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tv   Weather and The Electric Power System  CSPAN  January 23, 2018 10:18am-12:37pm EST

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call this hearing to order. i want to welcome everybody here. senator murkowski will be here shortly for this hearing. it's titled, examining the performance of the electric
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power system in the northeast and mid atlantic due to increasing winter weather events, including the bomb cyclone. i would like to start by calling on the ranking member to give her opening statement. >> thank you, chair, and good morning to everyone. i'm sure that senator murkowski will be here shortly. as some people may know, a 7.9 magnitude earthquake hit off the coast of alaska, impacting co kodiak and parts of the pacific northwest with tsunami warnings that were issued for activities that were expected, and those warnings for tsunami waves have been recalled but no doubt i'm sure the senator is dealing with lots of things this morning related to that and other issues. so, impa want to thank our witnesses, chairman mcintyre and mr. walker, for being here and many of the staffs that people have here that we're glad we're back in operation. so we look forward to hearing from all our witnesses on the subject of the reliability of
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the grid. and its performance. last year, secretary perry and his staff reviewed the liability of the electricity grid in the light of the changing fuel mix, and i was relieved when the saw the staff report in august, which i thought was very balanced. it carefully distinguished between the terms "reliability" and "resilience" and described emerging techniques to integrate more renewable resources, and it also recommended grid operators adopt resell yailience metrics needed to be developed. unfortunately, when secretary perry filed his report as a proposal to ferc, i was a little more alarmed. the proposal ignored the conclusion of the department's own staff. it was a transparent attempt, in my opinion, to prop up the administration's favorite kinds of energy. there were many problems with this proposal. and never defined resilience. it picked a single attribute of
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power plants fuel stored on site and elevated it above all other factors. it promised full recovery for coal in some states that had promised to follow a market model years ago but the biggest problem was that it would hit consumers with additional cost to multiple independent assessments. bailing out coal plants just isn't bad policy, it was breathtaking raid on the consumers' pocketbooks. the pgm market monitor found the secretary's proposal could nearly double the wholesale cost of electricity so i want to applaud chairman mcintyre and the whole commission for unanimously rejecting the secretary's proposal. at the heart of that rejection, i believe, are consumers. i think the commission wisely reviewed the federal power act's just and reasonable standard for electricity rates and found the secretary had not met this burden in proving the current rules are unjust and unreasonable. consumers couldn't have asked
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for a better defense. given some of the troubling stories about coal interests and lobbying the department, it has never been more important for ferc to maintain its tradition of independence. i hope the secretary's proposal hasn't given resilience a bad name. the difference between the grid's recovery from hurricanes in florida and texas versus puerto rico shows that resilience really does affect the lives and quality. it deserves more attention. so i'm pleased that we have allison testifying today, along with our other witnesses. she serves on the national academy's committee that wrote an excellent report last summer on grid resilience and i'd like to submit that report for the record. it also has a series of concrete recommendations to congress, to ferc, and the department of energy that i hope we can explore today. so again, madam chair, thanks to all the witnesses for being here and calling this hearing. >> thank you, senator cantwell. my apologies to our witnesses as well as committee members. we've had a busy morning in alaska this morning, so i'm told all is well, but i appreciate
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more than ever the value of things like the earthquake and tsunami early warning systems. so, it's important that they're there, and that they were actually operating now that the government is back to order. last week, i outlined the busy agenda that we'll have this year and we will maintain our focus on legislation and nominations oversight is also very critical part of our role. we're obligated to examine the performance of agencies under our jurisdiction. today's an opportunity to gauge whether federal policy is helping or hindering improvements in energy system performance. while it may not have been up to alaska's standards, the cold snow and ice endured by many in the lower 48, especially along the eastern seaboard, was quite notable over the holidays and into the new year. while the worst of it occurred over and on the shoulders of a holiday period, and we didn't reach the extremes felt in the 2014 polar vortex, we did experience a so-called bomb cyclone event. i understand that a bomb cyclone
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is a cyclone storm system in which the pressure drops precipitously in a short period of time. apparently these happen relatively off the northeast coast but this recent storm was a record breaker with the largest pressure drop in a 24-hour period since 1976. as such, it presented a kind of informative stress test for the electric power system. now, i've often said that federal law and policy must enable energy to be affordable, clean, diverse, and secure. with this hearing, we return to a subject i've been following keenly since at least 2010 about how changes in the nation's electric grid and the mix of primary electricity sources are stressing system reliability and what federal changes may be necessary to address those stresses. the secretary of energy's notice of proposed rule making issued in september and the recent ferc order in response were focused on these same issues. in 2014, following the polar vortex, we held a similar hearing to examine challenges to the electric system.
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i said then that we needed to redouble a properly scaled and continuously improving approach to grid reliability and security. i'm pleased to say -- to see that today's testimony shows that there were many lessons learned from that extreme weather event. for example, there now appears to be improved coordination between the electric and the gas systems. the rtos and ferc have reformed market rules and improved business practices. nerc has updated its approaches and that's all good news. the bad news is that we've not addressed the more difficult and fundamental challenges for electric and gas infrastructure. for example, gas pipeline infrastructure remains too constrained. broader policy changes are not sufficiently taking into account increasing risks that in future years system operators may have to turn to intentional service interruptions, otherwise known as load shedding or rolling brownouts or blackouts, to manage certain peak periods. one of our witnesses will speak
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about the situation in new england, which in some respects could serve as a harbinger of challenges in other parts of our nation. we must ensure that our nation's natural gas supply, which is a boon to our economy and to our national security, can be reliably delivered to a changing marketplace. at the same time, it's not clear what the reliability and economic impacts will be of a grid whose primary electricity resources are less diverse over time as base load nuclear and coal units continue to retire. meeting all of these challenges will also strengthen in competition for the betterment of energy customers should be a shared priority. after all, promoting competition has been a tenet that has enjoyed wide bipartisan support for more than two decades. this morning, we will hear from two agencies under our jurisdiction, ferc and the department of energy. we'll hear from the heads of three regulated entities with quasi-regulato
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quasi-regulatory responsibilities, nerc and the two regional transmission organizations, pjm and iso new england. we also have a member of the committee of the national academy of science, engineering, and medicine with us. i welcome each of you to the committee this morning. look forward to your testimony. i would ask that you try to limit your testimony this morning to about five minutes. your full statements will be included as part of the record. this morning, we are joined by the honorable kevin mcintyre, who's the chairman of the federal energy regulatory commission. this is the first time that you have appeared before the committee in your capacity as chairman. we welcome you. the honorable bruce walker is also with us as the assistant secretary for the office of electricity delivery and energy reliability at the u.s. d.o.e. good to see you again, bruce. mr. charles barridesco is the ceo for nerc, we welcome you.
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ms. allison clements is the president of good rid, llc. senator cantwell has mentioned your contributions. we thank you. mr. andrew ott is the president and ceo for pjm and mr. gordon van welie is the president and ceo of iso new england. welcome to each of you. chairman mcintyre, if you would like to begin with your comments this morning. >> yes, senator. chairman murkowski, ranking member cantwell and members of the committee, thank you for the opportunity to appear before you today to discuss the performance of the electric system during the recent weather events. i am honored to serve as the chairman of the ferc. our commission takes seriously the responsibilities that congress has entrusted to us, concerning the reliability of the bulk power system in this country. we are still receiving and
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reviewing the data related to the performance of the bulk power system during the cold weather event that has taken place over the past month. based on what we know to date, it appears that notwithstanding stress and several regions, overall, the bulk power system performed relatively well amid challenging circumstances. looking forward, we must both learn from this experience and remain vigilant with respect to challenges to the reliability and resilience of the bulk power system. the performance of the bulk power system during the 2014 winter event you have referred to, now commonly known as the polar vortex, did provide useful context for understanding the performance of the bulk power system under the more recent winter events of the past month. during the 2014 polar vortex, much of the u.s. experienced sustained and at times extreme cold weather.
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the challenges presented by these conditions and high electric demand were compounded by unplanned generator shutdowns. of various fuel types. these combined circumstances tested grid reliability and power supplies and contributed to high electricity prices. drawing on that experience, ferc took numerous actions, as you have referenced, to address reliability and resource performance issues. for example, the commission directed regional transmission organizations and independent system operators or rtos and isos, as we usually call them, to report on fuel assurance issues, and the commission revised its regulations to enhance coordination between the natural gas and the electric industries in light of the increasing use of natural gas as fuel for electric generation. for certain regions, the commission approved capacity market reforms that are intended
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to increase financial incentives for improved resource performance and to penalize nonperformance or poor performance. the commission also approved temporary winter reliability programs in new england. turning to the winter event, winter weather events of the past month, it is useful to consider the impact of the recent weather events on both the provision of service and the associated costs of that service. importantly, there were no significant customer outages that resulted from failures of the bulk power system, generators, or transmission lines. while there were no significant reliability problems during this recent cold weather event, wholesale energy prices were high, reflecting the stress on the system. higher wholesale energy prices that accurately reflect fuel costs and current system conditions can be beneficial, sending important signals that drive operational and investment decisions for both utilities and
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consumers. we also recognize that higher wholesale energy prices are ultimately born by retail customers. and so the commission is attentive to the potential for behavior that takes advantage of extreme weather events. just as the commission and the rtos and isos drew lessons from the polar vortex in 2014 and applied them in ways that better prepared us for this recent cold weather event, we will examine these more recent events very carefully and seek to learn from them. i would like to emphasize a few points that the commission made in an order issued a couple of weeks ago on the issue of resilience, more generally. referred to by ranking member cantwell in her opening remarks. on january 8th, the commission responded to the proposed rule on grid reliability and resilience pricing, submitted to the commission by the secretary of energy. and we initiated a new proceeding to further explore resilience issues beginning with the rtos and the isos.
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as we stated in our order, we appreciate the secretary reinforcing the importance of the resilience of our bulk power system. it's an issue that warrants further attention, and as we said in our order, prompt attention. the goals of our new proceeding are, first, to develop a common understanding among the commission and industry and others as to what resilience of the bulk power system actually means and requires. second, to understand how each rto and iso assesses resilience within its geographic footprint. and third, to use this information to evaluate whether additional commission action regarding resilience is appropriate at this time. commission directed each rto and iso to submit within 60 days of our order specific information regarding resilience of the bulk power system within those respective regions, and we invited other interested entities to file areply comment
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within 30 days after the rtos and isos submit their comments. we expect to review the additional material and promptly decide whether additional commission action is warranted to address grade resilience. in our january 8th order, the commission also recognized that the concept of resilience necessarily involves issues that extend beyond our commission's jurisdiction, such as distribution system reliability and modernization. for that reason, we encouraged rtos and isos and other interested entities to engage with state regulators and other stakeholders to adjust resilience at the distribution level and more broadly. i assure you that reliability and the resilience of the bulk power system will remain a priority of the ferc. i look forward to answering your questions. >> thank you, chairman mcintyre. assistant secretary walker, welcome. >> thank you. chairman murkowski, ranking member cantwell, and
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distinguished members of the committee, thank you for the opportunity to discuss the issue of grid resilience during the recent cold weather affecting the northeast united states. just two months ago, i testified before this committee regarding the responsive recovery efforts in puerto rico and the u.s. virgin islands. secretary perry and the administration remain committed to this restoration. the topic of today's hearing is timely. the resilience and reliability of the energy sector are top priorities of the secretary and a major focus of the department of energy. in fact, the first study requested by the secretary was the staff report to the secretary on electricity markets and reliability. the report examined the evolution of the wholesale electric markets, the effect on grid reliability and resilience as it relates to capacity, the connection between regulatory burdens and the retirement of base load power plants. many of the findings were borne out of the recent severe weather event across the nation. the last several months have been quite demanding on the energy sector. from an extremely active
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hurricane season to the 2018 deep freeze, we have confronted challenges that tested the resilience and reliability of our energy infrastructure in different ways. during the recent cold snap from late december 2017 to early january, the northeast saw a record low temperatures for several days. however, customer outages were minimal. what was apparent during this weather event was the continued reliance on base lode and a diverse energy portfolio. without action, we cannot guarantee the resilience of the electric grid. the grid's integrity is maint n maintained by an abundant and diverse supply of fuel. resilience for our electric infrastructure has become more important than ever as major parts of our economy are now totally dependent on electricity. even momentary disruptions in power quality can result in major economic losses. at the same time, we are in the
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early stages of large transformation of our electric supply system with this process of change likely to continue for many years. keeping the lights on during this transformation will require unprecedented collaboration and coordination amongst many parties. d.o.e. is committed to work with ferc and regional rtos and isos to achieve this mission. stakeholders are facing multiple connected issues. with growing asset stress, the integration of increasing amounts of distributed energy resources, growing consumer participation, dynamic markets, increasing cyber security and physical threat and the advent of the internet of things, the grid that sustained us for over a century must be designed to ensure reliability and resilience over the next century. today, the marketplace, rather than engineering principles, focused on building and maintaining a resilient energy system is driving the design of the system. however, it is clear we need an in-depth understanding of the resilience of our electricity and related infrastructure in order to know how to best either modify existing market
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structures or -- and/or build new resilience standards into the system. to that end, i propose that d.o.e. undertake a detailed analysis that integrates into a single north american infrastructure model of the ongoing resilience planning efforts at the local, state, and regional levels, including the interconnections between canada and mexico and also fills any gap and harmonizes any inconsistencies at those same levels. i understand that we don't have funds appropriated for those tasks. i believe that building this resilience model should be a top priority over the coming years. as does the leadership of department of energy. to address challenges posed by events such as the recent cold snap, it is critical for us to be proactive and cultivate an ecosystem of resilience, network producers, distributors, regulators, vendors, and public partners acting together to
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strengthen our ability to respo respond, repair, and recover. d.o.e. continues to partner with stakeholders to identify threats to develop in-depth strategies and rapidly respond to any disruption. resilience is not a one-time activity but a habit. it is something that can be -- cannot be done in 24 or 48 hours before an event and in events occur with little or no noelts. resilience is approaching our energy infrastructure with long-term planning in mind, understanding the future benefits resulting from investments made today. in conclusion, today, we are faced with various threats that continually become more frequent and impactful. the energy system that provides services throughout the nation are prime targets. accordingly, we need to build upon the reliable system we have today, realize from the hard work of ferc and the rtos and isos, to make them more
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resilient to stave the deleterious effects of these present and real threats. the near-term concern is that energy markets are significantly driving the investments being made in generation sources throughout the nation. indeed, most of these investments are primarily being made to address economic dispatch issues within specific regions. this has resulted in a significant reliance, in fact, perhaps, an overreliance in some instances, on less costly fuel. in this case today, natural gas. the lack of a comprehensive integrated process to drive appropriate investments to improve resiliency that take into account energy system interdependencies, critical infrastructure susceptibilities, essential reliability services as well as affordability increases the risk of a compromised energy infrastructure, and thus the security of this nation. thank you for the opportunity to testify, and i look forward to your questions. >> thank you, assistant secretary. appreciate your words.
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>> chairman murkowski, ranking member cantwell, members of the committee, thank you for holding today's hearing. i'm the interim president and ceo of nerc, the electric reliability organization designated by ferc. in addition to developing and enforcing mandatory reliability standards for the bulk power system, nerc continuously assesses reliability and monitor system operations, including in new england and the mid atlantic chblt. my testimony covers four points, nerc's monitoring of the bulk power system and our work with stakeholders, industry, and government. the performance of the system during the recent extreme cold weather, and how nerc fosters a continuous learning environment to improve reliability, and recommendations based on nerc's reliability assessments. for nerc, severe weather is, among other things, an opportunity to learn from events, to improve reliability for the future.
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even when nothing bad happens, stress on the system points to reliability risks that should be addressed. nerc's bulk power system awareness group is our eyes and ears on the system and an important part of this process. on a daily basis, we continuously monitor operations on the grid, working with nerc's regional entities, reliability coordinators, transmission operators, and generators. in conjunction with nerc's region regional entities, we also analyze system disturbances that could impact reliability. in turn, this information is shared with industry operators, ferc, and d.o.e. in short, these activities provide daily visibility into the system and actionable information to improve liability. during extreme weather events, nerc operates on an elevated basis. throughout the severe cold weather period, we held calls with nerc's regional entities in the affected areas and gathered information from the reliability coordinates such as iso new england and pjm about concerns
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associated with the impending storm. mu multiple coordination calls were held daily to understand fuel levels, natural gas availability, and other factors such as fuel storage and replenishment plans as well as dual fuel capabilities. during the extreme cold, the primary challenge was reliably serving electricity demand during a period of near and in some cases record-setting winter lows. to manage the situation, reliability coordinates implemented conservative operations, emergency procedures, and began heightened planning, communications, and preparation. throughout, the bulk power system remained stable and reliable. a diverse generation mix with adequate flexibility and back-up fuel was key to meeting increased electricity demand. and all forms of generation contributed to serving load. new england experienced perhaps the greatest stress to the system. the region experienced increased use of fuel oil for generation
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due to high natural gas prices, combined with record-setting consumption of natural gas for heating and other uses. resupply of depleted oil inventories was delayed due to a winter storm impacting new england. finally, the loss of a nuclear power station to a transmission system outage removed 685 mega watts of base load generation for several days. but again, throughout all of this, in new england and elsewhere, there was no loss of load due to bps conditions. based on the information we've reviewed to date, we are seeing improved performance this winter compared to past winters of similar or worse severity. in part, this is due to actions taken from the lessons of the 2014 polar vortex. nerc's report analyzing the polar vortex underscores the need for thorough and sustained winter preparation, close coordination and communication between generator and system operators, and reliable fuel supply. nerc and the regions in close coordination with industry
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stakeholders conduct annual workshops and webinars concerning winter weather preparation, provide lessons learned, and share good industry practices. the regional entities are important to leveraging nerc's work with industry at the regional level. for example, the reliability first corporation, whose footprint includes the mid atlantic region, conducted 18 on-site visits to generators since the polar vortex. these engagements are targeted at generating facilities that have experienced freezing or cold weather related issues during prior winters and new generating facilities. this collaboration helped remedy winter challenges and share lessons learned, thereby contributing to improved performance. while the recent extreme cold weather period was less severe than the 2014 polar vortex, observations from both events point to four recommendations that nerc makes in recent reliability assessments. first, reliable and assured fuel supply is central to electric liability. in wholesale electricity markets, nerc recommends that
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market operators develop additional rules or incentives to encourage increased fuel security, particularly during winter months. policy should also promote reliable natural gas supply and transportation. second, generator owners and operators should maintain and regularly test back-up foil operability. third, regulation of oil-based fuel for back-up generation raises a potential need for expeditious consideration of air permit waivers. and finally, during the extreme cold, a diverse generation mix, flexible fuel resources, and back-up fuel were key to meeting increased electricity demand. accordingly, nerc recommends policymakers and regulators should consider measures promoting fuel diversity and assurance. thank you for this opportunity, and i look forward to your questions. >> thank you. ms. clements, welcome. >> thank you. good morning. thank you, and good morning,
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chairman murkowski, ranking member cantwell, and distinguishing members of the committee. i am president of good grid, a firm that specializes in energy policy and law. in 2016 to 2017, i served on the national academies of sciences, engineering, and medicine committee that produced this consensus report, enhancing resilience of our nation's electricity system. well, i will talk about the report's findings, the views i express today are my own and not the committee's. the national dialogue about resilience comes at a critical moment. the national academy's report notes that the u.s. electricity grid is increasingly vulnerable to the risk of cyber and physical attack and the increased frequency and duration of hurricanes, blizzards, floods, and other extreme weather events caused by climate change. the hurricanes you mentioned, senator cantwell, in your remarks provide the most vivid examples of the health and safety impacts that prolonged electricity outages can have on our population, especially our already most vulnerable communities.
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natural disasters reportedly cost $306 billion in 2017, making it, by far, the most expensive natural disaster year on record. as ferc most recently defined it, resilience is the ability to withstand and reduce the magnitude and/or duration of a disruptive event. importantly, resilience is, at its core, a transmission and distribution system concept and not one that is, you know, specifically focused on power generation types. we must distinguish between resilience and reliability, as you mentioned. grid reliability is ensuring that enough generation and transmission exists to satisfy all customers' electricity needs and avoiding blackouts if a line or plant goes down. well, implementing reliability rules is certainly complex, the concept itself is relatively straightforward and amenable to standards for measuring its efficiency. resilience, separately, has
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emerged with this massive new risk brought on by the threat of attack and by the impacts of climate change. although the unpredictable nature of the threats, like from this morning's cancelled tsunami warning, making -- defining and developing resilience metrics is difficult. however, existing nerc and regional standards for reliability do actually also provide some resilience benefit. the recent winter conditions provide three takeaways to inform your resilience-related policy thinking. first, the transmission system is reliable. we've already heard this. incorporating lessons learned from the 2014 polar vortex, rtos reliably managed unexpected outages during the bomb cyclone, like the shutdown of the pilgrim nuclear plant in new england. before we rush to establish resilience rules for the transmission system, we should determine what markets, planning, and operations protocols already do in terms of supporting resilience and whether additional metrics are
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necessary. the national academy's report cautions about the difficulties of creating cost effective and nonredundant rules for unpredictable and varied resilience needs. this committee can support the efforts that chairman the efforts that chairman mcintyre described at nerc on the resilience front. ensuring access to hospitals, fire stations and other critical services. despite the bulk system reliability in the last month, 80,000 homes and businesses have little comfort when they lost power during the bomb cyclone. to tackle end use resilience needs where people are affected, we plan on resilience planning and emergency preparedness at the local and state level. proactive congressional support outlined in the national academy's report especially via public/private partnerships can go a long way in supporting this planning and improving resilience. third, renewable energy and distributed energy resources are
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critical components of a reliable grid. the bomb cyclone and the 2014 polar vortex affirmed wind power as a reliability. wind power performed well above allotted capacity values and did not go offline -- generally, helping to avoid price spikes and other blackouts. distributed energy resources, especially customers getting paid to reduce their power use, can provide significant contributions to extreme weather reliability as well. this was demonstrated during the the polar vortex in pjm where nearly 3,000 megawatts of voluntary demand reduction played a key reliability role. unfortunately, current guides do not provide incentives for economic under these conditions and did not facilitate significant economic demand this month, to my understanding. these takeaways affirm the value of competitive wholesale markets and ferc's long tradition of
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technology neutral support for these markets. with the d.o.e.'s proposed number behind us, this committee should be wary of other supposed in-market proposals intended to sustain specific types of power generation. at this critical moment, and through smart resilience policy this committee has a strong opportunity to support a clean, reliable and affordable energy future. thank you. >> thank you, miss clements. welcome, mr. ott. >> thank you. appreciate the opportunity to testify in front of you today about pgm's experience in the recent cold snap. i wish to offer also our perspective on activities we need to engage in in the future to ensure that our nation's electric infrastructure remains reliable and resilient and is supply electricity is met efficiently, fairly and cost
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effectively. as i note in my testimony, we are a ferc regulated regional transmission organization serving all or parts of 13 states plus the district of columbia. we have a population of 65 million people. so obviously reliability of the grid is job one for us. during recent cold weather we've experienced three of our top ten winter peak demand days of all-time. overall the grid and the generation fleet performed very well. we had very sustained high performance throughout the cold snap. this cold snap was actually prolonged as compared to the polar vortex which is much shorter, more deeper cold. this cold snap is much more prolonged and we depend on that prolonged improved performance. with the support of ferc we instituted reforms in our passing regarding pay for performance based on lessons learned from the polar vortex as
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chairman had indicated. and we did see significantly improved performance during this cold weather event. all resource types, coal fire generation, gas fire generation, nuclear generation, renewable generation, all performed better in this cold weather event than what we saw during polar vortex. and certainly we see that improvement was based on lessons learned, improvements in investing back into those resources to see that they perform well. what i can assure you that the grid is reliable today, our work is not done. we certainly cannot become complacent. we need to look at certain initiatives to undertake. and certainly pjm has been undertaking those initiatives to look at the resilience of the grid and how we are going to improve the robustness and resilience of the grid into the future. we look at this from three perspectives. we have to plan the grid with eye towards resilience, go
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beyond the traditional criteria. we need to operate the grid looking at the increased risks and increased threats that we see. and also look at recovery of the grid. should something happen, we need to bounce back quickly. those are the types of things we look at. i want to also bring to this committee's attention some of the broader initiatives. we'll actually be working in partnership with the new ferc chairman as we go through the process of the docket that they opened, as he had mentioned. one of the most important things that we have been focused on is how does our market, electricity market, actually compensate for resources providing reliability services. we've proposed key reforms. and what i'm engaged in discussion on key reforms what we call price formation. i want to spend a little time explain whag that means for this committee and for ferc as a whole. just to be clear, the generating units we call upon to serve
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customers and produce electricity get paid. they recover their offers and their costs and certainly are not uncompensated. but at times what we find is the total cost of operation of those units to provide the reliable power in each day, they don't necessarily get those moneys in the market. sometimes the market price doesn't reflect the fact they're online and running, therefore we have to compensate them for what we call an out of market payment. to put in perspective, in this recent cold snap normally the out of market payments are about $500,000 a day for us, which is a very small number compared to the total cost of electricity. in the cold snap we saw that increase fairly dramatically to $4 million, sometimes $6 million a day whach. what that shows is we are running those units to provide reliability to the grid, but the fact they're running isn't reflected in the price of electricity. they get paid, but they aren't seeing it in the price. therefore when they go to sell
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their electricity forward in the market, so you're going to sell it for next month or next year, they're selling it at a discount that's not reflecting the fact they were onto certain customers reliablely in that cold snap. that's the issue we have to address. that's the issue that all resources will benefit from whether it be coal fire resources, gas fire resources, nuclear, renewable, demand response, alternative technologies. if we get the price right, all of these resources will see the dollar value with the reliability they're proposing. and that's what we want to engage in is that conversation. but what we really need because there's so many things we need to address, we need to put time discipline, certainly we'll work with ferc to address these in a timely manner. thank you very much. look forward to questions. >> thank you, mr. ott. mr. van wheeling. >> good morning. i'm ranking member cantwell members of the committee, thank you so much for the opportunity to appear before you this
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morning. in 2013, i appeared before this committee to highlight a great concern in new england which was we were becoming more dependent on natural gas power generation without making investment to supply fuel to the generators and since that time we've continued to express our concern over the lack of secure fuel arrangements in the region. we also highlighted the possibility that both wholesale energy prices and emissions would rise when extreme weather results in natural gas pipeline constraints. in late december and early january, we experienced the impacts of the current fuel constraints as bitter cold temperatures drove an increase in demand for natural gas in the region. we've known for several years that when it gets cold, the region does not have sufficient gas infrastructure to meet demand for both home heating and power generation. constrained pipelines result in substantially higher natural gas prices, causing gas to be priced out of the market.
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as a result, the bulk of the replacement energy was provided by burning oil either through steam generators burning oil or by fuel units switches from gas to oil. these circumstances raise reliability challenges. first, rapidly diminishes oil inventory which inevitably needs to be replaced. however, in a snow or ice event, replenishment can be difficult or even impossible. second, emission regulations limit the run time of oil fired generators. finally, fuel constraints and rapid depletion in the oil industry dramatically increase the potential reliability consequences of a large transmission or generator outage during an extended cold weather event. these circumstances caused us to reduce the operation of a number of oil fired generators and commit other resources into the market in order to manage the fuel inventory through the tail end of that extreme weather
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event. so far this winter we've been fortunate not to experience any major contingencies that we could not handle. and the bulk power system has operated reliablely. we will continue to monitor fuel availability. regardless of the outcome of the remainder of the winter, i believe the last few weeks validate our concerns and underscore the importance of a study that we released last week. in late 2016, we embarked on a study we call the operational fuel security analysis to improve the region's understanding of the reliability risks stemming from the lack of fuel security. our recent experience leads us to the conclusion that no new incremental gas infrastructure will be built to serve power generation. therefore, the study does not assume the buildout of additional gas supply for power generation. we examined 23 different scenarios to analyze whether enough fuel would be available
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to meet demand and to assess the operational risk that materialized in particular with the retirement of non-gas fired resources or the outages of critical resources and infrastructure on the system. the analysis that energy shortfalls due to inadequate fuel would occur with almost every future fuel mix scenario, requiring frequent use of emergency actions including to protect grid reliability. so i will discuss the results of this analysis with stake holders, policymakers and regulators in the region throughout 2018 to understand the level of fuel security, risk and hopefully determine what level of risk the region and grid operator should accept. it will be costly to remedy these fuel security challenges. however, alternative is negative impacts on system reliability, chronic price spikes during cold weather, higher emissions when there's more economic to burn oil and natural gas and the
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possibility of further interventions by the iso into the market to delay the retirement of critical resources. also, markets and the transformation of new england's bulk power system have resulted in significant economic and environmental benefits to the region. however, the fuel security difficulties are real. and they are significant. if we're able to meet these challenges, i think it will result in a more reliable, efficient and clean power grid benefitting the entire region. i appreciate your committee's focus on this important matter and look forward to any questions you might have. >> thank you, mr. van welie. appreciate it. appreciate the testimony of each of you this morning. senator manchin has commented he's got a pressing thing somewhere else and asked very politely so i'm going to yield my time. you may take the first question. >> i begged. i begged. i want to thank chairman murkowski, thank you so much. and my dear friend ranking member cantwell for allowing me to have this opportunity.
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but also for this hearing. full disclaimer, west virginia as you know has been a heavy lifting state for a long time. we're very blessed and please to provide energy the country's needed starting way back when for building, making the steel to build ships that defends our country. so we're very proud of the energy part that we play in this great nation. with that, i think you all know that i'm an all-in energy portfolio. in the state of west virginia is too even though coal has been dominant factor now that the marseilles shale has come on so strong. and utica and even rogersville, so we've been blessed. and we're going to be able to help the country for many years to come. with that, as you know, i've been vocal about ensuring reliability and resilience of our grid for some years, particularly since the polar vortex of 2014 which you all alluded to and also the recent cold period that we hit. and i supported the recent department of energy grid study and subsequent proposal by ferc
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rule making i've been asking questions about reliability and resilience in this committee for some time. will continue to do so particularly because we continue to see coal nuclear plants going offline. we know the market forces that are at play. but over the most recent deep freeze of the bomb cyclone as many are calling it, the grid performed well. and i think you all recognize that. and i applaud each of you in your role, particularly you, mr. ott, in staying vigilant to make sure west virginia homes stayed warm and the lights stayed on since pgm is over west virginia. i want to stress three points. we need to stay vigilant because coal fired power perform well during the latest cold snap, yet many planlts are fighting to survive. we need to better protect consumers from the shock and hardship of high electric bills when these events happen and west virginia bills as my colleague senator capato will tell you have risen exhosh
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tantly. it's truly hard to know whether our grid is actually resilient or not. so for those people who believe that we can do without fossil completely, you know, i want us all to be completely honest and accurate with them. we can't. maybe that day will come in the future. it's not here. and for what period of time and how soon that will happen, i don't know. i want to make sure we can provide what this country needs immediately and now and continue to do so. for the time that it's going to be called upon. if i can start with you, mr. mcintyre and go down, ask one question. what would this country have done without the backup coal fired plants in the polar vortex and also this last bomb cyclone, if you will? and what critical position would it have put our country, if any, so we can put that to rest and find out how we can stabilize and keep coal vibrant so it's there for that resilience that we need and the dependability this country needs.
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>> thank you for the question, senator. coal did, as you heard from a couple of our witnesses here, perform well alongside other -- >> i guess the question i'm asking would the system have been able to be flexible enough to provide the energy we needed during these periods of time? >> i think in this recent weather event we wouldn't have seen any widespread outages absent coal. that said, coal was the key contributor. it wasn't example from operational problems. there were some issues, as i understand it, with frozen coal pilots and certain sites and so on, but no question a key contributor. i share your overall view that all of the above needs to be our philosophy of the different types. >> coal needs to have a place. >> absolutely. >> okay. mr. walker? >> yes, sir. thank you for the question. you said something i just want a little bit of a nuance, it's whether or not we could or should survive without coal. and i think -- >> well, there are some people that think that we should. >> right. and i think it's very important
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to point out -- >> i think they're wrong. >> -- that the evolution of the electric grid that has inextricably tied together the vast energy systems throughout the united states. coal, natural gas, oil, in so much as what we've done is we've put ourselves in position where we now have more infrastructure to have to protect to ensure the safe and reliable distribution of coal power. and so, you know, coal did play an important part here. on average it presented and provided 38% of the load during this event. so -- >> that 38% if it wasn't available we'd been in serious problems. >> the markets would have met the need with just simply much higher resources. but the point i'm trying to make, perhaps not well, is that when we start relying on those other resources, things like natural gas and things like oil,
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we also increase our exposure because now the critical infrastructure in this country is not the coal sitting at a plant or a nuclear facility where i've got the nuclear fuel there. i've got to rely on thousands of miles of pipeline or transportation systems to get oil to locations. so the challenge to manage this, particularly in the -- facing the threats we have today with mostly physical and cyber security really, really should give us pause to step back and think about the diversity mix and whether or not we could ever get rid of oil, i think the better question for us is should we get rid of oil. because it does -- or coal, rather. >> i'm not worried about that. >> each one of those has certain unique characteristics that are very important. and i apologize for that. page 86 of the staff report there's a chart that defines the differing values different type of generation had. and it's really, i think, what we have an opportunity going forward with and i look forward to working with ferc and the respective rtos is really
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finding that optimal mix that gives us the diversity for the resiliency and also minimizing our exposure from the cyber and physical threats that we face today. >> chairman, i know my time is up. can i just ask mr. ott with pjm, he's responsible for delivering the 56 million -- i think, was it 56 million? >> you are pressing your luck here this morning? [ laughter ] >> mr. ott. >> i'll make it very short. the reality is, again, for this past event 45,000 megawatts of the electricity we delivered, which is 40% or more, was coal fired. we could not have served customers without the coal fired resources. that's the reality. the point is is are the prices reflecting the fact that those resources are running? my answer is, no, it's not. we need to fix that. we clearly need it for now, the question is how does it transition? clearly some coal plants don't run. they never run. they don't produce electricity. they're just hanging on. they should go. the ones that are running and online every day to serve customers should be reflected in
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the price. so we need those. some can go, some have to stay. >> thank you all. thank you, madame chairman, for being such considerate and kind. >> it's a new day. senator cantwell. >> thank you, madame chair. mr. walker, obviously you've heard some of the recommendations on resiliency. which one of those ideas in the report stand out to you as good things to implement? >> i think the position that ferc has taken in reestablishing what was previously the noper in bringing the rtos and isos together to evaluate the resiliency on their respective systems will provide an excellent baseline. i've had the opportunity to meet
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with mr. van welie and go over his new england report and look at the work done by pgm and vortex, those are two fantastic baseline analysis that will enable ferc, the rtos and isos to move forward with really having a fundamental understanding of where the interdependencies are on the system so that we can actually build a better and more resilient system informed by where the actual risk is and not the markets. >> well, i appreciate your comments about first of all compromised infrastructure and cyber security. i mean, given the quadrennial review that's where it said we should be spending our attention. and i'm reminded of the debate we had in this committee in 2015 about just that very issue where oil and coal were competing for rail supremacy, i guess, is the right way to say it.
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and definitely left north -- or probably say upper midwest utilities without their ability to serve their customers simply because of congestion. so the dynamic is changing, so i appreciate reports and recommendations of those reports because you're citing the changing nature of economics. and the challenges it then delivers to the utilities and to those who regulate the utilities. and that is why chairman mcintyre, i'm so glad that you guys resisted, you know, what i thought was undue political pressure on the noper to try to force a bailout. i know that last week commissioner filed a next party notice about first energy of coal plant transfer. i think that was the right thing for him to do. but the news was troubling to me because it said to me there are those who are trying to influence ferc on a political
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aspect as opposed to the thorny economic issues that are at stake here. and so i don't -- what do you plan to continue to do to make sure that ferc is an independent agency? and i will just give a little context when enron manipulated the energy markets, i don't think anybody in my state really understand who or what ferc was. but after that, i guarantee you it's become a household word because they know it is those that protect them from being gouged unfairly on energy prices. something so important to the economy of the northwest. >> yes, well, thank you for the question, senator. the independence of ferc as an agency, as a federal agency, is essential to -- first of all, it's that way by design. statutorily in its construction. and it's very important to me personally as i stated here in my confirmation hearing. and i intend to do my utmost to
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ensure that it lives up to that independence. in this particular instance, i am delighted that we had a five to nothing vote reflected in our january 8 order. as you know that is -- that reflects a bipartisan commission three republicans, two democrats, and i'm pleased we were able to see a common path forward in terms of pursuing this very important issue of resilience. >> so you'll make sure that politics stays out of it? >> thus far, honestly, it hasn't been a problem. i have not personally felt any undue influence into any efforts to affect my decision making and i would expect that to continue. >> great, thank you. miss clements, what about the northeast and getting more supply? a lot of focus has been on increasing natural gas, what are some of the other options? i certainly understand the value of supply. i don't want to cut mr. van
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weile without a comment, but what are some of the other regions for reliance and resilience? >> thank you for the question, senator. i think there are a couple realities we have to start with when we answer that question and one is that this transition towards different resource mix, one that has low marginal costs, free fuel from the sun and the wind, as a predominant choice on parts of communities, on the parts of companies, on the parts of citizens is already underway, it's already happening. and what the grid operators have always done as the energy mix has transitioned over time from back in the '50s all the way up until today is manage that transition, very well. and so the idea that this new set of resources coming on can't be reliable is a false place to start. and the last reality to inform the answer to your question is that fuel diversity is one aspect of a resilient grid and of a reliable grid. it's not the only aspect. so when you're looking at the
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fuel security report that just got released from new england, it is a great input into what is the standard regional planning practices for regional transmission organizations and integrated system operators. it's a piece. it showed 23 different scenarios. the assumptions that are included in the report have yet to be vetted through the stakeholder process. and certainly there's a view by different stakeholders on whether or not those are the correct assumptions, but the report doesn't look at energy efficiency. the cheapest, most effective resource at protecting both resilience and reliability, doesn't look at energy storage or any of those other options. >> thank you. thank you, madame chair. >> senator. >> thank you very much. senator mcintyre, leading coal and uranium producing state. the industry is responsible for thousands of jobs, billions in state revenues. so during this recent cold snap
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that coal fired nuclear power generation resources were critical to meeting the electricity demand during the most extreme conditions, so i'm concerned about both the economic impact and the electric reliability impact of the continued retirement of these vital resources across the country. as ferc deals with this grid resiliency question, is the commission going to evaluate pricing of reliability and resiliency in terms of the attributes of coal and nuclear resources? how do you plan to look at that? >> thank you for the question, senator. i don't think we're doing a complete job if we don't take that into account. so we've been fairly broad in the range of the questions that we have put to the boots on the ground here which are the rtos and isos. and we need them to give us their best informed views on not only the operational aspects of keeping the lights on, as we say, but also what is needed from a market standpoint since
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they run the organized markets in the respective footprints as well whach well. what is needed in a market sense to ensure resources are indeed contributing resilience benefits to our grid are properly compensated. >> following up on that both for mr. van welie and i'll ask you, mr. ott, to weigh in as well. data from the department of energy shows heavily reliant on base load coal and nuclear generation during this recent cold snap, specifically the data shows that at the peak of the cold snap coal fire generation accounted for 7% of the dispatched capacity despite being only 2.6% of installed capacity in the region. so really called upon to perform. additionally, nuclear generation accounted for 23% of dispatched capacity despite being only 12% of the installed capacity. so isn't it fair to conclude that when your region needed power the most, it was the reliable coal and nuclear power
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plants that were necessary to keep the lights on? >> well, i think coal and oil differently, coal and nuclear differently contributed. i think the prospect for coal in new england is limited. the two coal fired power stations left on the system, one of which will retire fairly soon, we have four nuclear reactors, one of which will retire soon. and, you know, what was surprising to us was 35% of the energy was coming from oil burn in the region. and many of those oil units are 40 years old. so i think the issue for us in new england is that we are definitely transitioning to a different power system as the region strives to decarbonize. by definition we have to reduce the amount of fossil fuel burnt in the region. the question is, what's the game plan looking forward in terms of to do so reliably? and the idea behind the study is
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to demonstrate the consequences of doing nothing in the first instance, which we think are severe. and lay off policymakers various powers forward. i think we're looking to engage a conversation on how best to orchestrate that transition. >> mr. ott, would you like to add anything about pjm's experience? >> yes, sir. certainly from pjm's experience we have a much bigger proportion of our total resource mix being coal and nuclear. in fact, during this recent cold weather event, obviously more than half of the total supply was coal and nuclear. and certainly, i mean, clear we couldn't survive without gas, we couldn't survive without coal, we couldn't survive without nuclear. we need them all in the moment and i think the key is each of these bring to the table reliability characteristics. each of these are online when we need them. the point was as i made in my opening comments, the pricing doesn't always reflect that therefore when they go sell their energy forward, the fact they were on for reliability during the cold weather isn't reflected in the forward price. that's unfair.
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it puts them at a disadvantage and we need to fix it. and i think really this debate over there are certain coal plants frankly that are old and didn't run much during this period, those need to retire. those that are online running and every day we need to keep them and that's the reality. >> so are there some specific actions that you might recommend ferc take to ensure that base load coal and nuclear generation resources are paid for the value that they bring to the grid? >> yeah. certainly we've discussed that with ferc and certainly we'll continue the discussion with the chairman as part of this new docket. really it focuses on the energy price formation that we've just discussed in saying we really need to take a hard look at that. ferc had already looked at pricing and phenomena i'm describing here fast start pricing won't affect that. we need to look at the pricing related to these types of events where it's not the resources that are flexible moving around. it's the ones that are online and serving customers.
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>> thank you, thank you, madame chair. >> thank you, senator. senator smith. >> thank you, madame chair for organizing this very important hearing. i very much appreciated reading your testimony though i'm sorry i missed your comments here today. it's apropos because minnesota is this morning digging out from a major snow event. in minnesota that means a lot of snow, not a little bit of snow. and so it is uppermost on my mind about the impact of dangerous weather events on sort of the resilience of the whole community. so i really appreciate how important this is to all come together. last week, we heard in this committee from the international energy agency director about renewable energy. and how renewable energy like wind and solar is going to be the lowest cost new generation around the world within maybe the next ten years. and also how energy storage costs are dropping as well.
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so i'd be very interested in hearing from this panel about how you think these changes will affect the grid, the reliability and the resilience of the grid. it seems to me that diversifying would contribute to that, but i'd be very interested to know what your perspectives are on this, really, anybody. >> i'll jump in briefly, first, senator. i say again, welcome to washington. renewable generation is already clearly in the column of success story and gets better every year. and it is contributing reliably to the satisfaction of our nation -- of our nation's electricity needs today. and i expect that trend to continue. it performs well during harsh weather, as we heard, including improved performance of wind resources in cold weather
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conditions. that said, it's still the case that it presents operational challenges in thatt the wind isn't always blowing and sun isn't always shining. that presents some realities to it. i think energy storage, which your question referenced also, will be something that will advance the ball significantly toward draaddressing that. not so much today at least my view a compensation issue as a technological one. we need the technology to take that next big step. but with that, i think the picture of thoo side of the industry is good already and improving. >> go ahead. >> senator, thank you for the comment. i would note that the diversity that you speak to, i think, does in fact add to the capability to provide resilient power. and i think in particular the integration of renewables provides strategic use of those resources to meet certain demands and certain requirements in certain areas that they
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really can add tremendous level of capability. that being said, storage, as i noted in my confirmation hearing, i considered the holy grail of the electric system. and that being said, it is one of the top five goals in my specific department to focus in on really moving grid megawatt scale storage forward so that we can integrate that as a resource and help enable integration of renewables and other resources to be really key parts of our resilient grid. >> thank you. maybe i could just follow-up on with miss clements on this. what role do you see energy efficiency, and you also have talked some about demand response play in resilience. in minnesota we've had some success weatherizing homes, for example, to lower energy consumption, take some of the pressure off the grid. i'd be interested in hearing your thoughts on that. >> thanks for the question, senator. energy efficiency is the most
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underrated resource we have. it's the cheapest by far. we've been talking about it for a long time, so perhaps it's not as exciting and new, but the potential is still high. a different national academies support suggest on the order magnitude of 25% to 30% reductions are available still. in the states that have pursued as a policy matter all cost effective energy efficiency they are are taking down decreases in total demand at the level of 3% a year. together with other distributed energy resources like demand response, which pjm has provided as high in some years 12,000 megawatts of resources, meaning that's 12,000 megawatts of power plants you don't need in certain instances and are really exciting. i think three things about distributing energy resources in addition to bringing down the numbers of megawatts. they provide the flexibility, the resource flexibility to integrate the high penetrations of this lowest cost renewable
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energy potential that you describe. and they can provide the flexibility. and finally, they are a great resilience resource. if you think about the storage during hurricane sandy when microgrids were able to island themselves and continue to provide power at hospitals and fire stations, that's a real opportunity on the resilience side. so i think that the potential is just tremendous and that's where we should start. >> thank you very much. >> thank you, senator smith. >> senator capato. >> thank you, madame chair. thank the panel. this is obviously very interest to me being the other senator from west virginia. and coal obviously very important part of our not just our economy but as senator manchin said very proud of the history of energy production that we've had in our state. we also have the marseilles shale development, which is very exciting. just a quick question, mr. ott, mr. van -- if i say your name, van welie, did i get it right?
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okay, mr. ott, he mentioned how many retiring nuclear and coal plants are going to be in his area. what does that figure for pjm in 2020, say? >> pjm we have one nuclear station 620 megawatt nuclear station scheduled to retire coming up before 2020. as far as coal plants, we've experienced like 20,000 megawatts of coal plants retiring previously for the next few years we're looking probably in the 4,000 range of announced. certainly there could be more. >> which is 17 different units, that's what i have here? >> yeah, about in that realm. but, again, some of them have not formally announced. some are formally. there are some that are having concerns financially. but as far as formally anou announcing it's a bit less than. >> so at peak load during the cold snap, natural gas generators provided only 48% of what you had predicted, i think it was going to and coal overtook that, is that correct? could you talk about that a
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little bit. >> yes. certainly in pjm what we saw was the coal during the recent cold snap we saw more coal production than normal. i think it was an economic displacement, gas price therefore dispatched down, coal came on at a higher level. so certainly we saw a lot more coal production, coal fired production, if you will, than we normally would in that cold snap. >> and can you help me, too, maybe chairman mcintyre can help me with this, the pricing of natural gas, spot prices, spiked up to an all-time high during this time, maybe 60 times their normal price. is that -- do you know that, chairman? >> i don't know if it was an all-time high. i know we did experience significant price increases. and as i mentioned earlier, that's the kind of thing that can in a broad sense be helpful. it's important that we have market signals that reflect shortages including in this case. short-term spikes in demand
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since proper signals both to providers of the resource and consumers. >> mr. van welie, do you have more comment? >> i want to affirm what you just said. the price has gone up into the hundred dollar range. if you look at the pipes constrained in the $2 to $3 range from an mbdu. >> that gets me to another issue that we sort of talked around, but certainly in the new england area the accessibility to natural gas and the permitting with pipelines, i mean, we're having difficulty even the state of west virginia sometimes permitting our pipelines, certainly the chairwoman can speak about this as well. you know, new england doesn't seem to have the appetite to permit the pipelines so i'm reading in the financial times that says gas from russia, arctic, is going to warm homes in boston. and there's lng coming from russia. we have a natural resource in my home state and region that would
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love to be selling our natural gas in this country and to the northeast. so how do you respond to that? >> well, i think the first problem in new england is to find a customer for gas pipeline. so i think the structural issue is that there's no customer prepared to sign the long-term contract to have the pipelines built. the second issue is once you have a customer, then you have to confront the citing issue and i would say there's a citing issue in new england and new york. so for us to sale into new england you'd have to overcome those two obstacles. i think the policy decision for the region do policymakers want to make those investments to relieve the constraints or live with the constraints and work around them? if you're going to work around the constraints, then you either have to turn to alternative fuels like oil or lng, and then in that sense the jones act doesn't make a lot of sense to me because we're importing lng from faraway places when we're
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exporting it from terminals a few hundred miles south of us. >> so with the russian lng that's come in, obviously they already have a customer that's purchasing this because the supplies got so low during the bomb cyclone, is that correct? >> yeah. so what happens if a dynamic is when the lng inventory of the gas supply drops, you know, below certain levels, customers in the gas markets, local distribution companies for example, will start calling for spot gas supplies. >> right. >> and so you get contracting happening in the world markets for lng. >> so interesting to me from another perspective is while that's occurring, the russian gas coming here, we have two cargo vessels going with lng to from our southern ports or louisiana into europe to try to help them meet their challenge. i mean, if we're looking at an overall system here, from cost, from emissions and all kinds of things, that doesn't seem to make a whole lot of sense to me. >> it doesn't make a lot of sense to me either.
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>> thank you. >> and our job is to make sense of all of this. let's go to senator king. >> i hate to follow the admonition to make sense. makes it difficult. mr. van welie, very much enjoy seeing you. i remember meeting with you in 2013 about this very issue. and first, madame chair, i love this panel. we should take them with us everywhere. you all have done a really good job of illustrating a lot of issues, important issues in a brief time. i do want to promote something for the audience and anybody interested in these issues and it is an app called iso to go produced by iso. and it gives you moment-to-moment prices all over new england where the demand occur. by the way, mr. van welie, the demand is exceeding the forecast at this moment by about half a megawatt, you may want to call your office when we finish here.
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but it also gives where all the resources are, renewables, oil, gas, coal and nuclear. very, very useful. thank you for this. it's incredibly helpful. now, i want to put up some visuals. i learn visually to what we've been talking about here today. the bottom red line on this chart is the marseilles shale cost in the region in pennsylvania going back to the beginning of december. the blue line is the cost in new england. so what this tells us is it's not a gas, it's not a natural gas price problem, it's a delivery problem. and that's what we've been talking about today. it's the infrastructure problem we've been talking about. the problem with the infrastructure is does anybody want to build a $2 billion or $3 billion pipeline to deal with this, if it's not going to be necessary the rest of the year? and that's where we get into the
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trade-offs between storage and lng as an option and building the infrastructure. i just want to indicate how these things all interrelate. the other piece is the relationship between what we just saw, which is natural gas prices and electricity. almost entire straightforward correlation as you see. and this goes back, this goes back 15 years. hurricanes hit the gulf, gas goes up, electricity in new england goes up. same thing over the winter of 2014, the polar vortex. and we're up in this area i saw $32 megawatt hour recently. so these things are all interrelated. one of my favorite comments was from a friend of mine in maine who said there is rarely a silver bullet. there's often silver buckshot. and that's what we're talking about here is a multiplicity of
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resources. and miss clements, you talked about efficiency, the cheapest kilowatt hour is the one you never use. we have efficiency, we have renewables, we have demand response, we have storage, we have infrastructure, we have rate structure, mr. mcintyre, we have rate structure which will influence how we use power in terms of efficiency during the day. i realize i'm making a speech here. if you can find a question in here, you're welcome to it. mr. van welie, talk to me about this. how we deal with this, let's make it specific, do we build a pipeline or do we do more storage? >> so i think it's going to come down to what policymakers decide to do. i think there's two parallel tracks in terms of this conversation in new england. the one track that we're going to be in the lead on is how do we make sure that the constraint is appropriately priced in the market because to chairman mcintyre's point, unless we price that constraint, we're not
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going to get the reliability we seek. and i think we learn some things over the past few weeks that make us think that we still have a lot of work to do. i think the parallel discussion is how to relieve these constraints and so to miss clements point, i agree one tool in the tool box, you may have missed in our analysis but we take into account and project forward all the energy efficiency efforts that the states are making. and the new england states have made significant efforts. i think they lead the nation now in terms of energy efficiency. but i think the evolution is occurring faster than what the states are doing with regard to these efficiency investments. and my fear is that the retirements will happen more quickly than these investments will be made. and the other thing i look out -- >> one of the problems -- one of the problems i see here is gas is the cheapest capital cost. and yet you're taking the price risk. and that's one of the trade-offs, but the way our system is working now everyone's looking for low rates next year
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and the year after and we don't have long-term 15-year power purchase agreements that will support the capital investment necessary for some of the other options. >> yes, i think the peakingness of the demand for this fuel is the issue. and i think we're going to be stuck with this problem for a long time because if you think about where the region is going, in the long run we want to take carbon out of transportation and heating, which means we're going to drive the demand for wholesale up in the region. over time we're going to have less utilization of the pipeline, but when you need it, you're going to really need it in a big way. you can offset some of that through electric storage, but our issue is really seasonal storage. so i think the region needs to work through the various possibilities and understand what the cost benefit trade -- >> and you're talking about grid level storage, but it's hard to justify the cost of grid level storage if you only need it two weeks of the year, correct? >> exactly. and grid level storage in terms of today's technologies are not
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very useful in a multiday multiweek event. >> thank you, senator. >> thank you. >> senator danes. >> thank you, chairman murkowski, ranking member cantwell. seems each summer and energy demands peak, we're reminded of the one of those northern states, montana, we respect terms like polar vortex and bomb cyclones, of course in montana we call that january. but that's the way it goes. in the importance of keeping supply on hand to keep the lights on and the infrastructure necessary to support that system this winter has been no different, this hearing is timely as my office is kicking off planning efforts for our montana energy summit. we do this every couple years. it will be in billings in may. we've invited ferc chairman kevin mcintyre to attend, secretary perry and others.
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we hope to have important conversations related to energy infrastructure and the jobs energy creates in our states. we hope that you can both attend. as you've probably heard me say more than you want to, one critical piece of our energy infrastructure in montana and across the pacific northwest is the gold strip power plant, supports about 750 direct jobs, generates enough power for about 1.7 million homes and businesses across montana and the pacific northwest. through heavy handed regulations, litigation and some state policies, the future of this plant is actually at risk. i was out there a couple years ago on a visit that's memorable to me. they were taking boilers down for maintenance. it was july. and i walked in and they were scrambling, the plant management up since early, early morning middle of the night. said what's the problem? he says, well, here's the problem. said we have tremendous balanced energy portfolio in montana, we're truly an all of the above
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state, we're developing renewables, we have great hydro resources and wind resources. but this high pressure system moved in to the northwest. and when high pressure systems move in, what happens? well, temperature goes up and the wind stops blowing. and because they had coal strip down -- one of the major units down for boiler maintenance, we were struggling to keep up with baseload at that moment because the wind stopped blowing. and we refer to wind as intermittent power, and it's not a critique of that renewable source of energy, but we still have to solve the storage issue with wind to make it a more reliable part of our energy portfolio. we just came back from taiwan last year when it was september, if you remember what happened in taiwan in august, they lost electricity to about half the homes across taiwan. it was a major outage. and why? because they were too aggressively going forward on eliminating nuclear energy from
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their balanced portfolio, they had a plant that was ready to go back 2014 was battling some of the regulatory issues to get up and running. and with that peak load, a hot day in august, they lost their base load. i understand that while a lot of coal fired generation is retired in recent years, new england had to rely on existing coal and oil fire generation for this winter event. and as more states, energy mixes are changing towards more renewable generation due to policies and so forth, i remain convinced that we must find ways to keep diverse truly all the above energy mix in this nation especially during these peak times of load. my question for mr. walker, in your experience, how important is it to keep a diverse energy portfolio at all times, but especially during peak load? >> thank you for the question, senator. i believe it's extremely important. and it's not only during peak load. i think it's throughout the year. you know, importantly, the
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diversity of the load provides the opportunity for us to build resiliency into the model. with the threats we have today, with cyber and physical security, which are very real, they're emerging, they're evolving, they're increasing and the impact of these could be very significant in the country. so as we look at the portfolio of generation sources that we have, the diversity component is extremely important. and as we work with the rtos and with ferc to evaluate the proposal set forth by ferc, those are things we will identify and look at. i mentioned earlier on page 86 of the staff report, there's a diagram that illustrates the different capabilities of just different generation sources. things that provide for the base load, the essential reliability services of each of the different types of generators. so as you look at this, it's like an optimization equation. when you look at all the different variables and you look at what the underlying goal is,
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which is to provide safe, reliable and resilient grid, it's about optimizing the generation components that we have as well as the underlying systems that tie into those generation sources to be able to get and achieve the reliability and resilience we need to. >> last comment and i know i'm out of time. my training was in engineering, so when i tell a quick little story about engineering, this is not meant to be disparaging because i is one, but i was in a debate one time about -- i was running operations for proctor & gamble and the variation in demand and so forth need to be able to have capacity available to cover spikes. and we believe need to be over here and engineers were off in their ivory tower doing some calculations and thankfully we had a senior executive that was kind of listening to this hatfield and mccoy and stepped back. said first i believe operation folks because they deal with reality, but two, if engineer were to design amount of beds
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needed for family of three, in terms of capacity, they'd say you only need one bed because on average everybody sleeps eight hours a day. something to think about as we relate to peak capacity. thank you. >> thank you, senator danes. >> senator danes can get away with that because he is an engineer. unfortunately, i am too. it's a curse. sometimes a blessing. i wanted to start out and talk a little bit about that term base load power because we hear a lot more of it today than we do 10 or 15 years ago and i find that fascinating. i grew up with a utility family where my dad was a lineman when i was young, he was a manager later. those were the days when coal and nuclear and hydro were the only games in town. but i bring that up because i think base load oftentimes today is more of a political term than an engineering term. and it tends to come up oftentimes at times when it's trying to subsidize generation
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that is no longer competitive in the marketplace. i would just point out that when those coal fired generators go down, they are providing and oftentimes that's unplanned maintenance. and it's not unusual. they're providing zero base load megawatts to the grid. and we need to find ways today to think about our grid and meet supply and demand together. and know what the weather's going to be tomorrow and the next day so that we can match those things up from whatever generation sources we're using. i want to go to mr. walker first because you said something to senator manchin. i don't want to misquote you. i want to understand if i understood you correctly. that inherently coal at a coal generating station is less exposed to the threats of physical or cyber threat to the grid than say oil and gas pipelines. and the reason why i bring that
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up is because from my perspective, once you use that coal to generate, you have to get it to the customer. you have to do that over transmission lines and then distribution lines. and it seems to me that all of these infrastructures are equally exposed to those threats. you have the same skait systems at substations and relating to transmission and distribution on the electric grid that you would use in pipelines. you have the same physical threats to both of those distribution networks. so i don't see the difference in terms of exposure in terms of critical infrastructure. am i missing something? >> no, it's a fair question. and i'll be -- so what you heard me say, what you reiterated is what i do believe. and from, you know, the perspective that we're taking skprks i'm taking right now is d.o.e. is focused on protecting
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critical national infrastructure. and, you know, as ferc deals with the marketplace and when we focus in on the resiliency, the capability that provides that safety and resilience in the grid, if i have a stockpile of coal in this instance at a location for sufficient period of time, i'm not placing at risk the infrastructure as it were natural gas. >> what if that coal is too frozen or too wet to actually burn? >> and those are possibilities that we realize during the polar vortex. and i think through much of the work that was done after the polar vortex, provisions have been placed at the utilities and the generation plants that utilize things like coal to prevent, you know, through weatherization techniques and things like that. >> so when i think of the polar vortex or even in latest bomb cyclone if i'm getting that term correct, the unsung hero that i think about that gets very
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little attention is actually demand response. and so i'd be curious from the folks at pjm and iso new england, you know, how important is demand response at this point in these sorts of events? and has a market been fully implemented? and are there federal policies in place that assure that demand response is allowed to compete as effectively as possible in these kinds of events? >> so a market has been fully developed for demand response. we speak of demand resources broadly in new england. and i say there are two categories, one is passive, demand resources like energy efficiency. and that's very well developed in new england because of all the state programs supporting that investment. the active demand response, which is active reduction during system events and so forth, we have lower penetration in new england but the market exists. i think the issue has been the
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economics. it's not competitive in the market relative to some of the other resources. if you'd give me a minute, i just wanted to reinforce something else you said as well. i think there's a policy conundrum here with regard to this discussion with regard to discussion between fuel diversity and security. the policy conundrum, the term fuel diversity is at odds with the idea of a competitive wholesale market because it implies a central planning orchestration of the different resources on the system whereas the markets what you're trying to do is create a competitive construct to produce the reliability service which is why you don't hear us using the term fuel diversity. we use the term fuel security. >> correct. >> thank you. senator cassidy? >> thank you. gentlemen, i'm going to refer to some testimony we with actually had in june of 2016 from a
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fellow jonathan perez who's the director of air policy environmental defense fund and it was a very good hearing last time which i'll raise questions from that. mr. mcentire, seeing there's this price spock in fuel cost, it was spot price going far higher in the northeast, this gentleman last year said that there was actually a lot of unused capacity in our northeast pipeline system and that firk was working to add flexibility to the schedule and to better use that capacity. do you agree that's an assertion from two years ago, do you agree with that assertion and has firk now worked to add flexibility in terms of delivering of gas? >> i know that we've worked on reforms in the market structures and practices and schedules in
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the interrelationship between natural gas, pipelines which we regulate and electric transmission which of course is critical to gaining the power from where its generated to where its consumed. >> i think you're speaking of the gas that at times that only the 54% was used in the polar vortex. is that an issue or has that been addressed specifically? >> we do have as you heard i think most -- >> i had to step out i'm sorry if i missed something. >> mr. van welie has presented the situation in new england and that is where indeed we have ongoing long-term challenges in transportation infrastructure. >> is that related to lack of efficient use of current capacity and i'm sure it's not either/or or is it due to lack of capacity, sir? >> in new england it's lack of capacity at this point. >> this gentleman made again the
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point and it was very provocative that if you look at the lack of capacity, it was only like two weeks out of the year in which there was lack of capacity and his point it's cheaper to pay hot prices on those two weeks out of the year as opposed to pay for the infrastructure that would remain unused for the rest of the year. >> i think it depends on the one's view of the cost and benefits. there's a point beyond which we will maintain the supply/demand balance by taking demand off the system. that's the tradeoff. one could look at it and say it's not worth making an investment in the pipeline infrastructure because we only use it 3 months a year, let's say. you have to weigh that against the other consequences as well. we show we're very close to the edge in new england and we need to find a way of relieving this constraint one way or another, either through investment in the
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pipeline infrastructure or continued investments in other sources of energy that will take the pressure of the gas pipeline and or reducing demand on the system. those are the three avenues available to the region. they have different implications with regard to cost. >> so importation of l & g would not be adequate for those two to four weeks a year in which you're constrained? >> we will become much more dependent than today on imports of l & grgs. market monitor has raised another question which is there are two suppliers of energy into the region one of which is in boston, the other is in new brunswick, canada. there are pivotal supplies into the marketplace. one you'd inspect to pay very high prices for natural gas and i think the policy tradeoff is do you want to pay these high prices on an episodic basis whenever it gets cold or do you want to soften those economics by investing in infrastructure that will relieve those
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constraints. >> the pipelines are so expensive particularly greenfield investment that it's actually cheaper to do the episodic high price than it is to do the infrastructure? he's not here to make his point directly but it sounds almost like you're disagreeing with that. >> i think that the region needs to work through those cost benefit tradeoffs. >> okay. i yield back. thank you. >> thank you, senator. senator duckworth. >> thank you for convening this very important conversation. unfortunately my two colleagues engineering colleagues are not here but i just wanted to remind them that multiple people sharing the same bed in the united states navy is called hot raking and there are young sailors, submariners are doing it right now in order to defend our nation. let's say a quiet prayer for them and what they're able to
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put up with to keep us safe. i want to go back to the work the states have been doing for renewable energy. illinois, my home state has made tremendous gains in this area and in addition to requiring 25% renewable energy by 2025, we also prioritize investments in jobs training programs that are focused on low income individuals to create thousands of clean energy jobs and these investments will help make our grid more reliable and more resilient, not less while also creating jobs. ms. clemens in your opinion how will the renewable energy impact the power system in the context of treechl weather events. >> thank you, senator. i think the recent illinois energy act is one of the great examples of the smart way that states are leaning in to this energy transition and saying we are going to use american ingenuity to harness the resources that we have and to create economic opportunity and
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jobs from making the grid more resilient and reliable, by increasing the diversity of the resources on the system through increased wind and solar and through increasing energy efficiency, it is increasing resource diversity at this point nationally only about 7% of the resource mix is nonhydro renewables. when you think about the characteristics, every kind of resource has a set of benefits and issues that we've just been talking about and so narrowing the conversation to just gas versus coal and l & g versus new pipelines is an overly narrow view. the wholesale markets have done a good job of what they've intended to do which is to provide low cost reliable energy. as the mix changes and as states like illinois take these exciting actions, the markets are going to have to start valuing things like resource flexibility that the illinois act is going to bring in through
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new distributed energy resources and that's exciting but when with we're talking about price formation in the markets, let's not forget that we can't undervalue the benefits that the renewable energy resources and the distributed energy resources and energy efficiency are also bringing to the table. so when they're overperforming and providing extra services to the grid they should be getting paid for those services. i think illinois, along with minnesota and hawaii and new york and california are just -- showing the way that other states can look to as an example. >> thank you. could you speak a little bit to the cost of the renewables during extreme weather events and how did it compare to other fuels? >> well, in a marginal cost basis, the beauty of renewable is that the wind and the sun are free and so they were able to help by -- wind specifically in the polar vortex and we're still getting the information from the bomb cyclone. what they -- the role that wind
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particularly served was to help avoid those price spikes by overperforming at low marginal cost. >> thank you. in every tragedy there is some opportunity and even though four months have passed since hurricane maria made landfall, the lack of electricity, running waters and reliable communications remain a central challenge to puerto rico and i'm committed to developing an advancing policy that will enable the island to remain operational during the next super storm so i would like to see in puerto rico some investments made so they're not put in the same place that they were in before maria hit. ms. clemens, in your opinion will policy that helps stimulate solar and batteries be useful in this endeavor to better position them for the next storm? we know with global warming they're going to get hit again.
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>> thanks for the question. absolutely. just as of yesterday 32% of puerto rico's customers remained without power so that's all of october, november, december and now most of january. and the government also announced that they're considering privatizing the utility. that might help in and of itself with credit worthiness and bringing in the expertise that can provide that innovative new model grid. anything that congress can do to provide those incentives to help get that solar and get that energy storage online in puerto rico is critical and will, you know, facilitate a model that per the national academy recommendations can serve as a best practice which then can be shared with other states and regions within the continental u.s. >> thank you and i look forward to working with members of this committee and securing legislation will help us achieve these goals. thank you, madam chair.
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>> thank you. >> i have two questions for each you that relates to the bomb cyclone but certainly the capacity and reliability, one goes back to question senator danes was getting at, how do we have enough base load power for those types of events so we're ready. one how do we make sure we have enough base load power? number two, how are we going to build the transmission and the pipelines to make sure that we have an adequate distribution system. we're running into incredible difficulties building any type of pipeline for oil or gas and also we're running into the same kind of problems with transmissio transmissions. it's actually whether you're a fan of traditional renewable energy, we're running into the problem of building enough infrastructure and i can cite examples to you including most recently dakota access pipeline in our state which now moves half a million of barrels of oil a day to east coast refineries
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that need our lighting sweet crude and if they don't get it from us they get it from saudi arabia and i'd rather they got it from north dakota. so you could each take a swing at it. those two issues. how do we make sure we have enough base load power? how are we going to have people that support this to have the reliability we want? >> chairman, do you want to lead the effort here? >> why not. thank you for the question. as to base load as was pointed out it's a term that means different things to different people these days. i think of it as the big large scale power plants that are intentionally design today run 24/7 essentially and that is changing as technology changes and the economics of the market change. to answer your question how do we ensure we have enough of it? we ensure we have the right market structures in place that compensate those resources, compensate them appropriately. second you raised the question, the difficulty of getting
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sufficient new energy infrastructure built. i fully share that concern. it's unquestionably a problem. we have to look at ways to mend and improve our permanent processes so we can get over some of these obstacles. >> okay. mr. walker. >> thank you. with regard to the base load, one of the things i learned early on is we're not very creative, so we name things for exactly what they do and base load referred basically the bottom of the stack, the economic stack and for what was going to meet the base requirements of load. i think that as the chairman recognized, i think recognizing them from a market standpoint and placing value on things like the central reliability services as part of the economics will help drive that. i think also in recognizing and taking a different perspective and looking at it from a
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resiliency standpoint there are values that will not be captured in the economic kpoept that have value to the economic and value to the united states. i think those in conjunction with the work that firk does needs to be integrated together to help drive the investment. and then once we've identified those critical components that are both valuable to the market from an economic standpoint to drive cost down and valuable from a physical and cybersecurity perspective to ensure the national security, we blend those together to help work through the processes, we work with the states and local components of the united states municipal governments to work through these issues as does firk and i think with the proper data, the proper analysis and the evaluation that reallies the right locations, we'll work through the process and get them in. >> i like your pin. >> thank you. i got it from northcom. >> good job. glad to see you're wearing it.
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charles? >> thank you. >> do pronounce it for me, though. >> ar adesco. >> thank you. >> nerc has identified -- we are in the middle of a significant transformation of our system and having that fuel diversity is what's going to allow us to have the reliable operations and i tend to move away from terms like base load or other kinds of adjectives and simply talk about the different generations provides different risks attached to it. so the policy makers need to consider what's the appropriate mix of that kind of generation that's going to give you the best risk outcome for operating your system in a local area. but what's really important to us as we move to an environment where we are more and more thinking about renewables as part of our mix is the stability of the power system behind it. that system is critical in order for renewables to be attractive
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to people because to the extent there is no wind or no sun you're drawing power from the grid. and so having the grid operating reliably is critical to the success of renewables being inserted into our system, and we need to really consider carefully what are the attributes that different generations provide to that stability of that system and in making sure that everyone is fairly contributing to that stability of the system from each of the different generation portfolios. i'm not much of an expert on transmission citing or incentives, just listening to the testimony here today, it seems obvious to me if you're going to move particularly in the case of gas generation, if you're going to move to more gas generation as being part of whether it's a bridge to a more renewable based system or simply part of the basic power structure, you're going to need more capacity. we're hearing that testimony today. providing some types of
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incentives that get better capacity for gas seems to be a fairly important consideration for policy makers going forward. >> you got to get support for citing it. ms. clemens. >> thank you. i'd echo the description of base load as an operating characteristic as a sum subset of power plants and that ergoing to as we move forward able to move away from that particular characteristic as the primary goal, however the sheer number of mega watts that resources provide on the system is important and we've got lots of power. the country across the country, planning reserve margins are very strong so from in general, how do we have enough -- there's already lots there. >> so go to the infrastructure piece then, if you have the power you got to get it to where you need it. >> absolutely. this is an opportunity for the committee to have real bipartisan work together on a well designed policy to build out transmission lines to support the movement of wind from the places to the cities that need it and from the sun
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from the sunny places. that development has to be up held and has to be done carefully but it can be done well. >> it has to uphold environmental protections. but you got to build it. you can't take ten years to build a transmission line or a pipeline. mr. ott. >> thank you. i'll be brief given the time. essentially for the base load resource it's really the reliability characteristics you're looking for to run the power grid and making sure those are appropriately compensated as the chairman indicated and certainly i think that we have a track record in the capacity of our -- that those have been effective in targeting performance resources. the polar vortex lessons learned was a success story. we can do some things in the energy market to address some of the concerns i raised. as far as infrastructure, i do believe rto regional planning processes have been successful in getting a lot of
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infrastructure built. certainly pgm $20 billion worth of transmission investment. as far as gas pipeline infrastructure, i see that as an issue. he we do need to figure out a way to get the citing process for gas pipelines moving. >> and it's really changed from this battle between renewable to traditional to both have the commonality in this interest of getting approval for construction of this infrastructure. we should be working together. >> agreed. >> sir? >> i'd say base load is rapidly becoming an obsolete term because i think -- i think of base load as what's reducing energy with the minimum price and i think that has changed over the years. we've come from a world where we had coal and nuclear and we now with gas and renewables going forward. so i think if i look at the problem, i think we've got structures in place to ensure is that we've got enough resource on the system. we've got structures in place
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through the transmission planning authorities that the rto has with firk oversight. citing is a problem. i think the big regulatory gap, the structural problem is when we restructured the markets 20 years ago we didn't understand the dependence that would be created on the gas system so we have a gas system where the business model is completely different from the electric system in the restructured markets so that leads to situation where you don't have a customer for the incremental pipeline investments needed to serve the gas generation. i think that's a problem we're going to struggle with for a while. >> it is a problem. madamwom madam chairwoman, thank you for your indulgence. >> this is exactly what this -- this committee hearing was designed to dig in to was these questions. >> when you say well, you mean qualitatively or kwaun take ta actively. >> both. both. these are questions that are very important and the records
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the answer's on the records are equally important, so well done, sir. senator cortez-masto. >> thank you. i appreciate that as well, the comments and the conversation we're having today is so important and thank you and thank you to the chairman as well. mr. mac entire, good to see you again, let me start with you. when you were before the committee for your nomination hearing we briefly discussed integrating renewable energy into the power grid and in nevada we actually have an energy bill of rights that allows consumers to generate, export and store renewable energy on their property and so mr. mcentire, do you believe there are additional actions that it can take for allow distributed energy resources access to wholesale electricity markets? >> there may well be, senator. thank you for the question. there is already a lot of work that has been undertaken within the commission prior to my
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arrival and we have a record of materials that have been submitted to address this very question, that is part of the work that remains before me personally and before the commission as well. it's very important issue, and it's something we're going to turn our attention to in due course. >> i know in late 2016 firk issued a proposed rule that would eliminate barriers to the participation of renewable energy in the wholesale markets. what's the status of that effort? >> that's precisely the work that i was referring to. >> is there a time frame or do you have a sense of how -- >> it's something that will be -- we'll be turning to in the coming months. i don't have a specific kaltd in mind for it. >> okay, okay. >> mr. baredesco, for cold weather, but i'm curious do you have any recommendations for extreme heat in nevada. it can get to 115 degrees in the summer.
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>> i don't off the top of my head. >> thank you. >> ms. clements one of your recommendations is to ensure that resilience efforts focus on protecting vulnerable communities. what exactly could be done to better protect vulnerable communities? >> if you think about -- first of all, let's remember that there's a lot of institutions involved in protecting communities in the event that something very bad happens like a hurricane or a drought or some other kind of storm, and critical services like hospitals and fire stations and police stations and shelters and food banks need support enable to figure out their plans for how they're going to respond in emergencies. a lot of this is subject to state and local jurisdiction. what we recommend is that congress provide funding and support and field desem nations
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and best practices so that we can try this. we can support the local communities and help to share that information and socialize those best practices by reaching across the country. >> thank you. and mr. walker, i know my colleague from illinois talked a little bit about this, puerto rico, and the devastation there and the work that's being done to modernize their electric grid. i just saw a report that notes that d.o.e.'s long-term plan for puerto rico is to begin with new microhe grid power installations at three manufacturing sites on the island. can you elaborate a little bit more on the long-term plan? >> sure. that project actually is not a d.o.e. project. it's a pridco which the puerto rico industrial development corporation owns about 200 pieces of property on the island of puerto rico. >> okay. >> as the industrial development corporation, they own the property and they lease it back,
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so -- back to customers, customers like johnson & johnson, honeywell. so we've been working very closely with them and their staff and the puerto rican government to give them technical expertise with regard to how to site these microgrids at various locations on the island to ensure better power quality for these bigger manufacturing customers and in an effort to reduce their energy costs to encourage them to stale on the island and further expand their employment opportunities for people in puerto rico. >> anything else you're doing to address their energy needs? >> we're working with all the stakeholders that put together plans and integrating and instilling them down into one so it's a better document and we're adding whatever technical capabilities we've got to do that, just yesterday i met and my team met with the tac committee that was put together by prepa. to coordinate our efforts and
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walk through what our plan is moving forward. >> okay. thank you. thank you, all. thank you, senator. and secretary walker thank you for your efforts puerto rico and all that's going on. i appreciate the opportunity that we had when we were over there to have that following conversation. obviously great deal more to be done but appreciate your ongoing efforts. several members have commented that about the quality the of the witnesses that we've had this morning and the discussion. one of the benefits of holding the gavel here is i get to stay for the full morning and it has been as important and i think enlightening in certain areas as any hearing that we've had in a while. so i thank you for that.
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i hear from most of you here that, okay, we're beyond the discussion about base load power and how we define it and i forget which of you referred to the policy conundrum between diversity versus security and i think it's often very easy to say we need to have this diverse portfolio but if the diversity doesn't give you the security of access to you fail when it comes to your resiliency. you fail in terms of your ability to really meet the expectation there and so i think it's important that as we -- as we talk about these very serious
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challenges that we see as you've got a grid that is evolving and changing and aging and how we do a better job with the integration of all of this that we keep in mind this distinction between diversity and security and recognize that that has to be part of our issue. we've heard several colleagues state that we can have all the supply that we need but if we can't move it doesn't get us anywhere and i think alaska is a poster child for that. we have extraordinary resources but our challenge has always been moving that to the market. so i really do appreciate so much of what we have heard here today. you'll notice that i have deferred my questions holding them until the end so i don't have the clock running with me and i don't want to keep you all too long but i do feel like i
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can bat cleanup a little bit. let me begin with you, chairman, and again i appreciate all that you're doing within the commission there. i don't know if it's fair to ask you your personal opinion but i will ask you your personal opinion about what you believe the risk to the grid presented by the ongoing retirements that we're seeing in nuclear with coal retirements and just for purposes of conversation here, if you've got a scale of one to ten with ten being the mote severe risk to the grid, where do you put us? >> thank you, madam chairman for the question. quantitification is an inherently tricky business and i feel so particular here but i can tell you conceptually that
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we're probably clearly at a five. i say that on the basis just of what we know today of the resilience challenge that have presented themselves in prior weather events and other circumstances and i say that because of the potential irreversibility of the situation of unit retirements and individual unit retirement of a sizeable plant is a serious matter to the grid let alone an entire class, entire class of power plants, so it's something that as of today i'd say merits a five ranking on your scale but i will have a better informed personal opinion after we have heard from the rtos and isos about what specific needs they see and concerns they have. >> let me ask you about that because you -- the firk has quicked that to the rtos and the
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isos to define what the concerns are with regards to resiliency. i guess the question is, are they the best -- are they the best organizations to make that assessment or that determination? what about the eros, the electricity reliability organizations, whether it's nerc or various regional entities, what about d.o.e.? how do all the others factor in to the -- i think we recognize that the rtos and isos, they don't own the grid, you do have owners of the grid. i understand why firk moved forward as you did in rejecting the nopra and i understand, i
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think where you're trying to go with gathering this assessment back, but does it need to be broader i guess is my question than just the rtos and the isos? >> i'm happy to say it is broader. >> okay. >> the most immediate and directed request was to the rtos and isos to report back in answering some specific questions to that. but we have invited broader stakeholder input. i'm happy to say we particular have initiated that and had some good communications already with mr. walker's organization and department and with mr. bar ra desco's organization. i would expect that to continue. so i do agree with your suggestion. >> i appreciate that and do feel that that is an important part of any analysis that might move forward. assistant secretary walker, you
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spoke to just cooperation and collaboration that needs to go on. i think you said it's going to take unprecedented cooperation and collaboration to keep the lights on or something to that effect. >> that's correct. >> and to that end, then, with the -- with the resiliency model that you have indicated is a top priority for d.o.e., have you or your staff, have you reached out to firk's reliability or security staff or been working with the rtos on this? tell me how you're going to do -- >> sure, sure. it's a good question and i do believe that it does and will take a significant amount of collaboration, chairman mcand tire have already spoken about this with regard to the model. yesterday i had the opportunity to meet with gordon down at the
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end of the table here with regard to the new england study. my team has already reached out and gone through looking toward integrating all of the work that firk's initiative will yield and so we work pretty regularly within d.o.e. with the isos and rtos as well as through the electricity sector coordinating council. we reached back throughout the united states and with nerc with all the partners that we've got there but in this case it's even bigger than the electric side because it's really where the nexus to bring together the oil and natural gas component. we have two separate coordinating councils which we're looking to bring together under this rubric because of the -- between oil, natural gas and the electric system. so we've already laid out a schedule of all of those participants that we need to
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pull together to work with firk, nerc and the regional rtos in an effort to ensure we have the best answer we can and that's the essence of where this model comes from. once we've got all of the information and we then can take the actual technical components of the system which we already have, we've already started gathering that and that's part of the reason i was out at northcom with my team last week is starting to define some of the resiliency work that's already been done at the department of defense and with the army corps. so we've already started that initiative to gather all of the components that we've got around. yesterday i met with d.o.e. security organization to identify work that's been done for resilience at our nuclear power plants and through our nnsa groups, to be able to coordinate that and provide that information effectively to firk as we express this forward.
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we're very much in lock step with this moving forward. it is so critically important to the national security components that we address day-to-day and obviously can dove tail very well into the marketplace to solve a lot of these issues. >> good to know. this is exactly what we need. it's good to know that there's reports and analyses but if we're not really coordinating and learning from other entities and what they have done or how they have advanced, it's -- it is not as valuable as i think we would have hoped. let me ask another question of you chairman mcentire because there's been discussion about price formation and making sure that -- that value is in place. and i guess the quick question is, is how prompt will firk be
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when it says that it will act promptly if it sees a need to take action and i -- i raise this because firk opened up its price formation documents just after the polar vortex couple months into early 2014. that work still hasn't been completed on price formation, so i think what would be important to know is -- is given -- given the reality of time that it takes -- when with you say that firk is going to take prompt action, does this mean that it's technical conferences or staff memos and white papers, what actually can be expected and i think we -- we know that often
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times this is complicated and lengthy but we also speak frequently about this paralysis of analysis and the situation of this review, of ensuring reliability. i raised it eight years ago, maybe even longer now since i have raised these concerns and we continue to see growing levels of retirements, so i would hope that firk recognizes that we need to move beyond technical conferences and more white papers, that we actually need to see that action, so can you speak to what -- >> yes, ma'am. it's a very valid question and certainly when i was in the private sector i shared -- >> you were pushing everybody along. >> -- as well. in terms of our january 8 order
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on our grid resilience initiative there was a certain calendar spelled out there, 60 days first for the rtos and isos to get back to us with our responses to our specific questions, 30 days for stakeholder input there after and then, yes, our commitment to prompt action thereafter. i cannot say now how much time will be involved in such prompt action because it will depend on the quality of the information which we get back which i expect to be very good in general, but it's something where i have declared it and it's a matter of priority for the commission. those are not words we utter very often as a declared priority of the commission now to get this right and move with speed. i should say that in the meantime, we have stated as well in the very same order that should any short-term concerns arise within a given rto or with a given utility, we want to know
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about it immediately. we will not sit idly by if there's some sort of legitimate concern regarding reliability or resilience of the grid. >> well, i appreciate that. i think it helps that you have been on the other side and just very recently so that you know not only of the need but have been one that is been in the situation where you're urging the action, so i think that will help on the inside as well. i think -- i think given what members have covered throughout, i had many, many questions and i started and i think we got good information before the committee and so many of the questions that i had had have been answered but i recognize that this is -- this is a challenging
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space most certainly and we see the challenges pronounced when we have weather events that push the energy status quo that we might get pretty comfortable with and it's a reminder that we need to be vigilant in understanding again the security, the reliability, the resilience of our energy supply. i mentioned just a few minutes ago that this hearing is probably been the most educational. it's right up there with the one that we had several weeks back when we had the head of the iea here who spoke about the energy trends internationally and he had four upheavals, i won't go through all of them but his
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fourth upheaval is what is happening with electricity and -- and how -- how that -- that whole sector is being impacted. we got a lot of work to do but this has been a very instructive and helpful hearing to all members, so i thank you for the time and with that we stand adjourned.
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president trump is signing a 30% tariff today on imported solar panels. that is likely to be a topic at today's white house briefing. cspan will have live coverage of that. on tuesday january 30th, president trump will give his
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first state of the union address to a joint session of congress. our coverage begins at 8:00 p.m. eastern. it'll be followed by the state of the union address itself at 9:00 and following the speech will take your phone calls and also get reaction from members of congress. coverage of the state of the union address live on cspan available at also listen with our free cspan radio app. several members of president trump's cabinet are traveling today. secretary of state rex tillerson held a bilateral meeting with france's foreign minister to discuss global issues. tillerson will be heading to switzerland next. and vice president mike pence continues his trip in jerusalem. today he toured a holocaust museum there. he is also heading to devos for the world economic forum this week. american history tv on c-span3. this week in primetime. tonight at 8:00 p.m. eastern,
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more from the american historical association conference with the discussion on presidential plantations and how slavery is explored at those sites. wednesday night at 8:00 p.m. eastern, historians attending the american historical association conference look at how american veterans are being remembered, honored and memorialized since world war ii. thursday night at 7:00 p.m. eastern, we're live from the museum in washington, d.c. with the discussion on the 1968 vietnam war tet offensive and the battle of whey. lincoln scholar and howard university professor he had na green medford on abraham lincoln's friends and enemies. watch american tv on c-span3. the supreme court heard oral argument over ohio's policy of
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removing inactive voters. the case houstoned versus a. philip randolph institute, whether it violates federal laws. larry harman went to vote and found his voter registration had been canceled. he didn't vote in 2009 or 2010 which according to ohio law triggered the purge. this is just over an hour. >> we'll hear argument this morning in case 6980. mr. murphy? >> mr. chief justice and may it please the court, congress passed the nvra to serve competing goals, increasing the number of eligible registered voters but decreasing the number of ineligible ones and this congressional compromise is evident in the statute's conflicting mandates. it both requires state's to under take general programs to


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