and Commerce Committee when we did that one of the things that act did is it gave NERC teeth and My folks my colleagues at work remind me all the time that I Actually voted for the bill that allows RTOs to be fined up to a million dollars a day per violation So we're heavily regulated Major services that's that's very comparable for all the RTOs the kind of services they provide Reliability coordination market operations and transmission planning or what I refer to as the as the big three Some things we don't do we do not cite transmission and generation We do not construct transmission and generation. We do not do the permitting Important distinction to make that's typically done by your state utility regulators So forth and so on That's what an RTO map looks like today. You can see the seven in the US the two in Canada Basically, there's a huge gap in the West and Basically where Southwest Power Pool ends is is where the eastern interconnect ends and the western interconnect begins And just because of where we're located basically we we manage or have responsibility for the What is it clear five or seven DC ties seven DC ties that connect the east to the West I can tell you the West is now looking at possible membership in different aspects of the West or looking at RTO membership in California and elsewhere What's referred to is the Mountain West transmission group recently announced that they're now in negotiations with with us at Southwest Power Pool Which would grow our footprint even more in Montana and Wyoming and Colorado and a little bit of Utah Arizona and even more than we Have now in New Mexico Today we're in all our part of 14 states that kind of blows up the area We're responsible to my so has a similar territory if not larger PJM, I think is a little less larger geographically But has a lot more a lot more people because if you look at if you look at where the wires are in the in America the middle of America That's the area that we serve. We're kind of like the Southwest Power Pools kind of like the electric cooperatives Of the RTO as we represent rural America as you can see But a lot of wires there 60,000 miles of high voltage transmission lines That would serve better trivia that would circle the earth more than twice about 5,000 substations 18 million people 700 generating plants our members as you can see if you do the math there about a third of them are munis public power WAPA, which is a federal agency the Western Area Power Administration is a member about a third or investor owned utilities and about a third or Cooperatives and we're real proud of our our member driven stakeholder Collaborative process where they all get in the room with varied interest But they're able to work out their differences to make the things that we do for them work, and I'm real proud of That so diversity it basically we say we have independence through diversity of membership Heavily regulators I mentioned before we're a non-profit Regulated by FERC operate on based on a tariff that's filed with FERC approve a FERC Regulated by FERC audited by FERC and then for physical and cyber security regulated and audited by by NERC Governance we have an independent board of directors We have a members committee a regional state committee which consists of a utility regulator from each state we serve and In other RTOs have similar construct and so basically when it comes to cost allocation on transmission It's utility regulators from each state within our region that gets together meet quarterly and work out some of those details They have sole responsibility for determining cost Allocation a lot of member driven stakeholder driven working groups So what do we do the big three quickly? Think air traffic controllers They don't own the airport or the sky or the runway or the airline, but they direct it all so we don't own Transmission or generation we simply directed all and so literally 60,000 miles of transmission lines 700 generators one don't really know what the other one's doing We're sending a signal every four seconds of whether they need to increase or decrease generation We're trying to match a load with demand And so forth and so on that sounds fast once every four seconds But again, we're talking about the largest machine in the world and it's traveling nearly at the at the speed of light Energy capacity that's the capacity available in our region. It would be different Depending on what region you're in that's the capacity. It's the market that determines what actually gets dispatched We don't pick the winners and losers the market does based on the lowest available price as you can see Coal is still heavy in our region when though as you'll see in a minute is really taking off And we continue to see more coal more gas given that we have $2 gas right now Some of us can remember when it was $14 gas though, which would drastically change This this this pot chart So the market basically it's like it we have an integrated marketplace. We have a next-day market today We were forecasting the demand for tomorrow Generators were bidding in whatever the lowest price is that clears the amount of load that we think we need to match Demand for tomorrow. That's the price they get paid It's not only about price that's important, but it's also about reliability. These markets whether it's PJM my so us New England, California Urcott any of the ISO RTOs it's about lowest price But it's also about reliability and these markets have been 20 years in the making To ensure both price and reliability. So when someone bids in on the next-day market Not only is it affecting and assuring lowest price But what it's doing is there may that unit's making a commitment to us that yes, we will run tomorrow Then we have a real-time market because someone may commit to run machines break And so maybe a maybe a plant's down. Maybe we missed a wind forecast for whatever reason We have a real-time market where we settle every five minutes Compared to Wall Street that settles I guess once a day And so that's some of the things that we do as it relates to our market Our new market has been up two and a half years We recently announced over a billion dollars in savings to our member companies and their customers the rate pairs So the market is working it works well heavily regulated by FERC that recently completed a year-long routine audit of our markets and of SPP and no findings several recommendations Which we've gladly accepted and have implemented are in the process of implementing but again heavily regulated industry that we're in Transmission planning Claire's gonna talk more about that. So I'm gonna skip over over that aspect of it and I will tell you that we're looking 10 and 20 years out on transmission Why because it takes about eight and a half years from the time you envision a line until it's put In service that's the generation expansion in SPP over the last decade as you can see most of that is because of when We're win rich Especially the Panhandle, Texas and Oklahoma and Kansas So people ask me where the wind blows and I always say where there's not a transmission line And so you've got to get the wind from where it you know you get the power of where it's made To where it's to where it's needed and so trans if you like if you like renewables, then you better love love transmission Expansion kind of matches up with the generation expansion. You've seen over the last Ten years and so what have we done? We've we've directed what we do is as our board has to approve and issue What's called a notice to construct? For any transmission line to be built in our region then whoever's building it takes it to their state regulators and figure out Who's backyard it's going through and and how they're going to recover their cost as you can see We've we've issued notices to construct for ten billion In the last 11 years or so Seven billion of it's now completed another three billion not in service yet, but either under construction or approved and planned Who pays for it? I think Claire's gonna get more into that in a little bit But it has to do with cost allocation and again cost allocation for us the bigger the line the more it benefits the entire region So the entire region pays those calculations are determined by those utility regulators I was telling you about that make up our regional state committee renewables in SPP is you if you the purple is where the wind is as you can see Most of the purple in America is almost an exact outline of the SPP region And so as a result of that here's where we are about 16,000 megawatts of in-service wind 35,000 under development and the potential for 60 to 90,000 megawatts more That's in a region that only requires about 50,000 megawatts. So a lot of surplus wind energy In the in the future and we all are challenged and must figure out how we get it where it's made to where it's needed Because different RTOs have different renewables available some are solar rich some are wind rich some just don't have many opportunities for for renewables and so that's in this it's hard to think about this but in 2001 when I first got to Congress SPP was handling 80 megawatts of wind 430 Sunday morning we set a new record for North America with over 52% of our total energy generation Coming from when and I'm proud to report that we were able to to manage that Reliably our grid operators five years ago would have told you that would have been impossible So technology has gone a long way toward allowing us to increase the percentage of renewables along with quick start natural Cast which is absolutely critical in the technology that brings some of these 200 megawatt plants now can go from zero to 200 megawatts in under five minutes which is critical because there's times of the day where you may have a thousand megawatts of wind There's times of the day when you may have 12,000 megawatts of wind That's a huge difference and you've got to be able to manage that so we keep the lights on and avoid brownouts and blackouts So when units as you can see they're concentrated the middle of the footprint as I've already discussed That slide throw it away because we set a new record at 430 a.m. Sunday and Jim demanded to have these slides to him last Wednesday and Finally modernizing the grid and modernizing the grid We did a study on the value of transmission the bottom line here is is transmission facilitates Renewables it facilitates the markets which reduces fuel cost so as a result of all that our study Found that forever dollar you invest in transmission You get a three dollar and fifty cent return over the life of the transmission line Transmission is a good investment and that's why we're here today to talk about it. Thank you very much Okay, I'll turn over to Claire Muller from my cell. So there's three of us with the same presentation Here's my map see We call ourselves the coast to coast RTO, but the coasts are Hudson Bay on the Gulf of Mexico We do all the same stuff But what I'd like to talk a little bit about is why How'd we get here? My so was formed from whole cloth in 1998 as a reaction to FERC's regulations 88889 which were a reaction to legislation which I think was 1995 to 92 took a long time to get to 888 But it was pretty important because the organized markets that we we started with and that SPP and PJM evolved to were about mitigating market power Right, so I was in the utility control room in 1996 And we did a test transaction between Minneapolis and Emeril of Texas because we were in negotiations about the merger of NSP and U-sensory energy to become Excel and So we did a test transaction of 50 megawatts and Before the megawatts were flowing an intervening Utility asked for the schedule to be cut For reliability reasons and before we hung up the phone That same utility called Emeril of Texas and said I hear you need 50. I got 50 for sale All right, that's a real story and that's real market power and that's how we got to 88889 All right, so that's the why behind the organized market. So Equal access Transparent And so that's the trip that FERC has been helping us take to make sure that everybody's treated comparably As we work our way through energy transactions So my job at my so is mostly about planning The the big difference that RTOs bring from the utilities that we sprang from is the old utility would take their Generation to their load and they try to do that as cheaply as they could and you did that by minimizing investment Because that's just how it worked look close generation your load center The difference with the organized markets in the bigger regions is you got a different opportunity Instead of thinking about minimizing investment your job is to minimize bills And sometimes that means you go get cheaper energy from the next door neighbor and bring it to the load And that was hard for all the utilities to make that transition, right? It's like well, this is my generation. This is my load. I got him a monopoly. What do you know? So then we talk well reliability projects are You know for my generation my load economic projects were from somebody else's generation of my load And that was a big change The notion that you could make it a new investment in transmission and make bills go down because you had a more efficient market was a new idea in in 1998 In 2006 my board handed me these six planning principles what are you trying to do here the the old job that we've had since Westinghouse was about reliability. We've got the NERC standards We've talked about that a little bit, but the the new one is make sure the benefits of that Effective market can get to all the consumers that you serve So right away. It's about how do you keep bills down? How do you manage the grid so that you keep bills down at the same time providing that same reliability you always had and Then you get some follow-on questions that are pretty interesting Because the policy landscape continues to shift And and that means what to who when? Right, so you've got all kinds of advocates that have different ideas of what the right future is and the planners Job is to figure out how to facilitate the future however it might develop So there's a lot of scenario work in that Six-dollar gas gets you a very different generation fleet than two-dollar gas. Well, what's price of gas going to be I? Got a pretty smart gas person tell me once they said if you want eight-dollar gas Build like it's going to be two dollars And if you want two-dollar gas bill like it's going to be eight All right, and that's just the reality that volatility has been the history has been the history with gas How to support the state and federal Policies the federal policy is and has been for a long time Efficient transparent wholesale markets that is our energy policy and then let generation compete States have different opinions everywhere from 35% renewable mandates to No mandate at all right and so our job is to facilitate that conglomeration of state energy policy goals and make sure we've got the infrastructure to do what they need to get done People ask me occasionally. What's the big game changer? What's the uber in the in the electric? Transmission business I say well, we're like the roads for uber Right it's no roads. No uber no transmission No flexibility in our energy policy. So that's what we're trying to accomplish How do you do that? Well the last go-around which I'll spend a little more time on a couple of slides that the notion is still since you don't know the future You have to book in the future so you know take a page out of the strategic planners playbook and go big and go small and Take a look at the policies as they've been rendered and see what different strategies might be so so what we did was we took three different alternative Planning philosophies if you will and looked at the regulations that we needed to follow those three different philosophies one was a heavily Investments in direct current DC one was bringing the voltage up to 7600 and the third one was to use this kind of standard voltage inside our area of 345 kilovolts and Then we did some elementary school math We literally did the Venn diagram that said what's common to all three of those philosophies and what we got was $6 billion worth of investment and transmission that So that process we started that in 2007 when six governors wrote me a letter that said I wasn't doing very good 7 8 9 10 11 We we approved those and the last of those 17 projects won't go into service until 2020 So we're at the front edge of the next set of that kind of planning trying to figure out what 2030 is going to look like Lots of turbulence around clean power plan Everybody wants to know a while now that it isn't what are you doing? It's like well, you know, we didn't believe it 13 of our 15 states were in the lawsuit against the clean power plan when everybody thought it was going to happen So we weren't counting on it anyway, right? but if you look at the trends economics wins in 2005 in our market 85% of the energy was coal Last year 42% of the energy was coal. That's without a clean power plan. That's $2 gas That's in the life coal plants. That's just the reality of infrastructure So it's important for planners not to get jumbled up in the prompt Politics you have to look longer than that and that is actually one of the struggles because the political horizon is two or four years and the planning horizon is 20 or 40 years and that's that's an actual thing that we all have to remember when we're doing this work and Regulation I talked on that a little bit. It's Not only are the RTO is regulated on domily by FERC our members are dominally Regulated by states and so we get to entertain that Regulatory jurisdictional dragon where states and feds both think they should be in charge The gas industry is Regulated somewhat differently, and it's a much more of a federal regulation And that's a product of how the two industries began the first pipelines were interstate pipelines The first utilities were not they were kind of city by city so the regulation grew up city by city state by state on the electric side and the Long-run pipes were kind of the beginning of the gas business and so FERC has a much Larger mandate to to work on the gas side. So this little chart just to kind of give you the idea So we're a federally regulated thing that comes up with plans that states have to license And so we were we're always kind of walking on eggs to make sure we don't Get into that jurisdictional boundary and Cause all kinds of trouble there I think that's the same slide that Mike had That's just making the point that the RTOs are different California's got its own set of problems It would be kind of nice to only have one state because you know what they want to do so you can go do it When you have 15 states you can't figure out what they want to do so you got it's a lot more work Texas they they checked out they're not regulated by FERC they managed to build themselves fence. I Don't know that's because your ranchers down there how they got away with that, but every once while they send us a FERC commissioner, that's always kind of ironic New York does their own thing So again, that's a place where you can kind of figure out what the policy is but for PJM and for SPP and for mice that we've got this problem the states don't all see died I and so there's a lot of Facilitation a lot of work we do to try to get to a consensus in those places and That's actually what kind of makes job fun That's the end of my prepare remarks. I look forward to your questions later And our last presenter is Craig laser from PJM All right. Well money Python used to say now for something completely different I'm gonna do something completely different first off just start with a little bit of a story Because whenever I talk about this subject and don't take a time away from me for this Whenever I talk about the subject of the benefits of transmission I'm reminded of the story of dr. Alfred Khan anybody remember Alfred Khan He was sort of the guru of airline deregulation in the 1970s but actually before that Alfred Khan was chairman of the New York Public Service Commission and he would go around the country Speaking on the benefits of electric restructuring in the role of transmission The story goes that everywhere that Alfred Khan went he had a trustee driver that went with him Driver wore a little chauffer's cap and chauffeur's uniform went everywhere with Alfred Khan But sure enough. It's about 15 years ago Jim Hecker is actually having this very same wires event wires university event and the featured speaker is dr. Alfred Khan Dr. Khan the driver pull up right here in front of the Russell Senate office building and the Con turns to the driver and says are you gonna come in and hear my speech on the benefits of transmission and an electric restructured environment Driver gets really annoyed and says dr. Khan. I've heard this speech a thousand times. I've heard this speech so many times I could give the speech Khan thinks about it for a minute and says I got a great idea Let's go change clothes and you go give the speech So they do that they go right here in the restroom right here in the men's room and they quickly change clothes Walk into this room right up at the podium is there's a driver looking very spiffy when a suit and tie and Way in the back of the room where that gentleman is with a little chauffeur's cap and chauffeur's uniform is dr. Alfred Khan The driver proceeds to give a speech on the benefits of transmission and an electric restructured environment The speech is fabulous. He gets a standing ovation Then it comes time for questions and sure enough since we're in the in here in Congress Congressman Mike Ross raises a hand and asked the first question as to the impact of Promod analysis on locational marginal prices given limits on transmission ratings drivers taken aback by this question gathers himself together and he says Congressman Ross that is a really stupid question In fact that question is so stupid that even my driver could answer that question Well, I hope to be a little bit of driver Don't take my time away there I'll be a little bit of driver in the remaining moments that we have and I really want to because we're in the halls of Congress here I want to focus on some policy issues, but before we do that. I got to have a map, too So just a little bit about PJM. We actually are just like these other organizations We are the regional transmission organization actually from a megawatt point of view and population We are the largest and we serve here proudly serve here in Washington, DC 165,000 megawatts of load 171,000 megawatts of generation so we do the same things that Mike and others mentioned reliability planning operations. You've seen that map but we also one of the benefits of The moving toward RTOs was what's cool. I call transparency And I'll tell you a story about that because I was chairman of the Ohio Commission There was a everybody remembers the California energy crisis and huge spike in prices But a true story the actually the first set of massive price bikes wasn't in California It was in the Midwest in the mid 1990s And I remember sitting at my desk and industrial customers calling up Do you know what the price of power is do you know what the price of powers? Can you help me out and there was no place to go It was a series of phone calls to figure out what were prices of power and what were system conditions? Well, one thing which we've all done is you can go on our website or my so's or SPPs and actually see in real time The state of the grid this is actually a picture from our website And there's a little ticker going across on the top like a stock ticker showing the real-time price of electricity That didn't exist back in the 1990s when people were sort of guessing and that in a little in and of itself Is a huge benefit people know what's going on? Quickly I will mention that prices are really really low in fact we hit You talked about the greatest amount of wind generation we hit the lowest prices We've ever hit in the history of PJM just this past week We are seeing a changing fuel mix. We still got a lot of coal people say coal is going away in our region It's not going away. It's taking a big hit. No question. We've got a lot of natural gas But there is the system is quite diverse people say well, there's not enough diversity in the system In fact, the system is diverse. We've got nuclear. We've got coal. We've got renewables all all playing in the market But enough of the statistics because I really want to wrap up just with some policy questions We are in the halls of Congress. That's what people do is policy. So let me just Raise a couple of issues and I'm going to illustrate this imagine You're the head of the transmission planning department of your local utility and you just hired these two college kids Really smart will call them Joe and Jane planner It's their first day. They come into your office and they say we're really anxious to get started planning So you say well, let me you know just as part of just getting you used to this I'm gonna tell you what it was like in the old days When the old days transmission planning was really easy. What did you do? You built transmission to support major generation projects. You connected generation from from the generating plant to load It was one-way delivery of power to the home. You didn't worry about what the costs were You just stuck it in the rate base. It was relatively small. People didn't fight about the return on investment It was for the easy days Okay, Joe and John Joe and Jane now go out and plan Well, they're kind of smart kids. So they said well, you know what I got a couple of questions They want to ask you a couple of questions before they go out and plan So Joe planner raises a hand that says Before I do this I got a couple of questions because I kind of got to know what I what you want me to do And what do you want me to plan? So here's my first question to you mr. My supervisor Is the grid an enabler or a competitor? You say what questions I would grid enabler competitor. What kind of question is that? Well, then Joe proceeds smart kid. He proceeds to say well, you know what if the grid is an enabler I can plan it one way. I accept the grids a natural monopoly I use all the tools of regulation and I just build it. I Build it and they will come is the kind of attitude I don't focus on is the generation there the wind farms may develop. So I'm just gonna build it Okay Well grids an enabler it enables distant generation to get the customers But Joe planner being a smart kid says, you know what? There's another model too On the other hand, what if the grid's a competitor? So good a better. What does that mean? Well, then then the grid competes with generation and demand side We're actually seeing this playing out in New York as a prime example of this. You don't just build it You decide between Demand side management between localized generation and rooftop solar whether you want to have this grid Which is the most cost-effective solution and Joe says you got to tell me boss Is it an enabler or competitor because that affects what the hell I do when I go back to my desk? So all right Joe get out of my office grids an enabler. So go go think you're done Then Jane raises her hands. You know what I got a question, too Okay, Jane. What's your question? Well, what kind of bill what kind of grid do you want me to build you want me to build a strong grid or a weak grid? Say Jane. What are you talking about with that? Jane explains. Well, if it's a strong grid you want me to build the generations distant from load I just Forecast what the future need is and I just oversized the transmission because of what I think is going to be the need The cost of it is just spread the cost like peanut butter to everybody because it's a national asset It benefits everybody. It's a strong grid and you decide it's needed because it's needed for the entire region so Jane says you want me to build a strong grid I can do that but She also says but wait a minute, you know, there is an alternative out there called a weak grid or I like to call it a localized grid What does that grid look like? That's totally different Generations closer to load you're focusing more on rooftop and entered demand side response energy efficiency The grid is an enabler of alternative generation and rather than saying it's it's good for the entire region So just pay for it. No, is it good for the state? Is it good for the location? Where it's located and only those people pay and We get this I posit these questions because I would I would Posit to you that one of the problems we have in this country is we've never decided these issues So poor planners or RTOs I don't feel sorry for us But we don't have a public policy decision on do we want a strong grid or a weak grid Do we want a grid is an enabler grid as a competitor? We have this yin yang back and forth and back and forth that leads to just endless fighting because we don't have a clear policy on what they want this grid of the future to look like and That isn't bad enough to that you can't answer Joe and Jane's very appropriate questions, but there's another problem It's not even clear who decides these questions It's not even clear who has the authority to answer these questions because there's a lot of people in this act You've got state governors in this act. You've got state energy offices state commissions They got their opinions the federal energy regulatory commissions involved. You got environmental agency involved You've got co-ops. It's not even clear who makes a decision of what kind of grid we want And I would suggest to you that until we get that issue solved Until we figure this out, which is why we're here in the halls of Congress I think we're gonna continue to sort of float around a little bit on this issue The grid's gonna stay reliable. We'll have we'll keep the lights on I'm not worried about that We will all do our job there, but I think there are some fundamental policy issues So please come and visit PJM sometime. That is our control room, which is actually an underground bunker I told you where it was. I'd have to shoot you but It's actually left over from the Cold War. It's very cool and I look forward to your questions as well Thank you very much Come and visit, but we can't tell you where it is Okay How about some questions for this distinguished group? I think you've gotten a pretty good sense of some of the realities we're dealing with that We're trying to look down the road a couple of decades as to what kind of electricity system a kind of an electrified Economy that we're going to have and try to build towards that or plan towards that very difficult job these guys have and The planning is is only slightly less complicated than the engineering Trying to trying to figure out what technology developments are going to occur between now and then Are we going to have a conversion of a transportation fleets To electricity and away from fossil energy boy, if that happens on a major scale, we're in a different ballgame, aren't we? so It's a it's a challenging time. It's a transformative time for the electricity business and almost everybody in the In the business that I've talked to and in the regulatory side The the big word is uncertainty and That that means that we need the help and collaboration of people on the Hill In regulatory agencies and governor's offices state regulatory commissions and so forth Questions for this distinguished group. I think we have some time left. Don't we Carol? Okay We've got a microphone over here if you could please We're filming this for 60 minutes Thank you. Good afternoon, everyone. I'm Jimmy Zumba. I am with the office of Senora Klobuchar but as and for example nicely explained that is Divide and for and for parts generation transmission distribution and local delivery I know that the the talk in general was mainly focused toward transmission a But my question is in general to everyone who ever wants to take it. It's why are the main threats? That you see in any of these four That you you encounter right now and also what are the major opportunities that you can see for innovation? And what we can do here in the Senate? to help policy-wise to either reduce the threat and either one and also incentivate the the Innovations and any of those. Thank you Thank you. Who wants to tackle that one? Claire. Yeah, so I'll start The work that has been going on since Let's see the first supervisory control and data acquisition computer. I put in was in 1979 What we've been doing Adding technology to the grid ever since has been about trying to maximize the use of the assets that we have so things like Andy Andy's company is working on Are about how to maximize that value the RTOs with their redispatch is about maximizing the value So those things are important to continue with the the energy efficiency is a remarkable tool that There's been a bunch of innovation around as well. There is essentially no load growth in the nation right, so the notion that you're going to avoid a transmission line with Distributed generation is kind of a false premise because the LED bulbs already did that for us So so the end-use side is where there can still be a lot of innovation around that efficiency And and I don't think efficiency is ever bad And then the last thing is Transmission lines move energy from someplace to someplace So that sourcing that we've talked about Mike talked about it with the wind solar farms those kinds of things the fact that People's choices of where energy comes from is what's driving the need for a more robust transmission system And so that'd be the third thing is this quest for less carbon Intensive energy isn't going to go away because that's kind of what people want in terms of what they want to purchase We're gonna have to find ways to facilitate and let that option Value of transmission allow people to make the choices as it varies into the future I'll also jump in this is sort of frankly more what I would ask Congress not to do Then to do One is there's a whole lot of discussion about infrastructure The new president is talking a lot about infrastructure. We're gonna see some kind of infrastructure package. I Would posit although I may get people in this some of the industry people in this room upset But this is this industry is funded with private capital It doesn't need money per se money is available in private capital We just had a meeting earlier this morning heard from the financial community They want to invest in this industry So we don't need to throw taxpayer dollars at this industry, but I think we do need to Transmission is great, but you need to have generation show up to you know to keep them to generate the electrons to keep them flowing Each of us operate a competitive market Congress in 1992 said it wants to see competition in this industry, but every once in a while Congress weighs in trying to skew things picking one particular technology as a winner and another one is a loser To be honest the there's some weird Implications as a result of the win the production tax credit and what that does to squeeze out other resources There's now a lot of sort of state bailouts of nuclear plants. That's creating its own set of issues Congress chose the competitive market model in 1992 I think that model actually at the wholesale level has worked really well When people get in and start favoring one technology or another I think that really helps to mess things up to be honest. So this is a plea to to You know watch it nurture it Stay with the model that dates back to 1992 and let's not just pick out well I like this like knowledge. I like that one because inevitably we'll get it wrong We'll throw a lot of customer or taxpayer money at the wrong technology and the whole idea of why we Restructured this industry was to shift the risks to the investors as it should be they get the reward They get the risk that was the whole deal and I think that deal was paid well for the American consumer Mike I would appreciate the question and and It's an exciting time to be in the electricity business Technology innovation is totally changing The face of the grid and how we deliver power and and so forth and so on you know, we as as RTOs. We're looking Strictly at generation and transmission and you know distribution and all those kind of things are what we refer to as behind the meter But that's changing, you know behind the meter is changing greatly with a smart grid distributed generation demand response Battery storage, you know Tesla has a deal at the residential level rooftop solar And so you ask any of the seven RTOs and if you look at a graph since 1941 Or you can even go back to when electricity was discovered and it started being available to the public and The chart is almost, you know, it kind of goes like this Up until about two years ago and now it's leveling off or actually slightly decreasing Because of all the things that I mentioned that's happening behind the meter and because of efficiency and my TV went out Then you and gets it burns less electricity. Same thing happened to my dryer last year everything broke last year Same thing with my dryer refrigerator went out. Yeah, and so You know collectively that is making a huge difference as well Just the efficiencies that are out there and then on our side of the meter, you know in generation and transmission all the renewables I talked about earlier AEP I'll single them out They're one of our members and I'm sure they're a member of several others up here, too But they have what's called the bold initiative, which is I think holds a lot of promise Utilizing exist, you know, there's more and more battles over whose backyard or whose farm a line's gonna cross The bold initiative Creates the potential for opportunities to utilize existing right-of-ways To get more power on smaller lines through more capacity and so forth and so on And and so in the other point I would make is there's a place for all forms of energy Some people want a favor wind over solar or natural gas over coal And I understand all that the debates that occur but the reason we set a new record in North America and we're able to Integrate 52% of our entire energy coming from wind at 430 Sunday morning And by the way, even at that we were curtailing over a thousand megawatts a thousand and The way we were able to do that is knowing that we have all these other forms of energy in our basket if you will You've got a you just the more types of energy you got the more you can integrate Renewables because until they get this this storage figured out on a massive scale and massive scale meaning 50,000 150,000 megawatts until we get to that point You got to always have something to back up because the wind doesn't always blow in the Sun doesn't always shine Let me add to that a little bit. I I think that Craig is absolutely right when he talks about Letting the market evolve and letting letting it's more or less dictate what kind of generation Comes about On the other hand, I think we can find a sign Find some examples in history where the Congress and Regulators that were doing Congress's work Have produced some wonderful results in terms of changing the character of the electricity markets Purpa for example back in 1977 brought about competitive markets Accelerate development of gas turbine technology because there are a lot of non utility Entities that could actually get into the market there the and investment tax credits Accelerated the development of wind technology and brought down the capital costs and ultimately Ultimately may have made them much more competitive there is a There is a danger or a hazard there that I think Craig was pointing out in terms of getting to too involved in in picking winners and losers, but Congress doesn't have a half bad record in 1992 They told my old agency that we needed to look at Opening up electric transmission was a which was a monopoly to competition let everybody use the wires on an open-access non-discriminatory basis And and foster markets that were more competitive and therefore capable of driving down the price of energy I Fork did what it was told and it did probably did more than even Congress anticipated And we're in a different world as we're as a result of that I know that on the other side of the hill are looking at the federal power act And whether it has outlived its usefulness. I kind of doubt that I'm very that that's the kind of thing where I subscribed to Craig's Formulation that you know do no harm It's a they don't make statutes like that anymore but a lot of it is that Regulators and people who work with the industry in an ongoing basis can make some judgments about how that Rather elastic statutory mandate can be can be adapted to to more modern circumstances Andy I was I was gonna give my thoughts on some of the trends that I've been seeing around the industry one and we already mentioned it but uncertainty and so then how how Do you operate? How do you plan build and operate a grid? Amongst the amount of uncertainty and the building uncertainty and then the other one is consumer participation, so unlike ever before The the electric customers are are now actively participating in the industry by putting solar on their rooftop or by plugging in their electric vehicle by Looking at reports of their energy consumption and then making decisions and changing their behaviors based on that And that's that's relatively new. So what comes with that? I think is more demands on their electric providers more expectations for them. So I think more participation more expectation and then With that, I think as when consumers become more involved like that. There's there's The word I want to look for here I guess more Requirements put in place then to be adaptable and to you know anytime consumers start playing more actively in a market There's just there's more need to be able to be Quick about things have fast solutions be flexible be adaptable I guess the main point I wanted to make I forgot to make and that is that That innovation and technology is occurring so rapidly that it's it it's almost in in Congress And I was part of Congress in Congress does not move very fast and and so any laws that are It's not that we need laws as much as we need to make sure the laws we have and the laws that are Contemplated in the future don't get in the way of Innovation and technology that maybe doesn't exist at the time of the bill's written But it exists three months three years later so forth and so on Yeah point I forgot to make Yeah, we have a study it's right outside the door done by the Brattle group and there may be some copies left out There yet, I would urge you to read it They say in a carbon constrained environment you know building transmission very proactively in anticipation of what kind of a Electrified economy we're going to have down the road and starting now Rather than you know because these things take eight or ten years to build us as as Mike said That's not desirable, but you compare that to gas pipelines which take three the The idea that we need to plan in an anticipatory fashion if we if the clean power plan goes into effect probably won't But if there's a major change in the generation mix from Fossil energy or at least from coal to gas and renewables and and nuclear a robust transmission system this study finds will save consumers American consumers 50 billion dollars every year and That is you know not pocket change and and I you know I I think that's the greatest Recommendation I can I can give you for for paying close attention to the importance of the grid Other other questions. We're talking and not not listening. Yes, sir Terry Hill with the Passive House Institute pay a lot of attention to what's going on in Europe and one of the things that I'm picking up on is Energy efficiency is infrastructure Is any of that being discussed here and one other question I Sort of concerned about the vulnerability of the grid to disruption Solar players or anything so what role will distributed generation playing mitigating that thanks? so we'll start with solar flares there's been a lot of engineering done on that and Most of the worries have to do with large transformers and There are strategies in place to protect those transformers that have been effective So so while the solar flare thing gets a lot of press from time to time. It really isn't a very big risk Um, so the the distributed generation really doesn't play in that in that horizon I wasn't sure I understood your question about efficiency. Could you paraphrase that so I can understand it better? Okay, so so in the states that tends to be a state-by-state Um Regulatory question and the 50 states are all over the map in terms of how much they Pursue those kinds of strategies We've seen New York push forward a lot some states do nothing a lot of states have a Regulatory construct they call an integrated resource plan where they cause their Utilities to pursue various goals around efficiency But I can think I see the fact that that efficiency has in fact flattened low growth to the point where Demand is it's unusual for demand to be the cause of a transmission line It's not growing low that is causing transmission It has to do with things like resilience and things like the the source itself renewables Dominantly aren't near the load centers So that's what we're seeing in terms of how the business case plays out for a transmission line Other questions Hi, my name is Maria Blank. I'm from climate advisors to small consulting from here in DC my question is for for Craig and it has to do on the earlier thread of the conversation in terms of um, oh Climate advisors, we're a very small consulting firm here in DC this is about government involvement in Market in in the electricity market and as you said in picking technology winners and losers I'm an economist by training from undergrad and graduate school so I certainly understand the power of the markets to provide an optimal solution and The fact that we don't want to Introduce distortions of any kind and I also appreciate the thought that that a government entity can go too far in terms of picking winners and losers in terms of technologies, but on the other hand and not keeping climate change out of the question from a Local pollution standpoint from a health and human safety standpoint I think a lot of us can agree that a In some distant future in a hundred percent renewable grid would be more desirable than a grid That's based on fossil fuels and a lot of those things the market can't provide at this point So what role in your opinion does the government have in moving us toward a more a grid? That's that's more health and human safety friendly while not creating distortions Not rising costs unnecessarily, but there is I think some role for a government I mean you you kind of ask the go the ultimate question here So it's a great question, and it's not an easy answer One thing though is I want to be clear I'm not suggesting that the grid doesn't Respond and the market doesn't respond to environmental laws. Of course it does and in fact every day our dispatchers right now Are accommodating environmental limitations on running plant a versus plant B So if government passes a law that says I put runtime limitations on coal plants or Gas plants in this particular location. We those are hardwired into the market I like to consider the market like a book like a food blender you put the ingredients in and it Shakes it all up and spits out the most cost-effective and efficient answer given those parameters the Challenge and it's very much a challenge is if this is a how do you do it question not whether you do it question and You know if Congress were to pick Technologies as Opposed to say and here's the environmental rule that we want to see abided by if it predicts if it chooses Technologies if it chooses particular units particular generating plants. That's when things get a little bit difficult but in terms of Overall environmental characteristics. We are today implementing renewable portfolio standards from a number of our states The Clean Air Act all that the market responds well to it's when it used so to say I like that plant But I don't like that plant. I like you, but I don't like you That's when it gets a little more dicey and that's frankly an issue that's in the courts right now And I suspect maybe headed to the US Supreme Court before we're done Darren wanted from Senator Angus King's office what along those lines like what can say The feds due to incentivize say collaboration among states that do have these requirements Like particularly in New England, you know where you've got sort of this this call for renewable energy from the state level But then you've got this growing transmission costs and the cost of the infrastructure to put that in place to get it From say Maine down to Connecticut. So like how can the feds help to incentivize? collaboration among the states It's well. It's a great question, too I'll give you one just from a pure product put my a legal hat on from a pure process point of view Right now the only way that states can sort of come together In terms of and not run afoul of challenges to the interstate commerce provisions of the US Constitution is through interstate compacts Interstate compacts are clunky Difficult to achieve you require legislators and governors to come together to take years to develop and I've been on some that have been very unsuccessful So from a pure process point of view there may be ways and this is like federal constitutional issue There may be ways to sort of make it a little bit easier for states that are willing to agree to Come together and have it legally binding as a and withstand a challenge under the interstate commerce clause Today, that's really kind of a very clunky process to try to address that so that's just a pure thing Holy within this building's authority to address Yeah, so FERC has tried to nudge Us all in that direction in their recent order 1,000 The whole notion behind regional planning is to encourage that kind of behavior In the in the myso footprint We had a situation where the At the time we were only 12 states those 12 states all had renewable energy Goals or requirements and they agreed that and this this is where it gets kind of complicated Most of those rps standards were passed in part because they were local jobs idea programs But those local programs For jobs did not produce the lowest cost to achieve renewable energy And so there was a conversation between the governor's offices It essentially came to a political Deal that said In your study site half the wind in the state and half the wind where it's best and That turned into that five billion dollars worth of investment that those states agreed on and the state Commissions agreed on how to allocate those costs. So so there's models out there where it has occurred But essentially everybody has to get something and that's usually where they blow up if you can't find an answer where everybody gets something You're in trouble and that's just this just you know That's what I've seen on the ground Unless Congress decides that not everybody needs to get something And that that that does occur. I mean there are those decisions that are made that Like Craig's remark about interstate compacts. They are a little clunky But you know James Madison put it an article one of the Constitution for a reason and and there are a last I checked 182 interstate compacts We govern everything from allocations of water in the west to Interstate respect for nursing licenses and It's it where they exist States relinquish their regulatory authority usually to some kind of an interstate body And that is sanctified by the approval of Congress and and and Congress deliberately put that into the Energy Policy Act of 05 And and invited states gave them a you know a go and an engraved invitation Please set up some interstate compacts to take some of these issues in south the response has been nada and The reason is that it's that states Have not Wanted To relinquish their regulatory authority over Utility operations within their state boundaries This is a tremendous burden on interstate commerce And it's really in many ways the root of why these gentlemen are doing what they're doing We're trying to solve that problem through other means Well, ladies and gentlemen, I think we've reached the end of of carols patients