 Our next panel, let me invite them up and we'll get cracking on this. I'd like this panel is dealing with a sweeping variety of issues, including the three things I mentioned this morning that we don't talk about enough, which is markets, trade, labor. We're going to talk about cyber as well this morning. This is a little bit of a popery, but I think this is going to be a fabulous panel. Let me just start introducing them while they're getting seated. A lot of you know Rob Gramlich. He was the oversaw transmission policy for the American Wind Energy Association for about 12 years, having just left there to found something called grid strategies. This is one of those indicators that says transmission is the coming thing. They're well qualified intellectuals going into this area and we're delighted to have Rob here. He was an economic advisor to Pat Wood, one of my successors at the FERC. He worked with Pat for four years. He was chief economist at the PJM interconnection. He was a senior associate at PG&E National Energy Group and worked at the FERC's Office of Economic Policy before that and ICF. Rob has really been around the block and I think that I personally have benefited many times from his insight and his energy. So I'm delighted that he's here. He'll kick off this conversation by talking a little bit about the implications of renewable energy for transmission. Arnie Quinn, I was delighted to see as a fellow badger. He's from, got his BA from or BS from the University of Wisconsin and a PhD from Minnesota. He is currently the director of the Office of Energy Policy and Innovation at FERC. Those of you who watched the two-day technical conference on the bulk power market will recognize Arnie as one of the leading policy lights at the commission and I'm sure his life is going to be very interesting and very busy when our friends across the street approve two new commissioners and the FERC gets back into the business of doing business. So Arnie is going to talk a little bit about transmission and the bulk power market. Caitlin Dirkovich, you may recognize Arnie. She flew in from someplace last night or this morning. Caitlin, you may recall if you were here two years ago and we did something similar in this location was at that time Assistant Secretary for Infrastructure Protection at the Department of Homeland Security. She is now with the leadership team at Toffler Associates. Some of you may remember Alvin Toffler, the guy who understood the future better than anybody. So I think that she will have some great insight. She's going to focus on physical and cyber risk management issues with regard to the grid. She's a graduate of Duke University and spent a lot of time with the folks at the Aspen Institute. Dan Prowse comes to us from Manitoba. Manitoba Hydro, as a matter of fact, he's a professional engineer at Manitoba Hydro, which I'm pleased to say is also a WIRES member. He has a lot of experience in nuclear reactor safety and just to change things up, a little hydro operational optimization, export power sales and transmission access. I think mastering any one of those would have been above my pay grade, but he is a really great source of information insight. Dan's been a design engineer. He's been a project manager, provided operational support. So we rely on him a lot for information about the Canadian market and how the cross-border trade is going to affect our grid and vice versa. He has a wealth of international experience and is, I guess, his position currently as director of transmission systems operation at Manitoba Hydro. Our last speaker, Tyler Eaton, it comes to us from the International Brotherhood of Electrical Workers. I mentioned earlier that he is going to talk a little bit about labor this morning, labor issues, and it's one of the areas we don't spend enough time on. Wires did a report. It's now, unfortunately, five or six years old. I believe the Brattle Group did it, as a matter of fact, and talking about how many jobs would be produced directly and indirectly by construction of transmission at the level we think it's going to be needed. And the numbers are really quite startling. At the time we did that report, the U.S. economy was struggling to produce 20 or 30,000 jobs a month, and this report said that we could, just by building transmission, produce many times that, perhaps as many as 150 or 200,000 jobs a year for 20 years. So transmission infrastructure is an area of economic development and employment that we shouldn't ignore. Tyler's going to introduce a video on the economic impacts of a single project. We picked one, and it's very informative, a little 10 or 11 minutes, and I think you'll enjoy that. Did I get it, everybody? Okay. Thank you very much. Let Rob Gramlich lead off, and hopefully we'll have time for questions at the end. Thanks. 10 or 12 minutes? Yeah, I forget. Thanks, Jim. I appreciate it. It's great to be here. Nobody gives an introduction like Jim Ecker. I've been very pleased to work with Wires over the years. I was there at the founding, helping recruit participation in the original creation of Wires. I felt like we really needed a strong voice just for transmission, and that's what we've had since Wires was created. So I really have always appreciated being a partner. We, when I was with AWIA for 12 years, transmission was always recognized as the biggest long-term challenge for the wind industry, and I'm just back. I took a red eye and shuttled over here from the wind power conference. I say that in part to give a caveat and excuse if I lose my train of thought from my fatigue, but also to say at the wind power conference, the annual event, the grid was everywhere. Everybody's talking about the grid as the number one challenge. And that is, I would say, in addition to the better operational use of the existing Wires, I look forward to the SmartWires presentation later. I've recently become a big fan of dynamic line ratings, which just a quick diversion when the wind's blowing. You're producing a lot of wind output. You're also cooling the lines at the exact same time so you can physically deliver more at those very times. And yet the system doesn't allow for that delivery because we use static rating. So that's one example. We've got to use the grid a lot better to deliver clean energy, but if I can get my picture here of the grid that you've already seen. That's just who my new effort is. You've seen this map. The purple area is the wind resource. We just have a vast, very low-cost resource here, and it's not just the macro scale in terms of the middle of the country with population centers on the coast, but also within areas like within California, within New York, there's a great upstate New York resource and obviously a downstate load. And within most regions that same dynamic occurs. So there's really no alternative in the long term to more infrastructure expanding the grid. That just really has to be part of the agenda. I want to, without repeating everything that Jim said on behalf of Wires and what Judy in particular said for Brattle, all of those enablers I think are benefits of transmission, resilience, reliability, reducing congestion, and access and clean energy. So clean energy access is just one of those benefits that the grid enables, but I think an important one. And there's not just a geographic component to it, i.e. moving remote resources to population centers, but there's an operational aspect that there's been a little discussion of. If you think about variable resources that are not operating at the same time, the output is not coincident. It's not correlated with each other. The wind's blowing somewhere else. If it's not blowing here, then what you really need to do is move the power around. Same is true for solar. We're seeing in California certainly this spring, they really need to move some of that zero, if not negative-priced power around the west if they're going to integrate more and do it in a cost-effective way. We've had some success in grid expansion. I think the last 10 years we did change the discussion a little bit and change some of the policies. You see these are all new lines here on the map, working from the top. There was the MISO multi-value projects where they took a whole bunch of the benefits of transmission, rolled it out together, and put together plans. The benefits exceeded the costs in the modeling. By the way, X-Post, the benefits have been two to three times the cost. Then moving down to the central planes there, the Southwest Power Pool, Highway Byway lines, very similar effort. I think they're all finding that they wish they had done the higher-voltage version of those lines, but those have been economic and valuable nonetheless. Then Texas, the well-known competitive renewable energy zone plans that is delivering a lot of wind from northern and western Texas. To blow that one up a little bit, in this picture you can see the wind resource bubbles there that were connected. It turns out the Permian Basin Gas drilling has relied on these same transmission lines as well, which is one indication that you build transmission, and you end up using it for a lot of reasons that you might not have originally thought of, and sometimes the power even flows in other directions from what you planned on. It creates that optionality and multiple values over time. How did we do that? There was a question about infrastructure. How do we pay for it? Is there enough money out there? The main way we've done it so far is in the wholesale transmission regulatory world, i.e. FERC, Federal Energy Regulatory Commission, policies and tariffs. There was a chairman of FERC around 2000 who did this thing called Order 2000. Jim instituted these new things called regional transmission organizations, and they put together, they basically started a regional planning process with, importantly, a tariff to link it up to. We had had regional transmission groups before, but there was no tariff to put the costs into. So now, with MISO and SPP, we had a tariff, so you could do the regional plan, you could see if the benefits exceed the cost, and then once you did that, you could agree and negotiate within the region on a cost allocation mechanism, i.e. which load serving entities paid how much of that cost based on the modeling of who benefits by how much. So it was roughly a beneficiary pays, but it was a regulatory beneficiary pays, not a voluntary type of approach as in other industries. This is still a natural monopoly that's a regulated sector, but we did that, FERC did that. MISO and SPP filed those with FERC, FERC approved, it got paid for, and all those lines got built, and they've been extremely beneficial. That whole process was easier in Texas than in the state. All the winners and losers are within one state boundary. It was much more difficult in the SPP and MISO context where you have multiple states fighting over well, my rate payers don't benefit as much as yours, so you should pay more. So that continues to be a challenge in the interstate context, but at least we know it can be done, and we did increase annual transmission investment, a fair amount, which basically allowed for we really would not have nearly as much of this 70 plus gigawatt wind resource operating now if we had not built all this transmission. Are we done? No, we're not done. There's still a lot of congestion out there. I'm actually not the only person today using this slide, but this is a heat map of congestion. The purple and blue are very low electricity prices. The orange are higher prices and you can just see this is not like annual average, but this is a point in time. This is a frequent occurrence in the Midwest basically from the central towards the east you get higher prices and that indicates costly congestion that could be reduced and benefit consumers as well as access to clean energy that a lot of these states want if you built that transmission. This is a set of plans from one Department of Energy study. I'm not sure if you can see it in much detail, but the point is a lot of lines were shown to be beneficial across that same geographic area. Everything I've described is sort of the regional AC alternating current grid network types of lines where with AC lines you can't really regulate who gets on and off. You can't cut customers off. It's all pooled electrons together and so it's really much more of a regulated environment in the RTO tariff is the only way really to do that. More recently there's been a lot of development in the direct current DC area. These can be more merchant or sort of voluntary market based types of lines. There's a lot of people around the country clean line pattern, LS Power and Barrick. ITC has a Lake Erie line. There's a lot of trans-West. There's a lot of these lines around the country. The economics of DC has become I think more widely just better and more widely recognized and understood. Moreover it's easier if you can get the customers to sign up for capacity then that's a lot easier than trying to get 15 states to agree on something. That creates a market for that. They're permitted in similar ways and let me get to the next slide to talk about permitting. The permitting of all of these lines is generally state by state or more localities that have to permit the lines and that gets me into some of the policy framework and policy discussions. We need to have to have a transmission supportive policy environment. We really have nothing like the natural gas industry where there's federal siting of pipelines and we're never going to get that but there could be ways we could move towards that in extreme cases where states disagree about a line and there could be some federal involvement to help with the permitting in that. There are some authorities at DOE that were passed after the black out of 03 in the EPAC 2005 act that provides some federal backstop siting for DOE. Only one of those authorities was ever used just once. So those 1221 and 1222 happy to talk more after about those but those could be used more and better than they have been. And then a lot of lines end up crossing some federal land or another. So interagency coordination and implementation of the fast act could be useful there certainly the Trump administration's focus on infrastructure and speeding up permitting could be used to great effect in the transmission space so we're hopeful that we'll see some of that. Moving to FERC and the regulatory agenda we have and others have said to at least two new commissioners coming on over there we are hopeful that they will put into continue or expand a pro infrastructure agenda there and that would involve more of this proactive economic planning so instead of what still happens all too often where the transmission planners only do anything if a line is strictly needed for reliability and you can relate a reliability criterion there's a lot more economically beneficial transmission out there if they would proactively look where the resources going look at what states are trying to procure in terms of often remote renewable resources and so do it on a proactive basis and consider all of the economic benefits not just the reliability benefits so that is squarely within FERC's authority and role we hope they pursue that on the planning side and then on the cost allocation side as I said before some form of broad beneficiary pays type of approach that goes into the tariff that would be very helpful and that only covers the intra-regional transmission that's what we've done fairly well at with the lines I talked about before pretty much nothing has happened in the inter-regional area so between MISO SPP MISO and then out in the west just any kind of regional transmission coordination out there would be better than what we've got so we hope the new commissioners put a focus on inter-regional transmission and then finally one other thing on FERC I mentioned grid operations dynamic line ratings you're going to hear more from smart wires but some form of incentives I would say for transmission delivery or throughput you could say incentives for innovation that's fine too but I think even just making it more performance base instead of a transmission owner only making money on their invested capital just because they built a capital asset and threw it in rate base if there were more incentives to take some of these lines and get an incentive so there's something in it for the transmission owner to deliver more power that would be very helpful I think we'd see some of these technologies deployed I think for energy delivery if we did that so then turning to finally to an incentive I think it's generally the narrative is generally true that transmission is privately financed there's not a great need for a whole lot of federal money in an infrastructure bill but I would suggest if you think about the discussion earlier with Judy about whether there's sort of enough money yeah there's enough money and yeah in theory the regulatory world could take care of lines that are economically beneficial over the long term but the fact is they're not for the higher voltage long term lines that would be of great benefit there's basically you can kind of get some of the lower voltage lines paid for people can kind of agree to pay a little bit here a little bit there but really what's efficient in the long term is to upsize these lines or right size these lines for the long term just like Judy said over the 20 or 30 year time horizon you know where these resources are they're not moving so you have a high degree of certainty these lines will be used and useful but we don't we have a big gap so if there is some kind of federal funding to sort of pay a share of a reservation on some of these lines and then it gets paid back over time as users come on I think that would be of great benefit to taxpayers and electricity users so I will end with that and look forward to the discussion thanks good morning Jim thanks for the invitation I'll try to step back a little bit and talk about how transmission and transmission planning fits into the bulk power markets overall and I'll do a little bit of a retrospective on how the thinking has evolved on how that interaction has worked or is going to work I think very broadly there had been prior to centralized organized markets when there were just vertically integrated utilities this sense that vertically integrated utilities would do integrated resource planning it felt like a nice closed system the utility could compare transmission investments versus generation investments and that is a system that had its pros and cons but doesn't translate particularly well into organized markets but I think you'll see themes as I talk about how our thinking has evolved how those general ideas maybe start to reappear a little bit going all the way back to when organized markets were invented I think one of the key breakthroughs in developing organized markets was the importance that transmission played in helping us understand the value and the costs of serving a broad footprint at the very beginning there was a debate about whether you should very granularly in a very detailed way model the transmission system or whether you could do that on a more higher level way and kind of manage transmission constraints on the fly kind of this debate between zonal higher level or nodal markets and I think the big breakthrough was that the transmission system is complicated and important enough that costs of producing electricity can go down a lot if you do very detailed modeling of the transmission system and really account for those transmission constraints on a very detailed way and I think that's become fairly close to a consensus view at least in the United States not so much in Europe but certainly in the United States once you've appreciated how important it is to understand what the transmission system is doing you then do this very detailed modeling and then you get very detailed prices out of that and you see very locationally specific prices and you get these heat maps like the one that Rob put on where you can see areas where you've got high prices and low prices that breakthrough I think one is important just for making sure you've got the lowest cost that a resource is producing at any one time and Texas did a study when they moved from zonal to nodal to show just the huge cost savings on a production cost basis of moving to that system the other benefit you should get out of that though is highlighting areas where transmission would be beneficial investment in transmission would be beneficial and I think our idea initially was that people would look at that heat map like Rob put up and say ah there's an opportunity there in Upper Wisconsin to connect Minnesota to northern Wisconsin and I as a merchant transmission developer will go find a way to exploit that opportunity that that I think was our idea when we started these markets in the 1990s and early 2000s the tough part of that model is that creating the line destroys the value so the moment the line is there and you collapse the prices there is no price difference and if someone was trying to grab the difference in value between those two locations that difference in value stops existing so you've got to find another framework for capturing that value so we haven't actually seen much of any investment from the merchant side on inter or within region transmission we have seen a little bit between areas where we've seen it is places like New England to New York or Canada to New York Canada to New England out connecting outside to inside the US or to US regions there's been a couple examples where merchant lines have been able to kind of capture the value of differences between market areas and there's been a couple very specific geographic places like San Francisco Bay where merchant lines have been successful but kind of appreciating that this merchant model for capturing value within a market based on locational prices wasn't working as well as it could have the commission has and market areas have started to use the transmission planning process to play that role so the commission did something a few years ago court order 1000 it was designed to provide both a ex ante or before the fact cost allocation method and a planning process that someone who gets a resource that is selected to that planning process can use that cost allocation method to get paid and that starts to feel like a possibility for addressing these economic projects because it's planned because the capturing the value really then goes to convincing consumers we're going to ultimately pay for the line that they're getting some value from the line and you're allowing the transmission developer to put something in rate base that's the idea these transmission planning processes have existed for a long time I think as Rob said the main role has been to address reliability problems it's typically not hard to convince and in fact often the market operator the transmission planner has no problem saying listen if I don't build that transmission line I'm going to violate a reliability standard we're not allowed to violate reliability standards we have to build something so the only question is what are we building not whether or not on economic projects there's a little whether or not question order 1000 is a little early it's not it's been going for a couple years most of the market areas or the transmission planning regions have done something it's fair to say some of them have done less than others so we have a little bit of experience in what's happening right now what we can say is some of the transmission planning regions have consciously chosen not to distinguish between reliability and economic projects and that's something Rob pointed out that's something that I think you just you keep an eye on to see whether that's a useful thing in terms of allowing a full set of benefits to be brought to the table to justify a project or if that becomes a way to just not address economic problems some of the other areas that directly do address economic projects in the planning process have done so but we haven't we just at this point haven't seen many I think as I was coming here I asked our staff I think we knew of off the top of our head one project that has gotten one economic project in the transmission planning process that order 1000 established so I think there is potentially more work that can be done there the commission held a conference last June to talk about this whole process and to identify areas where that process can be improved it was a pretty expansive tech conference we talked for two days we asked a bunch of questions we ultimately identified five high level areas the fun part and the frustrating part of FERC all of those areas get into the esoterica of the federal power act and transmission planning and market design really fast so all of the things are little things none of them are huge things they're enhancing transparency or they're modeling beneficiaries a little better but that's something that as a number of people have noted we're waiting for a full commission to get on board so we can start to talk about whether that fits into the priorities of the next commission the last thing I wanted to say was that that transmission planning process in addition to identifying reliability projects and identifying economic projects also can identify public policy projects projects that are designed to address public policies for the states that are involved the the bubbles that Rob put up for the middle of the country SPP and MISO those would probably fit into the bucket of public policy projects they I think the interesting thing about the public policy projects is the places that have had success have been able to do it because they can bundle a bunch of projects together and get a portfolio of things that everyone feels pretty comfortable provides sort of a grand bargain of benefits and costs and I think it's telling that the grand bargain was successful and I think something that we keep our eye on going forward is whether you can do discreet individual projects one by one through this process or whether you ultimately do have to get to the point where you've got a grand bargain of multiple portfolio sets of projects to kind of get the process to work and that would be tough I think because a lot of the areas I've told us when we look at why there hasn't been more activity in the planning process that they had just gotten done doing a lot of work ISO New England says in points to a lot of investment and transmission as a reason they haven't done things Midcom and ISO points to those multi-value projects as being the reason they're not doing more things going forward if there's a basis for any of that in fact then that means that we're not going to get eight or nine projects coming out of a process to get to a grand bargain and so we've got to be able to do these things one by one and with that I'll the next person go Good morning everyone and Jim thank you very much for inviting me back Rob I thought I had it bad coming from Milwaukee connecting through Chicago and getting in last night at 12 but if you've caught a red eye then I have no excuse and cannot stumble you did very well I am really very delighted to be here in part because I firmly believe that the grid and in fact all critical infrastructure is a strategic asset and in fact I spent the last eight years of my life working at the Department of Homeland Security in partnership with owners and operators of critical infrastructure to manage this increasingly complex risk environment that we are living in and that included with owners and operators of the grid of our water systems of our transportation systems the list goes on and I will tell you over the course of those eight years the risk matrix that we used evolved it started early on in the days of the stand-up of the Office of Infrastructure Protection focused largely on natural hazards and threats of terrorism and by the time I left the department and if you look at the matrix we use now where you have likelihood increasing likelihood on the X axis or probability on the X axis and materiality and consequence on the Y axis the number of existential threats that you now find on that axis has grown and it includes or that matrix has grown and it includes everything from denial of service attacks to coordinated cyber attacks to EMP to space weather and the list goes on and so much of what we did in the Department of Homeland Security and it's certainly what I'm doing in this next chapter of my life was work with owners and operators to help them understand these risks to think about the consequences to understand where we had gaps what the roles and responsibilities were of industry and of government really at the end of the day to better manage this risk and there are when you take an issue for example like cyber security a number of kind of strategies that we talk about about how you can protect the grid but at the end of the day we would keep coming back to this very basic notion that we have to start to do security by design and that we are at a very important part are at a very important time in our country is we start to modernize our infrastructure and whether that's our transportation infrastructure or electrical infrastructure or water infrastructure that we have to put the coders or the security people next to the coders the builders and the architects it struck me as I was talking to Jim and others involved in this wire's effort and certainly looking at the presentations here today that the absence of security in this conversation is something that we have to change that as we think about integrating renewables all of these amazing technologies this concept of prosumerism that we have to make sure that we are talking about security at the same time when you think about this modernized grid certainly the complexity of the physical layers are going to increase we are building a grid that is highly dependent on communications and so we already live in this complex interconnected interdependent world where disruption in one sector can have cascading impacts across multiple sectors we have to start to think about what does it mean as we continue to build reliance on all of these sensors and all these communications to increase efficiency to increase control what that means for the congestion of the communications network and the ultimate reliability of the grid itself certainly we are building a grid that is geared towards performance and efficiency again monitoring and sensing all the time and the integration of all of this distributed technology how are we thinking about the security and the resilience of this amazing what is already an amazing engineering feat and so as we start to think about this next generation of the grid really what I argue is that security has to come hand in hand with all of that and so I think that begins as we think about this infrastructure bill that part of that bill has to be inclusive of security and resilience we have to make sure that as we modernize it as we fund these investments we are tying it to make ensuring that we are building in security that as we evolve and we look at the lifespan of infrastructure that we also account for the evolution and the adaptability of that infrastructure to evolve with a changing climate with changing threats and that we recognize that that lifespan is going to be a hundred years long we have to think about the supply chain this is something that increasingly we are concerned about in today's grid and where we procure the all of the different technology that makes up this complex ecosystem where is it coming from what do we know about the provenance of it what does the fact that we may be buying some of these products software hardware from countries like Russia China and others what window does it give does it give them into how we run our networks who owns some of these resources we did a lot of work in my time at the department with Australia and increasingly they were seen parts of their energy system bought up not only by the Chinese but controlled on the mainland of China which created a rather existential threat for them and so this is something that we need to consider as we think about the policy how do we create a framework with the public utility commissions with state and locals with all of the stakeholders who make up this grid really to think about again the security of this very complex enterprise and not leave it in the hands of individual owners and operators and users again bake that security in from the beginning equally challenging and I'm very interested in Tyler's comments is the workforce concept what we know now is that we have a aging workforce in many of our utilities they're at the retirement age and when the availability of the workforce to some of these utilities especially with an increasingly technology driven and modernized grid you don't have really the transfer of knowledge that we need to understand how the current grid current utilities works and to be able to transition that into a modern grid and that has a lot of implications really at the end of the day for resilience when you think about this very electrified digitized environment that we've built and if you have a disruption the ability for a human being to know where that crank is to know where the box is to be able to press that button we have to make sure that we don't engineer that out of the out of our systems and that we've got a workforce that's available to be to be that backup and at the end of the day how we ensure that we as we again create this distributed network we're not increasing the attack service and that we're creating that tax service so what's that partnership that we build to think about that so I end with as we drive towards a modernized grid as we think about all of these distributed technologies resources that can lead to a more reliable and resilient grid that security has to be part of that so thank you very much good morning I'm Dan Dan Prost from Manitoba Judy started off by our inner talk mentioned that Canadian Hydro can play a role in the US grid and that's quite true it's more than a thousand miles from our hydro generating plant on the on the left up there to Minneapolis it's more than a thousand miles from some of Hydro Quebeck's generating plants to New York but in spite of those differences in 2014 Canadian electricity provided 11% of the load in Minnesota and North Dakota it provided 12 to 16% of the retail sales in New York in New England 30 states deal with Canada on electricity supply and the major purchasers are in Michigan California Oregon Washington Montana and Vermont Jim showed you a slide about what the grid looked like mid last century and it doesn't it didn't look the way that it does now at the beginning of my career there were essentially no significant grid infrastructure across our international borders in the 1970s we built international connections with cheap surplus energy either U.S. or Canada were building large generating plants and we wanted to improve reliability by the 1980s we had large interconnections like our 500 KV line down to Minneapolis at that time bulk commodity exchange made sense Canadian generators helped to meet peak U.S. load in summer U.S. generators helped to meet Canadian winter peak load but over the decades things changed we moved to an impressive level of coordinated operation we have levels of reliability and economic efficiency that were just impossible in the past and impossible without cross border trade I would have told you a decade ago that what the current operation is not technically possible you can't have that many smart people you can't have that much infrastructure you can't have computers that are that fast now we are at the state that we are at is that if the Midwest has a sudden surplus or deficiency in wind generation energy is pushed into energy storage in Manitoba or it's pulled out of energy storage in Manitoba within five minutes and while our eastern and mid provinces mid continent provinces we have exporters of energy to the U.S. in the west our western provinces are net importers in electrical energy Canada is both a customer and a supplier to the U.S. now trade prospers when there is a competitive advantage the Canadian and U.S. generation portfolios have developed to reflect their natural advantages the U.S. is well positioned to take advantage of low cost gas and increasingly wind Canadian generation supply is largely hydro it's clean it's very reliable it's very fast moving and is often integrated with large amounts of energy storage that inherently exist cross border trade makes good sense we share our surpluses we help each other out in shortages and we provide related services that each of us is better positioned to provide cheaply like energy storage reliability is enhanced when there's diversity and this has been mentioned several times it's no longer inconceivable that there would be malware that would affect the control systems of a large number of gas turbines or nuclear plants or wind farms there could be price or supply disruptions and fuels natural disasters geopolitical barriers those can all separate you from your generation or separate you from critical spare parts we stand together in emergencies 20 years ago U.S. generation saved Manitoba from blacking out you supplied energy when we were in the midst of a wind event that isolated a lot of our generation 10 years ago we returned the favor in September 2007 our fast responding hydro generation was key to saving Northwest MISO from blackout and most critical response occurred within 2 seconds we moved 1,000 megawatts of generation to halt the frequency excursion most of you are experienced in the industry but if you're not just understand that 1,000 megawatts is like the energy of a million horses it's like 100,000 cars driving down the highway and all of a sudden you start to go down the steepest hill you've ever seen you start to take off to break and what we had to do was essentially bring 100,000 cars to a halt within 2 seconds in order to keep the system from speeding up and shutting down to keep it from breaking apart this is a slide often seen Canadian hydros has typically provided cheap economical energy and it just happened to be renewable the U.S. trend towards renewable energy is basically coupled with the energy for energy independence and there have been large investments in these wind resources now wind power availability becomes important when you start to look at new resources this is a graph of load over 30 days at Bonneville power and it shows you that when the generation mix includes large quantities of wind which is the blue lines the average is smooth the heavy blue line in the middle but it can be anywhere from zero and maximum and similarly solar in general has a very predictable pattern but at any moment it can almost be anywhere from maximum to zero so you need a large amounts of energy storage to deal with this and although there are new technologies keep in mind what's proven to be reliable and cheap 99% of the energy storage in the world is stored in water the sun drives everything whether you capture it directly because you're capturing the energy or it moves the air and you capture it or it moves the water and you capture it each of those steps slows down the variability MISO is called the mantle-bohydro system a super-sized pump energy storage plant so grid transmission and cross-border trade provides US grid operators with more supply options including energy storage operation of the grid is challenging supply and demand is changing constantly and just as a stalled car or a minor accident can cause havoc in your transportation system problems on the power system can be disruptive if not resolved immediately and if you're interested in some details on energy storage I participated in the webinar as done by the Midwest Governors Association and you can look up some of the discussion there MISO has been very effective in calculating the cheapest way to serve load and identifying borders to providing least cost supply and addressing the short and long-term barriers or remedies to those barriers one of MISO's initiatives was to study in a very detailed way how Canadian hydropower could serve MISO's customers at the lowest cost while dealing with the challenges of wind power integration now it showed that study that the benefit of additional cross-border trade which would result from a new transmission line and new Canadian hydro generation could benefit US customers by between half a billion and a billion dollars a year depending how you measure the savings slide number 44 there shows the great northern transmission line which is something I've been working on for more than 10 years so this study is an example of how an effective grid and an innovative grid operator can permit low cost Canadian hydropower to deliver energy provide energy storage and fast-acting response facilitating border cross-border trade is a special case for creating artificial hurdles MISO studies its value proposition and to illustrate that regulatory and technology change can free up the unrealized value in the grid infrastructure and facilitate rational future investment much of the $2 billion benefit that MISO claims comes from permitting existing generators to more effectively serve load this is accomplished by a variety of changes from reducing tariffs hurdles administrative barriers to trade and by coordinated grid planning and by operations that reduce physical barriers to trade so over the decades we've moved from a bulk commodity exchange to a highly integrated level of new levels of efficiency and reliability Canada and US bring different energy sources together in products and we have shared interests security, rational investment reliability or jobs we are each other's customers and suppliers and in certain regions Canadian power is an important supplier of low cost energy we work together on the issues that Caitlin was describing whether we're designing electrical infrastructure or we're worried about cybersecurity whether the future involves carbon capture and storage but Canadians are making a major investment in that and we share our knowledge cross-border trade is important it's mutually beneficial we're reliable partners, we're trusted partners and when you build on that trust you can make long-term investments and you can make the policy and process decisions that move us forward that's how the grid becomes more reliable more affordable safe and secure so our experience has been throughout the US and across borders when we eliminate barriers we reduce costs we improve reliability and we improve price certainty thank you good afternoon before I do show you the video I just want to say what was done actually by one of our contractors Ellie Myers this is in no shape, way or form me up here trying to sell their services but the story that comes out of the video has helped other utilities that are looking to get projects going such as Northern Pass and a few other ones so I'll let you watch the video and then I'll speak some about what it's done for us and the utilities that I've been working with in 2011 the first truckload of poles arrived at Ellie Myers newly established construction yard in Palmyra, Maine after months of planning crews were eager to begin work on the four year construction project which would add some 2100 jobs per year and more than a billion dollars in spending to Maine's economy the largest energy infrastructure project in the Pine Tree States history the Maine Power Reliability Program was an investment that would ensure reliability of Maine's 40 year old bulk power system and increase access to the state's growing renewable energy resources established in 1891 the Ellie Myers Company is the oldest of the MYR group subsidiaries over the years the company has established a reputation for ingenuity in fact it was Ellie Myers who first deployed helicopters to set lattice structures and built this country's first 345KV transmission line in the 1950s nearly 60 years later Ellie Myers was awarded the largest portion of the MPRP the Northern Loop where it would build and rebuild more than 1000 structures and 210 miles of 345KV and 115KV transmission lines spending the evergreen forests, rugged mountains and sparkling rivers of northeastern Maine the project for what it means to the state of Maine not just for the electrical side but in the economic side as well as the line turns we'll be putting in and who better to work on the project than the folks who live here I'm one of many lucky people from the state of Maine to be able to work on this project a lot of our team are from Maine the scale of this project is required of just an enormous amount of folks and we've had to take people that weren't in the trade bring them into the trade give them the training they needed through the local apprenticeship programs and we've really given a lot of folks an opportunity to work in a very good field and make pretty good money I'm working my way through this apprenticeship program thanks to Ellie Myers I definitely notice they like to hire as many local people from the areas they can the area includes not only Maine but other New England states as well yeah there's a lot of local people here on this project it's always nice to see the company try to keep local employees you know so I'd like to stay as close to New Hampshire, Maine as I can Tom McCosh is from Burling, New Hampshire he came to the MPRP from IBEW Local 104's apprenticeship training center in the Granite state yeah I'm pretty excited to get on this job it's only about two hours from my house which is actually the closest I've ever been the Northeast Apprenticeship Training Program has been really fantastic to work with we've worked with at least 150 apprentices on this project that have come through our doors it's a great place for a young apprentice to come and gain this kind of experience you'll be able to pin that, you see what I mean? you've got good teachers here there's a bunch of people that's willing to teach I mean that's the thing they're going to learn more on this job than they are in a lot of places one of the few videos you're going to see out there and most important they learn how to work safely during our orientation process that's one of the things that really stresses that everyone is empowered to stop the work if it's not right we've got plenty of the big hooks we've got positioning lanyards we've got retractables they appreciate the tools we give them the safety equipment the fact that we give them time to do it right I really think they appreciate that we recently achieved a million work hours on the project without a lost time incident we're extremely proud of that and it's a commitment, number one to safety but it's also a commitment to doing the right thing for everybody all I ever wanted to be was a farmer Gary Williams is the Community Relations Specialist for the project he's a friendly face who answers questions and solves problems for local residents and town officials and Gary and I, over the project we were able to build a relationship of trust with one another and I considered that relationship was nothing but positive any complaints that were brought forward by residents and so forth were handled expeditiously and they got right on to it so it made my job much easier Danielle Flanagan and her husband bought their home in Clinton knowing line crews would be using their driveway to access the right of way and not knowing what to expect we were scared particularly because the crews would sometimes be working at night the crew was very courteous they tried to face the lights as far from the house as possible which was nice for our sleep schedule and even pulling down into the driveway they turned their headlights off so that they weren't shining into our windows at night that meant so much especially as first-time home buyers we could still have a home and not be part of this active construction site were you happy with the project? yeah, were you very happy? Moral resident David Simmons also had nothing but good things to say after leasing his field to Ellie Myers for helicopter landings it was in a strategic spot form it seemed like it would work out alright so I agreed to let them use it but when they left there was no evidence of them even being here in the field you wouldn't even know it pristine when they landed and pristine when they left that makes me feel good to know that our footprint is almost non-existent and that makes me feel like I've done my job and the company has fulfilled their commitment I hired another one today as a manor himself environmental coordinator Chris Lavasser shares that commitment to preserve and protect the state's natural resources so we're all doing our part to make sure that we leave our state in a condition that we're happy with and that we're working for a company that supports that Maine's climate and landscape while beautiful can also present some major challenges the four seasons in the state of Maine along with the very difficult terrain that we have to deal with this is a very tough project one of the toughest tasks on the project was site preparation for four 370 foot tall lattice towers which were assembled along the rocky banks of the Penobscot River blowing through tons of ledge to make way for the towers required the local knowledge and expertise of crews from Maine drilling and blasting who have worked steadily for Ellie Myers throughout the project we've had five, sometimes ten guys on the line at one time throughout the last couple years which has been a huge deal for us in Maine larger small, steel, wood or concrete Ellie Myers Quality Assurance Supervisor is there to see the crews are doing the right things the right way if a bolt is sticking out half an inch longer than it's supposed to then he lets the general foreman or the foreman know we build the line the way it's supposed to be built they know our quality is there and I think that's true with our subcontractors that we've hired subcontractors such as Lawcom based in Viana, Maine who performed all of the fiber optic splicing and testing for the project our fleet department in where our fleet has supported us in every way it takes an awful lot of equipment it takes a lot of good equipment of all the remote sites we have you've got to have dependable equipment they have a lot of nice stuff to work with when you need something they buy it and it's not junk and it's really helpful for us to be out here working also really helpful are the hundreds of Ellie Myers workers who are out there powering up the local economy giving new energy to Maine's small businesses oh it's been a huge pick up especially in the morning business for the coffee and the breakfasts and stuff and the guys have been great we saw a big influx at lunchtime you know you'd see anyways from 10 to 20 different guys come through it was good, it was good for business it's good for the whole state absolutely the dealership uptown, people renting homes young fellow that went in the snow plowing business in town, yeah it's made a big big difference that's going to be a hard call Gary Beam is a farmer who supplied Ellie Myers with more than 60,000 bails of hay and straw it's helped me get a lot of back bills paid up because you know the economy hasn't been that good and stuff and it has helped in that respect so I'm setting a lot better position than I was Steve Clisham's construction company supplied Ellie Myers with more than 10,000 yards of aggregate we hindered the inch and a half stone for the pole settings and a lot of the round rock stone for the entrances and the crushed 4 inch stone it was orders that would be 15 20 loads that we could split between a few trucks worked out great for us to give the employees more hours a lot of overtime that they didn't expect that really helped everyone in the area the town of Winterport received an unexpected windfall when Ellie Myers leased an old runway that was ideal for Lattice Tower assembly came at a really great time because as everyone knows revenues are down in the state of Maine and it was unanticipated revenue which helped our tax taxpayers MYR and Ellie Myers are extremely proud to be a part of the MPRP project the aging infrastructure is ready to be addressed and I think Central Maine Power has done an awful lot for the state of Maine everybody has worked so well together but this is a great model I think for people to look at and it's just been a win-win for everybody we've got hundreds of folks from New England, Maine myself included that have worked on the project we've been able to live close to home earn a great living contribute to the economy and protect Maine's environment looks just like they've never been we're putting power in that enables this renewable energy to flow into our state and out of our state so that makes me feel good that this construction is allowing for a cleaner future so again that was a great project and it wasn't just Ellie Myers there was five other contractors out there working but what this had done for us and done for I worked with Eversource Utility I worked with National Grid I worked with multiple ones but as some of these projects such as Northern Pass a few of the other ones where they're trying to get through like New Hampshire is the SEC all the as I call them nuts in the state house I mean it was nice we had set up something similar like we have heard today with state reps and senators and brought those people not only the workers that worked on that project in Maine but the small business owner and they actually told their story where some people think they want to build these projects it's just in years past I've been in the trade for a long time and I've worked all over the country and I always kind of felt bad that I was working in Michigan knowing there was probably people that could do the job I was doing but didn't have the proper training so but through all this we came up with a commitment on Northern Pass was the first one and we're looking to do it elsewhere we're looking at a commitment to New Hampshire workers first so as I think Caitlin had mentioned about our numbers are going down big time I mean through retirement maybe close to 50 or 52% in the next 10 years we'll lose so we're trying to replace those as quickly as possible but again like I said the experience is one thing you really need but what these transmission projects especially the new ones do where there's no energized conductors we can usually it's one apprentice to one journeyman we can go three apprentices to a journeyman and get them at least the basic the climbing working on transmission so we have a long road to hold but we're willing to do it and we're partnering together with the utilities in other things such as we have a community college in New Hampshire that Eversource, the IBW and the Contracts Association have partnered up with the college to ensure that we again take the ones we're running it there's many line colleges around the country right now where you can just apply and you get in and you decide halfway through the program that it's not for you well your parents or yourself have lost money we're ensuring we're putting them through a small boot camp before the college will even accept them so we're trying our best to make sure that we have a reliable workforce and a local workforce so that's it, thank you well while talking about grid security and transmission planning over the next 20-30 years and renewable energy and bulk power markets it's important we get a dose of the real world once in a while and Tyler thank you for that thank the IBW for sending us to bring you our way we have time for some we have time for some questions Christy? Hi there, Christy Tezak from Clearview Energy Partners and this is for anyone on the panel one of the things that shifted in the pipeline industry was a move away from building new infrastructure based on what you know exclusively funded by the consumer and user through rates so a lot of the pipeline infrastructure was built by to meet the needs of the local gas distribution companies who then recovered it over time in their rates not unlike utilities recover transmission investments in their rates to retail rate payers now we are seeing more interest from the producers in the gas fields interested in taking their product to market also participating in trying to help fill that gap of getting the pipeline built maybe a little bit earlier than right when it's needed do you see any opportunity for discussion of that sort of rate structure on the electric side so that generation that's remote may sort of find a way to you know because we talk a lot about incentives and I can think of a pretty big investment tax credit I can think of a production tax credit and so the question is is there a way to sort of equilibrate and sort of help bridge the gap by getting the generators involved the way producers have become more involved on the pipeline side sorry, yeah good point a couple thoughts for the electric sector first of all with these merchant DC lines those are largely funded by capacity reservations from either generators or their off taker so between the two so it's much more pipeline like which you can do with DC because you can control who's on and off that line and we are seeing a lot more of those merchant DC lines around the country that's one and then generally talking about incentives for transmission if there's some federal incentive to sort of up size or right size some of these lines I think you can always or should always make sure that there's enough skin in the game from the market that there's enough reservations from private parties to show that you know this is a you know this is a useful line that was sort of the framework that was used in the to hatch a B transmission the Cres also had some skin in the game requirements in Texas and I think there were some others but you know whether that's ultimately funded through a tariff through the regulatory approach or through some kind of federal incentive I think you can basically up size or fill the gap in the lines but I think it's good public policy to make sure there's enough private demonstration of interest where people are putting their own capital at risk to show a certain portion of the line is reserved and pay for others I'll just I think Rob makes a good point about merchant the other thing I'll talk about a little bit is on the electric side the one place where the generator does pay is on the interconnection side so when there's an interconnection of a new resource the generator is paying for the upgrades to the system to get on board when we did our interconnection reform technical conference last March or it's the last May one discussion we had was the degree to which you could marry up the transmission planning process and the interconnection process in a way that would make both of them a little bit more efficient I think I sensed during that conference a certain interest in folks to explore that issue further I think what people talked about was that the thing that will make that a little hard is the cost allocation element because right now we have this very clear generators pay on the interconnection side load pays on the transmission side that you'll have to reconcile how costs shift whether there is a cost shift or how those costs are changing that cost assignment will change but I think once we've got a couple commissioners we'll have a sense of whether those couple commissioners are interested in that but I think that idea of marrying up interconnection and transmission planning is out there I guess I'm a bit of a perspective from the view of bringing generation to market and in the case of the great northern transmission line essentially it's a generator interconnection almost for a new generation Canada however when generation connection is transmission the difficulty is that the producer is paying for the line and Manitoba Hydro is a substantial pays 100% of the line in Canada a substantial portion of the share in the U.S. however if that's now transmission is regional transmission it provides all kinds of reliability benefits that you don't get with a typical lower voltage generator interconnection so there's benefits that flow to the broader market and MISO's study between half a billion and a billion dollars a year flows through to customers but none of that comes back to the generator so there's quite a difficulty in that scenario also MISO's way of valuing value economic projects essentially stops at the border it takes into account production costs from existing generators it doesn't take into production savings from generators that could be built in the future so there are discontinuities when you are actually trying to apply cost allocation to make everyone happy currently one of our concerns is not are there proper incentives but to what extent are there going to be disincentives with respect to energy storage with energy whenever you move energy on the transmission system the locational marginal prices are a very effective way of saying here is a barrier that you should respect and try and move energy around and in order to accomplish that they charge marginal losses marginal losses are double the cost of real losses so that signal that's saying too much because incrementally you are causing this load that produces a net cash flow which essentially the company the RTO like MISO takes and gives to someone else now consider yourself as energy storage the system has too much energy you want to get rid of it so energy storage takes that to the extent that it creates marginal losses you pay a premium for those losses you pay a tax on taking energy out of the system then when the system wants the energy you put it back you charge a tax again for putting the energy back into the system and then MISO takes that and gives that to somebody else so I think energy storage faces some disincentives and this issue has been brought up before FERC and FERC's first response was let's keep it simple let's just call it a megawatt hour a megawatt hour the price is always the same and that there is some logic to that however there still exists this issue that not only in some case are you missing incentives in some cases you're creating disincentives this panel is a bunch of appetizers because each subject matter that we've been talking about is going to be of a half day conversation so that's our fault for trying to cram a lot in there but I'm going to take one more question I hope it's really a good one from somebody and then we're going to break for lunch questions questions well let I have a question sorry this is a geeky transmission question and it might not appeal to everybody I have a question about the lack of investment in the AC system and so in theory when we were designing the nodal markets it should have been the price splits that got the cost differentials that someone would want to build to move those cost differentials back in line but they got the property rights they got to do the delivery and so that was in theory how you funded these forward was through the auction revenue rights or financial transmission rights however when you look at the planning paradigm you're trying to plan for reliability first and foremost and sometimes the economic signals aren't strong if you're taking those away economic splits are often an early indicator of a reliability problem about to come up so is it the interaction of the economic signals the reliability signals that it just puts too much uncertainty into the price splits and the original design of saying you would buy forward congestion relief is just not holding together because there's so many influencing factors in the planning process that introduce a lot of risk so I think the difficulty is the way that merchant model was supposed to work for the AC system was someone built that line and what they got as a result because it's a financial market what they got was the right to the congestion charges across that line so just the math of how electricity markets work from the high price area ends up collectively paying more than the low price generators typically get paid there's a chunk of money left over that chunk of money has to be distributed to people it's distributed through these financial transmission rights I think the difficulty thing with transmission investment is if you've identified that place where there's this persistent price difference if you build a line that's big enough to completely collapse the price difference there are no more congestion rents after the line is built so you have the right to collect but there's nothing left over so then the incentive is to only build the project big enough that it still makes sense but you keep some congestion left over on the system and that's not a great planning model so I think that has been the difficulty is that the value is destroyed by the investment and so there's got to be another vehicle the people who are getting the benefit out of that are the customers at the end who used to pay a lot and now are paying less and you've got to find a way to encourage those customers to be willing to pay for the cost of that line I'll add a little bit, I agree with that and just to wonk out a little bit deeper your friend in mind, Bill Hogan and others would say well but you could have the customers on the high side of the congestion contract long term for those with that developer because in the long run they're going to be paying that high congestion cost and so there's some incentive there is room for a deal in other words for a market based solution in that case but when I was I know advising Chairman Wood and other commissioners in the early 2000s and approving these early RTO filings we had these debates with the Paul Jaskows and Bill Hogan and others about how much do you rely on the market versus regulatory planning for transmission and Bill, if he were here, I think would acknowledge that even in the pure LNP market based model the optimum amount of transmission is not built, there are market failures in transmission in fact just about every market failure there is is in transmission and you can't fully define all the property rights as public goods so it's going to under build the grid and so for that reason as well as I would say there were some other reasons such as the added complexity you get in markets when you're trying to have understandable markets for consumers you know after the California experience and others when congestion can create all sorts of opportunities for manipulation and consumer confusion about what's going on as well as just the accessing remote resources gave us reason at that time to say don't rely on the market alone include economic planning as well in fact FERC rejected PJM's initial RTO application because it did not have economic planning so PJM had to come back and say here's our economic planning we'll look at benefits compared to cost and of course they've implemented that based on stakeholder input in a way that you can almost never pass a benefit cost test so we ultimately lost that one but that'd be my answer is that it's not efficient to rely on the market alone even in an LMP framework so you need to do more and perhaps one you know one thing we should think about here when you can say when you do the right thing in transmission it doesn't make economic sense you need something else to come in and get things straight and in the case of a vertically integrated utility someone can make an investment and they reaped it all because it was whether that benefit was economic or reliability added cheaper maintenance or whatever they captured it all now that doesn't happen so how do you get back to that is what we're trying to do with this experience let's look at where we're going with energy storage and look at the invest look at Luddington we don't have pump storage but I always look at a plant like that at DTE as an amazing plant it was the largest in the world these are the largest machines in the world they are larger than the engines that drive your aircraft at full speed and they were built when they were built they were valuable because they moved energy, cheap energy from the night to onto peak and they survived on the on off peak differential that plant is worth a billion dollars but however the current market will destroy the on off peak differential because solar will reduce the price during the day gas will reduce that price during the night the on off peak differential is destroyed so as you get more and more wind and solar you need more and more Luddingtons as you get more and more wind and solar you destroy the market economics that make Luddington possible so we have if you look back at the problem we've had with transmission looking forward you're going to have exactly the same problem with energy storage and I think it's going to be worse well ladies and gentlemen let's get on that optimistic note let me let me ask you to go get your lunch it's right outside let me ask you to bring it back because we have a congressman Walberg is going to be here in probably 5 or 10 minutes and and I think you'll want to hear from him so join me in thanking this fabulous panel for their support