**[Statement of Senator Harry Reid]{.smallcaps}**

[Before the Committee on Energy and Natural Resources]{.smallcaps}

[challenges and regional solutions to developing transmission for
renewable electricity resources]{.smallcaps}

**[June]{.smallcaps} 17, 2008**

I want to thank Chairman Bingaman, Senator Domenici, and the members of
the Committee for scheduling this important and timely hearing.

Our nation has many grave challenges that have gone unaddressed for much
too long. Chief among them is global warming, which is closely connected
to our growing energy and economic security problems.

Fortunately, the most abundant form of energy in the US and across the
earth - renewable energy - the wind, the sun, the heat of the earth,
biomass, and water - is the solution that works best to meet all of
these challenges.

It works best to grow our economy in a sustainable way, to create new
jobs, and to leave a legacy for our children that we can be proud of and
one we wouldn\'t mind having in our own backyards today. That\'s a
better legacy than leaving piles of dangerous waste, dirty air,
threatened water supplies, or a dangerously warmer world for generations
to come.

Unfortunately, the nation has been fixated on the easy answer of
throwing billions and billions of tons of carbon waste into the
atmosphere. Fixated on short term profits and not investing enough in
renewable energy.

That\'s unfortunate, because from the moment the Senate ratified the
United Nations Framework Convention on Climate Change in 1992 --
industry should have been on notice that cost-effective, low-carbon
solutions needed to be found and invested in right away.

But, most of the momentum in the utility industry to invest in renewable
generation has come because of states passing renewable portfolio
standards.

Right now, 25 states and Washington, D.C. have a Renewable Portfolio
Standard -- and many were created over the objections of local
utilities. These states understand the potential for new jobs and the
long-term cost advantage of renewable over increasingly expensive fossil
fuels.

And just think about this, if 20% of the nation's power came from
renewable energy by 2020, which happens to be the same standard in
Nevada but for 2015, we would create at least 185,000 new jobs and
actually save consumers \$10.5 billion in lower electricity and natural
gas bills.

Some leaders in the utility industry are slowly waking up to the value
of investing in energy efficiency and renewables. But some persist in
thinking that we have the luxury of going backwards to the old,
inefficient fossil fuel use of the past.

We don\'t have that luxury and we don\'t need to go backward.

Rapid investments now in a combination of efficiency, renewable energy
and a smarter, more flexible and reliable electricity grid can meet the
power demands of the country for the foreseeable future, affordably and
cost-effectively.

Senators have heard me say this before, but it bears repeating. A
100-mile-square area of Nevada or elsewhere in the desert Southwest
could meet the entire nation\'s electricity demand with solar PV and the
right transmission infrastructure. The total solar thermal potential in
the Southwest could generate 7 times the U.S.'s current electricity
capacity.

Despite 25 States with an RPS, the Federal government has been very slow
to embrace renewable energy, instead preferring the older, dirtier or
more expensive sources. Neither the Federal government, nor the utility
industry have invested enough to integrate the growing renewable
generation assets into the grid.

And, overall, the sluggish pace of transmission investment by utilities
has left us with a brittle and insecure power grid. Even the Department
of Defense is concerned about grid security now.

Unfortunately, nationwide investment in transmission declined for over
two decades -- by 1998, companies spent less than half of what they did
in 1975. At the same time, electricity sales have nearly doubled, prices
have risen, and consumer demand continues to grow. Recently, utilities
have begun to increase their transmission investment, but they're far
behind the curve.

A new and significant amount of investment must occur. This will not be
easy, given the incredible backlog. It will not be cheap either, because
instead of making gradual improvements over the years, the industry has
waited until now. The Brattle Group estimates the nation will need \$900
billion for distribution and transmission by 2030.

But, that investment must be smart. And by smart, I don\'t mean simply
linking existing and highly inefficient coal plants by Federal energy
corridors.

That investment and those corridors must accommodate mainly new
generation from renewables if we\'re serious about addressing global
warming.

I have introduced legislation to tackle several of the obstacles to new
investment in renewable electricity transmission. It is not perfect, but
I believe it is time for the Federal government to take a much more
constructive role, particularly since industry has not yet risen to the
challenge.

My bill -- S. 2076 -- directs the President to identify and designate
zones where renewable energy resources can generate at least 1,000
megawatts of electricity. It would then provide new financing options
for building transmission lines and connecting remote renewable energy
zones to the grid.

After designation, the Federal power marketing agencies -- like the
Western Area Power Administration -- would have a year to identify new
transmission lines needed to access the renewable power in these zones.
If no private companies invest within the next two years, the Federal
agencies would each have \$10 billion in bonding authority to finance
those power lines.

These lines would carry mostly clean renewable energy, particularly if
they cross Federal land. We need new sources of energy that don\'t add
more global warming pollution.

Renewable energy companies cannot always afford to pay up front for new
transmission lines and the costs of connecting to them. My bill would
help change this.

Renewable project and transmission developers would pay back the
Federally financed line costs over 50 years. But, the bill also
clarifies the FERC should let transmission utilities recover prudently
incurred costs for interstate high-voltage lines, and allow for a
systems charge on intrastate trunklines which declines as more renewable
projects are added. Existing power marketing agency customers would not
be liable for the costs of renewable project interconnection.

Utility executives like to say that we can\'t afford to build
transmission lines that carry only or mainly renewably generated
electricity. They like to say it just doesn\'t pencil out.

But, if they say that, I just don't think they\'ve really tried very
hard or very seriously to crunch the numbers. This is particularly
relevant when you look at the declining cost curves for renewable energy
technologies and the rising

costs of fossil fuels, even without a carbon constraint. Cost is an
issue, but it\'s not an excuse for inaction.

As Senators know, the utility industry is not noted for it\'s agility or
flexibility. That is a function of the service it provides -- Americans
want reliable and affordable electricity.

But, to keep the lights on and meet the demand for clean power, America
needs change.

My bill is a serious effort to find solutions to the challenges of our
energy security and global warming problems. The Federal government has
to add its weight and support to help convince the pencil-pushers of the
necessity and cost-effectiveness of investing in renewables. The Federal
government needs to be a better partner.

The West will need 7,500 miles of new transmission lines over the next
decade to significantly expand renewable energy production. The Western
Governors Association and the states of Nevada, Texas, Oregon, Colorado
and California are beginning to consider how to connect renewable
resources to transmission. This is responsible action, but their efforts
will not be sufficient without more constructive Federal involvement.

Efficiency, renewables and improvements to the grid can more than meet
the country\'s growing electricity demand -- but only if utilities don't
sit on their hands and underinvest, allowing a train wreck to occur like
we saw in the Northeast Blackout in 2003 and the Western energy crisis
in 2000 and 2001.

I would like to ask to include in the record the executive summary of a
recent Energy Foundation study. The study uses Nevada as a case study
and contains a solid roadmap for meeting growing demand without using
old technologies. It emphasizes the need for greater efficiency, but
also the urgent need for new renewable transmission capacity.

Again, thank you Chairman Bingaman and Senator Domenici for holding this
important hearing. I look forward to working with you to move S.2076, in
part or in whole, and any other solutions that the Committee may develop
to make the Federal government a better partner.