good morning to everyone and welcome today's hearing on effectively transforming our electric delivery system to a smart grid i'd like to welcome our expert panel us will discuss both the role of the federal government and industry stakeholders in transforming our power grid even today with tremendous advancements in technology electrification is considered the greatest engineering achievement of the twentieth twentieth century however parts of this infrastructure are nearly a century old and our increased reliance on electrical power is straining our systems capacity in the past nine years we've experienced three big blackouts it is estimated that the blackout of two thousand and three resulted in a six billion dollar economic loss to the region in order to improve efficiency of power delivery and incorporate renewable energy technologies we need to modernize our grid infrastructure a smart grid is a sophisticated two way communication system for managing our electric infrastructure it will operate more efficiently and reliably and empower consumers to more actively engage in energy use decisions the technology to encourage their participation in these decisions will be at their fingertips accurate and timely price signals will help consumers reduce energy consumption during peak demand when prices are highest this shaving off of the peak load in turn offers power plant operators the opportunity to avoid investment costs for new generation capacity in addition utilities will be better equipped to manage their systems and integrate energy from renewable sources plug in electric vehicles and other storage technologies also there's a growing recognition that a smart electric grid is extremely important for responding to environmental problems such as ocean acidification and lethal overheating of our planet more efficient energy production and increased use of renewable energy resources will help to set us on a course to address environmental challenges i'd like to thank the witnesses for their participation today i'm looking forward to your testimony i'm sincerely excited and interested in this as i think so many of us are as it's going to be central to of solving our nation's energy problems and we have a next outstanding energy wind and solar in particular into the electricity market in a meaningful way one of the biggest gaps we heard about was getting renewable energy onto a grid designed for centralized generation from conventional power plants in order to move away from fossil fuels we need to update the grid smart grid presents many exciting opportunities first will be able to use distributed generation to supply our population centers and able in a shift toward renewable power second will improve efficiency and increase capacity on the electricity grid finally will create a new model of consumer participation with a two way communication made possible by smart grid technologies consumers will have access to new information about their energy use in prices and get more involved in how they use electricity so so now we have to figure out how to get to a modern electricity grid i'm looking forward to hearing from our witnesses about where we are now and where we have to go governments and professional associations will certainly play an important role in the research and development of smart grid technologies and in setting the standards that will govern the new electricity delivery system private enterprise will step in with cutting edge technology designed to integrate the grid better manage peak loads and give consumers the tools they need to make informed decisions i have several questions about the smart grid we're working on developing a new grid and  a new pattern of energy generation at this time i hope to learn how these efforts are working in tandem and if we're going forward at the right pace i also wonder what the proper relationship between private and public investment is in a project like this that serv both interest together finally the smart grid will support electricity from sources far away from population centers while this will support development of renewable extra city may also support continued reliance on old facilities that operate in the same remote areas i hope we can dress these concerns today and i thank the chairman for holding this hearing thank you mr inglis if there are members of other members who wish to submit additional opening statements your statements will be added to the record at this point it's now my pleasure to introduce our witnesses at this time this patricia hoffman is the acting assistant secretary of the office of electric delivery and energy reliability of the department of energy ms sue deane am i pronouncing it right is it g kelly is the commissioner of the federal energy regulatory commission dr george arnold is the national coordinator for smart grid interoperability at the national institute of standards and technology mr paul de martini is the vice president of and technology for southern california edison mr jeff ross executive vice president for bridgepoint incorporated and finally mr michael stossel is the group president of cooper power systems we thank you all as i think you've been briefed by staff we try to keep the testimony as near to five minutes as we can distinguish friend dr elders used to say when he chaired the committee as you go past five minutes there's a risk the chair drops out from under you and you don't get to testify for the rest of the hearing but  i know it's difficult to keep these comments brief but we sure appreciate your testimony and following your comments they will have a series of questions from other panel members so with that we'll start with ms hoffman from the department of energy thank you  chairman and members of the subcommittee for the opportunity to provide an update on the current status of smart grid activities at the department of energy as well as future directions and priorities the energy independence and security act of two thousand and seven office of electricity delivery and energy reliability are carrying out smart grid activities and three primary areas smart grid investment grant smart grid demonstrations and smart grid research and development one of our top priorities is to responsibly dive disperse funds made available on the rig under the recovery act to develop and deploy smart grid technologies design designs to modernize our nation's electric system on june twenty fifth two thousand and nine we release two funding opportunity announcement one for smart grid investment grants and the second for smart grid demonstrations we are expecting to evaluate hundreds of applications over the coming months and to make awards for projects that will show the benefits of a more modern grid that uses market technologies tools and techniques for the betterment of electricity consumers across america we expect this funding the spark innovation create businesses provide jobs for american workers we believe these programs represent a once in a generation chance for game changing investments and we are dedicated to make sure that the american taxpayers get maximum value for these vestments in terms of a more reliable secure efficient affordable clean energy clean electric system while these programs are about transforming the delivery and management of electric power through the applications it's a smart grid technologies tools and techniques such as phase or measurement units in advance metering infrastructure we are simultaneously working on next generation systems for expanding the capacity and increasing the flexibility and functionality of the electric transmission and distribution system our fiscal year two thousand o concepts and prototypes for power lines substations transformers storage systems and power electronics section thirteen two of the end energy independence and security act directed his secretary of energy to report to congress concerning the status of smart grid the points nationwide and any regulatory or government barriers to continue deployment this week the department of energy released its market systems report the report finds that while many smart grid capabilities are emerging penetration levels for substation automation smart metering distributed generation technologies are growing significantly a part of the vision for smart grid is its ability to enable informed participation by consumers making them an integral part of the electric power system with bi directional flows of energy and coordination through communication mechanisms a smart grid should help balance supply and demand and hance reliability by modifying the manner in which consumers use and purchase electricity these modifications can be the result of consumer choices that motivate shifting patterns of behavior and consumption these choices involve new technologies new and for information regarding electricity use and new pricing and incentive programs a key aspect for the implementation of smart grid technologies is the need to address cybersecurity development of industry based standards for governing how the many different devices involved in a smart grid can communicate and interoperate with each other in a seamless efficient and secure manner is one of the top priorities for dealy and other federal and state agencies since us mark rid of vision involves two way flow of information and electric power for hire greet degrees of awe to make automation and control than what exists today in the electric transmission a distribution system it is necessary for there to be standards that guide manufacturers and smart grid developers foster innovation and provide a platform that enables a wide range of offerings to come to market and have the opportunity to compete as well curve with the telecommunications and the evolution of the internet and effective standards form the basis upon which entrepreneurs can bring innovations to the marketplace build new businesses create job opportunities to the public private partnerships on phase or measurement units has been instrumental in the development of deployment of technology in the formation of the north american singer fazer initiative the s is an important technology to provide greater insight into system operating conditions and holds a promise to enable better indication of good stress as well as other performance characteristics an important goal is to use the p m u derived information to trigger corrective actions and maintain a reliable system operation this concludes my statement mr chairman thank you for the opportunity testify i look forward to answering any questions you or your colleagues  have thank you most often miss kelly thank you mr chairman and members of the subcommittee for the opportunity to testify today my name is sue gene kelly i'm a commissioner on the federal energy regulatory commission and what i'm going to do now is describe burks efforts to develop and implement a range of technologies which has come to be known collectively as the smart grid i'm going to discuss three topics our authority to act the coordinated efforts we have undertaken to date with other federal regulators and state regulators and the activity that we've undertaken on our own regarding our authority to act it derives from two statutes the energy independence and security act passed in two thousand seven and the federal power act which has been with us for over seventy years now the energy independence and security act gives firk authority in the area of inner operability standards for the smart grid the federal power act gives for jurisdiction over part of the electricity industry and part of the electricity market specifically there are three areas under the federal power act where we have jurisdiction that are relevant to smart grid development first we have jurisdiction over the transmission of electricity by public utilities but we don't have jurisdiction over the distribution of electricity which is subject to state regulation we have jurisdiction over the wholesale sales of electricity in interstate commerce by public utilities but we don't have jurisdiction over retail sales which is under the jurisdiction of state regulators and we have jurisdiction over the approval and enforcement  reliability standards for the bulk power system we have been coordinating over the last two years with federal and state agencies in the federal arena smart grid efforts involve a broad range of government agencies and the federal agencies include primarily those who are with you today the department of energy the national institute of standards and technology and for as ms hoffman has described you use role on smart grid and dr arnold will soon describe the role of nist nist will be involved in setting up the framework for inner operability standard development and overseeing that development once burke determines that nist work has led to sufficient consensus regarding a standard then fergus role under the energy independence and security act is to adopt the inner operability standards quote needed to ensure the functionality and interoperability of smart grid so it may be that some of the standards developed through the nist process will not ultimately fall into the category of needed to ensure the functionality and interoperability but to the extent those standards do fall into that category as for express ponse ability to adopt them as regulations or at least we have the authority to do that development of these of the interoperability framework as dr arnall discussed is a very challenging task recent funding for nys efforts will help but coordination among government agencies as well as among industry participants is just as important deal we nist and ferk have been working with each other to ensure progress and those efforts will continue in the state arena as i mentioned utilities are regulated by firk at the transmission level and the wholesale level and most of them are also regulated by one or more state regulatory commissions at the distribution level and the retail sales level now because smart grid technologies span the grid from the transmission through the distribution level the conqueror and jurisdiction of federal and state regulators we believe will best be served if both federal and state regulators adopt complementary policies to avoid sending regulatory signals to address this as well as other issues related to deployment of smart grid technology i and mr fred bottler who is chairman of the new jersey public utility commission as well as president of the association of state utility commissioners formed a collaborative and we co chair that collaborate give but tweens burke and the state commissions at present there are twenty one states that have become a member of that collaborative since its creation fifteen months ago the collaborative has explored a host of technological and regulatory issues involving the smart grid including the development of a clearinghouse of information at the department of energy as well as the drafting of criteria that we suggested to the department of energy for the funding of smart grid technologies under the stimulus bill and we are now participating with the help of a lawrence berkeley lab and the pacific northwest national lab in the nist process as a collaborative and in the development of deal he's clearing house for information from smart grid demonstration projects power act last week for adopted a smart grid policy statement that basically has two parts the first part identified priorities that we see from our position of regulator of the electric industry for the development of inner operability standards cyber security is one of those priorities as is standardized communication across inner system interfaces we also listed four functional priorities wide area situational analysis to manage response electric storage and electric transportation the policy statement also specified certain cost recovery mechanisms available for recovery of costs of transmission owning utilities that want to invest in the smart grid facility aides i appreciate the opportunity to testify today and i'd be happy to answer any questions that you might have thank you ms kelly chairman baird ranking member inglis and members of the subcommittee thank you for this opportunity to discuss this progress in accelerating the development of standards needed to realize a secure and nationwide smart grid working with industry government and consumer stakeholders nist is providing strong national and technical leadership to help make a reliable robust smart grid a reality recovery act provided nest with ten million dollars from the department of energy and we are using this funding to speed up the process to build the standards foundation for the smart grid first i'd like to summarize our three phase effort to expedite development of this foundation phase one is well underway and nearing completion on the basis of stakeholder input we have identified an initial slate of sixteen standards and sixty four more are ongoing are undergoing public review in september we intend to issue for public comment release one point zero of the nist framework and roadmap for smart grid inter ability standards the document that we deliver to perk will describe a reference architecture and initial set of standards to support secure and interoperable implementation and a private public partnership to drive law long term progress in the development and implementation of the hundreds of standards that eventually will be needed later this year in phase three nist will announce plans for a framework for testing and certifying how standards are implemented in the smart grid devices systems and processes as we work with the many stakeholder groups we are uncovering and addressing many issues that are impediments to a fully operational smart grid for example there is a foundational smart meter related standard that is so feature rich that different meter than ours have implemented it in different ways this ambiguity interoperability we have commissioned a fast track effort to revise the standard and to ensure upgrade ability to extend the useful life of smart meter deployments we're also focusing on the plethora of wired and wireless communications technologies being employed by the smart meter manufacturers the goal is to provide guidance on the selection of communication standards one size does not fit all in this case and not to mandate the use of a particular technology or spectrum then there is the matter of supporting plug in electric vehicles or p e d s the interface between the peaveys and the grid needs to support to a flow of electricity and information and to meet relevant safety codes at least seven sets of standards on the under the auspices of five different standards development organizations need to be completed or revised to provide this functionality these are but a few of the many technical issues that are we are addressing with the engagement of the many hundreds of stakeholders in our process mr chairman i'd like to conclude with some final thoughts first and foremost we will continue to stress the critical dimension of security in our work we need to design in the necessary safeguards at the very beginning second i believe the approach we are taking to develop standards for the smart grid a strong public private partnership forged with active white house and cabinet level leadership is the right one third we must aim to develop and use international standards wherever possible to enable us manufacturers to capture global market opportunities for the nist is engaging as commissioner kelly has  d the states as integral partners in the standards effort and finally it's essential that we base the smart grid on open standards in order to foster innovation in conclusion is proud to have been given such an important role in the smart grid effort we are committed to achieving the administration's vision of a cleaner greener more efficient and effective electric power grid that creates jobs and reduces our dependence on others to meet  energy needs thank you for this opportunity and i would be happy to answer any questions they've had to nist to hit within one second of the two i'm sure you're proud of that and so i where appreciate well  martini thank you mr chairman and distinguished members of the subcommittee for the opportunity to be here today so the california edison is one of the nation's largest utilities serving a population of nearly fourteen million people and fifty thousand square mile service territory as a subsidiary of bettors and international southern california edison is uniquely qualified to share experience and progress and vision in the development of a smarter electricity grid at assen purchases more renewable energy than any utility in the country including sixty five percent of the nation's solar power we pioneered man response programs and help our customers conserve more energy than any other utility we are a leader in the implementation of advanced transmission and distribution technologies including one of the largest smart meter programs in the country and twenty years ago we launched an electric transportation program that includes our electric vehicle technology center opened in one thousand nine hundred three allowing us to be a critical player in the development not only of the electric vehicle but also of improved battery storage technologies as members of this committee are well aware the current stakes for addressing climate change energy independence and infrastructure security could not be higher and our nation's climate and energy goals simply cannot be we need a smarter more robust electricity infrastructure if we as a country are to rely on greater amounts of intermittent renewable energy use electricity as a fuel for vehicles and power customers to manage their monthly energy bills and ensure the continued reliability and vitality of our nation's energy economy and california we are on a critical path as we also have a number of ambitious climate and energy policy goals that will require many aspects of our smart grid to be smart grid vision to be operational by the and twenty southern california edison the limitations associated with our aging grid and began implementing components of a smarter grid over the past decade to improve our ability to anticipate and prevent outages and empower our customers to make smarter consumption decisions in the best interest of our environment and their bottom line three examples illustrate the breadth of these investments edison pioneered synchro fazer technology that allows operators and engineers the ability to monitor the grid at critical points every one thirtieth of a second which significantly reduces the what the likelihood of widespread outages or system collapse such as the two thousand and three ne blackout edison also has one of the largest deployments of substation and distribution automation technologies in the industry including an advanced distribution circuit called avante co founded by the department of energy after the energy crunch california crisis edison deployed smart meters to all of its largest commercial industrial customers they consume in total about sixty percent of the energy delivered on our gr over the next four years edison is making additional capital investment of one point five billion dollars in smart grid infrastructure that's already been approved by the california public utilities commission this year edison's new smart meter program will begin rolling out to our five million small commercial and residential customers we are also expanding our synchro fazer technology to all of edison's ball transmission system which will be the largest deployment in the united states as we look forward edison believes the deployment and development of a smart grid is a journey that will evolve over the next decade or more and more require significantly more r and d and capital investment to achieve our goals it will require new technology open standards and more robust security we are actively collaborating with research institutes universities product manufacturers aerospace and defense and information technology firms to identify opportunities to develop game changing energy technologies such as energy storage high high temperature superconducting equipment as well as adapting telecommunications cyber security and data management technologies edison believes that advancing the smart grid enwrapped brilliant security through standards adoption fosters innovation and accelerates robust secure and reliable technology developments we have been active for the past five years and several dio he sponsored efforts including the grid wise architecture council and have been increasingly active with dr arnold in the nest national institute of standards and technology efforts to identify and recommend standards for the smar grid technology is deployed we believe consumer adoption of new pricing energy conservation and demand response programs will be one of the largest behavioral change management initiatives under undertaking a public policy however the time appears ripe for introducing change edison's research indicates consumers are more clearly wrecked more clearly wrecked nies that the smart use of energy will save the money and help make a positive difference for the environment and conclusion edison is making significant investments in both capital infrastructure and r and d to accelerate our country's transition to a cleaner smarter energy future we look forward to working continue to work with members of this committee congress and the ministration to make our vision a reality in the best interest of our customers   vironment and our economy thank you excessively martini mr  good morning mr chairman ranking member inglis and distinguished members of the subcommittee thank you for the opportunity to testify today i'm executive vice president of grid point a leading smart grid software company we've developed an online energy management solution tha enables customers to tain near real time information on their energy use and empowers them to make informed decisions about their energy consumption our solutions also help utilities better balance supply and demand across a wide range of areas including electric vehicle charging storage integration of renewable energy and demand response and an economical efficient and environmentally beneficial manner i have three points i'd like to leave with you today first while the infrastructure of smart meters and advanced communications is important in modernizing the nation's grid to realize the benefits of increased efficiency reliability security we also need software  optimize load second we need to realign the regulatory and economic policies and incentives guiding investor owned utilities such that those utilities are motivated to invest in smart grid technologies third we must provide consumers with greater information on their energy use if we expect them to be able to reduce their consumption and their energy costs the term smart grid refers to energy delivery and distribution using two communications and digital technology to enhance the grid with sensing communications analysis feedback and control technologies in order to improve efficiency increase reliability ensure security and reduce environmental impacts the energy independence and security act of two thousand and seven and the american reinvestment and recovery act provide for regional demonstration projects to develop advanced techniques for measuring peak load reductions and energy efficiency savings from smart metering demand response distributed generation and stored systems and to validate new business models and best practices for implementing advanced smart grid technologies that can be replicated throughout the country these goals encourage the testing of new technologies while smart grid will benefit from the investments and smart meters in vans communications these investments alone will not realize the true promise of the smart grid smart meters in advance communications cannot by themselves manage peak demand integrate renewable energy manager lectured vehicle charging and storage or provide customers with information they can use to manage their energy consumption all of which can help the electric grid operate more efficiently and reliably the electric grid needs software and applications to work in conjunction with meters and communications to realize these benefits excel energy smart grid city is the u s first full scale pilot project designed to test smart grid technologies and the new business models and able since two thousand and eight excel energy and its partners have developed a website portal for customers to better manage their energy use launch the nation's first test of plug in hybrid electric cars with vehicle to grid capability turn the chancellor's residence at the university of colorado into the nation's first fully integrated smart house with solar back power electric vehicle charging and consumer controls installed nearly fifteen thousand smart meters and implemented a wind battery program to create a more predictable reliable source of energy the city of austin texas also announced late last year a new smart grid deployment called the pecan street project that would create a virtual three hundred megawatt clean power plant through a combination of fission seeing clean power these types of efforts would likely increase as funding under the recovery act is awarded there is real value in these types of demonstration projects because they provide a test bed for new and innovative smart grid technologies only through testing new technologies can we determine what works in order to spur innovation studies have shown that when consumers have more information about their energy use they typically reduce their consumption by ten to twenty percent near real time information on energy use the report or an in display will empower consumers to control their energy consumption the portal and home display provides customers with energy savings tips and a comparison of their use against earlier periods among other benefits which will help them lower their energy consumption in conclusion we haven't a stork opportunity to transform a modernize our nation's electric grid to do so we need to look beyond smart meters and communications and invest in the applications that reside on top of this infrastructure to make the smart grid more efficient reliable and secure we must create the regulatory and economic structures that incentivize utilities to makes market investments and we need to provide consumers with information about their own energy use to empower them to control their energy consumption thank you for this opportunity to testify here today i'm happy to answer any questions you may have thank you mr ross before moving on i just are you any connection to the ross of the ross power station fame in the pacific northwest now that they've been aware that ross is a great name in northwest energy so there may be some connection there mr stuffy good morning mr chairman and members of the committee of behalf of the national electrical manufacturers association mike stuff will group president cooper power systems i've been asked to appear here today to help describe some of the challenges our industry faces in actually making the grid smart now cooper power systems has been providing equipment solutions to the electric utility industry literally since the days of thomas edison we provide transformers and components needed to connect and restore energy switchgear and automation technology needed to make the electric grid reliable and efficient as well as a mind demand response capabilities that help manage the grids overall load our solutions cover the range of smart grid intelligence now all smart solutions have in common the ability to sense activity on a grid communicate that information back to some sort of decision support application send a decision back to the grid and actually make some change so as an example we brought a picture here of a sensor that can help determine when the gr more or less efficient if air conditioning comes on in the middle of the day the grid can actually start wasting energy as it responds that increase in load so the sensor you see in the upper right working with the capacitor bank controller that you see in the middle on the left can determine that inefficiencies are occurring equipped with radio technology or some other form of communication it will send a signal back to the utility alerting them to the situation they in turn can then choose to take that capacitor bank which is in the lower middle of the screen and turn it on or off using a cap banks which this is just one example of a smart application and the sort of things that have to be installed in the field to make it work now one of the big challenges we face with building out smart grid is the integration of legacy equipment that already exists many pieces of apparatus installed on the grid do not provide or support any external interface or have custom communication protocols so for example this recloser that is pictured here provides overcurrent protection to our overhead lines if there is a fault for instance a branch falls and shorts out a power line the recloser will open isolate the circuit and to basically try to restore power many of these devices do not support two way communications so while there an effective isolated solution they cannot be truly part of a smart grid without being replaced or being retrofit the key to doing these kind of upgrades will be an economic cost benefit to the utility or it's going to be government incentives based on the value more intangible value of a truly more reliable grid with more than five hundred thousand of just these type of recloser is out in service today rich retrofits of product that will be important retrofits a product like this will be an important part of making the grid smart another challenge we face in building out smart grid is the range of communication options that are already available in the past three years we've seen intelligence to the grid but they also present a host of challenges so as an example the fault circuit indicator shown here in the upper left is a great example of a successful product product making the transition from being a dumb isolated solution to a smart integrated solution the original form of a fault circuit indicator had no communication capabilities it simply displays a local orange visual indication when a fault is occurring on the line and prior to communications capabilities the utility would literally dispatched airline crew who would drive the line looking up trying to find the orange indicator when they found it they know where the fall was and they could begin to repair when you actually can communicate with the utility the utility can now know where the fault is occurred dispatch linemen directly to the source of the fault which reduces fuel consumption reduces c o two emissions and also potentially can reduce the time of an outage from hours into minutes that's just one example of what the smart grid can do however what's pictured directly below the fault circuit indicator are the range of hardware options that we have to add into the device in order to communicate even though each card then requires that we integrated into our package so it has to fit into the device itself validate it with a variety of standards certify it with a communications provider and then write software which we grab some screenshots and put at the bottom to actually interface it with our software as well as the software that the tillett is themselves use and have deployed over past decades so in conclusion cooper power systems believes congress nist in the deal we should continue to drive smart grid standards we also commend the dio in their preparation for evaluating grant applications for the four point five billion dollars stimulus for smart grid investments we believe the swift and judicious release of these funds will help stimulate the economy and support the process of converting the legacy grid into a smart grid we would also encourage congress to consider favorable incentives to utilities and vendors for replacement or upgrades to existing legacy equipment thank you for the opportunity to appear before you this morning and repaired answer any questions you may to thank our witnesses for a very interesting and informative testimony i recognize myself for five minutes for questions give us a sense of the glide path of when we  we begin to see these technologies becoming more adopting you know the temptation to say when will this be ready i know it's going to be a trend gradual transition but give us a kind of a sense some metrics that give us a sense of what will be established by what time and i know that's dependent also on incentives and markets etc but give us some thoughts about that mr de martini might be and maybe the best places for sure well i think certainly across the country we're seeing and in california in particular the adoption of smart meter technology as a foundational element as was discussed certainly is we see over the next in our case in california over the next three and a half years all three investor owned utilities will have smart meter deployed for all their other customers building on what we've done already for our effective so we see that over the next next couple of years that being deployed on the transmission systems and that is to benefits not only the one that i mentioned in terms of helping to reduce or improve i should say the reliability and reduce the exposure to these  large blackouts but also has the benefit allowing us to to be able to understand how large amounts of wind energy can be integrated into the grid because of the very dynamic nature of wind energy so that's one of the things that we look at in california with the with the strong reliance on renewable energy in our system word to supporting over the next five years or so as much as forty five hundred megawatts of new wind energy coming on and so we're looking at that as we look at the distribution automation technologies while we've deployed it and many others in the country have deployed quite a bit of distributed automation what we've had in the last ten years needs to be taken further i think it was mentioned in the other testimonies and i think at the outset in the opening comments that when we start to look at two way power flaw in the distribution system many of the really protection schemes how we think about and design these distribution systems need to be taken to another level so part of what we're looking at with this vaunted circuit but also other demonstration projects is how do we accommodate to a power flow on the distribution system that for the last hundred plus years has been designed as a one way power flow from central plant down to the customer  summary what's an average citizen and you say the word smart meter you're installing a smart meter what what's the difference between the dominator i have outside in the smart meter well the demetre hasn't really changed in fifty years actually  exact form factor it's been pretty much the last fifty years and really in basic form type and one hundred plus years so it's an electro mechanical device it's just as a magnet and it spins on a disk i think most folks have taken a look at one of those is difficult to read because of the way the clocks in terms of the numbers are there so it's very difficult for folks to understand the average consumer what the digital meter will do first and foremost it is digital it's two way communicating not only i think pretty widely adopted these days has two forms of communication and included in the meter one two way communication methodology back to the utility to be able to do remote metering real time well near real time so we can get the information and we can collect it on an hourly or up to fifteen minute achromats and then we usually download it once a day or a couple times a day but we can get real time reads off the meter as needed the other communication goes into the home so there's a many of us are looking at wireless technology ziggy in particular that we're looking at that allows us to bridge to the many devices that mr raw talked about in terms of being able to allow energy management  home to get the read right off the meter every ten seconds really real time information and take advantage of that so these sorts of things and more probably processing and memory capability in the meter really would distinguish it and features like remote service which is that allows us to remotely turn on the power when somebody moves in in our case we have over twenty percent of our customers move every year that's over about a million have customers moving thank you i'm not going to have time to ask a couple other questions i'll just put those out of someone who could be kind enough to share down the road with us if we get a second round of questions we'll get to it i'm interested in the extent to which the energy bill that we recently passed out of the house with a number of folks mentioned incentives as key to adopting or not adopting some of these technologies how the how the system of allowances and credits etc particularly the cap and trade system would relate to incentives or disincentives possibly for adoption of this the other thing is  you know when we travel the world we're used to now carrying these little plug adaptors that i'm interested in you mentioned global standards i'm interested separately and how how we're coordinating with the rest of the world smart grid technology and so talking earlier about the feedback loop of customers figuring out how much power they're using the first house that my wife and i bought was heated with electric baseboard resistance heaters and so the first time it turned cold i went outside and watch the meter and i called out to her to turn on i thought the thing was going to come busting through the glass and become a dangerous projectile going through the neighborhood days going so fast that was the beginning of the food that feed back loop but thirty days later when we got the bill was when their real feedback came about gee many do we have to change this technology and so we changed pretty rapidly because even in warmer south carolina not that cold you know how was it expensive so i can see the value of a quick feedback loops to change behavior because you realize oh my god this is costing us a fortune to heat this house and mr ross dr arnall is working on standards you are in a rapidly evolving area software moves rapidly is it time for standards are you ready for standards or you hoping for more development before he gets his standards in place or do his standards help you  implement your technology we've been very supportive of the nest standards efforts and really would like to commend dr arnold and all the work that they've done there you know they're dealing with a huge huge area and i've set forth a plan in multiple phases that really is moving with good deliberate speed while taking into account all the complexities of the issues they're needing to deal with from our standpoint i think most people in industry are supporting open standards it would be helpful to have the standards in place obviously as quickly as possible but you really need to balance that with you know getting it right and making sure there's enough time to investigate and work through all the issues is there a way to keep those flexible i mean because it seems to me an area of rapidly evolving technology which i hope is what we're dealing with particularly the software to keep those standards flexible may be a question for mr ross and dr arn i can just comment then dr i would have a lot more to say i think there is i think the intent is not to pick winners or losers or very specific technologies but to be able to pick the types of technologies broadly innovation which will benefit the consumer there are certain aspects of the standards that everyone agrees have to be common like you have to have seen some common understanding of what data are you going to have how it's going to be represented in the these are things that key fundamental standards you know data models and so forth so we're proceeding to address this and i think a thoughtful fashion what's the hold up with net metering and here you know a lot of people have trouble with radically were i think impact ofeibea really requires power companies to to allow us to do that right it's in there all kinds of questions about the ability the actual of ability  to sell your power back to the grid what's let's hold up as it is a technological areas it or is it a business issue and we really don't want to move quickly if you're in the power  produced at the home the current meters that we're deploying the electronic meters have capability to do net metering they also have to be lety if we put a discrete measurement device on the on say a solar panel to be able to measure that and we're looking at this also for the vehicle i think dr arnold talked about this as well as when we look at energy storage essentially in the home or at the business how we'd be able to measure that as well in terms of contribution to the grid not only for energy but also what other services it might provide in terms of grid stability so we are looking at that it's really it's not a technical technology issue i think we're looking at what the new form factors need to be to be able to do that and then there are standards both in terms of interconnection standards that might be required as well as some technology standards to deal with these different form factors because in most cases these meters would have protection on them unlike the meter on the side of the house that doesn't and so there's different safety considerations not picking winners or losers but the importance of interoperability and as we look to see some of the technology that we depend on every day our cellphones as an example which are developed in open platforms but grow in the u s have not kept up some of the technology technological advances that have occurred in other nations and when you talk about an open platform but some of the restrictions that are placed on consumers as a result of carving out n within this this industry can you talk about the importance of interoperability and some of the minimum performance standards that should be included so that we were able to maximize efficiency cost effectiveness homer looking at consumers implementation and the integration with utilities as well this effort is to identify the critical interfaces in which there needs to be a standard and the nature of the standard has to be right as well one example that i'll give you is that be a standard for communicating  dynamic pricing information across the grid is going to be a very fundamental standard for the smart grid but we have fifty three jurisdictions in the united states that set terrace and rates and they're not all the same so we can't have one pricing model so this type of standard that we need there is a language to describe pricing models and this is this is quite doable so it's a so it's a combination of recognizing which are the key interfaces and applying the right type of technology to create the right type of standards anyone else coming on a from the regulatory perspective both said the federal and state regulators have recognized the importance of interoperability at some level and in the absence of in our operability of open architecture and the state commissions adopted a resolution at their meeting their national meeting yesterday that pledges the state commissions to ensure that any smart grid technology that is sought to be deployed on their systems that they'll require that the architecture be open and firk spotlessly statement for cost recovery we've made the same statement thank you and i'd also like to second the thoughts of  this is well as it pertains to net metering we're looking into smart meters and the importance of making that inclusion is we're making this critical investment now to prepare homes and the investments in major smart meters for those individuals that would like to get involved in that type of an environment i think is critical and we hope that that would be some type of a promoter they would be established and lastly commissioner kelly just to applaud your efforts with what you have done in the collaborative effort between first and a route to bring those entities together to talk about the regulatory environment that exist the framework that has to be adopted and how the two can truly adopt best practices throughout the united states to help carry this out and if you can just touch upon any of the practices that you've already identified or the progress can be made and how we as a congress can provide the support that we need whether it's for for the o e nest with ne root to help you do what it is that we need to do recognizing that all of your testimony supports the robust investment that's been made in smart grid applications recognizing the investments that can be made in the progress that can be made over the next five ten and fifteen years well thank you congressman it has been a very fruitful effort this collaboration between the states and the federal government in addition to adopting a policy that interoperability has to be met by all smart grid investment cyber security as also been a concern of state regulators as well as federal and we've pledged ourselves to demand that any smart grid technology that comes before us for approval for for deployment to the grid will have to be shown to be cybersecurity you already have helped us with the stimulus funds and in the a r a you created a a clearinghouse of information which the department of energy is working to establish right now and we see both of these  very help all for the encouragement of deployment of the smart grid with with the stimulus funds where anxious to see them spent on demonstration projects that actually demonstrate a range of technologies from the transmission and down to the distribution end because some of these technologies are not known so if we can have a demonstration project and get the information from that project that shows that this technology performs that it actually provides benefits that we can quantify and report on and that it has been accepted by consumers this is a wonderful way to kick start the deployment of  technology and an advance it so thanks for your legislative efforts thank you and thank you madam chair see my time is expired and invite any of you other panelists to submit a response to that question if you so choose in writing  thank you very much just about a week before the g eight ratified the framework agreement that ended the cost of a conflict i was sitting in a hotel room in vienna austria with three members of the russian  personal representative slobodan milosevic one of those russians was lattimer looking who was ambassador here and at that time the chair of there would be our foreign affairs committee he was very angry spent two days with his arms crossed looking at the ceiling and finally he said if we really wanted to hurt you with no fear of retaliation we launched an s l b m with that made a nuclear weapon high above your country and shut down your power grid and your communications for six months or so the third ranking communist was there alexander siobhn off and he smiled and said no one weapon wouldn't do it we have some spares like a bow ten thousand i think what was he talking about i won't ask ms hofmann because i know that she knows what he was talking about but i start with miss kelly because it's really is relevant to this hearing and what you all are doing what was he talking about well congressman he was talking about electromagnetic pulse and he was thinking about using it as a threat to the stability of the united states and it is a concern and say a physical threat as opposed to a cyber threat but nevertheless a very real threat mr arnold well this is indeed a very serious concern that we must address in the context of the smart grid and although it is a physical threat it does have cyber implications because the greatest damage with that threat is to the control attack in which it says it's not practical to try to protect the entire electrical power system or even all high value components from damage so i think the key to this is identifying which are the critical assets th need to be protected and to apply the relevant design standards to ensure their protection you know the smarter we make the grid the more vulnerable we are and let you incorporate e m p protection you're simply making it worse rather potential physical damage for things like transformers and other large equipment that we have on our block transmission system and also in our distribution and sub transmission systems there are ways to approach this this is also similar to again i think to dr charles point what we need to look at is sort of a risk assessment and looking at what we think the key vulnerabilities in the case of the physical infrastructure it's long lead items like transformers so if a transformer was to fail  getting a new replacement transform for a five hundred thousand volt transformer is very long but what's very long could be two to three years so if we had a very wide scale usually if we have one fail we can you know there's a sharing  we don't adequately respond to this it could really if we had that event and life as we know it in this country let's come back to that in a second round thank you must make you talk about it thank you mr chairman thanks for the panelist for being here today i come from southern arizona and the state that's abundant in solar energy and credible potential in this natural resource as you all know smart grid technologies provide a real relevance to the goal of making our state in the country more dependent on renewable energy and particularly solar because of the storage capacity issues that deal with the sun setting that night and clouds coming overhead so i want to talk a little bit about what happens under the traditional rate making process i mean there are very few ways currently that utilities can monetize the benefits of salt or at least may have storage storage technologies do not fall into any of the traditional asset class is like generation or transmission or distribution it's really a struggle for the utilities to use storage as part of their rate base so my question is what can  encourage the use of energy storage in light of these circumstances and should first institute a separate class or asset class for storage since it provides benefits for the generation in the transmission and distribution of energy thank congresswoman you're absolutely right storage is not a traditional resource on the system the traditional resources are generation transmission and distribution and that's how rates have been set storage can potentially act as either one of them or all three of them and that's where the difficulty comes in if it is acting as a generator for example pumped storage a traditional storage facility then it receives revenues as a generator some of the issues that get more difficult to come if the deployer of the asset wants to capture multiple revenue streams i know that there was a proposal by a p that was at the distribution level at to in texas that was that would have been a distribution asset and the texas commission did approve that  distribution rights and i believe also allowed them to recover revenues as a generator at the same time one thing that ferg has done to facilitate storage is to allow in our organized markets we have seven organized markets in the united states and we've allowed storage to qualify we changed the rules so that stores can qualify as a demand response provider and we have lithium ion batteries in particular that are although if they're expensive they can provide ancillary services because those ancillary services are costly so we are working to it to change market rules to allow storage to sell power into the market we also have a office of policy and innovation and two months ago they began an effort internally to decide whether this is something that we should develop a comprehensive policy on or whether it's something that we should decide on a case by case basis because you're absolutely right storage can act as a number of different kind of entities within the system and the question is each whether or not they can recover as a transmission asset and a generation asset has a lot of implications for the market and the competitiveness of the market and cost recovery but it's something that we're undertaking to look at to see whether we should come up with some sort of comprehensive policy thank you miss kelly would anyone else like to com often i just would like to comment that the best thing we can do for the industry is to develop a clear definition of those services what can be covered under what cost structure so that the industry knows how to move forward where they can get cost recovery so it completely transparent and consistent and i think those those price points are now approaching new generation and i think the clarity would be beneficial for the industry because today where we're at there are some utilities that have deployed storage solutions gr scale storage solutions but it's tended to be basically on a pilot basis and not more wide scale mr chairman i just in closing this seems to me a real key part of how we're going to figure out transitioning to renewable energy and you know i'm glad that you're holding this hearing today and i look forward to working with all of you to make sure that we can actually get these changes in place so that we can really move forward and transform our economy and our energy usage excellent point as always miss givers maybe we want to pursue specifically a hearing on the issue of storage and some more detail learned a lot just one quick comment on the e m p in my mind when i look at that issue i just think this is so far beyond what anyone should do that it almost is in the category of mutually assured destruction as being the only defense against it we can protect some things but if given all of them all to the processors around and everyone if every car stops because of e m p you have total gridlock the nation doesn't function so it's something we'd rather not think about but i really think it's very very difficult to address the whole issue on the smar that seems to me a smart grid requires smart people to and i think the comments about digital meters i think we would do everyone this country great favor if every major energy consuming appliance had a digital display on the appliance showing how much energy it was using at that moment you know this was applied to stores dryers washers dishwashers major appliances perhaps even the conditioners you wouldn't want to display on the machine per se but somewhere in the house people have to become much more conscience conscious about their energy use is if we're really going to be serious about conserving energy and so i would you know i don't know dr arnold whether you want to put this as one of the standards but i certainly wouldn't mind seeing a recommendation in there that this is something we should move towards and perhaps it's requires legislation at some point when the public or i think the public will make intelligent decisions if they know the facts and we have to make sure that we let them know the facts and every in every way possible question i have is what is the primary purpose of the smart grid it seems to me its origin was in the blackouts and concerned about that but what you're talking  discussing is far beyond just dealing with blackouts and i don't have much time left but if you can to give just a short response of what really are we trying to accomplish with the smart grid what is our becomes something that is ubiquitous everybody takes anything going on in the grid and calls it smart grid application but from our perspective improving reliability is a key part of it proving conservation of resources dusun waste is a key part of it and providing signals to both consumers and as well as the utilities on how to reduce waste reduce usage is also a key part of it thank you mister i would agree with a lot of that i think it's to create  i think it's to improve reliability we should have as a goal to increase security and i think there's a lot of work being done on that i think those are the main problems cheney say there's three things one is that if we look at renewable energy integration large amounts of wind and distributed solar energy we need a different set of technologies to be able to integrate that in a reliable safe manner the other is the efficiencies that were talked about two elements one is there are technologies superconducting technologies that can make our grid the inherent grid more efficient which means less energy wasted to losses on the system and then i've seen engaging our customers in the process that you described in terms of using more efficient energy so i would say those and then overall reliability of the grid in terms of providing better service for our customers dr arnold i think of it as  reducing energy usage allowing consumers to to manage their use of energy increasing reliability and benefiting the environment congressman i think of it as doing the same thing that the dumb grid does which is send electricity only doing it better more efficiently m r i of reliably and then increasing our ability to do things with the grid that it's never done before like sending electricity two ways measurement information decision making and automation so it's that we have a greater educated eloquently stated an educated consumer and a more sophisticated industry thank you very much just to  this is another critical part of the equation that oftentimes gets gets overlooked so to start out by asking about this i read recently that the national association best way to start building the nation's margarets and maybe to start with them is often i actually think we need to drive innovation and smart grid technologies on all three level at the transmission level with phase or measurement units at the distribution level through substation automation and at the customer level the safest route from a regulatory commissioner's perspective is something that's dealing directly in the industry within the utility industry itself the most competitive and most innovative aspect of the smart grid is on the consumer side for consumer decision making is going to congressman i would have agree with ms hoffman the utility regulators are concerned because the technology that we're talking about putting in is new to them and so i think that the deal we demonstration projects will be very valuable inch demonstrating that the technology does perform that it does provide benefits and that it is accepted by the consumers the technology that they referred to is technology that we understand pretty well and we could put on the transmission system and i think that's one reason they endorse it because it's it's known it's well known and we know how much fission see can can be delivered by it but and so from that perspective i think that it is important that that kind of technology be deployed but in parallel we should be undertaking these demonstration projects to show that other technology can also work well  yes thanks i think that it's important to recognize what for example in california and certainly in southern california edison is case our peak system peak is occurring on less than sixty hours out of the year during the period from two thousand  to two thousand and seven when we were experiencing the dramatic growth in our economy our average peak demand was growing by about a thousand megawatts a year that peaks thirty percent of that peak seven thousand megawatts is air conditioning  as we look at investing more and capital to try and meet that type of growth which we dissipate that we'll see again once we come out of this this downturn porton we engage our customers in a way that they can see what prices are what the cost of this energy is going to be so that we can have this very you know mutually beneficial relationship that we can meet their needs but also that they can recognise what the cost of this is so we can end up with a much more efficient system it's just not possible to continue to try and meet that sort of yeah i guess i'd like to just comment on that as well i agree with what the other panelists have said i would like to point out that a lot of the work that's been done to date though really has been on the grid operations reliability side so we've done a lot in transmission we're doing a lot at substations and distribution automation where we haven't done a lot so far really is on the demand side and looking at efficiency and so a lot of those things hopefully through this market demonstration projects and elsewhere will see new technologies that can be deployed but those things have done you know at best very small pilots so a real focus on efficiency and addressing the demand side as well as the we are through the demonstration program where we will have a complete portfolio of generation as well as smart grid technologies that will and that will hopefully show improvement in the fission c of the whole system the system as a whole for the investment grant program they're very technology this ific actions are proposals that will be submitted to the department so some of them could but not all of them probably well i think if you might my time is up with that thank you for your answers bigger thank you mr chairman this must be smart grid day i co chair a caucus on high performance buildings and then the title of what we're having today is connecting buildings in the smart grid so it's it's obviously is a topic that's very much in the forefront i do hear this caucus with representative carnahan from missouri so if you if you happen to be  down in the basement of rayburn around eleven thirty that's when that starts if you need some more talk about the smart grid but i read recently that the national association of regulatory utility commission commissioners head has reported that the most fish affected place for initial investments margaret improvements are immediate investments in this market improvements is on the electric grid itself where energy and cost savings are immediate and do not rely upon changes in customer behavior and do not need customers to purchase and install in home energy savings devices do you agree with that assessment is the best way to start building this nation smart grids miss hoffman congresswoman thank you i believe that we really need investments at the transmission level system as well as at the distribution and the customer level  innovation that is occurring on the system is occurring at the customer level if you look at the wealth of technologies including the appliances with the intelligence and that will provide a great advancement and great education to the industry as well as consumers on their energy consumption thank you congresswoman that technology that they're discussing there will indeed provide a lot of efficiency and translates into a lot of savings for consumers however i don't think we want to lose sight of the fact that adding smart grid technology at the retail level in the home home also has the potential to do to accomplish similar types of savings in vid you mentioned something in your testimony about absolutely and i think that while it's essential that we invest everywhere i think if you really want to mediate games the fastest response is going to come from going after management of  y on the grid itself voltage management and reactive power management that first example that i provided looking at how you turn capacitor banks on and off are current voltage regulators on and off when the load shifts in  when demand shifts in the load comes up and up and down that's something the utility can manage directly without relying on consumers to get queues and individually make a whole host of actions and so i think there are opportunities for immediate benefits going at that direction while waiting for all the cues that the consumers will need to manage their own consumption which is going to be very important down the road as well you know i we hear a lot about the smart meters and the programs to to enable consumers to reduce energy use you know usage and shift part of it to predict you know particular times of the day but it seems that there's more of a smart some wonderful proposals through the american recovery and reinvestment act that demonstrate some of the objectives that the legislation asked us to do in advancing consumer behavior managing load on the system as well as we look at supply and demand increasing the availability of renewable resources i believe that through the american recovery and reinvestment solicitations both the demonstration as well as investment grant we will have taken a major step in the right economically secure and more have greater national security i look at the issues today that i hear discussed so often from everyone in this room and everyone in the district i represent and throughout the country and it seems percent efficiency when the sun goes down we're putting fifty percent of our introduction is from coal which belches into the atmosphere carbon emissions that seems to be the strong and i believe destroying our planet about twenty to twenty five percent from nuclear energy we have no place to send the spent rods and then some twenty percent or so comes from would come from natural gas or from fuels and then one or two percent from can reduce the amount of generation which means we would use reduce the amount of pollution are more official and more effectively trash for electrical energy that we're producing in certain locations throughout america as my understanding today and i live the tennessee valley area represent kingston where the spill is located and so obviously all of us are trying to find some way to what are we producing data find a better use of that so with the grids that we have my understanding we transfer now energy being produced from one from one particular company to another from one area and one region to another how how do we how do we how do we redo the grid system to where that it can become more effectively and if we do with the cost we're talking about how much more can we wring out and how much can we reduce the generation that we have today as a result that one percent two percent three percent five percent but you give an estimation of how if we had the perfect grid system based upon your upon your knowledge and study how much can we save in production i don't have an exact number with the savings but i'll characterize it a little bit differently if we can reduce the peak on the system we can show great savings so if we actually can flatten the loads of customers and flatten the transfer on the transmission system we will get the greatest value and benefit there are some numbers out for peak load reduction i don't remember the exact savings numbers but i can provide that to you when it gets one hundred degrees in tennessee and it's one hundred fifty percent humidity we all turn our conditioners on and we want to be about said five degrees and so that produces a peak how do we convince that customer and what you're saying is we need to reduce the consuming so therefore we don't have a peak how do we do that i'm added to grid system bring about a reduction in peak use for those customers who feel they need that energy one of the technologies if you actually can cycle the air conditioners  through price signals they can cycle some sort of incentive program for cycling the the air conditioners and that's been a common program it has been and that works because i just put like a sixteen serum a house from propane to electricity and we just changed all of the lot so we're not talking about grid now we're told but actually efficiency and conservation in consumers decision you can have the air conditioning running and there might be a price and all but the consumers may say ok well i'm not going to start my dishwasher at this time so you look at the all the factors that pull together not just the air conditioner yes mckellar thank you congressman davis the first recently completed a study which the energy independence and security act asked us to do on assessing the national potential for demand response and in that study we determined that in a perfect world we could reduce peak twenty percent over the next ten years so the numbers i think that as hoffman was talking about now that would be a perfect world but that perfect world would be all consuming entities having a smart  meter and having that smart meter stand the real time price signals dynamic pricing and having the devices and appliances have a smart chips in them that could automatically respond to the price and but that estimate twenty percent is very significant yes it would be twenty gigawatts today we consume on peak about eight hundred twenty gig a lot so it would be i agree with mr ellery and all of the panelists contributed to our knowledge base on this issue which i consider to be vitally important because i think that in the future our country relying on electricity and electrifying america even more than it is is probably the answer to the pollution problems that we face the challenges that we face today i might add to the pollution those of us who don't believe that global warming is a problem caused by c o two are very concerned with pollution and very concerned with america's energy independence as well i'd like to go back