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27–054 2018

POWERING AMERICA: A REVIEW OF THE OPERATION AND EFFECTIVENESS OF THE NATION’S 

WHOLESALE ELECTRICITY MARKETS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JULY 26, 2017 

Serial No. 115–49 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

GREG WALDEN, Oregon 

Chairman 

JOE BARTON, Texas 

Vice Chairman 

FRED UPTON, Michigan 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

MIMI WALTERS, California 

RYAN A. COSTELLO, Pennsylvania 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

RAUL RUIZ, California 

SCOTT H. PETERS, California 

DEBBIE DINGELL, Michigan 

(III) 

SUBCOMMITTEE ON ENERGY

FRED UPTON, Michigan 

Chairman 

PETE OLSON, Texas 

Vice Chairman 

JOE BARTON, Texas 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

ROBERT E. LATTA, Ohio 

GREGG HARPER, Mississippi 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

GREG WALDEN, Oregon (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

SCOTT H. PETERS, California 

GENE GREEN, Texas 

MICHAEL F. DOYLE, Pennsylvania 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

PETER WELCH, Vermont 

PAUL TONKO, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

G.K. BUTTERFIELD, North Carolina 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(V) 

C O N T E N T S 

Page 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 2 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 4 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 5 

Prepared statement .......................................................................................... 6 

WITNESSES

Gordon Van Welie, President and CEO, ISO New England ................................ 9 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 119 

Nick Brown, President and CEO, Southwest Power Pool .................................... 25 

Prepared statement .......................................................................................... 27 

Answers to submitted questions ...................................................................... 128 

Bradley C. Jones, President and CEO, New York ISO ........................................ 36 

Prepared statement .......................................................................................... 38 

Answers to submitted questions ...................................................................... 136 

Richard Doying, Executive Vice President, Midcontinent ISO ............................ 43 

Prepared statement .......................................................................................... 45 

Answers to submitted questions ...................................................................... 142 

Cheryl Mele, Senior Vice President and CEO, Ercot ............................................ 53 

Prepared statement .......................................................................................... 55 

Answers to submitted questions ...................................................................... 153 

Keith Casey, Vice President, Market & Infrastructure Development, California ISO ............................................................................................................. 63 

Prepared statement .......................................................................................... 65 

Answers to submitted questions ...................................................................... 157 

Craig Glazer, Vice President, Federal Government Policy, PJM Interconnection, LLC ............................................................................................................... 73 

Prepared statement .......................................................................................... 75 

Answers to submitted questions ...................................................................... 165 

(1) 

POWERING AMERICA: A REVIEW OF THE OPERATION AND EFFECTIVENESS OF THE NATION’S WHOLESALE ELECTRICITY MARKETS 

WEDNESDAY, JULY 26, 2017 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in room 

2123 Rayburn House Office Building, Hon. Fred Upton (chairman 

of the subcommittee) presiding. 

Members present: Representatives Upton, Olson, Barton, Shimkus, Murphy, Latta, Harper, McKinley, Kinzinger, Griffith, Johnson, Long, Flores, Mullin, Hudson, Cramer, Walberg, Walden (ex 

officio), Rush, McNerney, Peters, Green, Doyle, Castor, Welch, 

Tonko, Loebsack, Schrader, Kennedy, Butterfield, and Pallone (ex 

officio). 

Staff present: Elena Brennan, Legislative Clerk, Energy/Environment; Jerry Couri, Chief Environmental Advisor; Wyatt Ellertson, 

Research Associate, Energy/Environment; Tom Hassenboehler, 

Chief Counsel, Energy/Environment; A.T. Johnston, Senior Policy 

Advisor, Energy; Alex Miller, Video Production Aide and Press Assistant; Brandon Mooney, Deputy Chief Energy Advisor; Mark 

Ratner, Policy Coordinator; Annelise Rickert, Counsel, Energy; Dan 

Schneider, Press Secretary; Sam Spector, Policy Coordinator, Oversight and Investigations; Jason Stanek, Senior Counsel, Energy; 

Madeline Vey, Policy Coordinator, Digital Commerce and Consumer Protection; Evan Viau, Staff Assistant; Andy Zach, Senior 

Professional Staff Member, Environment; Priscilla Barbour, Minority Energy Fellow; David Cwiertny, Minority Energy/Environment 

Fellow; Jean Fruci, Minority Energy and Environment Policy Advisor; Rick Kessler, Minority Senior Advisor and Staff Director, Energy and Environment; and Tuley Wright, Minority Energy and 

Environment Policy Advisor. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. The Subcommittee on Energy will now come to order 

and the chair would recognize himself for an opening statement. 

So good morning. Last week, the subcommittee embarked on its 

first hearing in our Powering America series where a panel of witnesses shared their diverse perspectives regarding the state of the 

wholesale electricity markets. And during that hearing, we heard 

2 

directly from market participants who operate in all seven of the 

nation’s RTO and ISO markets. Today, I would like to welcome representatives from the nation’s grid operators and invite them to 

share their thoughts regarding the current issues and the challenges in their respective regional markets. 

Americans have come to expect that electricity will always be 

available when it is needed and it is the role of the grid operators 

to make sure that this expectation is always met. RTOs and ISOs 

play a vital role in the delivery of power from the generator to the 

consumer, but it is a role that is largely outside the public’s view. 

By operating and dispatching the transmission systems 24/7, the 

grid operators must ensure that supply and demand is continually 

kept in balance. In addition, they are responsible for conducting 

long-term planning to reduce congestion on existing transmission 

lines and to ensure that there is adequate transmission capacity to 

reliably serve future electricity demand. 

So as we sit in the committee room today, the grid operator responsible for coordinating the movement of electricity in D.C. is 

known as the PJM. In addition to serving the needs of 13 other 

states including Michigan, and serving 65 million folks, PJM also 

operates over 82,000 miles of transmission lines. And that should 

provide a sense of the size and the importance of these grid operators. 

Along with the other six grid operators at the table today, these 

RTOs and ISOs combined serve two-thirds of the nation’s population. However, as we heard from our witnesses last week, there 

are concerns regarding the state of our nation’s competitive electricity markets. Some of the testimony focused on a specific RTO 

function such as the complexities of the capacity market, but we 

spent much of the time focused on broader issues involving grid reliability, market competition, generator fuel diversity, and whether 

certain baseload resources should receive financial assistance to remain viable. 

As our witnesses are aware, there are many involving challenges 

currently facing the electricity industry. In a very short period, we 

have witnessed significant changes in the market supply and demand fundamentals and specifically weak growth in electricity consumption combined with the availability of large supplies of inexpensive natural gas. In turn, wholesale electricity prices are now 

at near-record lows around the country and these low prices have 

resulted in some generators being unable to recover their costs. Notably, several states are advancing proposals to support at-risk nuclear plants that are unable to survive on revenues from the energy 

and capacity markets alone. 

The witnesses before the subcommittee today all operate competitive markets, the dispatch generation across the country based 

on lowest cost. They also now find themselves in the middle of this 

policy debate involving changing technology, environmental goals, 

and the effects of out-of-market actions. Many are questioning 

whether the RTO and ISO markets can remain competitive and 

perform all of their existing essential functions while still tackling 

the new challenges in the faces of these emerging trends. 

So as our Powering America series continues, I look forward to 

learning more about what is occurring in each of your regions, 

3 

hearing your thoughts regarding what, if any, reforms could assist 

your efforts to achieve greater efficiencies, reliability, and competition in your organized market. 

And I yield the balance of my time to the gentleman from Oklahoma, Mr. Mullin. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Good morning. Last week this subcommittee embarked on its first hearing in our 

‘‘Powering America’’ series, where a panel of witnesses shared their diverse perspectives regarding the state of the wholesale electricity markets. During that hearing, 

we heard from directly from market participants who operate in all seven of the nation’s RTO and ISO markets. Today, I’d like to welcome representatives from the 

nation’s grid operators and invite them to share their thoughts regarding current 

issues and challenges in their respective regional markets. 

Americans have come to expect that electricity will always be available when it’s 

needed, and it is the role of the grid operators to make sure that this expectation 

is always met. RTOs and ISOs play a vital role in the delivery of power from the 

generator to the consumer, but it’s a role that is largely outside the public’s view. 

By operating and dispatching the transmission system 24/7, the grid operators must 

ensure that supply and demand is continually kept in balance. In addition, they are 

responsible for conducting long-term planning to reduce congestion on existing 

transmission lines and to ensure that there’s adequate transmission capacity to reliably serve future electricity demand. 

As we sit in this Committee room today, the grid operator responsible for coordinating the movement of electricity to Washington D.C. is known as ‘‘PJM’’. In addition to serving the needs of 13 other states (including Michigan) and serving 65 million people, PJM also operates over 82,000 miles of transmission lines. That should 

provide a sense of the size and importance of these grid operators. Along with the 

other six grid operators at the table today, these RTOs and ISOs combined serve 

two-thirds of the nation’s population. 

However, as we heard from our witnesses last week, there are concerns regarding 

the state of our nation’s competitive electricity markets. Some of the testimony focused on specific RTO functions, such as the complexities of the ‘‘capacity’’ market— 

but we spent much of the time focused on broader issues involving grid reliability, 

market competition, generator fuel diversity and whether certain baseload resources 

should receive financial assistance to remain viable. 

As our witnesses are aware, there are many evolving challenges currently facing 

the electricity industry. In a very short period, we’ve witnessed significant changes 

in the market’s supply and demand fundamentals; specifically, weak growth in electricity consumption combined with the availability of large supplies of inexpensive 

natural gas. In turn, wholesale electricity prices are now at near record lows around 

the country and these low prices have resulted in some generators being unable to 

recover their costs. Notably, several States are advancing proposals to support ‘‘atrisk’’ nuclear plants that are unable to survive on revenues from the energy and capacity markets alone. 

The witnesses before the subcommittee today all operate competitive markets that 

dispatch generation across the country based on lowest-cost. They also now find 

themselves in in the middle of this policy debate involving changing technology, environmental goals, and the effects of ‘‘out-of-market’’ actions. Many are questioning 

whether the RTO and ISO markets can remain competitive and perform all their 

existing essential functions, while also tackling new challenges in the face of these 

emerging trends. 

Mr. MULLIN. Thank you, Chairman Upton, for yielding. I just 

want to take a quick moment to recognize those that are here. One 

of the witnesses today is Mr. Nick Brown who represents the 

Southwest Power Pool. Southwest Power Pool is a regional transmission organization whose members like Oklahoma Gas and Electric and GRDA operate in my state and help provide power to millions of Oklahomans. 

4 

I want to thank all the witnesses for being here and look forward 

to hearing your testimony as this committee evaluates the state of 

our wholesale electricity markets and I yield back. 

Mr. UPTON. The time is expired, you yield back. I recognize the 

ranking member of the subcommittee, Mr. Rush. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman, for holding this 

important hearing today examining the operation and effectiveness 

of the nation’s wholesale electricity markets. I must also commend 

you, Mr. Chairman, for following up last week’s very informative 

hearing where we heard from industry insiders, with today’s discussion consisting of regional grid operators as these are the people 

responsible for administering the nation’s wholesale electricity 

market and managing the day-to-day operations of the respective 

transmission systems. 

Mr. Chairman, it has been some time since this subcommittee 

has held comprehensive hearings on the Federal Power Act, and I 

think these informative discussions greatly benefit all of our members and will also help us make better, more informed decisions 

when determining whether we need to update the Federal Power 

Act or leave it as it is. 

Mr. Chairman, one of the points that every one of our industry 

panelists from last week’s hearing agreed upon was the fact that 

the nation’s electricity grid has changed in recent years and will 

continue to undergo dramatic transformations in the near future. 

Whether spurred by state and federal policy, marketing forces, or 

consumer demands and behavior, we have seen significant new 

trends taking place in the electricity market. 

Mr. Chairman, consumers are driving many of these changes as 

they demand new tools to more responsibly use energy both as a 

way to save money and as a way to save their environment. Some 

of these trends include greater demand for cleaner, renewable 

sources of energy to compete with traditional fossil fuels, an increase in distributed generation and demand response resources, 

more energy efficiency initiatives and all the while demanding 

lower energy costs. With all of these consumer-driven changes 

there is also the debate as whether issues such as fuel diversity 

and distributive energy make the grid more or less reliable, and I 

look forward to hearing from our witnesses on this important topic. 

There is also the important issue of grid modernization and grid 

security. As new and different sources of energy are absorbed into 

the grid, it is important that we have the infrastructure in place 

to get this new, cleaner energy from the places where it is produced 

to the places where it is needed. Congress should not only focus on 

streamlining regulations in an environmentally safe and responsible way, but also, Mr. Chairman, we should be making sure that 

we provide adequate investment into modernizing and securing the 

grid. 

Mr. Chairman, the American people want to feel confident that 

our energy infrastructure provides secure, reliable, sustainable energy while also understanding that the grid is safe from attacks, 

5 

whether those attacks mean cyber or physical, natural or manmade. 

So Mr. Chairman, I look forward to engaging today’s distinguished panelists on what they identify as the greatest opportunities as well as the most difficult challenges that we see in ensuring 

that we have a greener, cleaner, more integrated 21st century grid. 

And with that Mr. Chairman, I thank you and I yield back the balance of my time. 

Mr. UPTON. Thank you. The gentleman yields back. The chair 

would recognize the chair of the full committee, the gentleman 

from Oregon, for an opening statement, Mr. Walden. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. Well, good morning, Mr. Chairman and members 

of the committee and our distinguished panelists. As you will recall, last week we held our first hearing on the Powering America 

series where we received testimony from a wide range of electricity 

sector stakeholders. That hearing provided this committee with the 

perspective, concerns, and ideas from the individuals who participate in the electricity markets. 

So today, we pick up where we left off and continue our review 

of America’s electricity system by hearing from individuals who operate, actually operate, the electricity markets known as regional 

grid operators, so thank you all for being here. Regional grid operators, or RTOs and ISOs, are one of the options Americans have to 

access reliable and affordable electricity. They accomplish this by 

performing a variety of functions ranging from long-term transmission planning services to overseeing competitive energy markets 

where wholesale electricity is bought and sold. 

Now in my home State of Oregon and neighboring state of Washington, similar grid operator functions are performed for various 

consumer-owned utilities by the Bonneville Power Administration 

or the BPA. BPA is a nonprofit, federal power and marketing administration based in the Pacific Northwest and is part of the Department of Energy. Past attempts have failed to form an RTO for 

the states of Oregon and Washington which encompass my Eastern 

Oregon district. That opposition, I should tell you, remains strong 

today. 

But given the size and scope of America’s electricity system, it 

is safe to say that the job of regional grid operators has never been 

easy, and looking at recent developments within the nation’s power 

sector, it is apparent that the job is becoming even more challenging. Thousands of different stakeholders participate in the U.S. 

electricity system and many of these stakeholders have differing 

and competing desires for how wholesale electricity markets should 

be administered. 

The RTOs and ISOs regulated by FERC have the difficult task 

of deciding how to best manage and oversee energy markets in 

order to provide power in the most affordable and reliable way for 

the consumers they serve. RTOs and ISOs do not own any physical 

grid assets and they do not exist to create a profit. They act as an 

independent, nonprofit entity and their goal is to effectively orchestrate the generation and delivery of affordable electricity across the 

6 

bulk power grid by instantaneously matching power supply with 

power demand for customers. 

Today, we have a panel of RTO executives who bring a wealth 

of experience operating organized electricity markets, and I look 

forward to their ideas on how we can we best serve the needs of 

the consumers we all need to take care of. Additionally, I look forward to discussing other important issues with our witnesses such 

as how RTOs and ISOs can accommodate state policies in the areas 

they serve while preserving the competitive nature of markets and 

how RTOs and ISOs can incorporate new forms of generation onto 

the grid without compromising system reliability. 

Even though many Americans may not understand the complexities of wholesale electricity markets, one thing most Americans do 

understand is the electricity bill that arrives in their mailboxes 

each month. This is especially true for American businesses who 

rely on affordable power to succeed and grow our economy and jobs. 

The goal of this committee and I think of the operators is to 

make sure that consumers are always coming out as winners. If we 

keep the consumer at the front and that is our goal when making 

important policy decisions, I am confident that the U.S. electricity 

system will continue to thrive and flourish and meet the needs of 

all Americans. With that in mind I am eager to discuss how we can 

ensure affordable energy for consumers across the country while 

also maintaining system reliability now and in the future. 

So Mr. Chairman thanks for the hearing. To our witnesses, 

thank you all for participating. I got your testimony here. We have 

a couple of subcommittees meeting at the same time as you might 

imagine, so I will be in and out. With that if there are other members on the committee that would like the balance of my time I am 

happy to yield to them and, if not, I will yield back to the chairman 

and thanks again. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

As you will recall, last week we held our first hearing in the Powering America 

series where we received testimony from a wide range of electricity sector stakeholders. That hearing provided this committee with perspectives, concerns, and 

ideas from the individuals who participate in electricity markets. Today, we pick up 

where we left off and continue our review of America’s electricity system by hearing 

from the individuals who operate the electricity markets, known as regional grid operators. 

Regional grid operators, or RTOs and ISOs, are one of the options Americans have 

to access reliable and affordable electricity. They accomplish this by performing a 

variety of functions, ranging from long-term transmission planning services to overseeing competitive energy markets where wholesale electricity is bought and sold. 

In my home State of Oregon and the state of Washington similar grid operator 

functions are performed for various consumer owned utilities through the Bonneville 

Power Administration. BPA is a non-profit federal power marketing administration 

based in the Pacific Northwest that is part of the Department of Energy. Past attempts have failed to form a RTO for the states of Oregon and Washington, which 

encompass my eastern Oregon district. That opposition remains strong today. 

But given the size and scope of America’s electricity system, it is safe to say that 

the job of regional grid operators has never been easy, and looking at recent developments within the nation’s power sector it is apparent that their job is becoming 

even more challenging. Thousands of different stakeholders participate in the U.S. 

electricity system and many of these stakeholders have differing and competing desires for how wholesale electricity markets should be administered. 

7 

The RTOs and ISOs, regulated by FERC, have the difficult task of deciding how 

to best manage and oversee energy markets in order to provide power in the most 

affordable and reliable way for the customers they serve. RTOs and ISOs do not own 

any physical grid assets and they do not exist to create profit. They act as independent, non-profit entities and their goal is to effectively orchestrate the generation 

and delivery of affordable electricity across the bulk power grid by instantaneously 

matching power supply with power demand for their customers. 

Today, we have a panel of RTO executives who bring a wealth of experience operating organized electricity markets and I look forward to their ideas on how we can 

best serve the needs of the customers they serve. 

Additionally, I look forward to discussing other important issues with our witnesses, such as how RTOs and ISOs can accommodate state policies in the areas 

they serve while preserving the competitive nature of markets and how RTOs and 

ISOs can incorporate new forms of generation onto the grid without compromising 

system reliability. 

Even though many Americans may not understand the complexities of wholesale 

electricity markets, one thing most Americans do understand is the electricity bill 

that arrives in their mailbox each month. This is especially true for American businesses who rely on affordable power to succeed and grow the economy. The goal of 

this committee, and I think of the grid operators, is to make sure that consumers 

are always coming out as winners. If we keep this goal in mind when making important policy decisions, I am confident that the U.S. electricity system will continue 

to thrive and flourish and meet the needs of all Americans. With that in mind, I 

am eager to discuss how we can ensure affordable energy for consumers across the 

country while also maintaining system reliability now and in the years to come. 

Mr. UPTON. The gentleman yields back. The chair will recognize 

the ranking member of the full committee, Mr. Pallone, for an 

opening statement. 

Mr. PALLONE. Thank you, Chairman Upton. This is the second 

hearing on this subject in the subcommittee this month and just 

like last week’s hearing, Ranking Member Rush and I worked in 

partnership with Chairman Upton and Walden to set up today’s 

hearing in order to provide us important and unbiased background 

for future decisions. 

I am pleased we have an opportunity to hear from those who are 

entrusted to run the grid, the regional transmission organizations, 

or RTOs. While versions of these independent system operators 

have existed for decades, it was the Energy Policy Act of 2005 that 

enshrined these organizations as central to the wholesale markets 

and these markets have yielded us many benefits including some 

of the lowest prices we have ever seen for electricity. 

However, that doesn’t mean that we should just turn a blind eye 

to the question of whether these organizations are properly positioned to address the many changes that are underway in the electricity sector. RTOs make decisions every day that greatly affect 

the market, its participants, and consumers. In some ways they are 

more powerful on a day-to-day basis than the Federal Energy Regulatory Commission, which is why we need to ensure that RTOs 

are providing unbiased management of their systems and not veering into the kind of policymaking that is the responsibility of Congress and the states. 

Today, RTOs have their work cut out for them. New technologies, 

evolving policies, fuel market changes, and aging infrastructure all 

influence the operation, reliability, and resiliency of the grid, so too 

do changes in patterns and distribution of electricity demand. All 

of these factors have called into question the most basic tenets of 

ratemaking and challenged the longstanding financial model for 

utilities. They are also having an impact on wholesale markets 

8 

with implications for the competitive position of more traditional 

grid assets, and I am sure we are going to hear more about these 

issues from our witnesses today. 

The growth of distributed generation and these new technologies 

are also creating opportunities for consumers and their advocates 

to have a more active role in the electricity sector. Consumers are 

driving policies at the state level through the Public Utility Commissions and seeking input on decisions that impact generation, 

distribution, and transmission of electricity. Although consumers 

have not played a role in RTO decisionmaking, it may be time to 

put in place formal mechanisms to facilitate direct communication 

between consumer advocates and the RTOs. 

And each of the organizations we will hear from today operates 

differently. While they are all administering wholesale markets, 

their governance structures, market rules, state and regional policies, and relationships to market participants and consumers are 

different. This hearing gives us the opportunity to compare and 

contrast the different approaches and to evaluate whether some approaches offer advantages in managing the grid. 

And keeping the electric grid operating is essential to our economy and our safety, so the RTOs’ focus on grid reliability and resiliency is understandable, but these concepts are evolving along with 

the new technologies and tools that have emerged over the past 

decade. Reliability and resiliency are no longer defined solely by 

transmission and baseload generation assets. In some cases, I have 

seen transmission projects needlessly rubberstamped in the name 

of reliability. 

There are certainly other ways to address reliability than just 

gold plating the transmission system. Newer and bigger transmission lines are no longer always the best or most cost effective 

answer to the question of how we improve reliability. It is time for 

the RTOs to begin to adapt to this new reality. Distributed energy 

resources, renewable and otherwise, along with efficiency and demand response are equally important. And of course we certainly 

do need more interstate and interregional transmission, particularly from the Great Plains to the rest of the Eastern Interconnection. The lack of progress in this area leads me to ask whether the 

approval process between regions is working as effectively and efficiently as it should and whether regions have become too balkanized and unable to work together for the greater good. 

So Mr. Chairman, I am pleased that we have been able to work 

together on this hearing series evaluating our nation’s electricity 

markets. Last week, we learned about the perspectives of market 

participants and today have an experienced panel representing our 

nation’s RTOs. But what we have been missing so far is an analysis of consumer perspectives. And there are number of important 

issues impacting consumers that we must consider including governance structure, cost recovery models, and appropriate transparency, and I hope that we will commit to holding such a hearing 

from the consumer perspectives in the near future. 

That said, I look forward to hearing from the panel and I yield 

back, Mr. Chairman. 

Mr. UPTON. Thank you. With that, all member statements have 

been completed. We are joined by great witnesses today and we 

9 

will start with 5 minutes for each one with Gordon van Welie, 

president and CEO of ISO New England. 

Welcome. You need to hit the mike button there. 

STATEMENTS OF GORDON VAN WELIE, PRESIDENT AND CEO, 

ISO NEW ENGLAND; NICK BROWN, PRESIDENT AND CEO, 

SOUTHWEST POWER POOL; BRADLEY C. JONES, PRESIDENT 

AND CEO, NEW YORK ISO; RICHARD DOYING, EXECUTIVE 

VICE PRESIDENT, MIDCONTINENT ISO; CHERYL MELE, SENIOR VICE PRESIDENT AND CEO, ERCOT; KEITH CASEY, VICE 

PRESIDENT, MARKET & INFRASTRUCTURE DEVELOPMENT, 

CALIFORNIA ISO; AND, CRAIG GLAZER, VICE PRESIDENT, 

FEDERAL GOVERNMENT POLICY, PJM INTERCONNECTION, 

LLC 

STATEMENT OF GORDON VAN WELIE 

Mr. VAN WELIE. Good morning, Chairman Upton, Ranking Member Rush, and members of the subcommittee. Thank you for the opportunity to appear before you this morning. As you said, my name 

is Gordon van Welie. I am the CEO of ISO New England. And the 

ISO was established back in 1997 and led to the creation of wholesale electricity markets and the subsequent investment in the region of some $30 billion in electricity supply and transmission infrastructure. 

This has caused a dramatic change in how electricity is produced 

and consumed and I believe this transformation is accelerating. 

Wholesale markets have produced demonstrable benefits for New 

England electricity consumers. For instance, in 2016, New England’s wholesale electricity markets cleared $5.4 billion in revenues. This was the lowest since 2003 and down from high water 

mark of nearly $14 billion in 2008. During this period, emissions 

have decreased substantially, and since I last appeared before this 

subcommittee the forward capacity market has driven investment 

in approximately 5,600 megawatts of additional generation in demand resources including energy efficiency. 

I last appeared before the subcommittee in March of 2013 to discuss the transformation of our power system resources. At the 

time, I noted a pair of key issues. First, the critical need for accurate price formation and performance incentives in our wholesale 

markets to ensure reliable electricity supply, and second, I stressed 

the importance of adequate fuel infrastructure and supply arrangements. We now have had an additional 4 years of experience to underscore the importance of both issues. 

I would like to update the subcommittee on these issues and also 

speak to cybersecurity challenge. First, I would like to comment on 

the issue of state-sponsored resources and their impact on wholesale markets. The region is preparing to accommodate an influx of 

state-sponsored, carbon-free resources. ISO New England has proposed changes to our forward capacity market to ensure appropriate price formation and to accommodate the states’ policies. 

These changes will allow existing resources that are seeking to retire to swap their capacity obligations with state-sponsored resources. We believe that this is innovative way to continue to utilize the wholesale market to ensure reliability while gradually 

10 

transitioning the region towards an energy supply with lowered 

carbon emissions. 

We are currently discussing this proposal with our stakeholders 

and intend to file the market rules with the FERC in January of 

2018. This proposal will likely accelerate the retirement of uneconomic non-gas generators which are the resources we currently rely 

upon when the region’s gas pipelines are constrained and unable 

to supply gas generators. 

This leads me to the issue of fuel security, which continues to be 

a top priority for ISO New England. The region is experiencing a 

major shift in the generation mix and we anticipate this ongoing 

transition could lead to the retirement of approximately a third of 

the generation fleet within the next decade. The shift away from 

generators with onsite fuel to gas generators relying on just-in-time 

fuel delivery has exposed the limitations of New England’s fuel infrastructure. 

As I have previously testified, the constraints on the natural gas 

transportation during very cold winters can lead to reliability risks 

and price volatility in the wholesale market. The transformation of 

the resource mix will continue to drive additional retirements 

among gas generators and likely exacerbate the effects of these 

pipeline constraints. In order to mitigate the risk, New England 

market participants or the states will have to invest in sufficient 

infrastructure and fuel arrangements and the ISO may have to 

make additional improvements to the wholesale market rules to 

incent these investments. The ISO is studying this fuel security 

risk and will report preliminary results in October of this year. 

Finally, the ISO is working to improve the safeguards for our 

control center and business system infrastructure. We recognize 

the volume and sophistication of the threats against the electric 

grid are rising. I can assure the subcommittee that we also recognize the importance of critical cybersecurity assets that we operate 

and are constantly working to identify and address these dynamic 

and evolving challenges. 

Since I last appeared before the subcommittee, ISO New England 

has made many operational and market-based changes to meet the 

needs of our region. Market forces and public policy decisions are 

impacting both operations and markets and the region continues to 

require innovative solutions to ensure reliable, environmentally responsible, and competitive electricity supply. I believe that the collaborative governance and risk management structures in place in 

New England will keep us on course to navigate and meet these 

challenges. Thank you and I look forward to your questions. 

[The prepared statement of Mr. Van Welie follows:] 

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Mr. UPTON. Thank you. 

Next, we are joined by Nick Brown, president and CEO of Southwest Power Pool. Welcome. 

STATEMENT OF NICK BROWN 

Mr. BROWN. Thank you and good morning, Chairman Upton and 

Ranking Member Rush and all the members of the subcommittee. 

My name is Nick Brown. I am president and CEO of Southwest 

Power Pool, an organization for which I have worked 32 years. The 

title of today’s topic, Review of the Operation and Effectiveness of 

the Nation’s Wholesale Electricity Markets, I appreciate your interest in that topic and I am here to tell you the wholesale markets 

are functioning very well and very effectively. 

In Southwest Power Pool we are focused on end use customers 

and we focus a great deal of our attention in ensuring that our benefit to cost ratio is large and increasing. Today it is greater than 

11:1 versus the cost of operation of our organization across all reports of 14 states in the central part of the U.S. We have over 

83,000 megawatts of generation and our footprint serving just shy 

of 55,000 megawatts of load, so obviously our reserve margins are 

multiple of our minimum criteria and we are very blessed that that 

portfolio is very diverse. 

We have significant coal, gas, nuclear, a huge amount of wind 

and continuing to grow, and hydro. In fact, this morning I pulled 

up our web site in real time, a typical summer day, and our footprint wa 46 percent coal, 28 percent wind, 19 percent natural gas, 

6 percent nuclear, 4 percent hydro, a very diverse portfolio. 

Very important to understand that the wind in our footprint has 

grown significantly over the past decade to nearly 17,000 

megawatts. Nearly 17,000 megawatts. Also important is that half 

of that came on line in the last 2 years. It operates extraordinarily 

reliably and does so for a multiple of reasons. 

I will tell you as an engineer with training in operations and 

planning, if you had asked me 10 years ago if we would have been 

able to reliably accommodate even half of that I would have said 

no. Period. End of discussion. So how are we able to do that today? 

There are specific reasons that we are able to accommodate that 

magnitude of wind in a very reliable fashion. 

First and foremost, over the last 10 years, we have invested in 

nearly $10 billion in transmission across our 14-state footprint and 

that has been paid for under policies developed by our regional 

state committee who is comprised of a commissioner from each of 

our states who, collaboratively, through our committee and their 

committee processes, determined a cost allocation process to pay for 

that transmission. But for that transmission we would not be able 

to accommodate in a reliable fashion that magnitude of wind. 

Second, a day-ahead energy and day-ahead unit commitment 

market, we are able to commit generating units across those 14 

states in a very, very reliable fashion. And then third, we consolidated all of the balancing authorities, more than 20, in our 14-state 

footprint, but for any one of those being pulled out of the equation 

we would not be able to accomplish. Reliability is job one. We can 

accommodate managing the system in a reliable fashion and we 

26 

can mandatorily from a reliability unit commitment perspective 

maintain whatever generation is needed to protect reliability. 

Second, I want to go on to cybersecurity. It is an interest. It is 

a very, very high risk for our organization, but we are subject to 

the standards of the North American Electric Reliability Corporation. They require us to mandatorily comply with those. We are 

heavily audited against those. They are backstopped by the Federal 

Energy Regulatory Commission as are our market rules and we are 

subject to penalties of up to a million dollars a day per violation. 

I believe we are in good hands, but the reliability standards are 

a threshold. We focus on security far above minimum reliability 

standards. I appreciate your time today. 

[The prepared statement of Mr. Brown follows:] 

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Mr. UPTON. Thank you. 

Next we are joined by Bradley Jones, President and CEO of New 

York ISO. Thank you. 

STATEMENT OF BRADLEY JONES 

Mr. JONES. Thank you. Chairman Upton, Ranking Member Rush, 

members of the subcommittee, thank you for having me here. I am 

the chairman and CEO of the New York ISO. Prior to my position 

as CEO of the New York ISO, I was the chief operating officer of 

the Electrical Reliability Council of Texas. 

New York has gone through significant changes much of the 

country has. Social, economic, policy changes are driving significant 

changes among each of these ISOs, and each of these ISOs here before you have responded to those changes and have built systems 

to ensure that they have the capability to maintain reliable, safe 

operations of their systems as well as do so at the lowest possible 

economic cost for their consumers. 

I would like to highlight three of the critical functions of the 

NYISO. First, the NYISO operates the bulk electric system and 

does so under reliability rules that are set by the nation, by the 

state, and by our regions. Second, we operate competitive electricity 

markets throughout our regions to attain that lowest possible cost 

for consumers. And third, the NYISO conducts planning studies to 

ensure that we can guarantee reliability out into the future not 

just for today. 

Since 1999, the competitive markets in New York have delivered consistently for consumers. Over $7.8 billion over the last several 

years have been returned back to consumers through the efficient 

operation of our systems. Now beyond efficiency, since 1999, the 

creation of the NYISO, we have also seen a significant reduction 

in air emissions. Carbon is down by 43 percent from our generation 

fleet. Nitrogen oxides are down by 87 percent and sulfur dioxide 

down by 98 percent in that same period, significant track record. 

Yet, New York State continues to be a national leader on the environment and clean energy. 

And at the NYISO we see a recognition as we move forward to 

ensure this clean energy future that we have something we must 

address. In our state we are beginning to recognize that we have 

a state which is characterized by a tale of two grids, a grid in Upstate which is primarily clean energy, nuclear energy, hydro, wind, 

solar, all components that have low emissions and yet in the south 

where much of our load is, over two-thirds of our load, Downstate 

we have a grid which is characterized by over 75 percent fossil fuel 

generation. 

In order to achieve our low emissions and clean energy objectives 

we must be able to transport that power. To move renewable power 

throughout our grid we have to focus on the transmission system 

in New York. Now I need to applaud FERC. FERC passed, several 

years ago, an Order 1000 which has given the great opportunity to 

move forward on transmission projects within our region. 

We have two major transmission projects that are currently underway and under consideration. One that moves power a thousand 

megawatts from left to right across the state and will enable us to 

get more of our power out of the hydro resources we have in the 

37 

west as well as the wind resources we have in the west. We also 

have another transmission project that is moving from Central 

New York down into our load centers of the Lower Hudson Valley, 

New York City, and Long Island. 

Third, under consideration we are looking forward to working 

with the Public Service Commission in New York to drive one additional policy improvement. That is transmission from our north 

country into the central part of the state so that we can capture 

again renewable resources in that region. Achieving our renewable 

future, which is set by our governor as a goal of achieving 50 percent renewables by 2030, depends upon building transmission in 

the state. We are making great progress thanks to the work of the 

FERC so far and we will be making more progress as we go forward. 

In addition, we are working very closely with the state of New 

York as an effective partner on analyzing the possibility of integrating carbon directly into our markets. What I mean by that is 

pricing carbon into the market dispatch, something that at this 

time that I don’t believe any other state is doing, but certainly 

something that I believe most economists would suggest is the best 

way to accommodate low carbon resources in our markets. 

We are very much at the beginning of this process. We have been 

working very closely with our state in a collaborative way. Our 

market participants requested that we hire a consultant. We hired 

the very renowned Brattle Group in to study this issue. We hope 

in the next several days to release a major report on the possibility 

of integrating carbon into our markets. 

We think it is an extraordinary way that could, is very promising 

for our future not only at keeping costs down for our consumers, 

but also in doing so in a way that reduces carbon even further than 

the current programs in place. So New York ISO, much like these 

ISOs before you, have accommodated change, they have led change. 

We will continue to do that in the future. Thank you. 

[The prepared statement of Mr. Jones follows:] 

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Mr. UPTON. Thank you. 

Next, Richard Doying, executive VP for Midcontinent ISO. Welcome. 

STATEMENT OF RICHARD DOYING 

Mr. DOYING. Good morning, Chairman Upton, Vice Chairman 

Olson, and Ranking Member Rush, and the rest of the subcommittee members. I appreciate the opportunity to talk to you 

today about the important topic of energy markets and their effectiveness and efficiency. 

I started at MISO in 2002 as we were developing the energy 

markets, and we have seen significant change in the markets and 

the resources since that time and I look forward to discussing those 

changes with you and how the markets have adapted to deal with 

those changes. I know the committee is interested in hearing about 

retirement of generation coal and nuclear units as well as increases 

in gas, increases in renewable energy, and I intend to focus my remarks here today on just those issues. 

As a brief introduction to MISO we are, as noted earlier, a 

501(c)(4), a public interest organization, so we exist for the benefit 

of the consumers in our region to reliably operate the system as 

well as to ensure the lowest cost delivered prices to those customers. We operate about 175,000 megawatts of generation across 

15 states, serving about 42 million people. As part of that we annually generate about $3 million in benefits for all of our consumers. 

The industry is being impacted by a combination of regulatory, 

political, and economic factors and we have already experienced a 

dramatic shift and changes in the MISO region. While coal-fired 

generation supplied about 75 percent of the energy consumed in 

the MISO region in 2005, it now accounts for less than 50 percent, 

about 46 percent. While gas resources generated about 7 percent of 

the energy consumed in the MISO region in 2005, that number is 

now at 27 percent. And while renewables generated and accounted 

for almost zero percent of our energy in 2005, it now accounts for 

about 7 percent and it continues to grow rapidly. 

The changes in that generation profile are due both to reduction 

in coal and the retirement of about 13,000 megawatts of coal within the region, but it is also driven by economic factors, primarily 

the reduction in natural gas prices. If you looked at the natural gas 

prices in 2005 and considered how far they would reduce by 2015 

and the fact that gas would be a more economic fuel source than 

coal, no one would have believed that that could possibly be the 

case. But it has led to considerable change in the generation resource mixes as well as the operation of the grid. 

So how do markets adapt to those changes? We innovate. We create new market products and new market services in order to accommodate those changes in the resource mix and we continue to 

innovate in order to address particularly renewables and the increase in gas generation. So I will note three different areas where 

that occurs. 

One is we partner with our states as they conduct their resource 

planning to evaluate the generation portfolio that they plan to 

bring forward in the future and to provide our planning and oversight to make sure that they understand in an aggregate basis 

44 

across the broader region the implications of changes they may be 

making in their portfolio and how that will affect the operation of 

the grid in the market. We also facilitate infrastructure investment 

and reliable grid planning. That process has resulted in over $26 

billion of new transmission infrastructure. An original portfolio of 

about $5.6 billion approved in 2011 resulted in 28,000 direct construction jobs and about 50,000 jobs total. 

We also work continuously to improve our markets, to innovate 

the market design and products and services. We have a market 

roadmap process where we work with all of our stakeholders including states, including the load-serving entities, generators as 

well as all other interested stakeholders, and that includes changes 

that are directly related to the changes that I noted in the generation mix in the region. 

And I will give you just a couple examples of those. Previously 

we introduced a new product that would allow wind generators to 

participate in the market on the same basis as thermal generators 

offering into the market and allowing dispatch within the region in 

order to assure the most operationally reliable as well as market 

efficient outcomes. More recent examples of additional changes to 

address both the changing fuel mix as well as increasing gas would 

be new market capabilities for combined cycle units which are very 

flexible and can offer in multiple configurations into the market 

and that will allow us to optimize the uses of those resources. 

Finally, we work closely with other sectors such as the natural 

gas sector and we will continue to do so as we go forward and gas 

becomes more important. I hope my written comments and introductory comments have been helpful to the committee in terms of 

introducing these topics and I look forward to the conversation. 

[The prepared statement of Mr. Doying follows:] 

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Mr. UPTON. Thank you. 

Cheryl Mele, senior VP and chief operating officer of ERCOT, 

welcome. 

STATEMENT OF CHERYL MELE 

Ms. MELE. Good morning, Chairman Upton, Ranking Member 

Rush, and members of the subcommittee. Thank you for the opportunity to address you today and offer ERCOT’s perspective on the 

wholesale competitive markets. My name is Cheryl Mele and I am 

the senior vice president and chief operating officer for the Electric 

Reliability Council of Texas. 

ERCOT manages the flow of electric power to about 24 million 

Texas customers. This represents about 90 percent of the load in 

Texas. We are a membership-based 501(c)(4) nonprofit corporation 

governed by a board of directors and subject to the oversight of the 

Public Utility Commission of Texas as well as the Texas legislature. ERCOT is the only non-FERC jurisdictional power market in 

the continental United States. We are subject to the reliability and 

security standards set by NERC, and maintaining this regulatory 

structure is vital and will continue to bring the benefits of a reliable grid and vibrant market with the lowest cost to the consumers 

of Texas that we serve. 

ERCOT has an energy-only market. With limited exceptions, generators are paid only for the energy they actually put onto the grid. 

A number of enhancements have been made to ERCOT’s market 

since it was launched, but the core energy-only principles have not 

changed. We continue to discuss further refinements with stakeholders and regulators and to consider the appropriate role for the 

ERCOT market and operations in accommodating newer technologies that may offer different characteristics whether they are 

storage, additional renewables, flexible thermal units or distributed 

generation. 

Contrary to the national trend, we project an annual average of 

1.5 percent load growth over the next 5 years, and in recent years 

the energy use in ERCOT has grown by an average of about two 

percent annually. The generation fleet in ERCOT features a diverse fuel mix including more wind than any other state. We currently have over 18,000 megawatts of wind installed and operating 

in ERCOT. 

In 2016, the energy produced in ERCOT was predominantly from 

natural gas plants at about 43 percent, followed by coal at just 

under 29 percent, wind at 15 percent, and nuclear at 12 percent. 

That continued load growth and new generation investments support continued investment in transmission in the region. With natural gas playing such a large role in our generation fuel mix, commodity price of natural gas is the primary driver of the wholesale 

prices in ERCOT. With consistently low gas prices and ample reserve margins, the average wholesale price of power in ERCOT has 

been very low in recent years. We recognize these low prices effect 

generation owners’ revenues and we are always attuned to the reality and possibility of generation unit retirements that could affect 

our reserve margin outlook. 

Like all independent system operators, reliability is our primary 

measure of performance. We have successfully updated our operVerDate Nov 24 2008 12:15 Feb 05, 2018 Jkt 037690 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-49 CHRIS
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ations and market rules to reflect a changing grid and we will continue to work with stakeholders as technologies evolve or issues 

emerge. Through innovation, our staff and stakeholders have 

shown an enormous capability to solve new and challenging problems today and in the future. While not a market issue, we are appreciative of and remain committed to our external collaborations 

with relevant federal and state governmental agencies, the industry, and national labs to enhance everyone’s cybersecurity posture. 

In conclusion, with healthy reserves and low prices in ERCOT’s 

energy-only market, continuing with the current, predictable regulatory structure is important. This allows us to be responsive to all 

of our regulators as well as the consumer and market participants. 

We will continue to collaborate to address future challenges and opportunities in the ERCOT region and we will continually investigate the inputs and tools needed to support reliability as the grid 

continues to change. Thank you for your time today and opportunity to appear before you. 

[The prepared statement of Ms. Mele follows:] 

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Mr. UPTON. Thank you. 

Dr. Casey, Keith Casey, vice president of Market & Infrastructure Development, California ISO, welcome to you as well. 

STATEMENT OF KEITH CASEY 

Mr. CASEY. Good morning, Chairman Upton, Ranking Member 

Rush, and members of the subcommittee. As you noted my name 

is Keith Casey. I am vice president of Market & Infrastructure Development at the California ISO, and I want to thank you for the 

opportunity to be here to discuss the operation and effectiveness of 

the organized wholesale markets in California. We appreciate the 

committee’s attention to this important issue and my comments 

today will focus on what is working well in our markets and, frankly, some candid discussion around some of the challenges we are 

having. 

Since the ISO started operations in 1998, we have almost 20 

years of operating experience and have been evolving our markets 

considerably since the Western Energy Crisis occurred 17 years 

ago. Our markets are in far better shape now than they were then, 

and over the past 15 years have been yielding significant benefits 

to our market participants. They have been very stable and competitive. 

In recent years, as I am sure many of you know, California has 

established itself as a global leader in environmental energy policies that are dramatically transforming the resource mix on the 

grid. Today, renewables comprise about 30 percent of the total energy produced in our markets and are on track to meet 50 percent 

by 2030, if not sooner. This transition from large station power to 

a more diverse and decentralized system has created a new value 

proposition for the California ISO. 

Our centralized energy markets are proving to be highly valuable 

if not essential for successfully integrating and managing a diverse 

fleet of grid resources. Indeed, our success has encouraged other 

transmission providers in the West to join our real-time market 

and form the Western Energy Imbalance Market. That market currently serves five entities comprising approximately eight western 

states and serves half the electric load of the Western Interconnection. And we have seven other entities that are planning to join the 

Western Energy Imbalance Market over the next several years. 

Since its inception in 2014, the Western Imbalance Market has 

created significant benefits not just for California, but for all the 

participating entities. In addition to the wholesale market, California provides significant value to market participants through facilitating new resource interconnections to the grid and developing 

long-term transmission planning. Both of these functions have 

evolved significantly over the years to meet the changing needs of 

the industry and ISO has used these processes to connect 20,000 

megawatts of renewables to the grid and approve over $7 billion in 

transmission investments. 

So notwithstanding these successes, there remain significant 

challenges to enabling the transformation of the grid. I will highlight two of them. The first is to maintain the resources we need 

for essential reliability services during the transformation of the 

electric grid; and secondly, to ensure the transmission infrastrucVerDate Nov 24 2008 12:15 Feb 05, 2018 Jkt 037690 PO 00000 Frm 00069 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-49 CHRIS
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ture needed to support the diverse set of resources across the West 

can one day be developed. 

Reliably integrating high levels of renewables into the power system represents a significant challenge that requires a complement 

fleet of resources that are highly dispatchable and flexible to balance the system and balance the ramping challenges that we face. 

We also need to make sure we maintain essential reliability services like voltage support, frequency response, and the ability to 

have a resilient grid that can respond reliably to contingencies. 

In the near future, California will need to rely primarily on the 

natural gas fleet to provide these essential grid services. However, 

as you have heard in testimony last week, the gas fleet in California is under financial duress due to lower energy prices, surplus 

capacity, and minimal bilateral contracting, and as a result, conventional power plants are beginning to seek some sort of backstop 

procurement from the California ISO to keep them financially viable or indicating they will otherwise retire. Currently, the ISO is 

working with the California Public Utilities Commission and our 

stakeholders to explore regulatory market options for addressing 

this problem. 

Just quickly on the second issue which is with respect to tapping 

the benefits of an expanded Western region. To date, the majority 

of California renewable resources are located within state and are 

predominantly solar photovoltaic and relying too heavily on one 

particular technology like solar PV exacerbates renewal integration 

challenges and essentially can create oversupply conditions at certain parts of the day and increase ramping challenges for the ISO 

to manage. 

So as California looks to achieve a 50 percent RPS it could take 

advantage of the opportunity to tap into other high quality renewables across the West. Ultimately, having a more diverse mix of renewables to meet the RPS goal will lessen the integration challenges, and may ultimately prove more cost-effective for California. 

But of course building transmission across multi-states has challenges. There has to be agreement on what the benefits are to each 

state and ultimately how the costs of that transmission will be 

shared. That is a significant challenge. It is one best left to the 

states to resolve, but a major challenge nonetheless. 

So in summary, I believe the market and grid services provided 

by the ISO are continuing to provide high value by enabling the 

transition to a low-carbon, modern grid and we will continue to 

look for opportunities to enhance our market and address the challenges I mentioned to you so we can continue to yield the benefits. 

I thank you for your time and look forward to your questions. 

[The prepared statement of Mr. Casey follows:] 

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Mr. UPTON. Thank you. 

Our last panelist is Craig Glazer, VP of Federal Government Policy, PJM Interconnection, welcome. 

STATEMENT OF CRAIG GLAZER 

Mr. GLAZER. Thank you, Mr. Chairman and Ranking Member 

Rush. I am Craig Glazer on behalf of PJM. We operate in 13 states 

from Chicago to North Carolina up to the New York border. I want 

to start with a personal promise. That is to—we have operators 

who have been keeping the lights on in your district, Mr. Chairman, and Mr. Rush’s district, Mr. Griffith’s, Mr. Johnson’s, Mr. 

McKinley’s, Mr. Doyle’s district, and I will just give you my personal promise. We will continue to work as hard we can to keep 

those lights on and keep prices low. 

Now it was the author Stephen Covey who instructed us in his 

book, The 7 Habits of Highly Effective People, it is sort of a favorite 

quote of mine where he says the main thing is to keep the main 

thing the main thing. It is sort of a favorite quote, the main thing 

to keep the main thing the main thing. And in the case of PJM, 

Mr. Chairman, Steve Covey’s main thing can be summarized in a 

couple of words. Investors are investing in new, innovative generation in our region. It is funding the all-of-the-above strategy that 

many people in Congress have talked about. And the generation 

fleet as a result is more diverse than it has ever been, more reliable than it has ever been, and prices are lower than they have 

ever been. 

But I am not asking you to take my word for it. If you had a 

chance, if we could take a drive around the region we could start 

out to show you some of this diversity. We would start out in Mr. 

McKinley’s district. 

[Photo shown.] 

Mr. GLAZER. This is the new coal facility known as the Longview 

Power Station using state-of-the-art coal technology. OK. Then as 

we continue that drive around we would find we could go to Cecil 

County, Maryland. 

[Photo shown.] 

Mr. GLAZER. This is an example of a natural gas plant that is 

self-supplying municipal load. I know we heard a lot about that. 

This plant is doing that very thing and depending on the PJM market to do it. 

[Photo shown.] 

Mr. GLAZER. We then drive over to near Mr. Latta’s district, the 

Fremont Energy Center, another new, another state-of-the-art natural gas facility that is self-supplying another municipal customer. 

Just to show you the diversity, we could then take a trip to Laurel Mountain, West Virginia. 

[Photo shown.] 

Mr. GLAZER. You would find a major wind facility there as well 

as a new, innovative battery facility all of which are depending and 

selling their output into the PJM market. 

And frankly, as part of the sort of ‘‘expect the unexpected,’’ we 

could end up near Mr. Rush, near your district at the Shedd 

Aquarium in Chicago. 

[Photo shown.] 

74 

Mr. GLAZER. That is actually studying using its pumps at the 

aquarium to sell into our frequency regulation market as well as 

they vary the pumps. So a lot of innovation and a lot of diversity 

that is out there. 

Now I don’t want to mislead you. We at PJM have challenges 

like everybody else and I hope we can talk about some of them in 

this hearing. They include enhancing grid resilience, reforming 

price formation rules, determining and rewarding the attributes of 

what has come to be called baseload generation, accommodating 

state policies that was mentioned before, and as was also mentioned before, continually being on the top of our game when it 

comes to cybersecurity. 

But the bottom line or, as Mr. Covey said, the main thing is investors are investing, consumers are enjoying the lowest electricity 

prices, and our system is more diverse and reliable than it has ever 

been. That is a testimonial to a lot of people. One is those operators 

that were there this morning when your constituents woke up and 

will be there tonight when they go to sleep to ensure that the lights 

stay on. It is also a testimonial to our stakeholders and to our regulator. 

I want to give a shout-out to the Federal Energy Regulatory 

Commission. It is a very professional regulatory agency. I was a 

former regulator myself. I wish I had some of the staff that we had 

at the Federal Energy Regulatory Commission. And a shout-out to 

the Congress which in this very room devise policies that have enabled this nation to move to a competitive market model which I 

would posit to you with all kinds of issues around it, but I think 

overall has served this nation well. 

We can argue about this market rule with that market rule and 

legitimately have those discussions and frankly we are our own 

harshest critics in PJM many times on these issues. But I think 

when I go back and reflect on the hearings, as many witnesses 

have stated, the Federal Power Act and the competitive market 

model have served the nation well and would urge everybody to 

keep that in mind as we debate some of these other issues. 

So thank you and I look forward to your questions. 

[The prepared statement of Mr. Glazer follows:] 

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Mr. UPTON. Well, thank you all. And at this point we will go to 

members with questions and we will try to keep to a strict 5- 

minute Q&A to try and get done by early this afternoon. 

I want to focus a little bit about the participation on cybersecurity efforts. Mr. Van Welie, you talked a little bit about it. I would 

like to follow up to see the participation with the grid exercises as 

well as cybersecurity training for ISO New England employees. 

And Mr. Brown, your comment that you thought your operations 

were far above the standards, which is great, but what can we do 

to try and help prevent a cyber attack? 

And Mr. Van Welie, we will start with you. 

Mr. VAN WELIE. Well, so I think what— 

Mr. UPTON. What else can we do constructively to help? 

Mr. VAN WELIE. Constructively, well, I think with the establishment of the oversight over the NERC by the FERC, the establishment of cybersecurity standards, I think we set a very important 

baseline in the industry with regard to managing cybersecurity, 

but those are what I would call a minimum baseline. 

Ultimately, all of the ISOs in front of you here today employ a 

defense-in-depth strategy and it is about deploying automated systems to detect issues. It is about training your employees which are 

often the weakest link in the chain. And I think that if I sort of 

look back over the past decade, I have seen the electric industry 

really lift its game with regard to cybersecurity. 

And that is not to say there is more to be done. I think there 

is a lot more to be done. I think the risk is shifting a lot from 

whereas we were previously concerned about cyber in the control 

centers, I think there is a greater risk out in the field. And so I 

see that utilities are going to have to invest money in this space 

and I think what Congress can do is to be supportive of the cost 

recovery of those investments and I think it is a necessary investment. 

The other thing I worry about, to be honest with you, it is true 

and I heard a number of the members today mention the proliferation of distributed energy resources. The issue with distributed energy resources is they often are relying on the internet for communications back to the control centers. And I think that is a weak 

link in the chain that we need to pay some attention to. 

If we are going to rely on those resources to be a substantial part 

of the capacity to keep the grid going and reliable, we need to make 

sure that those resources which are often in private hands are 

practicing safe cybersecurity practices as well. 

Mr. UPTON. Mr. Brown? 

Mr. BROWN. So what can you do, certainly support the standard 

development process, but as Gordon indicated that is minimum. 

Policy can never keep up with technology, so we are constantly 

communicating among our regions and with the government entities on attacks that are occurring in real time. 

And that is why I emphasize the standards are important because we are all in this together, highly interconnected, highly 

interdependent, so we must all operate at a minimum threshold. 

But in order to keep up with the attacks that are very real-time 

we have to go above and beyond the standards because again policy 

can never keep up with technology. 

93 

Mr. UPTON. Anybody else want to comment? Oh, Mr. Jones. 

Mr. JONES. Yes, thank you. One additional thing that I think is 

important and Nick touched on that as well is threat identification. 

So from the federal side that is the most important element for us, 

threat identification and dissemination of that information. That 

allows us to prepare for these threats and defend against them. 

Thank you. 

Mr. UPTON. Let me go to my next question and that is, it is a 

good thing that with all of the things that have been going on that 

harmful emissions from the power sector have been reduced, I 

think, rather significantly. I know, Mr. Jones, in New York we 

have seen the NYISO achieve a 98 percent reduction in SO2 emissions since the markets began operation in 2000. So with all these 

changes that are going on whether it be RPS standards by states, 

reduction in coal, tell us a little bit about how you expect to see 

that continue in the next decade or so. 

Mr. JONES. Excellent, thank you. New York State is currently 

undergoing a strong push toward reduction of carbon emissions, so 

CO2 emissions in the environment from our generation fleet. The 

goal is currently to achieve a 40 percent, 50 percent, rather, reduction in carbon emissions from 1990 levels by 2030 and an 80 percent reduction by 2050. 

In order to achieve that, there are a number of steps that the 

state has already taken. Number one, to drive more renewables in 

the state to achieve these high renewable penetrations, but they 

have also stepped forward recently to preserve the low carbon 

emissions associated with a portion of the nuclear fleet in New 

York. And we have supported that but we have also supported 

moving that into the competitive market environment. 

So to the degree that we can do that, the best way to control 

emissions of carbon throughout our state would be to integrate it 

directly into our dispatch in the energy market side. We are currently working on that with the state of New York, as I said. We 

will have a report coming out very shortly which will identify the 

opportunities and the very promising nature of that approach. We 

will begin discussing that with our market participants as well and 

we hope to have something in the very near future. 

Mr. UPTON. When you get that report we will be anxious to take 

a look at it. 

Mr. JONES. Thank you. 

Mr. UPTON. My time is expired, so let me go to Mr. Rush for 5 

minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman. My question is 

to Mr. Glazer. In your written testimony you state that PJM works 

with its stakeholders on proactive rule changes in order to ensure 

that the market can continue to accommodate individual state policies in a manner that still preserves competitive outcomes without 

burdening neighboring states that may not have the same state 

policy. 

As you are aware, to the consternation of some stakeholders 

states like Illinois and New York have implemented policies that 

take into account the social cost of carbon by giving credit to their 

nuclear fleets as safe, reliable, zero-carbon sources of energy. 

94 

Mr. Glazer, how would you address the assertion that adding 

value to nuclear fleets unfairly distorts the market? In other words, 

how do we incorporate the social cost of carbon in a way that reflects that cost in energy clearing prices? And on this question I 

would also like to hear from Mr. Jones on this issue. 

Mr. GLAZER. Thank you, Mr. Rush. I appreciate the question. 

This whole question about accommodating state policies, of course 

we need to accommodate state policies and we do that. It is not a 

question of whether we should do it, there is no question we should 

do it. It is a how do you do it question and that is the difficult part. 

Let me give you just an example. 

Maryland may have one state policy supporting renewable generation. West Virginia borders Maryland. They have a completely 

different policy. It is all an interconnected grid, the electrons don’t 

respect state borders. So the trick is to find a way to ensure that 

Maryland’s policy or Illinois policy is not exported to West Virginia 

in my example that may not buy into that same policy. 

So how do we do it? There was a discussion, we are working on 

sort of almost like, if you will, firewalls, that would ensure that the 

market prices are protected, that we don’t export to an unwilling 

state what that policy is, but at the same time allow states like Illinois to go forward with what it wants to do. 

So that is the rub here. It is an interconnected grid, electrons, 

we don’t want to force other states to absorb that policy, but we 

want to respect what Illinois did. And that is what we have got 

proposals out to accomplish. 

Mr. RUSH. So do you have a more definitive example of how you 

would do that because you have illuminated the problem? 

Mr. GLAZER. Yes, we are looking at, for example, potentially running the market two times, if you will. Running the market once 

that would allow the Illinois nuclear units in this case to participate in the market, but also almost running it a second time to correct any sort of price-oppressive effects of the fact that there is a 

subsidy going to certain nuclear units in Illinois but not the same 

equivalent nuclear units, in Ohio or Maryland or anyplace else. 

So it is a technique that we are looking at. We have actually got 

a proposal to do that and it is a vigorous subject of discussion. 

Mr. RUSH. Thank you. Mr. Jones? 

Mr. JONES. So the proposal in our region is different than most 

of the other ISOs. As Mr. Glazer had mentioned, multi-state ISOs 

have a difficult time of getting all of the states onto the same policy 

position. 

In the three ISOs that are led by a single state—California, 

Texas, and New York—it is much easier to implement state policy 

directly since we have a single state. In the State of New York we 

want to approach this issue through the energy market. To best 

say this, in states that are approaching it through a capacity market the vernacular that is used is to accommodate state policy into 

the market. In our state, by using the energy market we are actually helping to achieve the goals of the state. It is a rather significant difference but it is one that we hope to deliver on. 

Mr. RUSH. I yield back, Mr. Chairman. 

Mr. UPTON. Thank you. Dr. Murphy? 

Mr. MURPHY. Thank you, Mr. Chairman. 

95 

Mr. Glazer. So I am from southwestern Pennsylvania and represent an area right in the heart of the PJM area. And as we are 

talking about this mix of state and federal regulations, can you 

give a little more detail of how they run into, interfere with each 

other, and then I will follow up from there. 

Mr. GLAZER. OK. And it is, a prime example is Pennsylvania has 

a renewable portfolio standard that includes, as I understand it, 

clean coal technology as one attribute of a portfolio standard. Maryland doesn’t have that. But the electrons don’t really care. They are 

moving across the border, they don’t really care. 

So the question is: How does Pennsylvania’s policy not get exported to Maryland and vice versa? So what we are looking as how 

do we, in a multi-state market how do we accommodate what every 

state can do, but in the absence of a national federal policy on any 

of these subjects how do we make this all fit together? We think 

we can. We think this is very achievable but it does take some 

work. 

Mr. MURPHY. So let’s talk about how this is achievable because 

states and federal regulators there is this bright line in some 

places. But does this take on our part some large overarching legislation? Do we recognize any of the state preferences there at all? 

Because obviously I represent coal country, every square inch of my 

district has coal under it, has Marcellus shale natural gas in multiple layers, Westinghouse nuclear is, part of it is in my district. 

We have got it all. So, but another area may not have that or prefer that so what is the solution? 

Mr. GLAZER. Mr. Murphy, I think it is a great question. There 

is no question that the more direction on these issues that can 

come from this Congress or from the Administration the better, because then it is federal policy whatever that policy is. 

And I like to say the markets are like a blender. They are only 

as good as the ingredients you put into the blender. But they do, 

once you put those ingredients in they produce the most efficient 

answer, so the more direction we can get from this Congress I 

think that helps. It is when states as Mr. Jones indicated start 

going in different directions that it gets complicated. But your district is a perfect example of having rich in all of these resources, 

and I think the PJM market appreciates it and we all benefit from 

the richness of those resources. 

Mr. MURPHY. Which these electrons get mixed up, so we can’t 

put a filter at the border. So if a state doesn’t like coal we can’t 

keep the coal electrons out? 

Mr. GLAZER. That is right. That is right, because electrons follow— 

Mr. MURPHY. Are you sure we can’t do that because if they don’t 

want coal I am glad to say, all right, you don’t get to have them. 

You have a brownout then. 

Mr. GLAZER. Right. 

Mr. MURPHY. Can’t do that? 

Mr. GLAZER. Can’t do that. 

Mr. MURPHY. All right, too bad. 

Mr. GLAZER. They follow the laws of physics and they go where 

they go. Yes, that is the problem. 

96 

Mr. MURPHY. Mr. Jones, do you have a comment on that too? I 

am just curious. He made reference to you there, what we need to 

do on the federal side in ironing out these state-federal differences. 

Mr. JONES. Why are there state and federal differences? 

Mr. MURPHY. Well, how, what we need to do to help overcome 

if there is some problems between them. 

Mr. JONES. So in multi-state ISOs the difficulty, of course, is to 

figure out how to accommodate each individual state with their 

particular policy positions. The PJM has issued a very short white 

paper that described one way that it could be done. For example, 

I think their white paper describes that each energy market could 

carry its own price of carbon. Those states that do not want to have 

a price of carbon would be adjusted as the power flows across those 

interfaces. 

So there are ways to do it, it is just much more difficult than 

what we might be able to achieve in New York. 

Mr. MURPHY. Anybody else have a comment on that because it 

is part of what we—Dr. Casey? 

Mr. CASEY. Yes, I would just note that in California we have a 

cap and trade program for carbon allowances within state and we 

have the issue of particularly when we run our Western Energy 

Imbalance Market we are dispatching resources all over the West. 

How do we attribute which resources are supporting imports into 

California that would— 

Mr. MURPHY. What is it you trade? 

Mr. CASEY. Well, we are trading energy. So we are optimizing— 

Mr. MURPHY. But it has to do with carbon too, right? 

Mr. CASEY. Yes. 

Mr. MURPHY. So if something like a nuclear power plant or a 

solar plant doesn’t generate carbon they trade what? 

Mr. CASEY. Well, they wouldn’t have a compliance obligation for 

purposes of cap and trade if they are not emitting GHG. But to the 

extent we are dispatching resources outside of California that have 

a carbon emission and they are supporting transfers into California, we have developed in our market a method to attribute that 

that resource in Arizona is supporting a transfer into California 

and is subject to a GHG price and ultimately a compliance obligation for compliance with California’s cap and trade. 

So I just mentioned it as it is a market mechanism where 

through the dispatch you can try to tease out which resources are 

being dispatched to support transfers to another state and can enforce a carbon price to it. 

Mr. MURPHY. I think, Mr. Chairman, that is part of the complexity that we need to figure out on all of that. It sounded very 

convincing, but I have no idea what you just said. Thank you very 

much. 

Mr. UPTON. We will give you 3 days to write a written statement, 

OK. Mr. McNerney is recognized for 5 minutes. 

Mr. MCNERNEY. Well, thank you, Mr. Chairman. I appreciate 

how business loves stability and predictability especially utility 

markets, so I am sort of going to leave that. But I would like to 

ask a question and ask each one of you to answer it in about 15 

or 20 seconds starting with Mr. Glazer and moving this way. What 

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ment needed for utility companies to manage the challenges you 

are facing with the rapidly changing marketplace? 

Mr. GLAZER. Very quickly, we are moving beyond reliability 

standards to look at a more resilient grid. And there is a lot of attributes of a resilient grid. It will require support. It is not going 

to be inexpensive to do, we have to do it wisely. I think this committee’s focus on these resiliency efforts would be very, very helpful. 

Mr. MCNERNEY. OK. 

Mr. CASEY. I think in the case of California we have a very robust investment environment with the integrated resource planning that goes on at the Public Utilities Commission and the direction and renewable procurement and the supporting transmission. 

So I don’t see, really, a need for anything beyond what we have. 

I think we have adequate investment incentives there. 

Ms. MELE. From an ERCOT perspective, I think that as I stated 

in my comments is that predictability is what we need to guide the 

future there and so I don’t think there is anything that we really 

need. I think that some of the focus on NERC standards and making sure cybersecurity standards continue to develop in that sharing of information is probably largely the most impactful thing to 

us from here. 

Mr. DOYING. I guess I would tend to agree with the other commenters and that is we do have federal support from NERC for CIP 

standards and for resiliency standards. Markets as I noted are able 

to adapt to the changes in the underlying market, the composition 

of the generation fleet, and I think the most important thing for 

us is regulatory stability. We largely have that through FERC, but 

to the extent that you have policies that come out that go in different directions over different periods of time that that is not beneficial to market participants or the marketplace. 

Mr. MCNERNEY. Mr. Jones? 

Mr. JONES. Thank you. From New York’s perspective we have a 

great deal of investment. We are very comfortable. We have investment in solar, wind resources, investment in natural gas field facilities. As I had mentioned to you earlier though, we have a great 

deal of need for additional transmission investment. And I don’t believe anything additional from this body needs to move forward, 

but we do need to have continued focus by the FERC on moving 

our transmission projects forward. Thank you. 

Mr. BROWN. No additional policy changes are needed in our region from this body. I would say though it would help if we had 

a quorum at FERC. 

Mr. MCNERNEY. All right. 

Mr. VAN WELIE. I agree with the previous speakers that regulatory certainty is very important. I think that I have watched the 

industry struggle with what is the long-term trajectory on carbon 

pricing, so from an investment point of view as one is investing in 

new long-lived assets that are 30 to 40 years in terms of their economic life, having some certainty around that question would be 

very beneficial. 

And I think as a nation we have struggled with that one and I 

doubt we are going to resolve it any time soon, but that certainly 

98 

would help us achieve that objective through the market if we 

could get it more clearly stated at a federal level. 

Mr. MCNERNEY. Thank you. 

Mr. Casey, one of my priorities has been to support technologies 

and projects that are making the electric grid smarter and more reliable, more resilient, flexible, and secure. As California ISO meets 

the challenges of renewable energy integration and other state policy objectives, what is ISO doing to support advanced grid technologies? 

Mr. CASEY. I would say, in short, a lot. I think in many ways we 

are leading the world in advancing new technologies into the power 

grid. There is a lot happening on the distribution network with, as 

you know with microgrids, energy storage, demand response, many 

of those resources are behind the customer meter. They are not 

connected to the transmission system. But we have put forward 

market models to enable those resources to actively participate as 

a grid resource so that we can be able to dispatch them to help 

meet the system needs. 

Demand response is an area in California that I think there is 

a huge untapped potential to really more fully develop. We have 

been a big advocate with that working with the Public Utilities 

Commission to really get to the technology capability to what demand response can really do. We have a lot of old programs out 

there that really you can only call once in a while. We need more 

advanced programs in demand response that we can call every day 

and it is seamless to the customer, they don’t even know it is happening. 

Those are just some examples of what we are trying to do on the 

customer side. There are other things we are doing on the transmission side as well. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Mr. UPTON. Mr. Barton? 

Mr. BARTON. Thank you, Mr. Chairman. Thank you for holding 

this hearing. We want to welcome Cheryl Mele who is from ERCOT 

in Texas. We are always glad to have you here. I just have one 

question, Mr. Chairman. Several years ago, in the Energy Policy 

Act of 2005 we had a very small section, section 1222, get authorized, the Southwestern Power Administration to build several new 

transmission lines. One of those projects has been approved, the 

Plains & Eastern Clean project line. It starts in either Texas and/ 

or Oklahoma, crosses through Arkansas and goes into Tennessee. 

The State of Arkansas has filed a lawsuit, and I don’t know if 

it is the state itself or stakeholders in Arkansas against that 

project. I would like to ask the head of the Southwest Power Pool 

if he is familiar with this project and, if so, what your position is 

on it. 

Mr. BROWN. So yes, I am very familiar with the project. It is not 

a product of a regional planning process that involves all of our diverse constituents, both regulatory commissions and all of our very 

diverse membership, it is a market-driven solution to delivering 

wind from the western part of our footprint to load centers in the 

East. We are not opposed to the line, I would just say it is not a 

product of a regional planning process. 

99 

The question is, do load centers in the East want to use that particular DC line as a transportation facility that is constructed solely for the benefit of the wind generators in the West and the load 

centers in the East, or do those load centers in the East prefer an 

AC solution that becomes a product of our regional planning process? The costs can be comparable. 

The utilization of a DC line is limited again to benefit the buyer 

on one end and the seller on the other end. An AC solution benefits 

everyone in the footprint. Both can reliably accommodate the same 

mission. Again it is, you know, what solution do you prefer. 

Mr. BARTON. All right. What about the representative of the 

MISO, it goes through your territory too. What is your position on 

it? 

Mr. DOYING. I would concur with Nick that it is not part of the 

regional planning process. I think this is a great example of somewhere where the RTOs have the ability to accommodate the policy 

decisions that are made by states or by bodies such as this one. If 

it doesn’t go through the planning process it is not eligible for cost 

allocation throughout the rest of the footprint, which means that 

to the extent it is approved by states or other entities and they are 

willing to pay the bill then it can certainly go forward and we 

would certainly accommodate the transmission within our system. 

So I certainly don’t object to it and we will wait to see how the litigation plays out. 

Mr. BARTON. Well, I am told that one of the Arkansas objections 

is that they don’t receive any of the power, but I am also told that 

the line is willing to, and it maybe even has planned in a connection point in Arkansas that if they wanted, if Arkansas wanted to 

it could receive power. Are you familiar with that? 

Mr. DOYING. No, sir. I am not. 

Mr. BROWN. And yes, I am, and certainly it could be accommodated. The real question is, are there loads in Arkansas that want 

that choice of delivery system, a DC line versus an AC solution 

that can provide other benefits to the state. 

Mr. BARTON. I doubt that anybody on the panel understands the 

difference between DC and AC. Well, Mr. Shimkus, we will say 

Mr.—OK, Mr. Flores says he does. Mr. Morgan, I stand—and I am 

sure Mr. McKinley does, so I stand corrected. I will say I am the 

only one that doesn’t understand the difference. Anyway thank 

you, Mr. Chairman. 

Mr. UPTON. Mr. Peters? 

Mr. PETERS. Thank you, Mr. Chairman. I want to thank all the 

witnesses. I also want to thank the staff for the excellent work that 

they did together to prepare us for this. 

Dr. Casey, I wanted to ask you about distributed generation and 

maybe you could describe for me what are the challenges in terms 

of reliability to the proliferation of distributed generation and 

whether the state is looking at weighing in terms of what is the 

most efficient way to provide, say, solar power? Is it large-scale 

solar farms or is it rooftop? Is the state taking a position on that 

and moving it one way or another or are we just kind of letting 

that happen? 

Mr. CASEY. Well, with respect to reliability issues with distributed energy I think it deals mainly with modernizing the distribuVerDate Nov 24 2008 12:15 Feb 05, 2018 Jkt 037690 PO 00000 Frm 00105 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-49 CHRIS
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tion network to accommodate it. As you know, these systems were 

designed with one-way flow of power from large central stations to 

consumers that were static consumers. The grid of the future is 

going to be much more dynamic. You are going to have 

bidirectional flows, you are going to have a lot of automation on the 

system. 

So I think from a reliability standpoint, the distribution utilities 

are really struggling to keep pace with how they need to upgrade 

the distribution network to provide the safety and controls to make 

sure that that dynamic can be reliably managed. As a transmission 

grid operator, that is really not our issue. That is the issue for the 

distribution utility. But as I mentioned, we are trying to leverage 

those distribution networks as a resource for the transmission network. 

On your question around going forward, is California going to 

rely more on large central station renewables versus distribution, 

my sense it is going to be both. I think what is happening on the 

distribution system is, it is not policy driven, it is consumer driven. 

People want more control. I know you are very involved with the 

naval bases in San Diego. They want more resiliency with their 

system with their microgrids. Other companies are doing the same. 

So a lot of that is just happening and we are enabling it, but to 

achieve ultimately the environmental policy objectives California 

has you are going to need more large central station solar and 

wind. 

Mr. PETERS. I would just ask the panel a question on cybersecurity and maybe ask it in an overly provocative way is why should 

I trust you to take care of cybersecurity? Is there a federal role for 

that? What interests you in having federal participation? What 

scares you about that? Does anybody want to offer me some advice 

about why I should get involved or why I should sit back? 

Mr. GLAZER. Mr. Peters, I would be happy to address that. This 

is joint effort. We are the people on the front lines. It is our systems that people are trying to hack into in many cases. But what 

the Federal Government has is the authority through this Congress 

to require standards. That is very important. Also, the Federal 

Government has information as to threats that we don’t have. We 

are not an intelligence agency. So I think this is not an either/or 

proposition, it is really a partnership. 

Mr. PETERS. OK. I think that makes sense to me. I think that 

information, best practices, setting standards makes a lot of sense. 

And I know we have taken some steps to make sure that an outage 

in one place doesn’t so greatly affect the whole country, so I think 

there is protection. But if you have any thoughts after this on that 

I would love to hear it. 

And then Mr. Jones, I am not as familiar with the regulatory regime in New York. I assume that that is what is driving investment in renewables and the reduction in emissions that you described. Can you just tell me a little bit about whether that is the 

case and what it is about the regulatory framework in New York 

that is helping? 

Mr. JONES. So the regulatory framework coupling with the efficiencies that are driven out of the markets within our systems 

itself is really what has contributed to those reductions, so more efVerDate Nov 24 2008 12:15 Feb 05, 2018 Jkt 037690 PO 00000 Frm 00106 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-49 CHRIS
101 

ficient generation has come to our markets to compete. That more 

efficient generation has lower emissions than the less efficient generation. And as the new generation comes to market, much of the 

older generation has left that had higher heat rates and higher 

emissions, so it has been a combination of both. 

On top of that the State of New York has been a driver for decades in trying to improve the environment throughout New York 

and throughout the country for that matter. There are a number 

of initiatives in place, as I had mentioned earlier. They are achieving a high renewables penetration, achieving significant reductions 

in carbon emissions that are driving changes in our markets as we 

attempt to achieve that through the NYISO itself. 

Mr. PETERS. Thank you very much again to the witnesses. And 

Mr. Chairman, I yield back. 

Mr. UPTON. Mr. Shimkus? 

Mr. SHIMKUS. Thank you, Mr. Chairman. I apologize for being in 

and out. Members do that all the time especially when you have 

competing hearings and other legislation you are working on. 

This is an area that I love to talk about and it is evolving and 

you all are managing a system that—I think FERC was here. I 

mentioned to some of you who came to visit my office that FERC 

was here a year or 2 ago and they basically said, the Federal Power 

Act has not been rewritten. It has been vague enough for us to 

evolve over time. 

So for that I want to thank Mr. Glazer and Mr. Doying for visiting the office, and Mr. Brown, I am sorry you got Mike Ross with 

you. You seemed to be successful even with him there, so we will 

keep cheering on—and a pharmacist dealing in electrons. 

So Mr. Glazer, in the last hearing of maybe last week and we 

talked about a little bit self-supply debate and issue, can you talk 

about that from the aspect of our munis and our co-ops and especially in the MISO generating area and then the PJM area? This 

is an Illinois kind of specific issue. Can you just talk about if they, 

if you were asked do you allow self-supply what would your answer 

be? 

Mr. GLAZER. Thank you for the question. And you may have been 

out when I said not only do we allow self-supply, in fact I think 

I showed some examples. These are some power plants that in fact 

are self-supplying. 

Mr. SHIMKUS. My apologies for not being here. 

Mr. GLAZER. No, no. I understand that. Just so you are aware, 

I actually brought pictures of plants that actually today are exactly 

doing that. The particular situation with regard to the IMEA— 

Mr. SHIMKUS. Well, as long as you have addressed it, I am good. 

Mr. GLAZER. OK, OK. Yes. The short answer is there are—I was 

a little concerned about the panel because there was this impression on the last panel that there is some rule against self-supply, 

and as I tried to show absolutely we have self-supply today. We 

have shaken hands with the public power entities and worked out 

those arrangements. So it is happening today as we speak and we 

have no intention of changing that. 

Mr. SHIMKUS. Thank you. I want to really dovetail a little bit on 

Joe Barton’s question because that line also goes through southern 

Illinois and it is really more of a siting fight versus—and I think 

102 

the AC and the DC argument is really kind of the critical debate 

of what can be used locally versus what is being used, because the 

local landowners, in essence eminent domain fights are like we are 

not seeing it and they are just forcing their way through. And I always can blame the Public Utility Commission of Illinois and 

FERC without taking direct responsibility for that. 

But it is a difficult process that makes you wonder if public policy needs to be involved somehow in addressing—well, Mr. Glazer, 

we were talking about this yesterday. When you look at the maps, 

and Mr. Doying, when you look at the maps, sometimes your RTO, 

the ISO areas look like political gerrymandering to some extent. 

And that is not positive. That is really a negative comment. 

And sometimes because of the engineering aspects they make 

more sense than just a visual, but that is why we grapple with 

this. That is why I am glad the chairman has these hearings. Not 

a question, I guess, just a comment. 

I want to also raise to Mr. Jones, you are with the New York 

ISO. So it just popped in my mind, and I have a new legislative 

staffer who wasn’t here, but I raised a couple years ago a concern 

of my alma mater which is West Point and their ability to get a 

new, some additional transmission into the Academy. I think I had 

a meeting or two after that. I don’t know the status of that and 

I can ask them. I was on the board of visitors at that time which 

is the responsibility of that board is to kind of take a look at the 

Academy and see if it is accomplishing its mission. It is training 

our young men and women to be the best leaders of our other 

young men and women. 

But also part of that is facilities and the ability of them to have 

the opportunity with the electricity and their needs, so if you would 

have some people go back and check that on my behalf I would appreciate it. 

Mr. JONES. I would be happy to. 

Mr. SHIMKUS. No other questions. Again I apologize for not being 

here. I yield back my time. 

Mr. UPTON. Mr. Doyle? 

Mr. DOYLE. Thank you, Mr. Chairman. Thank you to all the panelists. 

Mr. Glazer, I want to ask you about PJM’s report on the evolving 

resource mix and system reliability. It sort of received considerable 

attention especially for the claim that PJM’s resource portfolio 

could feature up to 86 percent natural gas and maintain operational reliability. 

I note also in the report though that you acknowledge that this 

hypothetical resource portfolio raises questions about electric system resilience and additional risks were not captured in the analysis including gas deliverability during polar vortex type conditions 

and to go on to include uncertainties associated with economics and 

public policy. 

And we have seen an incredible increase in the share of natural 

gas in the markets and I am a big supporter of natural gas, I am 

not speaking against it because it has its benefits. But I want to 

know how you view this trend going forward? Do you think we are 

going to continue to see greater shares of natural gas in our markets and are you concerned about that from a resiliency standpoint 

103 

and what does it mean for the long-term perspective in terms of infrastructure investment? 

Mr. GLAZER. Mr. Doyle, thank you very much for that question. 

First off, the good news is particularly in your district you have the 

strong natural gas pipeline infrastructure in that district and in 

many of the districts that we serve. That particular report was one 

of a number of reports that we have done. 

It was looking at the equivalent of if you went to shop for a car 

it was asking the question just like you would ask, what is the size 

of the gas tank? What is the miles per gallon? What is the ability 

to go from zero to 60? We were looking at different fuels and how 

they perform as part of a generation mix and gas served very well 

in that context as did coal as did a number of other fuels. 

But it is just one part of the puzzle and I think you put your finger on it. The system is strong. We have tested individual pipeline 

dependencies and we look at those. But the next thing we need to 

do and we are focused on is resiliency, which is that sort of highrisk, low-frequency event, what if a lot of pipelines go out, what 

happens? 

And so that is sort of the next generation. That is where we are 

now. We are beyond just the NERC reliability standards and that 

is the focus, a big at PJM initiative. 

Mr. DOYLE. Thank you. I want to talk about price formation too. 

You mentioned energy price formation reforms basically saying 

that the existing rules fail to appropriately value large generating 

plants. And I want to say that I appreciate PJM’s response to a notice of proposed rulemaking from FERC earlier this year and share 

the concern that current energy pricing mechanisms fail to fully 

transparently and accurately value an array of resources in our 

markets. 

So I am interested in PJM’s proposal of a load following product 

that encourages the development of new, innovative, and flexible 

resources. Could you describe what type of issue this product would 

address and what type of generation resources would qualify? 

Mr. GLAZER. Great, thank you. First of all, let me just very 

quickly just sort of analogize to what this problem is because it 

gets very wonky very quickly. But imagine you go in the supermarket. You want to get a can of beans. You want to make sure 

that that can of beans, the price you are paying for that is reflected 

right there on the shelf, you know what you are buying. 

And because of some ways, the way price formation has happened, actually what happens is you can see an artificially low 

price, then you get to the checkout counter and suddenly there is 

an add-on price you never knew about. That is not a great system. 

So we need to find ways to both price that so you know what you 

are buying and frankly the manufacturer can keep making the 

beans, if you will. So that is one aspect of our price formation. 

The second aspect is the load following product. Who can benefit 

from this? Wind technology, energy storage, batteries, anybody that 

can be flexible it is a way to reward them directly and so we are 

beginning those discussions with FERC. I think it can be very 

promising for new technology. 

Mr. DOYLE. Great. And I want to ask you this question and the 

rest of the panel too. Congress is looking at, I don’t know if we are 

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looking at it as we speak, but there is a lot of talk about passing 

a carbon tax. And I am curious. Would PJM have any issue in implementing this policy? Do you think reliability or resilience would 

suffer if given the fact if you were given adequate time to adopt 

it? What are your thoughts if we were to enact a carbon tax? 

Mr. GLAZER. Again the market is a blender. This would be an ingredient and we could easily absorb that into the market and it 

would be reflected in the prices that people pay. Obviously we continue to ensure the system is reliable, but it would work. And the 

market, it actually is adaptable to that kind of proposal. 

Mr. DOYLE. OK, just down the line real quick, yes or no. Would 

you be able to, do you think resiliency or reliability would be affected or could you adapt to it? 

Mr. CASEY. Well, in the case of California, we are— 

Mr. UPTON. Want it to be just a yes or no. His time is expired, 

so just answer his question yes or no as he asked. 

Mr. CASEY. OK, yes. 

Ms. MELE. It could be accommodated, yes. 

Mr. DOYING. Yes. 

Mr. JONES. Yes. 

Mr. BROWN. Yes, but not the preferable way. 

Mr. VAN WELIE. Yes. 

Mr. DOYLE. OK. And Mr. Chairman, thank you. 

And I just want to say hello to my friend Mike Ross, a former 

member and colleague of ours and a great member of the Energy 

and Commerce Committee regardless of what Shimkus says. 

Mr. UPTON. He was indeed a very good member and still remains 

a friend. 

Mr. McKinley? 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

And Mr. Glazer, I think I am going to direct most of my comments to you with PJM. I appreciate you using Longview as one 

of your models, but you are well aware that the current regulations 

in this country prevent us from building into the Longview 2? 

Mr. GLAZER. Well aware of that, yes. 

Mr. MCKINLEY. So why I think it is so important that if we are 

serious about developing baseload we have to be able to take that 

into consideration on how we are going to be able to replicate the 

success that occurred at Longview. 

Mr. GLAZER. And it is a success story, I agree. 

Mr. MCKINLEY. Yes, absolutely it is. And I had the pleasure with 

Secretary Perry there touring the plant just a few weeks ago and 

then he went over to NETL to look at some of the fossil fuel research facilities and what is underway on that. So just for the 

record, we can’t do what you want us to do. 

The secondly is that you said in your testimony you want to keep 

prices low. That is one thing that you said—you are helping to try 

to keep prices low. But yet we have perhaps conflict and maybe you 

can help clarify that in keeping prices low. West Virginia now has 

lost its stature of being number two in lowest cost energy costs to 

now the 26th, just in 10 years. Pennsylvania and Ohio are also in 

that 25 to 28 range on that so I don’t think the utility rates in the 

PJM market are particularly low. Do you want to comment about 

that? 

105 

Mr. GLAZER. Mr. McKinley, I think it is not a question of are 

they, further, we don’t see our mission keeping them low as much 

as making sure the prices are right, that they are sending the correct price signals for new investment just like we just talked about 

for a future Longview. That is really the goal is to make sure the 

prices are fair and right, attract investment— 

Mr. MCKINLEY. Then at the same time we are—and I support 

the chairman’s mission for nuclear facilities. For example, in Illinois we know that the state is going to subsidize or has already 

started to subsidize their rates for nuclear. But when they bid into 

the PJM market that means that they have a competitive advantage over coal and gas fired in the East. Do you want to respond 

to that? 

Mr. GLAZER. And that is exactly the concern with sort of just a 

state sort of subsidizing a plant, because it has the effect of crowding out other plants in the state like West Virginia that didn’t 

adopt that particular policy because you don’t have any nuclear 

plants in West Virginia. 

So you are absolutely right. It is a concern. That is why we are 

looking at some mechanisms to— 

Mr. MCKINLEY. So you are trying to develop something that does 

that? 

Mr. GLAZER. We are trying to do something that prevents the 

harm, if you will, Illinois doing something that hurts West Virginia 

coal plants. 

Mr. MCKINLEY. Should regulators be rewarding baseload production and should they be rewarding lowering carbon emissions as 

part of their rate base? 

Mr. GLAZER. Yes, one of the problems, and I am a former regulator. One of the problems in this whole area, if you start picking 

winners and losers inevitably as a regulator we got it wrong and 

then we just create stranded costs and we create problems. 

Mr. MCKINLEY. Would trying to protect our baseload be something that is subjective? 

Mr. GLAZER. What I am saying, Mr. McKinley, is picking out particular power plants. 

Mr. MCKINLEY. I am not trying to— 

Mr. GLAZER. Right. But in terms of a mix of resources we agree, 

but the way to get at it is not to say I need x amount of coal, x 

amount of nuclear, x amount of gas, because who decides that 

question? To us, the best way to look at it is what are the reliability attributes of those? And frankly our study, as Mr. Doyle 

pointed out, the study actually identified many reliability attributes of coal that are very valuable to it. 

Mr. MCKINLEY. And I want to be very supportive of natural gas 

because obviously the Marcellus is in Utica, the possibilities that 

come forth from that. 

Mr. GLAZER. Right. 

Mr. MCKINLEY. But we look at that and we see during the polar 

vortex in 2014 we saw what happened that they went from about 

a hundred dollars per megawatt hour up to what, it went from the 

average of $30 up to $1,800 for a megawatt hour during that polar 

vortex. 

106 

What savings could we have had if we had been using base price 

back on coal and, you say coal, for example, coal and nuclear? 

Mr. GLAZER. Well, to be honest, we saw power plants that were 

not producing during the polar vortex and some cases were coal 

and some cases were gas. Overall, the extreme weather hit the entire fleet pretty hard. So we have actually changed our system to 

award that good performance of all those units, coal and natural 

gas, and that helps to moderate the fluctuations and the energy 

prices as well. 

Mr. MCKINLEY. I have 20 more questions so I guess we will have 

to have a meeting. 

Mr. GLAZER. I will be happy to follow up with you. 

Mr. MCKINLEY. Yes, we will, please. Thank you, Mr. Glazer. 

Mr. GLAZER. Yes, thank you. 

Mr. UPTON. Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman, and thank you and our 

ranking member for holding this hearing particularly after last 

week’s hearing we had on electricity and power. 

Coming from Texas, I have to admit when—Ms. Mele, your testimony said that our natural gas is 43 percent followed by coal at 

28 percent and wind at 15 and nuclear at 12 percent. Do you expect our baseload to change? Are we seeing more wind power coming to the market? And by the way, everybody on the committee 

is used to us in Texas bragging. I was happy a number of years 

ago when the Public Utility Commission to get that wind power 

from West Texas to the Dallas-Fort Worth, San Antonio, Austin, 

and of course the Houston market where I am from, made a decision and spent, was it $5 billion? 

Ms. MELE. Yes, sir. Actually it was a little bit more than that. 

About $6.9 billion was invested under the legislature’s direction to 

really— 

Mr. GREEN. To make sure that wind could get to the urban areas 

where the customers are. 

Ms. MELE. Correct. And so today we have about 14,400 

megawatts of wind taking advantage of those CREZ lines, and actually in the queue of potential interest being shown is an additional 23,000 megawatts of wind. So we assume that will not all 

get built, but that interest in developing wind in Texas in the western region and the Panhandle continues. 

Mr. GREEN. ERCOT is the only RTO in the nation that is not 

regulated by FERC. You offer a perspective of what we are discussing today. In your testimony you mentioned Competitive Renewable Energy Zones, CREZ, was mandated by the state legislature. How has this program evolved since its inception and do you 

believe it could be replicated across other RTOs present today? 

Ms. MELE. I don’t know if I can offer comment to the other RTOs. 

They can probably add their own. But I do think that that certainty of having a resource like the CREZ lines built certainly has 

enabled the interest of wind to develop, but also is serving some 

our industrial loads in West Texas associated with our natural gas 

and oil businesses. And it also is starting to show a value for the 

solar development that is beginning to grow in that western region 

as well. 

107 

Mr. GREEN. What are ERCOT’s projections for the incorporation 

of large-scale solar projects and how the additional solar impact on 

your current fuel generation mix under ERCOT jurisdiction? 

Ms. MELE. Yeah, today we have just over 700 megawatts of utility-scale solar installed in ERCOT. As we look down the road at 

what is in the cue for development we are seeing significant interest in solar. It is in the thousands of megawatts over the next several years. When we did our long-term system assessment and 

really looked at what resources are likely to be developed in Texas 

based on the resource that we do have in solar and wind and natural gas and those, that tends to be where the interest is being expressed in the applications that we see for interconnection requests, so we believe that will continue. 

But just looking at the solar development, we have an expectation of about 850 megawatts in 2018, over 7,000 megawatts is expressed interest in 2019, and 8,000 megawatts-plus the following 

year, so this is going to be another big resource that can take advantage of those CREZ lines. 

Mr. GREEN. And so you see these numbers in your testimony 

shifting over the years because solar is not part of it now but there 

is growth. And I go home every weekend and I love when I drive 

to South Texas to see grandchildren, starting about north of Corpus with those windmills and then they skip a little bit of the 

urban area, but then between King Ranch, from King Ranch to 

Raymondville almost in the South Texas area there that—is it potential for any offshore? I have heard of offshore wind power also 

being developed, but again on the Texas coast it is all land-based. 

Ms. MELE. Yes, it continues to be land-based, and the virtues of 

that southern and coastal wind that we have is that it tends to be 

there and available during the peak consumption hours in the 

afternoon. And so that resource development has really been valuable to our state. 

Mr. GREEN. What is the difference in the wind power, say, in 

South Texas as compared to West Texas and the megawatts that 

they deliver? 

Ms. MELE. The actual installations in South and coastal Texas 

are quite a bit lower. I don’t have those exact numbers, but I would 

say it is probably over in maybe 3- to 5,000 megawatts. 

Mr. GREEN. OK. 

Ms. MELE. I can certainly confirm those numbers for you. 

Mr. GREEN. So the wind blows more in West Texas than it does 

in South Texas. 

Ms. MELE. Well, the wind blows predictably in South Texas, but 

it blows more in West Texas. 

Mr. GREEN. OK. Thank you, Mr. Chairman. 

Mr. JOHNSON [presiding]. I thank the gentleman for yielding 

back. I recognize Mr. Griffith for 5 minutes. 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. I appreciate 

it. As you may realize if you watch this committee very often, you 

have entered into the coal sector of this panel starting with Mr. 

McKinley, or Mr. Shimkus, then Mr. McKinley, myself, and Mr. 

Johnson, and others. 

Coal fueled power is still critical to our electrical supply. It provides about 30 percent of the power we use and is a workhorse that 

108 

if we don’t kill it is always available. It helps prop up intermittent 

wind and solar and uninterruptable natural gas without a hundred 

percent firm guaranteed contract power sources, yet it has been 

under severe regulatory assault and victimized by generous subsidies, e.g., wind, PTC and solar ITC, and mandates, e.g., state renewable portfolio standard requirements offered to competing 

power sources. 

We have lost about 60,000 megawatts of coal generation over the 

last 5 years and the remaining coal plants in competitive markets 

are very much at risk. In my understanding of how power markets 

work, and I want to clarify some of that if I am wrong. But my understanding is, is that those generators don’t get compensated for 

the resiliency they provide the grid. So it is a perfect storm for fuel 

secure baseload generators like coal units and each of the individual clouds in that storm is the result of a policy decision. 

Now earlier, Mr. Glazer, you said something about rewarding 

those that are available and I interpreted that as resiliency. So tell 

me how that works because that ought to be helping my coal-fired 

plants. 

Mr. GLAZER. Thank you, Mr. Griffith. And we actually see this 

initiative as doing just that. It was one of my supermarket analogies with the price of a can of beans making sure that the full price 

is reflected in what you buy. And in the case of coal to the extent 

it is providing a service to customers, ensuring that that is reflected in the price, absolutely. 

Mr. GRIFFITH. Well, I hope, and if you can give me some more 

information on that I would appreciate it. 

Mr. GLAZER. Sure. 

Mr. GRIFFITH. And I hope you will continue with that because 

when you start talking about resiliency I don’t think there is anything better than coal. I too have natural gas. I don’t have as much 

as Mr. Shimkus or Mr. McKinley have, but it is important that we 

have a mix. 

Now one of the other things that you said earlier that intrigued 

me when you were talking to Mr. McKinley about cost is you said, 

of course we don’t want to have stranded costs. But in my district 

alone there have been several facilities that still had life that were 

shuttered because of regulations. And when those are shuttered 

and there is a stranded cost, isn’t it the ratepayer that ends up 

picking up that cost in the long run? 

Mr. GLAZER. Well, and we— 

Mr. GRIFFITH. I just need a yes or no because of time. 

Mr. GLAZER. Yes, yes. And we moved to a market to try to not 

put it all on the backs of the customers, to be honest with you. 

Mr. GRIFFITH. And I appreciate that but I think it ends up pretty 

much on their backs, notwithstanding your good efforts. Now I 

have got to get something straight because I don’t understand. 

Mr. GLAZER. OK. 

Mr. GRIFFITH. So when we had our previous hearing the folks 

were talking about, you know, the payment for self-supply and selfsupply. And you are here today and you have pictures of some selfsupply facilities and I think it is great and we have got some great 

coal plants out there that are working on some of this type of stuff. 

109 

Clearly there is a disconnect so I need your help in filling in the 

gaps. Is it what they get paid if they sell back to the PJM or others? I mean where is the disconnect? Because I think both sets of 

witnesses are honest brokers trying to do the best they can, but 

clearly there is something that doesn’t fit. 

Mr. GLAZER. Yes, and it is a fair point. 

Mr. GRIFFITH. I have your position, I have their position, but 

where is the disconnect? 

Mr. GLAZER. Yes, yes. No, and it is a fair point, so two things 

very quickly. One is, I think they were referring to a court of appeals decision that puts some uncertainty around the various rules 

that we have. Embedded within that was the self-supply exemption 

we worked out with public power. The court didn’t overturn that 

but it did overturn the rest of it, so there is a little bit of uncertainty going forward but not for lack of wanting to honor that deal 

or even FERC wanting to honor that deal. So I think that is really 

part of what we were talking about. 

And the public power says we should just have a totally different 

model in terms of how we buy capacity. I don’t want to take a lot 

of time, but that has got its own set of problems with it, one of 

them being there is no price transparency. If everybody can just do 

bilateral deals it is like going to the supermarket. There is no 

prices. You just wait until the checkout line and then you have to 

negotiate what the price is and you don’t know what the person— 

it just doesn’t work very well. So that is, I think, the essence of the 

beef. 

Mr. GRIFFITH. All right, so, is it something that we ought to resolve? I personally think it is much better if we let you all figure 

it out, but at the same time if we need to resolve that so that we 

guarantee that both the urban markets and the more rural markets are being served and getting a fair rate, I am happy to wade 

into that if that is necessary. 

Mr. GLAZER. And we will keep the dialogue going. I think in a 

large part it has been worked out. We have got to work out what 

is the impact of this court decision and we will keep you posted on 

that. 

Mr. GRIFFITH. Thank you very much and I yield back. 

Mr. JOHNSON. I thank the gentleman for yielding back. I now 

recognize Mr. Kennedy for 5 minutes. 

Mr. KENNEDY. Thank you, Mr. Chairman. Thank you to the witnesses. Thank you to the committee for calling an important hearing. Thank you, Mr. Van Welie, for coming down. Thank you for 

the time to speak with the New England delegation yesterday, and 

your team as well. 

I am going to echo some of the comments of my colleagues I 

think, first and foremost, to say this is really a complex area of a 

critically important market and so I think you have seen from the 

folks on this side of the dais anyway a real effort to understand it. 

Some obviously do better than others. 

In that I haven’t been around Congress too long, but I do know 

that the greater the complexity the harder it is, one, to oversee, 

and the more likelihood is that incentives aren’t perhaps structured 

quite as well as, or there is opportunities there for incentives to 

skew to folks that happen to know this industry really well, parVerDate Nov 24 2008 12:15 Feb 05, 2018 Jkt 037690 PO 00000 Frm 00115 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-49 CHRIS
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ticularly if those that are overseeing it don’t have that same degree 

of expertise. 

Mr. Van Welie and his team has been generous with their time 

in walking us through some of the challenges that we face in New 

England including a conversation yesterday and I wanted to further engage in that conversation. ISO New England has been very 

effective in driving down those wholesale market rates to very low 

levels and those prices have come down. 

One of the challenges that we face again that we talked about 

yesterday is that while those wholesale rates are low, those retail 

rates aren’t and that once the energy comes out from that wholesale marketplace because of a whole bunch of factors that is not 

under ISO’s control, some of which isn’t directly under Federal 

Government of Congress’s control, all of a sudden the price that the 

end user gets is not cheap. And that is something that I hear actually from constituents and particularly as they are trying to bring 

back a manufacturing industry in the Northeast when those energy 

costs start to be a driving factor for their own businesses. 

We ran into some problems here with FERC, obviously an FCA 

8, without having a sufficient quorum. What is the best way and 

do you have any suggestions to ensure that there is some sort of, 

whether it is a public advocate or some way to make sure that the 

public has a way, a seat at the table and some method to push 

back on a system, the price increase? Because understanding that 

the wholesale rates are low trying to explain this at a town hall, 

not all that productive from somebody that has tried and failed. 

And with due respect it is not all that great to say, well, the wholesale rates are low but da-da-da-da-da. They don’t care what the 

wholesale rates are. They care what they are having to pay. 

So how do we get to a point where we can address some of these 

concerns where the public actually feels like they have a seat at 

the table? 

Mr. VAN WELIE. So yes, a great question. I would say that there 

are some well-established structures for the public to have a voice 

both the wholesale and at the retail levels. So just to describe briefly what happens with the structure around the ISO, we are compelled to take every rule change through a stakeholder process. 

There are six sectors in that stakeholder process, one of which is 

end users. There is another sector for public power. 

So public is represented right at the table when we are discussing all the market rule changes at the wholesale level. We also, 

several years ago, established something called the Consumer Liaison Group and so that is a place where consumer advocates and 

the public can have a voice with directly to the ISO as well. So the 

states are also represented through their regulatory commissions. 

Mr. KENNEDY. Can I push you to get to the retail level because 

we have about a minute left. 

Mr. VAN WELIE. OK. And well, at the retail level I think you 

have a similar structure in place around the Public Utility Commissions in each of the six states, so I think there are many opportunities for the public to engage in this discussion. 

I think the issue that you started this with though is the complexity. And so getting an understanding of how wholesale affects 

retail prices and what is in the retail price and what has been 

111 

added in there, I think is a very daunting task for somebody who 

is uneducated. And I would be happy to talk more offline about 

how we can perhaps improve upon that. 

Mr. KENNEDY. Well, I would certainly appreciate it. As we look 

at the focus, in 30 seconds, ISO is focused on reliability, obviously 

stems from the reason for your work. The challenge then comes on 

that cost side if the issue on reliability ends up being, well, we can 

make it reliable at a certain price point where generators will come 

in and say we are willing to enter this marketplace but at a set 

price, would those prices then get passed along to consumers? 

And again we have seen those wholesale rates come down, but 

at a retail level that anger ends up getting channeled in certain 

levels, town halls are a great place for that anger to get channeled. 

But there is a tension there that is going to break at some point 

particularly given the resource-constrained environment that we 

might find ourselves in. So let’s continue the conversation. And 

sorry for going over, thank you. 

Mr. JOHNSON. I thank the gentleman for yielding back. The chair 

will now recognize himself for 5 minutes. 

Mr. Glazer, in your testimony you stated PJM is concerned about 

potential retirements of additional coal resources and that the relevant question is how best to respond to that. You asked to have 

your feet held to the fire to devise market-based solutions to address these challenges. What can and should Congress do to play 

a role in this process? Anything else you would like to expand on 

in relation to this issue? 

Mr. GLAZER. Thank you, Mr. Johnson, for that great question. 

Really is the subject as we are going to look at what the future is 

we have got to focus on this question of resilience. And part of resilience is who decides? Who decides what is a credible threat and 

who decides as many consumers argue it is gold plating the system. 

Where is that balance? We need input from the federal government 

with that. We need oversight from this committee on those kinds 

of questions. It is a whole new area for all of us. 

Mr. JOHNSON. OK. All right, well, I thank you for that. Perhaps 

you have already touched on this next issue with some of your previous answers, but as you know, FERC began a stakeholder process 

to reform the process at which market prices are determined and 

paid back. Does PJM believe that these price formation rules have 

been successful thus far? 

Mr. GLAZER. We think what they have done has been very helpful, but we need to and we have been, frankly, pushing on the 

Commission to move on this next level which is what I talked 

about before how we do a load following product, how we focus on 

these inflexible units that ought to be able to set price. 

My supermarket example with the can of beans, that is the kind 

of stuff, frankly, we are asking the new Commission when it gets 

seated to take this to the next level. What they have done has been 

helpful. This is a big issue and might help a lot of those issues that 

you have raised. 

Mr. JOHNSON. OK, all right. Well, what remaining areas of price 

formation reform are of greatest concern to your RTO? 

Mr. GLAZER. This one is probably the largest, which is do we let 

these large block loaded units, which in some cases are coal units 

112 

or large natural gas units, could even be nuclear units, to set price? 

That is a very big issue. I think if we truly got our hands around 

that it is not a panacea but would help to take some of the pressure off this whole question about baseload. 

So we are just beginning that dialogue, in fairness to FERC, but 

this committee’s oversight over that would be appreciated. 

Mr. JOHNSON. OK. And you mentioned the word resiliency just 

a few minutes ago and you also touched on it in your testimony, 

a very important topic that has been receiving a lot of increasing 

attention. So what steps are PJM taking to promote a resilient 

power grid especially in the context of extreme events? 

Mr. GLAZER. And great question. We have got, actually we just 

outlined for the stakeholders literally a complex map of things we 

are doing, some of it is just done in the control room operating the 

system more conservatively at times when we are seeing issues on 

pipelines, for example. Some of them are operational. Some of them 

are these price formation type issues. Some of these are planning. 

We have got some critical transmission substations. How do we 

make them less critical so that in fact something happens they 

don’t have this big impact? Those are the kind of things we are 

looking at. We have got a whole map that we have outlined of 

those initiatives which I would be happy to share with the committee. 

Mr. JOHNSON. OK, great. Well, let it be noted that the interim 

chairman yielded back over a minute of his time. Yes, I will recognize Mr. Pallone. 

Mr. PALLONE. Thank you, Mr. Chairman. I have to get to a couple of things here, so for the first question if I could just ask all 

the panelists to just answer either yes or no, otherwise I am not 

going to get to the other question. 

So the question for everyone yes or no is does your RTO or ISO 

have a designated body responsible for consumer input or advocacy? Just yes or no. 

Mr. VAN WELIE. Yes. 

Mr. BROWN. Yes. 

Mr. JONES. Yes. 

Mr. DOYING. Yes. 

Ms. MELE. Yes. 

Mr. CASEY. The answer no to that. 

Mr. PALLONE. You said no, Dr. Casey, okay. 

Mr. GLAZER. And I would say yes. 

Mr. PALLONE. OK, so everyone was a yes except for Dr. Casey. 

Thank you. All right, so let me move on. This is more specific to 

my congressional district. 

In my congressional district, Jersey Central Power and Light, a 

subsidiary of First Energy, has proposed the Monmouth County Reliability Project, a 10-mile, 230 kilowatt transmission line and substation enhancement project. But a lot of questions have been 

raised about the necessity of the project for meeting its proposed 

goal of increasing reliability of the push into the grid serving Monmouth County. I have raised these myself at public hearings. And 

this project was recommended by PJM’s Transmission Expansion 

Advisory Committee and approved by its board of managers. 

113 

So Mr. Glazer, assuming you understand what I asked, if not I 

will repeat it, critics say that the process for approval of transmission projects lacks transparency, consumer advocate input, and 

true independent oversight. What can PJM do to address some of 

those concerns, if you will? 

Mr. GLAZER. Mr. Pallone, I appreciate the question. I do not 

agree with the premise of it because these meetings are open, the 

material is published, and we don’t just passively do that. We 

reach out to the consumer advocates, they are very active in our 

process—to the states as well, the BPU in New Jersey, so people 

are there. 

The problem comes in then you go to a siting process months 

later and people, the public is hearing about it for the first time. 

So maybe we need to do more, admittedly, to sort of reach out to 

the public on these things than we do and that is a fair point that 

we will talk about to address some of those issues. We are not the 

deciding authority here, but people do need to understand what the 

need is and there probably is more we could do, to be honest. 

Mr. PALLONE. So what you are saying to me is that it is not, you 

believe that there is opportunity for consumer input and oversight, 

but the problem is they just may not be aware of what those opportunities are. 

Mr. GLAZER. Right, and in fairness we need to do more in that 

area. 

Mr. PALLONE. All right. Well, again, I appreciate that and if we 

can work together on thinking about better ways of doing that I 

certainly appreciate it. I just wanted to say, I understand the need 

to prepare so there is enough electricity generation to cover the 

needs of the market, but I also worry that drastically overestimating load forecasts on a regular basis can lead to unnecessary 

build-out that ultimately has to be paid for by the ratepayers. 

And to that point some are peak load forecasts for PJM’s annual 

reliability planning have been consistently and significantly overestimated for the past 8 years even as the actual use of electricity 

in my state has declined. So some projects that have been approved 

by PJM and have been constructed based on what I consider overly 

optimistic forecasts have resulted in underutilized transmission 

lines. 

So Mr. Glazer, what checks and balances are in place to encourage PJM not to overexaggerate forecasts? 

Mr. GLAZER. Thank you for the question. This is a Gordian knot, 

because if you overestimate consumers would pay too much; if you 

underestimate you could run short and then be in a serious reliability problem. So it is a Gordian knot to find the right mix. It 

has been very tough over the past couple of years, not an excuse 

but a reality, because we have seen the economy, the impacts of 

the recession, and we have seen energy efficiency. As the economy 

picks up we are not seeing the load picking up, which is showing 

us that maybe there is some permanent energy efficiency changes 

which are then affecting the load forecast. But it is kind of a difficult area to ping it exactly right, but we are trying to work very 

hard on getting this more sophisticated. 

Mr. PALLONE. All right, let me just throw in one more thing. 

What can PJM do, in your opinion, to minimize transmission 

114 

projects that are approved, built, and then underutilized resulting 

in unnecessary high cost to ratepayers? Is there any recommendation you would have? 

Mr. GLAZER. We generally don’t have a problem of underutilized 

transmission lines, they are pretty utilized at this point. As I was 

talking about with Mr. Shimkus, a situation where I can’t get 

power into Chicago because the system is too tight, so generally 

they are well utilized once they are built. 

This whole question of do you build it just in time or do you look 

forward a little bit and predict is a very tough one because it takes 

a couple years to get a transmission line built, so it is difficult. If 

anything, we have canceled a whole bunch of transmission lines in 

response to let’s not overbuild the system. Sometimes I worry 

maybe we canceled too many, but in fact we have canceled a bunch 

of lines. So we have tried to be responsive to the changing needs 

of the system, very much so. 

Mr. PALLONE. So you don’t have any suggestions about trying to 

minimize that problem? 

Mr. GLAZER. The way we do it is to continuously question— 

Mr. JOHNSON. If you can answer that quickly, Mr. Glazer, the 

time is expired. 

Mr. GLAZER. Yes, to continually question what we have done, to 

look at it year by year and cancel projects we don’t need any 

longer. 

Mr. PALLONE. All right, thank you. 

Thank you, Mr. Chairman. 

Mr. JOHNSON. I thank the gentleman, his time has expired. I 

now recognize Mr. Flores from Texas. 

Mr. FLORES. I thank the chairman. By the way Mr. Chairman, 

I want to share the news with you that a member of this committee, Steve Scalise, has been released from the hospital, so we 

look forward to him joining us soon. Prayers for his continued recovery. 

I have a couple of micro questions just because I am a little bit 

of a nerd on some of these things, and then I want to come back 

out to the macro. I was just checking my home solar system, we 

are producing about 86 percent of my daily needs right now. We 

will go up to about 130 percent, maybe less, because my wife is 

home with the thermostats under her sole control. 

In any event, Ms. Mele, this raises sort of an issue. Do you have 

an idea in ERCOT how much distributed power is behind the 

meter like what I am doing? Do we have a way to measure that? 

Ms. MELE. That is something that we are currently discussing 

with our stakeholders and we recognize that as an important thing 

for us to keep our eyes on. So really, with something like your rooftop solar we have proposed in a white paper to the stakeholder 

community and market participants that we start to talk about 

how we get a view of that perhaps through aggregation. 

As the transmission operator and wholesale market operator, we 

don’t really want to get down into the distribution system, but we 

do think it is important where they start to see a significant 

amount of that building up at a transmission load point that there 

would be some visibility to come back to ERCOT. That is for our 

operational readiness as well as for our planning. Not different 

115 

than the conversation we just had about transmission resources, 

we need to consider how we use that information in our transmission planning process. 

So at this time we don’t have a exact picture of how much is out 

there. There are some reports that are filed to the Public Utility 

Commission that do give us some insight into that. 

Mr. FLORES. OK. I was just curious, because I mean implied in 

your answer is that it does have an impact on distribution and reliability or dispatch and reliability. 

And so that sort of I want to come out to just another level up, 

in Texas, because of the tax credits for certain types of power, we 

have had negative pricing enter into the market and so that seems 

to be disruptive to being able to dispatch with transparency and reliability. 

Can you tell us what the challenges are because this has to do 

with wind primarily and some solar. What has that done to your 

job? 

Ms. MELE. So I think the important thing to think about for our 

job as the people who are responsible to forecast and procure the 

resources that we believe are going to be needed to get through the 

day as well as the ancillary services to close the gap between the 

load forecast and the operational difference in real time, what we 

have focused on is really the accuracy of forecasting. We have done 

a lot of work, especially with wind, to look at how accurate we can 

get that forecast, considering where we are, and looking at what 

that net load ramp potential is. So here is what might change 

based on where we currently are with wind and here is load is 

going and trying to really focus in on that. 

We have actually added a new operating desk in our control 

room. It has been in place now for about 8 months, and some of 

their primary responsibilities are really looking at that, looking 

closely at forecast. We use some pretty sophisticated software to do 

both our load forecasting and monitoring our wind. In addition to 

that they are looking at what is the inertia on the grid as we have 

this changing resource mix. 

Mr. FLORES. Right, right. Well, that takes us to the next area I 

wanted to go and I welcome comments from any of you on this and 

I want to start with Ms. Mele. We have got the challenges in managing baseload and also renewables which by the way they are 

structured are intermittent. 

Recently in Australia there was an incident that was weather related that caused their wind energy, wind resources, to drop off 

line in southeast Australia and putting 1.7 million people in the 

dark. And they really hadn’t factored in that type of an event and 

so they didn’t have enough baseload ready, enough inertia, if you 

will, to be able to back the system up and bring people back on 

line. 

What are each of you doing about that particular issue? And I 

only have about 49 seconds. We will start with you, Mr. Glazer. 

Mr. GLAZER. This is one of those resilience issues. It deals with 

things like black start to be able to—resilience isn’t just preventing 

things but restoring the system rapidly. Those are some of the 

things that we are digging into. 

Mr. FLORES. OK. Dr. Casey? 

116 

Mr. CASEY. A couple of things, one, carrying reserves. 

Mr. FLORES. Quickly. 

Mr. CASEY. To make sure when that happens we have backup so 

at least they can step in. And secondly, making sure the inverter 

technologies with these new technologies can ride through events 

on the system. 

Mr. FLORES. Right. 

Mr. CASEY. It is a relatively new technology. We are learning as 

we go, but we are discovering issues and we are trying to fix them. 

Mr. FLORES. Let me just quickly, through the rest of you, are 

each of you familiar with this incident and are learning from this 

incident? OK, thank you. I used up all my time. Thank you, I yield 

back and I will submit additional questions for the record. 

Mr. JOHNSON. I thank the gentleman for yielding back and recognize now Mr. Tonko for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. Because of a conflict I apologize for missing the beginning of the hearing and for hitting any 

topics that may have already been covered. And I thank all of you 

for participating this morning, it is a wealth of talent to have at 

the table. 

And if I might do my hometown, or home state shout-out to Mr. 

Jones, thank you for being here and for all of the great work that 

you do to guarantee great reliability throughout my home State of 

New York and for your work to keep our state on the cutting edge 

of our nation’s energy transformation. 

So we are very happy with the results. New York has launched 

a number of ambitious state policies, including environmental and 

fuel diversity goals, the Reforming the Energy Vision, the REV concept, and clean energy standards are keeping the state at the forefront of our changing energy system. ISO clearly benefits from 

dealing with a single state government so there are not competing 

state interests or goals to balance. 

Mr. Jones, based on your testimony it sounds like RTOs can play 

a role in achieving state policy goals. How has NYISO been involved in New York’s REV initiative? 

Mr. JONES. Thank you, Mr. Tonko. REV initiative is primarily directed at animating our customers in a way that the customers can 

participate in both the retail and the wholesale markets. From 

NYISO’s perspective we have gotten engaged on that issue and 

that we launched last fall a DER roadmap. A roadmap provided 

some clarity to our approach going forward to individuals that are 

proposing to invest in distributed resources. 

Those resources now we are bringing into a pilot program. The 

pilot program is intended for us to develop the types of communications that we will communicate both price and dispatch these individuals and the settlement process is to make sure that happens. 

We hope in a 3-year period to be able to solidify all of the wholesale 

market interactions. We are currently also working with our distribution companies within the State of New York to assist them 

in developing their systems. 

Mr. TONKO. Thank you. Obviously that effort with distributed resources provides great value to the grid. 

Mr. JONES. Yes, sir. We see great opportunity to by animating 

those customers to reduce overall needs for both transmission and 

117 

new generation resources to provide significant value to our customers. 

Mr. TONKO. Super, thank you. And at the market participants’ 

hearing last week we heard complaints from some witnesses about 

out-of-market subsidies. Now New York’s ISO recently commissioned a study from the Brattle Group to explore the potential to 

pursue state environmental and other goals within its market 

structure. You have suggested that this could incentivize cleaner 

generation, provide proper price signals in the competitive markets, 

and help achieve state policy goals. How might that work? 

Mr. JONES. Just to put it as simply as I can, the way it would 

work is that we would charge generators that produce carbon emissions. We would charge them for the value of those carbon emissions. That money then we would return to customers. But because 

those individuals are being charged for that cost, that cost would 

be reflected into the marketplace, the price, and low carbon emissions resources then would benefit by that higher clearing price. 

Mr. TONKO. And is there a timeline that you have for considering 

the possibility of adopting these types of changes? 

Mr. JONES. Yes. We are about to launch the Brattle report or 

Brattle, rather, will launch it on our behalf within the next several 

days. At that point we will begin to engage our market participants 

as we have been working closely with the PSC, the Public Service 

Commission of New York, throughout the last several months. We 

will engage our market participants. I would hope that in a period 

of 3 years we could have that implemented within our markets. 

Mr. TONKO. Thanks a lot. And your 2017 Power Trends Report 

identifies transmission constraints as a limitation for New York to 

get clean energy resources to some high demand areas. We are also 

seeing this on a larger scale throughout the nation where renewable resource potential is high in the Midwest. Can you explain 

how New York’s ISO’s role in overcoming these constraints is working? 

Mr. JONES. It is working quite well. We need to continue to drive 

the process to improve it and speed the process up. We currently 

have two projects that are well underway, one from Western New 

York to Central New York, one project that will take power from 

Central New York down into New York City and Long Island. We 

see additional needs going forward and we proposed those to the 

Public Service Commission. They are currently evaluating those. 

We hope to move those forward very quickly. 

Mr. TONKO. Thank you. And just for those in the eastern portion 

of our nation that are here as witnesses, you have created capacity 

markets. Do you think that the capacity markets are the optimal 

in least-cost means to determine the mix of generation resources 

that we need to serve our customers? Mr. Glazer? 

Mr. GLAZER. Nothing is perfect, but I think they have accomplished the goals of in getting new investments very efficiently, retiring inefficient investments, so I think they are overall working 

well. 

Mr. TONKO. Mr. Van Welie, please? 

Mr. VAN WELIE. Yes, I do think so. 

Mr. TONKO. And Mr. Jones? 

Mr. JONES. Yes, very much so. 

118 

Mr. TONKO. Thank you. Again thank you for the work you do. It 

is so valuable in this given transformation period, so thank you. I 

yield back, Mr. Chairman. 

Mr. JOHNSON. I thank the gentleman for yielding back. 

And seeing there are no further members wishing to ask questions, I would like to thank all of our witnesses once again for 

being here today. In pursuant to committee rules, I will remind 

members that they have 10 business days to submit additional 

questions for the record and I ask that witnesses submit their response within 10 business days upon receipt of the questions. Without objection, the subcommittee is adjourned. 

[Whereupon, at 12:22 p.m., the subcommittee was adjourned.] 

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