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POWERING AMERICA: TECHNOLOGY’S ROLE IN 

EMPOWERING CONSUMERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 26, 2017 

Serial No. 115–58 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

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, Michigan7 

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) 

(II) 

(III) 

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 .......................................................................................... 3 

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 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 7 

Prepared statement .......................................................................................... 8 

WITNESSES

Arvin Ganesan, Vice President of Federal Policy, Advanced Energy Economy . 9 

Prepared statement .......................................................................................... 12 

Answers to submitted questions ...................................................................... 103 

Karen Butterfield, Chief Commercial Officer, Stem ............................................. 20 

Prepared statement .......................................................................................... 22 

Monica Lamb, Director, Regulated Markets, LO3 Energy ................................... 30 

Prepared statement .......................................................................................... 32 

Answers to submitted questions ...................................................................... 106 

Bryan J. Hannegan, Ph.D., President and Chief Executive Officer, Holy Cross 

Energy ................................................................................................................... 36 

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

Val Jensen, Senior Vice President for Customer Operations, ComEd ................ 49 

Prepared statement .......................................................................................... 51 

Answers to submitted questions ...................................................................... 109 

Todd Sandford, Senior Vice President, North America Distributed Energy 

and Power, Direct Energy ................................................................................... 65 

Prepared statement .......................................................................................... 67 

(1) 

POWERING AMERICA: TECHNOLOGY’S ROLE 

IN EMPOWERING CONSUMERS 

TUESDAY, SEPTEMBER 26, 2017 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:03 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, McKinley, Kinzinger, Griffith, Johnson, 

Bucshon, Flores, Mullin, Hudson, Cramer, Walberg, Walden (ex 

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

Tonko, Loebsack, Schrader, Kennedy, and Pallone (ex officio). 

Staff present: Elena Brennan, Legislative Clerk, Energy/Environment; Wyatt Ellertson, Research Associate, Energy/Environment; 

Tom Hassenboehler, Chief Counsel, Energy/Environment; Jordan 

Haverly, Policy Coordinator, Environment; A.T. Johnston, Senior 

Policy Advisor, Energy; Mary Martin, Deputy Chief Counsel, Energy/Environment; 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; Hamlin Wade, Special Advisor for External Affairs; Priscilla Barbour, Minority Energy Fellow; Jeff Carroll, Minority Staff Director; Rick Kessler, Minority Senior Advisor and 

Staff Director, Energy and Environment; Alexander Ratner, Minority Policy Analyst; Andrew Souvall, Minority Director of Communications, Member Services, and Outreach; Tuley Wright, Minority 

Energy and Environment Policy Advisor; and C.J. Young, Minority 

Press Secretary. 

Mr. UPTON. You may be seated. I don’t usually have to say that. 

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

Welcome. So good morning, everybody. Today we are going to 

kick off our fifth hearing in the Energy Subcommittee’s Powering 

America series. And these hearings as we know have provided valuable insight into the complexities of our Nation’s electric grid and 

electricity markets. 

2 

And as many in this room are aware and are watching now, this 

week is National Clean Energy Week so that makes our hearing 

this morning even more timely. I look forward to the opportunity 

to hear how advanced energy technologies are giving consumers 

greater control, convenience, and choice when it comes to their electricity use. 

And that is why we are all here. Our Nation’s grid is an engineering marvel that has enabled our country to become the advanced and modern society that it is today. However, that grid is 

currently undergoing a significant transformation—changing fuel 

mixes, advances in energy technologies, evolving consumer demands to say the least—and these changes present opportunities 

for consumers to become active market participants and to have 

greater control over their energy usage. 

Some within the electric industry are recognizing the need to address and integrate the electric industry, to integrate these new energy technologies to meet the consumers’ demand and preferences. 

Consumers now expect a certain level of control, convenience, and 

choice. No longer dependent on one centralized generation source, 

consumers, or ‘‘prosumers,’’ can generate their own energy and sell 

that surplus back to the grid and behind-the-meter energy storage 

lets consumers store electricity for later use. 

Intelligent energy technologies enable consumers to monitor and 

manage that energy consumption. The ability to manage energy 

gives consumers the opportunity to utilize techniques such as peak 

shaving, which is reducing electric power consumption during periods of maximum demand. That allows the consumer to save money 

on their electric bills. 

And we know that with technological innovation, that is moving 

us closer to integrating artificial intelligence into our electricity 

systems which will for sure ensure an efficient, reliable, and resilient electrical grid. 

Now most of these energy technologies are located at the distribution level of the electric grid. State utility regulators have jurisdiction over distribution level or retail markets while FERC has 

jurisdiction over the wholesale markets. However, the traditional 

jurisdictional lines are becoming blurred, in part, by the development and deployment of energy technologies, State energy policies, 

and the valuation of new energy resources such as demand response. 

The digitization of the electric grid coupled with more distributed 

generation, energy storage, energy management technologies, and 

other distributed energy resources does indeed open the door for 

market-based transactive exchanges between energy producers and 

consumers. This transactive energy would allow for a more dynamic balance of supply and demand across the entire electricity 

system using the value as a key operational parameter. At the 

same time, energy technologies could help ensure that reliability, 

security, and resiliency of the grid is not compromised. 

Looking forward, the traditional utility model could operate more 

as a market platform where consumers can find exactly what they 

need to meet their energy needs. Ultimately, this platform could 

lead to a better optimized grid where a consumer demand is more 

responsive in real-time to price. 

3 

Today we are going to hear from a robust panel of witnesses representing a variety of energy technologies on the cutting edge of innovation. We have witnesses who represent different utilities, electric utilities, and companies that are leading the way in accommodating and integrating these new energy technologies. A more dynamic and flexible grid, it does empower consumers and allows for 

energy to be available in a reliable and affordable manner. 

[The statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Good morning. Today we kick off our fifth hearing in the energy 

subcommittee’sPowering Americahearing series. These hearings have provided valuable insightinto the complexities of our Nation’s electric grid and electricity markets. 

As many in this room are aware, this week is National Clean Energy Week, which 

makes our hearing this morning all the more timely. I look forward to the opportunity to hear how advanced energy technologies are giving consumers greater control, convenience, and choice when it comes to their electricity use. 

Our Nation’s electric grid is an engineering marvel that has enabled our country 

to become the advanced and modern society that it is today. However, the electric 

grid is currently undergoing a significant transformation—changing fuel mixes, advances in energy technologies, and evolving consumer demands. These changes 

present opportunities for consumers to become active market participants and to 

have greater control over their energy usage. Some within the electric industry are 

recognizing the need to address and integrate these new energy technologies to meet 

consumers’ demand and preferences. 

Consumers now expect a certain level of control, convenience and choice. No 

longer dependent on one centralized generation source, consumers, or 

‘‘prosumers’’can generate their own energy and sell the surplus power back to the 

electric grid. Behind-the-meter energy storage lets consumers store electricity for 

later use. Intelligent energy technologies enable consumers to monitor and manage 

their energy consumption. The ability to manage energy gives consumers the opportunity to utilize techniques such as peak shaving—which is reducing electric power 

consumption during periods of maximum demand. This allows consumers to save 

money on their electric bills. Technological innovation is moving us closer to integrating artificial intelligence into our electricity systems—which can help ensure an 

efficient, reliable, and resilient electrical grid. 

Most of these energy technologies are located at the distribution level of the electric grid. State utility regulators have jurisdiction over distribution level or retail 

markets, while the FERC has jurisdiction over the wholesale markets. However, the 

traditional jurisdictional lines are becoming blurred, in part, by thedevelopment and 

deployment of energy technologies, State energy policies, and the valuation of new 

energy resources such as demand response. 

The digitization of the electric grid coupled with more distributed generation, energy storage, energy management technologies, and other distributed energy resources opens the door for market-based transactive exchanges between energy producers and consumers. This ‘‘transactive energy’’ would allow for a more dynamic 

balance of supply and demand across the entire electricity system using value as 

a key operational parameter. At the same time, energy technologies could help ensure that reliability, security, and resiliency of our electric grid is not compromised. 

Looking forward the traditional utility model could operate more as a market ‘‘platform’’ where consumers can find what they need to meet their energy needs. Ultimately, this platform could lead to a better optimized electric grid, where consumer 

demand is more responsive in real-time to price. 

Today we will hear from a robust panel of witnesses representing a variety of energy technologies on the cutting edge of innovation. We also have several witnesses 

who represent different electric utilities and companies that are leading the way in 

accommodating and integrating these new energy technologies. 

A more dynamic and flexible electric grid empowers consumers and allows for energy to be available in reliable and affordable manner. These energy technologies 

will enhance the reliability, security, and resiliency of our Nation’s electric grid— 

particularly in the event of extreme weather events. The key to ensuring the continued growth of technological innovation is competitive and wellfunctioning energy 

markets, which is an issue the committee will continue toexplore going forward. 

4 

Mr. UPTON. So we look forward to your testimony moving forward, and I would yield for an opening statement, my friend and 

colleague from the good State of Illinois, Mr. Rush, the ranking 

member of the subcommittee, 5 minutes. 

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

Mr. RUSH. Good morning, Mr. Chairman. I want to thank you for 

holding this important hearing today, Examining Technology’s Role 

in Empowering Consumers. 

Mr. Chairman, as we convene here today, our thoughts and our 

prayers are with the three million American citizens on the island 

of Puerto Rico who still have no power and very little communication, as well as the people of Houston and Florida and all of those 

who have been uprooted by this historic and deadly season of hurricanes. 

Mr. Chairman, it is my sincere hope and my expectation that 

these profound indicators that scientists have been warning us 

about for years now will finally spur serious consideration, compensation, and action by this subcommittee to finally address one 

of the greatest threats facing this Nation and our world, and that 

is the issue of global warming. 

I must also note, Mr. Chairman, that we are holding this hearing 

in the midst of National Clean Energy Week, which is fitting, Mr. 

Chairman, considering that today we will hear about a variety of 

new and innovative technological advancements in the clean energy 

arena that would help move our Nation forward. 

Mr. Chairman, the fact that as consumers we have become more 

aware of our carbon footprint and how their behavior impacts the 

environment, consumers are also demanding more information and 

the American consumers are demanding more control over how 

their energy is produced and consumed. Meanwhile, many changes 

in our electric grid are spurred by State and Federal policy and 

market forces. 

It is important to understand that consumers are also driving 

many of the trends we see taking place in the electricity market. 

From an increase in smarter appliances with real-time access to 

data to local solar and wind gardens supplying an entire community, consumers are pushing 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 our environment. 

In addition to greater access to data and more control over their 

energy use, other consumer-driven trends we see emerging include 

a greater demanding for cleaner, renewable sources of energy to 

compete with traditional fossil fuels and increase a more discriminative generation in demand response resources, more energy efficiency initiatives as well as a demand for lower energy costs. 

Mr. Chairman, I look forward to this hearing, and I want to 

thank you. And with that I yield back the balance of my time. 

Mr. UPTON. The gentleman yields back. The Chair would recognize the chair of the full committee, the gentleman from Oregon, 

Mr. Walden. 

5 

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

Mr. WALDEN. Thank you, Mr. Chairman. As you know, today we 

continue our Empowering America hearing series and we appreciate the witnesses who are here today to share with us as we look 

at new energy technologies and how they benefit and empower 

electricity consumers. 

While the committee continues its review of wholesale power 

markets in ensuring reliability and affordability, this hearing is intended to examine the ways in which the traditional model of delivering electricity through a centralized system and one-way power 

flows is being disrupted by an increasingly de-centralized system 

with power being generated and managed by a growing number of 

new distributed technologies located at the edge of the grid. 

You don’t have to look far to see examples of how innovation is 

transforming the way electricity is being generated, delivered, and 

consumed and how consumers are interacting with the grid. For example, in my district in Oregon, Oregon Tech uses geothermal 

power to operate its entire campus. They also have a big solar 

array as well. They sell the excess energy back to the grid. 

And I visited Oregon Tech’s one-of-a-kind geothermal plant in 

August and saw firsthand how they are taking advantage of great 

renewable resources in the Klamath Basin. It is pretty cool to see. 

I think they may be the only university in America that is fully 

self-contained with renewable energy. 

Today’s hearing also allows us to examine how advanced electricity technologies are not only transforming the way the grid operates, but also how these technologies are empowering consumers. 

Today’s consumers both large and small increasingly expect more 

from the energy infrastructure systems and the rigid regulatory 

structures of the past. Modern consumers want an electricity that 

is nimble enough to accommodate new technologies and provide 

consumers with greater control over how they purchase and manage their electricity usage and needs. 

Advanced technologies are allowing consumers to express their 

preferences in electric generation and consumption to make purchasing decisions based on affordability, control, time of use, and 

the generation source or location of their electricity. And this consumer behavior is having an effect on electricity prices, choice, the 

environment, the grid resiliency, and reliability. 

So in many instances, advanced energy technologies are being 

deployed behind the meter at consumers’ homes or businesses. 

However, even though these technologies are physically located on 

the distribution system, we are seeing more and more instances 

where distributed energy technologies are beginning to have impacts on the bulk power system and the wholesale electricity markets. These technologies raise questions on what role, if any, Federal regulators and regional grid operators should play in relation 

to distributed energy technologies, an issue that this committee 

will continue to explore. 

Joining us in this hearing, we have witnesses representing a 

wide range of energy technologies along with witnesses from utilities who are successfully attempting to implement and accommodate new types of grid technologies. I would like to welcome our 

6 

witnesses. I want to thank you for contributing your experience 

and expertise to this hearing. 

I am confident this hearing will help us better understand the 

role that technologies such as distributed energy, microgrids, demand response, and battery storage play in the 21st century electricity system. Furthermore, today’s hearing will also shed light on 

the challenges that are preventing advanced technologies from deploying in more areas around the country and at faster rates. 

The U.S. electricity sector is one of the most regulated sectors in 

the American economy, evidenced by the numerous oversight entities positioned at both the State and the Federal levels. This regulatory structure has been crafted for good reason and remains critical in ensuring that all Americans have access to affordable and 

reliable electricity. However, when it comes to advanced energy 

technologies we must make sure that the country’s regulatory 

structure and policies continue to be updated and modernized so 

they do not stand in the way of innovation. 

With that Mr. Chairman, I yield back the balance of my time and 

again thank the witnesses for participating in our series of hearings. 

[The statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

We continue our ‘‘Powering America’’ hearing series today with a closer look at 

how new energy technologies are benefiting and empowering electricity consumers. 

While the committee continues its review of wholesale power markets and ensuring reliability and affordability, this hearing is intended to examine the ways in 

which the traditional model of delivering electricity through a centralized system 

and one-way power flows is being disrupted by an increasingly decentralized system 

with power being generated and managed by a growing number of new distributed 

technologies located at the edge of the grid. 

You don’t have to look far to see examples of how innovation is transforming the 

way electricity is being generated, delivered, and consumed, and how consumers are 

interacting with the grid. For example, in my district, Oregon Tech uses geothermal 

power to operate its entire campus and sells excess energy back to the grid. I visited 

Oregon Tech’s one-of-a-kind geothermal plant in August, and saw firsthand how 

they are taking advantage of this great renewable resource in the Klamath Basin. 

Today’s hearing also allows us to examine how advanced electricity technologies 

are not only transforming the way the grid operates but also how these technologies 

are empowering consumers. Today’s consumers, both large and small, increasingly 

expect more from their energy infrastructure systems and the rigid regulatory structures of the past. Modern consumers want an electricity system that is nimble 

enough to accommodate new technologies and provide consumers with greater control over how they purchase and manage their electricity needs. 

Advanced technologies are allowing consumers to express their preferences in 

electric generation and consumption; to make purchasing decisions based on affordability, control, time of use, and the generation source or location of their electricity. 

And this consumer behavior is having an effect on electricity prices, choice, the environment, and grid resiliency and reliability. 

In many instances, advanced energy technologies are being deployed behind-themeter at consumers’ homes or businesses. However, even though these technologies 

are physically located on the distribution system, we are seeing more and more instances where distributed energy technologies are beginning to have impacts on the 

bulk power system and the wholesale electricity markets. These technologies raise 

questions on what role, if any, Federal regulators and regional grid operators should 

play in relation to distributed energy technologies; an issue that this committee will 

continue to explore. 

Joining us in this hearing, we have witnesses representing a range of energy technologies along with witnesses from utilities who are successfully attempting to implement and accommodate new types of grid technologies. I would like to welcome 

these witnesses and thank them for contributing their expertise to this hearing. I 

7 

am confident that this hearing will help us better understand the role that technologies such as distributed generation, microgrids, demand response, and battery 

storage play in a 21st century electricity system. Furthermore, today’s hearing will 

also shed light on the challenges that are preventing advanced technologies from deploying in more areas around the country and at faster rates. 

The U.S. electricity sector is one of the most regulated sectors in the American 

economy, evidenced by the numerous oversight entities positioned at both the State 

and the Federal level. This regulatory structure has been crafted for good reason 

and remains critical in ensuring that all Americans have access to affordable and 

reliable electricity. However, when it comes to advanced energy technologies, we 

must make sure that the country’s regulatory structure and policies continue to be 

updated and modernized so they do not stand as barriers to innovation. 

Mr. UPTON. The gentleman yields back. The Chair would recognize the ranking member of the full committee, the gentleman from 

New Jersey. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman, for holding this hearing 

examining the role of technology and its impact on electricity consumers. 

Today’s electric grid is incorporating technology in ways unimaginable 20 years ago. Electricity and information on the grid no 

longer flow in one direction and as a result consumers are embracing the ability to take control of their energy needs not just 

through internet-connected devices such as smart thermostats, but 

also by turning their homes into generators of electricity through 

technologies like rooftop solar. And this is all good news. 

And as electric technologies evolve, they are demanding a grid 

that accommodates two-way flows of electricity and information. 

Our job is to recognize these advancements and align policies to facilitate new technologies, empower consumers, and deliver a grid 

that is more resilient and efficient. 

2 weeks ago we held a hearing to look at how we define reliability in a transforming electricity industry. At that hearing, 

Gerry Cauley, president and CEO of the North American Electric 

Reliability Corporation stated that over the past 6 years the 50 

largest events impacting the grid were caused by severe weather. 

Clearly, in today’s world, making our grid more reliable means 

making it more resilient to the impacts of extreme weather. 

And nowhere is this more evident today than in Puerto Rico 

which is suffering from the aftermath of Hurricane Maria. While 

the overall toll is still being assessed, the island has lost at least 

80 percent of its transmission and distribution infrastructure. The 

lack of electricity means there is no power for lighting, air conditioning, drinking water treatment, refrigeration for food and medicine, and so much more. 

And this is catastrophic. We must keep the people of Puerto Rico 

in our hearts and minds and help them in any way we can. And 

it would be nice if the President could turn his attention away from 

the NFL games long enough to realize that everything in Puerto 

Rico is not fine and this is a humanitarian crisis and they need our 

help now. 

Hurricane Maria followed Hurricanes Harvey and Irma which 

also resulted in widespread outages in Texas and Florida. These 

8 

hurricanes should serve as a wake-up call to prioritize investments 

in the technological advancements that can make our grid more resilient and help us adapt to the catastrophic potential of climate 

change. 

Some of the new technologies we will discuss today like battery 

storage and microgrids are uniquely positioned to provide considerable resiliency benefits to the electric grid. These new technologies 

are also enabling us to generate and store power close to where it 

is consumed. Until recently, grid resiliency meant building more 

transmission lines and fortifying substations. That is simply not 

the case today thanks to increased deployment of battery storage 

and microgrids as well as solar and other distributed energy resources. 

These new technologies are providing greater localized solutions 

to keeping critical facilities powered in the aftermath of severe 

weather that has caused large-scale damage to the grid. In the 

aftermath of Superstorm Sandy, I spoke to a lot of local officials in 

my district who were interested in developing microgrids in their 

area. And thankfully, New Jersey recently announced a plan to develop 13 microgrids across the State. 

And this is a good start, but more needs to be done to fully protect our grid from another major storm. The Federal Government 

should also be doing more to incentivize this shift to utilize new 

technologies to make our grid more resilient. Earlier this year, 

committee Democrats introduced the LIFT America Act which includes $4 billion for modern, efficient, and resilient electric grid infrastructure. We need to make real and significant investments in 

our country’s grid infrastructure now, so we can protect our grid 

from a major, long-term outage like we are now seeing in Puerto 

Rico. 

And we have a knowledgeable group of witnesses before us today 

and I look forward to hearing their testimony. I yield back, Mr. 

Chairman. 

[The statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Thank you for holding this hearing examining the role of technology and its impact on electricity consumers. 

Today’s electric grid is incorporating technology in ways unimaginable 20 years 

ago. Electricity and information on the grid no longer flow in one direction. As a 

result, consumers are embracing the ability to take control of their energy needs, 

not just through internet-connected devices such as smart thermostats, but also by 

turning their homes into generators of electricity through technologies like rooftop 

solar. This is all good news. And as electric technologies evolve, they are demanding 

a grid that accommodates two-way flows of electricity and information. Our job is 

to recognize these advancements and align policies to facilitate new technologies, 

empower consumers, and deliver a grid that is more resilient and efficient. 

Two weeks ago, we held a hearing to look at how we define reliability in a transforming electricity industry. At that hearing Gerry Cauley, President and CEO of 

the North American Electric Reliability Corporation (NERC), stated that ‘‘over the 

past six years, the 50 largest events impacting the grid were caused by severe 

weather.’’ Clearly, in today’s world, making our grid more reliable means making 

it more resilient to the impacts of extreme weather. 

Nowhere is this more evident today than in Puerto Rico, which is suffering from 

the aftermath of Hurricane Maria. While the overall toll is still being assessed, the 

island has lost at least 80 percent of its transmission and distribution infrastructure. The lack of electricity means that there is no power for lighting, air conditioning, drinking water treatment, refrigeration for food and medicine and so much 

9 

more. This is catastrophic. We must keep the people of Puerto Rico in our hearts 

and minds and help them in any way we can. And it would be nice if the President 

could turn his attention away from NFL games long enough to realize that everything in Puerto Rico is not fine—this is a humanitarian crisis and they need our 

help now. 

Hurricane Maria followed Hurricanes Harvey and Irma, which also resulted in 

widespread outages in Texas and Florida. These hurricanes should serve as a 

wakeup call to prioritize investments in the technological advancements that can 

make our grid more resilient and help us adapt to the catastrophic potential of climate change. 

Some of the new technologies we will discuss today, like battery storage and 

microgrids, are uniquely positioned to provide considerable resiliency benefits to the 

electric grid. 

These new technologies are also enabling us to generate and store power closer 

to where it is consumed. Until recently, grid resiliency meant building more transmission lines and fortifying substations. But that’s simply not the case today thanks 

to increased deployment of battery storage and microgrids as well as solar and other 

distributed energy resources. These new technologies are providing greater localized 

solutions to keeping critical facilities powered in the aftermath of severe weather 

that has caused large-scale damage to the grid. 

In the aftermath of Superstorm Sandy, I spoke to a lot of local officials who were 

interested in developing microgrids in their area. Thankfully, New Jersey recently 

announced a plan to develop 13 microgrids across the State. This is a good start, 

but more needs to be done to fully protect our grid from another major storm. 

The Federal Government should also be doing more to incentivize this shift to utilize new technologies to make our grid more resilient. Earlier this year, committee 

Democrats introduced the LIFT America Act, which includes $4 billion for modern, 

efficient, and resilient electric grid infrastructure. We need to be making real and 

significant investments in our country’s grid infrastructure now so we can protect 

our grid from a major, long-term outage like we are seeing in Puerto Rico. 

We have a knowledgeable group of witnesses before us today, and I look forward 

to hearing their testimony. 

Thank you, I yield back. 

Mr. UPTON. The gentleman yields back. We are ready to start 

with our testimony and I think you all know the routine. Each of 

you, thank you for submitting your testimony in advance. We have 

had an opportunity to go through that. You will each have 5 minutes and then we will start a question and answer after that. 

And we will start with Mr. Ganesan. Is that correct? 

Mr. GANESAN. That is correct. 

Mr. UPTON. Vice President of Federal Policy at Advanced Energy 

Economy, welcome. 

Mr. GANESAN. Thank you. 

STATEMENTS OF ARVIN GANESAN, VICE PRESIDENT OF FEDERAL POLICY, ADVANCED ENERGY ECONOMY; KAREN 

BUTTERFIELD, CHIEF COMMERCIAL OFFICER, STEM; 

MONICA LAMB, DIRECTOR, REGULATED MARKETS, LO3 ENERGY; BRYAN J. HANNEGAN, PH.D., PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, HOLY CROSS ENERGY; VAL JENSEN, 

SENIOR VICE PRESIDENT FOR CUSTOMER OPERATIONS, 

ComEd; AND TODD SANDFORD, SENIOR VICE PRESIDENT, 

NORTH AMERICA DISTRIBUTED ENERGY AND POWER, DIRECT ENERGY 

STATEMENT OF ARVIN GANESAN 

Mr. GANESAN. Thank you, Chairman Upton, Ranking Member 

Rush, Vice Chairman Olson, and distinguished members of the 

committee. I am honored to testify today on the evolving role of 

consumers in the electricity system and how technological innovaVerDate Mar 15 2010 13:58 Dec 11, 2017 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X58PACONSUMERSSCANS120817\115X58PACONSUMERSPEN
10 

tion is transforming our grid for the better. My name is Arvin 

Ganesan and I am vice president for Federal Policy at Advanced 

Energy Economy. 

We are a national trade association representing over 120 advanced energy corporations across the United States and our member companies deploy, produce, or use a wide variety of different 

energy technologies including, but not limited to, storage in different forms, small modular nuclear reactors, solar, wind, and a variety of smart grid technologies in addition to many others. I am 

happy to join two of our member companies on this panel. 

Over the last 6 years, this sector, the advanced energy sector, 

has grown by close to 30 percent. Our industry supports jobs across 

the country, as well with more than three million jobs supported 

by our growth. So I want to talk about what is driving that growth: 

two factors—declining costs and consumer preferences. Renewable 

energy has increasingly been a significant provider of energy and 

will continue to grow in the United States based on economic competitiveness. 

Since 2007, the cost for utility-scale wind and solar power has 

declined by 66 and 85 percent, respectively. In their most recent 

analysis, the investment house Lazard finds that wind and solar 

PV have become increasingly cost-competitive with conventional 

generation technologies—this is the most important part—on an 

unsubsidized basis. Because of this rapid decline in costs, largescale renewable energy purchases that were once driven primarily 

by State policies such as RPSs are now increasingly being made on 

economics and on corporate preference. 

But the consumer demand is in no way limited just to corporations. Declining costs also have a significant impact on the everyday consumer. More consumers are increasingly exercising choice 

and control over their energy needs, whether that means purchasing solar panels for their rooftops, charging electric vehicles in 

their garages at night, or managing their household energy consumptions from their phone, which is connected to a smart thermostat, consumers are increasingly active participants in the grid. For 

example, U.S. revenues from home energy management systems 

such as Nest thermostats grew from $91 million in 2011 to $1.3 billion last year. And through consumer engagement, companies like 

Oracle have helped more than 15 million households in the United 

States save more than $1 billion in energy costs. 

This transformation is changing the very nature of the electricity 

system. We are shifting from a rigid, centralized grid to a more dynamic and diverse one and this transformation will further help 

improve the stability of the grid. Allow me to give one example of 

how a dynamic and diverse grid can help improve resiliency. 

During the 2014 polar vortex, the extreme cold, winter cold, 

caused a winter record demand for electricity and contributed to 

the failure of 22 percent of the generation in PJM. Of the unplanned power outages, coal plants accounted for 26 percent of the 

total and natural gas 55, due to the freezing of onsite fuel supplies 

like coal piles, frozen control and sensor equipments, and the inability to receive fuel from outside providers due to natural gas 

pipeline constraints. 

11 

Facing this situation, grid operators were able to turn to demand 

response which paid consumers to reduce their consumption during 

peak times, and wind energy to meet electric power needs to recover to keep the lights on when other resources failed. 

Let me wrap up my testimony by making some brief remarks 

about the potential role for Federal policy. As we all know and believe, competition brings out the best in everyone and the same is 

true for energy technology. By enabling true competition, the main 

beneficiaries will be consumers. For example, in parts of PJM they 

have seen over $11.8 billion in savings in just 1 year from demand 

response and energy efficiency, which was enabled by rules that allowed these resources to compete against building additional power 

generation. 

However, these competitive markets continue to suffer from technology-specific barriers that prevent advanced energy from providing a full suite of benefits. In fact, some market rules prevent 

new and emerging technologies from selling their services on the 

open market, stifling innovation and keeping our electricity system 

from being modernized for higher performance. 

For example, in Indianapolis, Indianapolis Power and Light recently constructed a state-of-the-art lithium ion battery facility utility-scale that had the ability to improve the reliability of the grid. 

But that facility was not able to get compensated because out-ofdate definitions of storage were baked deep into RTO policies and 

prevented anything from older definitions of storage from simply 

competing. 

Mr. Chairman, I really appreciate this series of hearings and I 

really appreciate the opportunity to testify before the committee. 

Thank you for your attention and your vision on these issues. 

[The statement of Mr. Ganesan follows:] 

12 


ADVANCED 

ENERGY 

ECONOMY the business voice of advanced energy 

September 26, 2017 

Summary of Written Testimony of Arvin Ganesan, Vice President of Federal Affairs at 

Advanced Energy Economy for House Energy and Commerce Committee 

1. Declining costs and consumer preferences- including those of Fortune 100 and Fortune 

500 corporations- will continue to drive market growth and innovation in the advanced 

energy industry 

a. Renewable energy will continue to grow in the United States based on economic 

competitiveness with the levelized cost for utility-scale wind and solar power declining by 

66% and 85%, respectively, since 2006. 

b. Large energy customers- most notably Fortune 100 and Fortune 500 companies- are 

driving demand for renewables. Many states are leading the way in creating a market 

that meets the needs of these customers, including Texas, Oklahoma, North Carolina, 

Ohio, and Illinois. 

c. More consumers are increasingly exercising choice and control over their energy needs. 

Customers are now active participants in the grid, making it much more dynamic. 

2. Advanced energy enhances the reliability and resilience of the grid by increasing fuel 

diversity, promoting a more flexible energy system, and responding to extreme weather 

events. 

a. Grid operators are now routinely managing high levels of wind and solar generation, 

sometimes exceeding 50% of load, without compromising reliability, levels that would 

have been viewed as impossible just a few years ago. 

b. During the 2014 Polar Vortex, grid operators were able to turn to demand response and 

wind energy, along with nuclear power, to meet electric power needs and keep the lights 

on even when other resources failed. 

c. Utilities are implementing more advanced energy solutions to prepare for extreme 

weather events, as well. 

d. Modernizing the aging energy infrastructure that has supported American prosperity for 

decades and moving toward a more diverse and dynamic energy system are the keys to 

maintaining a reliable grid in the future. 

3. Federal policy should pursue technology-neutral competition in wholesale markets to 

maximize benefits to consumers and enhance the reliability and resilience of the grid 

a. Technological innovation benefits consumers by increasing competition in the 

marketplace between energy technologies, increasing customer choice, and driving 

down the cost of electricity. 

b. While some wholesale markets overseen have opened opportunities for advanced 

energy technologies to compete, others have maintained legacy established rules 

technologies from competing on price and performance. 

c. FERC is addressing these issues with proposals to remove barriers for storage and 

aggregated distributed energy resources (DER). AEE fully supports, and is engaged 

with, this effort. The Commission also has a NOPR related to primary frequency 

response. 

Washington DC S:an Francisco Boston 
13 


ADVANCED 

ENERGY 

ECONOMY the business voke of advanced la'nergy 

September 26, 2017 

Written Testimony of Arvin Ganesan, Vice President of Federal Affairs at Advanced Energy 

Economy, Before the U.S. House of Representatives, Energy Sub-Committee of the Energy and 

Commerce Committee 

Thank you, Chairman Upton, Ranking Member Rush, Vice Chairman Olson, and Distinguished 

Members of the Committee. I am honored to testify today on the evolving role of consumers in the 

electricity system. and how technological innovation is transforming our electric grid for the better. 

My name is Arvin Ganesan, and I am Vice President of Federal Affairs at Advanced Energy Economy 

(AEE). AEE is a national business association representing over 120 advanced energy businesses 

across the United States. 

As an energy business association, we are unique. Our businesses currently produce, deploy, or use 

over 50 different energy technologies including battery storage, advanced natural gas generation, small 

modular nuclear reactors, solar, wind, demand response, energy efficiency, combined heat and power, 

electric vehicles, and smart grid technologies, among many others. In addition, many businesses that 

want to source their energy needs from advanced energy are joining AEE to reduce policy hurdles 

preventing them from doing so. 

Today, I want to talk about the benefits of technological innovation for the grid and for consumers. 

Within that theme, I will discuss three points: 

1) Falling costs, technological innovation, and consumer preferences are driving a transition to a 

more diverse resource mix in which advanced energy plays an increasingly dominant role. 

2) Advanced energy brings numerous benefits such as increased reliability and resilience. At the 

same time, these technologies give consumers more control over their own energy use. 

3) Technological innovation ultimately benefits consumers by increasing competition in the 

marketplace among energy technologies. driving down the cost of electricity, and increasing 

opportunities for customers to exercise choice in their power sources and save money by 

controlling their utility bills. 

Declining costs and consumer preferences- including those of Fortune 100 and Fortune 500 

corporations- will continue to drive market growth and innovation in the advanced energy 

industry 

The advanced energy industry is a major economic engine in the United States. The U.S. industry 

generates $200 billion in revenue, equal to pharmaceutical manufacturing and approaching wholesale 

consumer electronics. In the six years that AEE has been tracking, advanced energy in the 

United States has grown by an average of 5% annually for a total of 28% compared to 2011. And it 

supports jobs across the country, as well, with more than 3 million jobs supported by the advanced 

energy sector. This includes nearly 2.2 million workers in energy efficiency, more than 650,000 workers 

Washlr1gton DC San Francisco Boston 
14 


in advanced electric power generation, 100,000 workers in advanced grid technologies, and 250,000 

jobs in advanced transportation. With the growth of the industry, technological advancement and 

deployment of advanced energy has accelerated as well. 

Renewable energy has increasingly become a significant provider of energy, and will continue to grow 

in the United States based on economic competitiveness. The most basic indicator of power technology 

competitiveness is the levelized cost of energy (LCOE), which measures the average cost of electricity 

over the life of a project, including the costs of upfront capital, operations and maintenance, fuel, and 

financing. Since 2007, Lazard, a financial advisory and asset management firm, has tracked the LCOE 

of power technologies using a consistent methodology. Lazard's annual analyses show that from 2009 

to 2016, the LCOE for utility-scale wind and solar power has declined by 66% and 85%, respectively. In 

their most recent analysis, Lazard finds that "wind and solar PV have become increasingly costcompetitive with conventional generation technologies, on an unsubsidized basis, in light of material 

declines in the pricing of system components ... and dramatic improvements in efficiency, among other 

factors." 

Additionally, while the addition of large scale storage is not required to add more solar or wind to the 

system, utility-scale solar photovoltaic and utility-scale technology combined with storage are poised to 

become the next cost-effective, fully dispatchable resources. New solar-plus-storage and wind-plusstorage systems are currently cost-competitive with new conventional resources and provide 

operational flexibility and enhancements to support grid reliability. 

Because of this rapid decline in costs, large-scale renewable energy purchases that were once driven 

primarily by state policies (e.g., renewable portfolio standards) are now increasingly made based on 

economics and consumer preference. Large energy customers- most notably Fortune 100 and 

Fortune 500 companies- are the most significant drivers of this demand. AEE has been actively 

engaged with a number of these companies in numerous states pursuing policy opportunities to help 

meet this demand for renewable energy from corporate buyers. 

Policies supporting corporate procurement of renewable energy can be a strong economic 

development tool at the state and local level. The ability to control energy costs and sources is a key 

priority for many companies, and as mentioned a growing number of corporations are specifically 

seeking opportunities to purchase advanced energy- a choice often backed by an internal 

sustainability or renewable energy target. As of last year, AEE found that 71 of the Fortune 100 

companies and 43% of Fortune 500 companies had set a renewable energy or energy-related 

sustainability target. This trend currently spans all industry sectors, with businesses in healthcare, 

chemical, apparel, financial services, and technology committing to purchasing more renewable 

energy.' 

Many states- including those represented on the Committee- are leading the way in creating a market 

that meets the needs of these customers. As of this month, according to data compiled by the Business 

Renewable Center of Rocky Mountain Institute, Texas had the largest market for renewable energy 

contracted by corporales from offsite facilities, with 2,965 MW of deals signed. Other leading states 

include Oklahoma with 1,279 MW, North Carolina with 407 MW, Ohio with 390 MW, and Illinois with 

1 https:l/info.aee.netlgrowth-in-corporate-advanced-energy-demand-market-benefits-report 
15 


373 MW. 2 These states show that customers working proactively with utilities and developers are 

driving a massive expansion of the renewable energy market across the country. 

Examples across the country demonstrate the extent to which U.S. corporations have succeeded in 

pursuing renewable energy within a competitive environment. For example, General Motors has 

committed to power 100% of its energy usage by renewable energy. While it has operations all around 

the country, the auto giant has signed the majority of its renewable contracts in Texas. This is both due 

to the favorable economics of wind energy and there the competitive market structure in the Lone Star 

State, which readily accommodates corporate procurement. GM has also recently announced 

additional purchases of renewable energy, from wind farms in Ohio and Illinois. 

Many other companies have put in significant effort to develop creative solutions, such as Amazon Web 

Services, which has collaborated with Dominion Energy in Virginia to develop a new market-based rate 

to bring over 250 MW of new solar energy onto the grid in Virginia. 3 Through an entirely different 

mechanism, Microsoft recently contracted with its local utility provider in Wyoming to power its facilities 

from renewable energy and onsite backup natural gas generators, which the utility can call upon in 

times of need to provide additional reliability to the grid4 Walmart, headquartered in Bentonville, 

Arkansas, and with stores in all 50 states, has also pursued a number of different strategies to work 

toward its 100% renewable energy goal. As of May 2017, the company had installed 364 onsite solar 

facilities across the United States, with a goal to grow that number to 480 by 2020. The company has 

also pursued offsite purchases, including a recent transaction through its local utility in Alabama, 

Alabama Power, to purchase energy from a 72 MW solar facility. 5 

Declining costs and increased adoption of advanced energy also have a significant impact on the 

everyday consumer. More consumers are increasingly exercising choice and control over their energy 

needs, whether that means purchasing solar panels for their rooftop, charging electric vehicles in their 

garages at night, or managing their household energy consumption from their phone that is connected 

to a smart thermostat. Customers are now active participants in the grid, making it much more dynamic. 

Consumers are driving this change, and federal policy must recognize the increasing role of the 

consumer in the grid. 

States are also recognizing the consumer value of advanced energy. Brooklyn, New York, is a notable 

example of how new regulatory policies can benefit consumers. As a population and economic boom 

takes place in Brooklyn, energy demand has spiked. The city estimated that a $1 billion investment in 

new equipment was needed to meet this demand. In response, the New York Public Service 

Commission (PSG) determined that the energy demand could be managed more cheaply through the 

use of other technologies, such as demand-side management and energy storage, and reduce the 

projected cost to $200 million. By making use of distributed energy resources (DERs), Brooklyn 

2 http://businessrenewables.org/downloads/brc nov 2016/State-of-the-market.pdf 3 https://www.greentechmedia.com/articles/read/amazon-and-dominion-power-forge-a-new-renewable-energypath-in-virginia and https:/lwww.amazon:comlplfeaturelgkkwdp34z5ou7ug. . 

http:llwww.utilltydlve.cornlnewslhow-mlcrosoft-and-a-wyommg-utlllty-deslgned-a-data-center-tanff-thatwork/430807/ 

5 Walmart, "Scaling clean, affordable, renewable energy," 2017 Global Responsibility Report, 

http://corporate.walmart.com/2017grr/opportunity 
16 


consumers will receive a $800 million savings.6 

Advanced energy enhances the reliability and resilience of the grid by increasing fuel diversity, 

promoting a more flexible energy system, and responding to extreme weather events. 

We are currently undergoing a transition to a more diverse energy resource mix. Ten years ago, nearly 

half of U.S. power generation was supplied by a single resource: coal. Today, coal and natural gas 

each supply about one third of our electric power, nuclear one fifth, and hydro and non-hydro 

renewables another one fifth. This greater fuel diversity gives us more options for meeting electric 

power needs, increases competition, and drives down prices. 

This transition has been primarily driven by consistently low natural gas prices, followed by flat 

electricity demand and competition from renewable energy, which has sharply fallen in cost. With grid 

management and operational techniques becoming more sophisticated, grid operators are now 

routinely managing high levels of wind and solar generation, sometimes exceeding 50% of load, without 

compromising reliability, levels that would have been viewed as impossible just a few years ago. These 

changes in resource mix are improving- not reducing- the reliability and resilience of the electric 

power system, as demonstrated by extreme weather events. 

During the 2014 Polar Vortex, the extreme cold caused a winter-record demand for electricity and also 

contributed to the failure of 22% of the generation in PJM Interconnection territory. NERC conducted an 

assessment of the Polar Vortex event and found that, of unplanned power plant outages, coal plants 

accounted for 26% of the total and natural gas 55%. Outages due to extreme cold were caused by the 

freezing of onsite fuel supplies like coal piles, frozen control and sensor equipment, and the inability to 

receive fuel from outside providers due to natural gas pipelines constraints.7

·

8 Facing this situation, grid 

operators were able to turn to demand response and wind energy, along with nuclear power, to meet 

electric power needs and keep the lights on even when other resources failed. 

Utilities are implementing more advanced energy solutions to prepare for extreme weather events, as 

well. Austin Energy- one of country's largest community owned utilities serving more than a million 

people -contracted with Schneider Electric to implement an advanced distribution management 

system (ADMS). ADMS integrates the millions of data points from the grid into one easily accessible 

system. This allows grid operators to have access to fast and highly reliable information to understand 

and communicate the status of outages when responding to weather events, like the summer storm 

season in Austin. ADMS helps to fully integrate demand response and other distribution system 

services that creates a more resilient grid. 

Other advancements in technology help maintain grid reliability. The New York Power Authority 

currently benefits from greater digitalization in the energy grid. NYPA is the state's largest public power 

6 http://documents.dps.ny.gov/public/MatterManagement!CaseMaster.aspx?MatterSeg=45800 7 NERC. "Polar Vortex Review." (Sept. 2014) available online at 

http://www.nerc.com/pa/rrm/January%202014%20Polar%20Vortex%20Review/Polar Vortex Review 29 Sept 2 

014 Final.pdf. 8 PJM Interconnection. "Response to Consumer Reports on 2014 Winter Pricing." (19 Sept. 2014) available online 

at http :1 /www. pjm .com/-/media/documents/reports/20 140919-pjm-response-to-consumer -reports-on-20 14-winterpricing.ashx. 
17 


organizations with more than 1,400 circuit miles of transmission lines and has transmission cables that 

connect Westchester County to Long Island underneath Long Island Sound. Over the last five years, 

ship anchors have hit some of the transmission lines causing electrical problems for the area. The 

digital system can now let ships know when they are too close to wires, and to avoid dropping anchor 

there. A more cloud-based energy system also helps to anticipate problems and find outages quickly 

instead of having trucks driving around residential areas.9 

Advanced energy companies are also empowering customers to take control of their own energy use, 

which has positive impacts for the grid. By providing personalized and actionable energy insights, 

Oracle has helped more than 15 million households save energy. These families have saved more 

than $1 billion on their energy bills by reducing their usage by more than 15 terawatt-hours. These 

savings are concentrated during peak hours, helping utilities manage the grid more efficiently. 

Modernizing the aging energy infrastructure that has supported American prosperity for decades and 

moving toward a more diverse and dynamic energy system are the keys to maintaining a reliable grid in 

the future. Competition and innovation will drive down costs while meeting our energy needs as they 

evolve. And as mentioned earlier, this process has not only improved the overall functioning of the grid 

but acted as an economic engine as well. Giving these resources the chance to contribute to and 

compete in the U.S. energy system has resulted in growth and prosperity, and will continue to do so 

going forward. 

Federal policy should pursue technology-neutral competition in wholesale markets to maximize 

benefits to consumers and enhance the reliability and resilience of the grid 

Technological innovation benefits consumers by increasing competition in the marketplace between 

energy technologies, increasing customer choice, and driving down the cost of electricity. Organized 

competitive wholesale power markets are driving development of a 21'' century electric system that 

adopts innovative technologies, drives down costs, and improves reliability and resilience through 

greater use of advanced energy technologies and services. 

A 2016 paper by the conservative think-tank R Street Institute, Wholesale Electricity Markets in the 

Technological Age, emphasizes that well-functioning markets incentivize technological innovation while 

producing a reliable and affordable grid. 

"RTOIISOs have exhibited strong reliability performance and provide incentives for market participants 

to engage in reliable behavior. The open-access organized market model is better positioned to reduce 

barriers to entry, lower transactions costs, provide clear investment signals to investors that spur 

innovation and compensate resources fairly and efficiently in a manner consistent with market 

fundamentals."10 

Real life examples show these principles to be true. For example, the Midwestern and Mid-Atlantic 

states in the PJM territory have seen $11.8 billion in savings in just one year from demand response 

and energy efficiency, enabled by rules that allowed these resources to compete against additional 

9 https:/ldailyenergyinsider.com/featured/5244-digitizing-electric-sector-well-way-power-execs-say/ 10 https:l/www .rstreet.org/wp-contentluploads/20 16/08/67 .pdf 
18 


power generation. 11 As mentioned above, PJM also credited these resources with helping to keep the 

lights on during periods of system stress, such as the Polar Vortex. 

Competitive wholesale power markets have opened important new opportunities for advanced energy 

technologies to provide reliability, resilience, and cost savings to consumers, but continue to suffer from 

technology-specific barriers that prevent advanced energy from providing a full suite of benefits. While 

some markets overseen by the Federal Energy Regulatory Commission (FERC) and managed by 

Regional Transmission Operators (RTO) and Independent System Operators (ISO) have opened 

opportunities for advanced energy technologies to compete on a level playing field with traditional 

generators and transmission operators, others have maintained legacy established rules (or even 

sought to enact new ones) that prevent advanced energy technologies from competing on price and 

performance; none has provided a completely level competitive playing field. 

In fact, some market rules prevent new and emerging technologies from selling their services on the 

open market, stifling innovation and keeping our electricity system from being modernized for higher 

performance. Market rules vary by RTO/ISO but there are generally three common barriers to fair, 

open, technology-neutral competition: 

1) Requirements that all energy resources have characteristics (such as size or operating time) 

that match the characteristics of traditional generating units; 

2) Categorizing resources based on what they are (such as a power plant) rather than what they 

can do (such as produce, store, or save electricity); and 

3) Prioritizing supply-side resources (such as power plants) over demand-side resources (such as 

efficiency). 

In July 2017 testimony to the House Science, Space, and Technology Committee, AEE member AES 

Energy Storage highlighted a notable example of current market rules impeding innovative technologies 

from getting full compensation for its services in the market. 12 Indianapolis Power and Light (IPL) had 

difficulty integrating a new 20 megawatt battery storage system (developed by AES Storage for IPL) 

onto the grid, and getting fully paid for the reliability benefits that system provides. IPL faced difficulties 

interconnecting to the grid because Midcontinent Independent System Operator's (MISO) definition of a 

"storage" product was designed for older versions of storage, specifically "flywheel." MISO's rules had 

not been amended to allow for newer, advanced energy technologies to participate and be fully 

compensated, such as lithium ion batteries. 

Similarly, compensation for grid services has not caught up with the capabilities of advanced energy 

technologies, such as solar and storage, as a fast-responding, reliable resource. The current 

framework incentivizes generators to run at full capacity, rather than configuring their inverters to leave 

the appropriate headroom required to offer these services, because there is no compensation for doing 

so. For example, First Solar recently completed a demonstration project with the California Independent 

System Operator (CAISO) and the National Renewable Energy Laboratory (NREL) to measure the 

11 Monitoring Analytics, the Internal Market Monitor for PJM. "Analysis of the 2013/2014 PJM Base Residual 

Auction Revised and Updated, September 20, 2010. Page 52. 12 https:/lscience.house.govlsiteslrepublicans.science.house.gov/files/documents/HHRG-115-SY-WStateKKumaraswamy-20170719.pdf 
19 


capability of utility-scale solar to provide flexibility to the grid. 13 The test data shows that utility-scale 

solar plants can provide services that range from spinning reserves, voltage support, ramping, 

frequency response, variability smoothing and frequency regulation, and offer them faster and with 

more accurate results than conventional generation. 

FERC is aware of these issues, and is beginning to address them. The Commission currently has a 

Notice of Proposed Rulemaking (NOPR) related to removing barriers for storage and aggregated 

distributed energy resources (DER)- such as electric storage resources, electric vehicles, and 

distributed generation participation in wholesale power markets. AEE fully supports, and is engaged 

with, this effort. The Commission also has a NOPR related to primary frequency response. This is an 

excellent start to address issues of compensation and the possible solutions that advanced energy can 

offer, but does not do enough, as it is limited to this one grid service and does not address larger utilityscale issues and capabilities for providing reliability to the grid. We look forward to working with FERC 

and Congress to ensure that federal rules and regulations do not impede innovative advanced energy 

technologies from fully participating in markets and receiving full compensation for the grid services 

they provide. 

AEE appreciates the opportunity to testify before the Committee today, and looks forward to working 

with each of you to ensure that technological innovation continues to thrive in the United States to 

preserve a reliable, resilient, and affordable energy system. 

Thank you, 

Arvin Ganesan 

13 NREL, CAISO and First Solar, Using Renewables to Operate a Low-Carbon Grid (January 2017), available at 

http://www.caiso.com/Documents/UsingRenewablesToOperateLow-CarbonGrid.pdf 
20 

Mr. UPTON. Well, thanks very much. Thanks for your kind words 

and we are glad that you are here. 

And we will go next to Ms. Butterfield, who is chief commercial 

officer of Stem. Welcome. 

STATEMENT OF KAREN BUTTERFIELD 

Ms. BUTTERFIELD. Chairman Upton, Ranking Member Rush, Vice 

Chairman Olson, and distinguished members of the subcommittee, 

thank you for the opportunity to provide this testimony on the role 

of consumers in the evolving electricity grid. My name is Karen 

Butterfield and I serve as chief commercial officer of Stem, a technology and services company that operates the world’s smartest energy storage network. We applaud the subcommittee for thinking 

through how consumers can play a more active role in the modernization of our electric infrastructure. 

We believe that software-driven energy storage enables consumer 

participation, drives down costs, increases U.S. competitiveness, 

and helps the grid. Stem was founded 8 years ago when the idea 

that lithium ion batteries combined with superfast and superintelligent software would become highly valuable to both electricity 

consumers and the Nation’s critical electric grids. We install battery storage systems to help businesses and institutional customers 

save money, take greater control of their energy usage, and more 

actively participate in energy markets. 

Stem provides storage as a service, financing the hardware so 

that customers pay nothing up front but rather pay a monthly subscription fee to save and participate. Our software then automatically charges and discharges the batteries to maximize savings and 

help balance the needs of the grid. We install battery systems at 

local facilities including businesses, schools, and Government sites 

in what is called behind-the-meter energy storage. 

Installing at the site allows the system to play many different 

roles related to capacity, energy, and voltage. We then connect 

these batteries together virtually, using super intelligent software 

known as Athena. Athena takes data from all the sites from weather stations and from the grid and creates virtual power plants or 

VPPs. 

Stem is now active in seven major U.S. markets as broad-ranging 

and complex as California and Texas. Our market traction demonstrates that strong commercial demand exists today. We have 

over 700 customer sites installed or in deployment. We have eight 

contracts with U.S. utilities to build battery networks with enough 

capacity to power 30,000 homes for 4 hours. 

We also have over $500 million in project financing. The traditional thinking of the grid is evolving as new technologies become 

more cost effective. Consumers are looking for more control and behind-the-meter energy storage gives them second-by-second control. 

It also makes decisions automatically without impacting their operations. 

Today, Stem empowers forward-thinking companies like Cargill, 

Extended Stay America, Macy’s, Marriott, Albertsons, and a host 

of schools, hospitals, and Government locations. At one customer 

site, the StubHub Center, a professional soccer stadium, we were 

21 

saving them thousands of dollars on their utility bills by charging 

and discharging their storage systems at the right time. 

They called us and asked us whether we could modify the software to allow them to discharge the battery to help deliver on a 

demand response program with their local utility. We made a few 

changes through Athena, uploaded the algorithms in the cloud, and 

were able to save them tens of thousands more using the same 

exact hardware at the site. 

This may sound futuristic, but Stem is delivering network storage just like this today. For example, one day last month when the 

California grid was strained by a record-breaking heat wave, Stem 

software automatically dispatched 14 VPPs that included batteries 

in over a hundred of our customers’ buildings spread across the 

State. Not only were we able to deliver exactly when called upon, 

our customers enjoyed knowing they were helping keep the lights 

on in California. 

The Federal Government can drive the modernization of our electric infrastructure by putting this technology option in the hands 

of the consumers. FERC has taken the first step by opening a rulemaking on how energy storage and distributed energy resources 

can participate in wholesale markets. This proceeding should move 

forward with urgency to capture the value of energy storage. 

The Federal Government can also take a leadership role in education and standardization of interconnection and permitting rules. 

Stem has served customers in over 75 different U.S. jurisdictions 

and knows firsthand how the lack of standards and education increase barriers to installation. 

In summary, now more than ever the consumer-driven electric 

grid requires super intelligent energy storage to optimize usage 

and to operate virtual power plants when and where they are needed most. Customer adoption of energy storage will be an essential 

facet of modern, vibrant energy markets here in the United States 

and around the world. 

I am honored to testify before the committee on Stem’s experience with customers. Thank you and I am happy to answer any 

questions about energy storage and the role of the consumer in 

modernizing the electric grid. 

[The statement of Ms. Butterfield follows:] 

22 


Testimony 

before the 

United State House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Energy 

(written statement) 

by 

Karen Butterfield 

Chief Commercial Officer 

Stem, Inc. 

Chairman Upton, Ranking Member Rush, Vice Chairman Olson, and Distinguished Members of 

the Subcommittee, thank you for the opportunity to provide this testimony on the role of 

consumers in the evolving electricity grid. My name is Karen Butterfield, and I serve as Chief 

Commercial Officer at Stem, a California-based technology and services company that operates 

the world's smartest energy storage network. We applaud the interest of the Subcommittee to 

explore how consumers can play a more active role in the modernization of our electric 

infrastructure, and we believe that software-driven energy storage enables such participation, 

empowering consumers to reduce their energy costs while providing important services to the 

grid. 

1 
23 


The key themes that I'll be covering in this testimony include: 

Energy storage for commercial and institutional electricity customers is no longer a 

future concept. Stem is proving that it is viable and cost-effective today. 

• Energy storage is key to enabling consumers to both take control of their energy cost 

and become active participants in dynamic energy markets. 

• Networked energy storage, managed by advanced software, can provide the same 

benefits as traditional power plants, improving the reliability and resilience of a modern 

electric grid. 

• The federal government can accelerate the deployment of this technology by helping 

open energy markets to consumers that are using energy storage and by helping reduce 

the time and money required to install energy storage. 

Introduction to Stem 

Stem was founded in 2009 on the premise that energy storage could provide a range of services 

that would be highly valuable to both electricity consumers and the reliability of one of the 

nation's most critical infrastructures the electrical grid. We start with installing energy storage 

systems (lithium ion batteries) to help a wide range of business and institutional electricity 

customers save money on their monthly bills, take greater control of their energy usage, and 

more actively participate in energy markets. This is known in the industry as customer-sited or 

"behind-the-meter" energy storage that performs real-time energy optimization. For our 

customers, we provide storage-as-a-service based on a monthly fee with no upfront payment. 

We finance the hardware so that customers only pay a subscription, making energy storage a 

2 
24 


cost-saving operating expense rather than a capital investment. Our software then 

automatically charges and discharges the storage to produce the most savings by providing 

energy from the battery to the building rather than from the grid. Customers save money from 

day one and can often save up to two-to-three times what they pay each month in subscription 

fees. 

We then network all these storage installations together into what we call Virtual Power Plants 

(VPP) and manage those networks with the world's smartest artificial intelligence (AI) for 

energy storage, Stem's "Athena". Only a "superintelligence" like Athena can handle millions of 

data points from the grid, the weather, and the buildings' histories to optimize, in real-time, the 

benefits energy storage can provide to customers and the grid. Our traction in the market 

demonstrates that cost-effective, flexible energy storage is in strong commercial demand 

today: 

• Since 2012, we have been operating storage systems ranging from 30 Kwh (e.g. for a 

small hotel) to 2.5 MWh (e.g. for a large integrated office park). 

• We have 8 contracts to provide grid services to U.S. utilities totaling 350 MWh (enough 

to power roughly 30,000 homes for 4 hours). 

• We currently have over 700 customer sites and 150 MWh installed or in deployment 

• Stem is active in 7 major markets as broad ranging as California and Texas. 

• Managed by the Athena AI, the Virtual Power Plants in the Stem network have 

successfully responded to more than 500 dispatch requests from utilities and grid 

operators to help grid reliability over the past three years. 

3 
25 


We have secured over $500 million in project financing, the most in the industry. 

The Engaged Consumer 

The traditional paradigm of large-scale electricity generators sending energy over long 

distances to passive customers is evolving at different speeds around the country as new 

technologies become more and more cost-effective. Consumers, starting at scale with 

commercial and institutional ones, are looking for more energy control, first to reduce their 

energy costs, and increasingly to participate in US energy markets. Enabling more customer 

control depends on advanced energy technologies and software, transacting over a highly 

efficient electrical infrastructure, in a modernized grid. 

All types of energy providers are looking for more customer satisfaction options, and utilities 

increasingly agree that cost-effective energy storage at homes, businesses, and institutions is 

integral to facilitating this heightened customer interest. Behind-the-meter energy storage 

gives a consumer second-by-second control over the timing of their energy usage to reduce 

their energy bills, and software-driven storage makes those decisions and market transactions 

automatic, without impacting the consumer's operations, freeing the customer to focus on 

their core business. Stem empowers dozens of Fortune 500 leaders, such as Adobe, Cargill, 

Extended Stay America, Intercontinental Hotels, JC Penney, Macy's, Marriott International, 

Albertsons, Wells Fargo, and Whole Foods. For our public sector customers, such as University 

of California, the resulting energy cost savings are important resources to redirect to other 

critical budget needs. 

4 
26 


Now, more than ever, the consumer-driven electric grid requires Al-driven energy storage to 

manage real-time energy optimization and to connect and activate virtual power plants when 

and where they are needed most. 

The Modernized Grid 

The modern economy is more and more dependent on an electrical system that is efficient, 

flexible, resilient, and managed with artificial intelligence. Energy storage is emerging as the key 

technology to help with all of those needs. As both supply and demand become more variable 

with technologies like wind, solar, and electric vehicles, the grid needs more flexibility, with 

resources that can respond quickly to steep ramps, up or down, to help balance the grid. 

Advanced energy storage is the fastest, most flexible resource, with the ability to respond to a 

signal in under a minute and to be precisely-positioned within distribution grids, to address 

system "peaks" in the grid and smooth out spikes in demand, as we are showing in our system 

tests for Hawaiian Electric. Energy storage can also engage customers in systems that directly 

work to integrate renewable energy resources, as we have contracted to do in Texas with 

Austin Energy. 

Utilities and their regulators also increasingly seek to get the most of our energy infrastructure 

at the lowest cost to ratepayers. Networks of energy storage are perfect for creating "nonwires alternatives" to traditional investments in grid infrastructure, as we have contracted to 

perform in the Brooklyn Queens Demand Management distribution deferral project for 

5 
27 


Consolidated Edison in New York. Large scale grid operators and policymakers are attracted to 

the reliability of these networks to provide an improved type of "demand response" or load 

reduction when called. Finally, major incidents in the last few months and years have 

highlighted the growing need for resilience, or the ability to maintain critical infrastructure and 

bounce back from major events that disrupt electricity delivery. Networked energy storage can 

not only provide resilience to specific buildings, but can also improve resilience at the level of 

the community, city, or regional grid. 

By joining Stem's energy storage network, the engaged electricity customer participates in 

Virtual Power Plants during the times that their storage system is not needed for their own 

site's interests. In this way, the customer's system can provide other services in energy 

markets, contribute to the reliability and resilience of the grid, and be compensated for it. In 

this way, customers engaged by Stem in Virtual Power Plants not only benefit themselves but 

can meaningfully help their community, as well. 

Virtual Power Plants are Real Today 

Although "Virtual Power Plant" sounds like a futuristic concept, they exist today and Stem is 

proving how they work. Stem's Athena-branded software "brain" manages dozens of VPPs 

across the Stem network, grouping customers in certain specific regions to respond 

automatically to the needs of the grid while continuing to save each customer money on their 

own bills. 

6 
28 


For example, on a single day last month, when the California grid was strained by a record 

breaking heat wave, Stem's Athena AI dispatched over 100 energy storage systems within 14 

VPPs spread across the state-all without manual intervention. In the first half of 2017, Stem's 

network responded to over 150 real-time grid events with only 5-minute notice for just the 

smallest of California's major utility companies, San Diego Gas & Electric. And, as we'd 

expected, our customers enjoyed learning that they were helping California reduce strain on 

the grid and avoid blackouts. In fact, Stem's California and Hawaii VPPs have led to industry 

awards such as this year's Innovator of the Year from the Smart Electric Power Association. 

Spread the Success 

The Federal government can help drive the modernization of the nation's electric infrastructure 

by empowering consumers everywhere with the technology and policies that Stem and others 

are proving successful today. The primary initiative should be to evolve energy infrastructure 

around the country with market mechanisms that fully value and compensate all the services 

customer-sited energy storage can provide. FERC has begun this effort by opening a rulemaking 

on enabling energy storage and distributed energy resources to more fully participate in 

wholesale energy markets. Both the storage and DER portions of this proceeding should move 

forward with urgency since together they have tremendous potential to increase market 

competition, driving down energy costs while increasing reliability and resilience. 

The other areas ready for Federal leadership are in education, quantitative analysis, and 

standardization of interconnection and permitting of energy storage systems. As an example of 

7 
29 


the latter, hundreds of local jurisdictions as well as state and local regulators are beginning to 

develop policies and processes for installation of storage at private and public buildings. Stem 

has installed in over 75 different jurisdictions in the US and knows firsthand how the lack of 

standards and basic education can be a major barrier to permitting, costing considerable time 

and money with unrelated code review. Moreover, Stem and other storage industry leaders 

have been working with the National Fire Protection Agency on a forthcoming fire safety code 

with an entire chapter on energy storage, NFPA 855. The federal government can help 

disseminate knowledge of these new storage standards. Creating consistent and streamlined 

best practices for these installations would allow for much more efficient storage deployment, 

reducing costs for consumers and the grid without sacrificing important safety reviews. 

Conclusion 

In summary, I am honored to have the opportunity to testify before the Committee on Stem's 

experience with engaging customers; thank you. We appreciate the Subcommittee's 

exploration of public policy and new technologies and services that can spur engagement of the 

21'' century energy consumer in the modernization of electric grid infrastructure. We conclude 

that customer demand for software-driven energy storage will be an essential facet of a 

modern, participatory grid and will increase the reliability and resilience of vibrant energy 

markets. We look forward to working with Members of the Committee to answer any 

questions about energy storage and the interests of the consumer in building a safe, reliable 

energy infrastructure. 

8 
30 

Mr. UPTON. Thank you very much. 

We are joined next by Monica Lamb. Ms. Lamb, Director of Regulated Markets, LO3 Energy, welcome. 

STATEMENT OF MONICA LAMB 

Ms. LAMB. Thank you, Chairman Upton, Ranking Member Rush, 

and members of the subcommittee. Thank you for the opportunity 

to testify today. My name is Monica Lamb and I serve as director, 

Regulated Markets for LO3 Energy, an energy technology company 

that enables an interactive multisided marketplace to allow customers, producers, and utilities to deploy and manage energy assets in an increasingly open and competitive electricity market 

using distributed ledger information architecture built on a 

blockchain data structure. 

LO3 Energy is a young company with deep roots in energy, finance, and technology. We are passionate about the future of an 

increasingly flexible, responsive, and reliable utility grid. We are 

developing ways to give people and utilities opportunities to shape 

that future. The community energy marketplaces that we are 

building enable utilities and neighborhoods to share in the responsibilities and the benefits of reliable distributed energy resources. 

You may be familiar with the concept of the internet of things, 

the idea that our devices, machines, thermostats, automobiles, and 

appliances are able to use built-in sensors and computing power to 

communicate information, coordinate with each other, and manage 

our environment and our energy use intelligently and independently by following the rules that their owners program into them. 

Our blockchain platform activates an internet of things within the 

local power grid, enabling it to generate market signals that will 

govern and balance neighborhood loads, generation, and storage assets, and allowing it to coordinate with the broader interconnected 

transmission grid. 

Currently, LO3 Energy is developing such a marketplace within 

the community of Brooklyn, New York, through a benefit corporation called Brooklyn Microgrid. The goal of this project is to enable 

a multisided, multiparticipant marketplace for consumer choice 

that is envisioned by the energy regulators in New York, and to improve the local community’s energy security during extreme weather events and other emergencies. 

This community energy marketplace in Brooklyn, which can be 

replicated in hundreds more communities around the U.S. and 

globally will create a locally optimized energy network that also coordinates with the broader power grid. These local energy resources 

provide resiliency for emergencies, reduce customer costs, optimize 

the utility infrastructure investments, and enable renewable electricity, energy efficiency, and energy storage deployments within 

that community. Meanwhile, the new market drives community investment and jobs boosting the local economy. 

The role of public policy is key in enabling the community energy 

marketplace. Policy can enable the integration of new, peer-to-peer, 

local consumer choice energy markets with the existing wholesale 

markets. 

In summary, we think the community energy marketplace enabled by the internet of things through blockchain will be critical 

31 

to enabling consumers to participate in and benefit from community-based energy resources both during normal operations and in 

emergencies. We see this as a win for the consumer, a win for the 

utility, and a win for the grid. We are grateful that the committee 

is discussing these important issues and we look forward to serving 

as a resource as you continue these conversations. 

Thank you again for the opportunity to testify and I look forward 

to addressing any questions from the members. 

[The statement of Ms. Lamb follows:] 

32 


Testimony 

before 

United State House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Energy 

Monica Lamb 

L03 Energy Inc. 

Summary of Points 

• L03 Energy applies tools from energy, finance, and computing to build a blockchain 

platform for a community-based, peer-to-peer, real-time energy market. 

• A distributed energy marketplace can leverage distributed computing power to 

incentivize energy use and investments in energy asset.<> and to efficiently track energy 

transactions. 

• Federal policy can recognize and streamline the integration of new community energy 

marketplaces with the wholesale markets. 

Testimony 

Chairman Upton, Ranking Member Rush, and Members of the Subcommittee, thank you 

for the opportunity to provide testimony for "Powering America: Technology's Role in 

Empowering Consumers." My name is Monica Lamb and I serve as Director, Regulated Markets 

for L03 Energy. an energy technology company that enables an interactive, multi-sided 

marketplace to allow consumers, producers. and utilities to deploy and manage energy assets in 

an increasingly open and competitive electricity market using distributed ledger information 

architecture. built on a blockchain data structure. 

L03 Energy is a young company with deep roots in energy. finance, and technology. We 

1 
33 


are passionate about the future of an increasingly 11cxible, responsive, and reliable utility grid. 

We are developing ways to give people and utilities opportunities to shape that future. The 

community energy marketplaces that we are building enable utilities and neighborhoods to share 

in the responsibilities and benefits of reliable distributed energy resources. 

You may be familiar with the concept of the ''internet of things," the idea that our 

devices, machines, thermostats, automobiles and appliances arc able to use built-in sensors and 

computing power to communicate information, coordinate with each other, and manage our 

environment and our energy use intelligently and independently, by following the rules that their 

owners program into them. Our blockchain platform activates an internet of things within the 

local power grid, enabling it to generate market signals that will govern and balance 

neighborhood loads, generation, and storage assets, and allowing them to coordinate with the 

broader interconnected transmission grid. Our platform enables this functionality by 

implementing a market in which neighbors. independent power producers, energy services 

companies, and utilities can choose to buy and sell energy and energy services on a peer-to-peer 

basis in real time. For example. a neighborhood resident may run his washing machine when 

electricity in the local peer-to-peer market is least expensive. perhaps when energy output from 

his neighbor's solar panels reaches its peak in the early afternoon; or a department store may dial 

back its air conditioning when that local electricity is most expensive, for example when a local 

utility transformer is being over-taxed in the late a!!ernoon on a hot summer day. 

Currently, L03 Energy is developing such a marketplace within the community of 

Brooklyn, New York, through a bene11t corporation called Brooklyn Microgrid. The goal of this 

project is to enable the multi-participant marketplace for consumer choice that is envisioned by 

the energy regulators in New York, and likewise to improve the local community's energy 

2 
34 


security during extreme weather events and other emergencies. 

This community energy marketplace in Brooklyn-which can be replicated in hundreds 

more communities around the U.S. and globally-will create a decentralized, peer-to-peer 

energy network that also coordinates with the broader power grid. By sending appropriate price 

signals for energy and energy services, these locally optimized networks engage all market 

participants to deploy distributed energy resources and infrastructure upgrades in the most 

efficient manner. These local energy resources also provide resiliency for emergencies; reduce 

customer costs; optimize utility infrastructure investments; and enable renewable electricity, 

energy efficiency, and energy storage deployments within that community. Meanwhile, the new 

market drives community investment and jobs, boosting the local economy. 

This is a new opportunity for the energy consumer who, until now, has been dependent 

on the grid but not able to directly participate in, control, or contribute to the reliability or source 

of the electricity on the grid. L03 Energy, and distributed energy marketplaces enabled by the 

internet of things more broadly, will enable consumers to truly determine their energy futuretheir source of energy, when they want to use that energy, and the price they pay for that energy. 

The role of public policy is key to enabling the community energy marketplace. Federal 

policy can recognize and streamline the integration of new community energy marketplaces with 

the existing competitive wholesale markets operated by the Independent System Operators and 

Regional Transmission Organizations under FERC'sjurisdiction. Policymakers can help lift 

roadblocks to the participation of individuals and local governments in energy transactions in 

community marketplaces and encourage cooperation, communication, and interaction between 

these new community energy marketplaces and the wholesale markets. Federal policy can clarify 

that behind-the-meter consumer energy assets should access energy markets on equal footing 

3 
35 


with in-front-of-the-meter energy assets, and that distributed energy resources like batteries, 

thermal storage, active demand management, microgrids, and other hybrid energy resources can 

transact energy services in the same manner as traditional generation. 

In summary, we think the community energy marketplace, enabled by the internet of 

things through blockchain, will be critical to enabling consumers to participate in and benetit 

from community-based energy resources, both under normal operations and in emergencies. We 

see this as a win for the consumer, a win for the utility, and a win for the grid. We are grateful 

that this Committee is discussing these important issues and look forward to serving as a 

resource as you continue these conversations. 

Thank you again for the opportunity to deliver this testimony. We look forward to 

addressing any questions the Members of this Subcommittee have about L03 Energy and our 

energy marketplace platform. 

4 
36 

Mr. UPTON. Thank you so much. 

We are joined next by Dr. Bryan Hannegan, president and CEO 

of Holy Cross Energy. Welcome to you. 

STATEMENT OF BRYAN J. HANNEGAN 

Dr. HANNEGAN. Good morning, Mr. Chairman and Ranking 

Member Rush, Vice Chairman Olson, and distinguished members 

of the subcommittee. Thank you very much for the opportunity to 

be here today to testify on how innovations in electricity technologies are opening up whole new realms for empowering customers. My name is Bryan Hannegan, and I am president and chief 

executive officer of Holy Cross Energy in Glenwood Springs, Colorado. 

Before I start, I just want to say our thoughts continue to be 

with those affected by the hurricanes in Texas, Louisiana, Florida, 

Puerto Rico, and the Virgin Islands, as well as those affected by 

the wildfires out in the West. As residents of these States work to 

rebuild their homes, businesses, and communities, I want to recognize the ongoing events of the efforts of the thousands of utility 

employees that are working around the clock to safely restore 

power. It is during these difficult times that we are all reminded 

of the critical importance of our Nation’s energy infrastructure, especially the electric grid. 

Holy Cross Energy was formed in 1939 as a not-for-profit, member-owned, electric cooperative utility that provides electricity, energy, and energy services to more than 56,000 customers in the 

western Colorado counties of Eagle, Pitkin, Garfield, Mesa, and 

Gunnison. The more than 3,000 miles of transmission and distribution lines that we maintain deliver energy to farmers, ranchers, 

and hardworking communities and towns of the Colorado Western 

Slope. Our workforce includes 158 skilled and dedicated employees 

that are committed to serving the energy needs of our memberowners and we are governed by a seven-member board of directors 

that is democratically elected from the local communities in which 

they reside. 

So empowering the customer and empowering the consumer is vitally important to Holy Cross in everything that we do. Working 

together, our board and our staff make decisions on long-term investments and near-term operations in order to efficiently optimize 

our resources on behalf of the members that we serve, providing 

them with safe, affordable, and reliable energy supply. However, 

several of you noted in your opening statements the landscape on 

which we are doing this is rapidly changing and I am pleased to 

share our views with you on how these changes will benefit our 

members and the Nation as a whole. 

In my testimony today I make five key points which I would like 

to call to your attention. The first, as it has been said several times 

this morning, the architecture of the U.S. electricity grid is rapidly 

changing from a conventional hub and spoke model with large generation and relatively passive customers to a grid which is more 

dynamic, decentralized, and distributed. And this offers a tremendous opportunity for customers, but it also has profound implications for how we design, operate and manage the grid. 

37 

This change in architecture is being driven by several factors. 

Not only the decline in costs for solar PV and other distributed energy technologies, but by the increasing digitalization of the grid, 

the availability of metering data, and the software platforms, some 

of which my colleagues have hinted at that allow us to bring new 

services to customers. 

The third main point I would like to make is that the Department of Energy’s grid modernization initiative is already yielding 

significant benefits for the Nation as it responds to these changes, 

in many cases in public-private partnership with companies like 

those that you see here, and it merits continued support by this 

Congress. 

Several of the many projects supported by the grid modernization 

initiative are already yielding benefits. For example, in Hawaii, we 

are using power electronics located on the back of distributed solar 

panels to absorb the shock of the variability those solar panels provide to the grid and actually allow us to emplace on those grids 

several times more solar than engineers thought possible only a 

few years ago. We are doing the same thing with utility solar installations in California and elsewhere where we can actually ramp 

solar production up and down in accordance with the needs of the 

grid. 

So too can we do this with wind turbines depending on what demands are needed in the marketplace. In Vermont, local utilities 

are using advanced distribution management systems to directly 

control energy storage and other DER on the grid in new ways that 

avoid the need for system upgrades and optimized asset utilization. 

And in Washington State, two university campuses and a national 

lab are engaging in transactive energy where buildings and even 

building components can interact directly with the marketplace 

and tailor their production to the needs of the grid. 

Because cooperatives are member-owned, member-governed, notfor-profit utilities, we are naturally consumer-centric and so as a 

result we put the needs of the consumer first and we will be responding and developing and deploying these technologies where it 

makes sense to provide safe, affordable, and reliable electric supply. 

I thank the committee for the opportunity to testify today and I 

look forward to your questions. 

[The statement of Dr. Hannegan follows:] 

38 


"Powering America: Technology's Role in Empowering Customers" 

September 26, 2017 

Before the Subcommittee on Energy 

House Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 

Testimony of Bryan J. Hannegan 

President and Chief Executive Officer 

Holy Cross Energy 
39 


SUMMARY 

• The architecture of the U.S. electricity grid is rapidly changing from a centralized, "hub~ 

and~spoke" model to a much more distributed, decentralized, and dynamic model that 

offers tremendous opportunity for consumers. 

• This change in architecture is being driven by several factors, including technological 

progress in a number of areas, increased demands by consumers for more resilient and 

secure power supply, aging infrastructure, and the impact of digitalization. 

• The Department of Energy's (DOE) Grid Modernization program is already yielding 

significant benefits for the nation as it responds to these changes, and merits continued 

support by this Congress. 

• America's electric cooperatives are responding to these changes as well by leveraging 

new technologies, offering new services, and continuing to provide affordable, reliable 

power for the communities they serve. 

• Changing technologies, evolving public expectations and the immense diversity within 

the nation's electric system will require local decision~making, innovation and flexibility. 

The Committee should keep this principle in mind when considering future legislation 

related to the electricity industry. 

2 
40 


PREPARED TESTIMONY 

Good morning Chairman Upton, Ranking Member Rush, and members of the Subcommittee. 

My name is Bryan Hannegan, and I am President and Chief Executive Officer of Holy Cross 

Energy in Glenwood Springs, Colorado. 

Thank you for the opportunity to testify on how innovations in electricity technologies are 

empowering consumers. Our thoughts continue to be with those affected by the devastating 

hurricanes in Texas, Louisiana, Florida, Puerto Rico and the Virgin Islands, as well as those 

affected by the wildfires currently burning throughout the West. As residents of these states 

work to rebuild their homes, businesses and communities, I want to recognize the ongoing 

efforts of the thousands of utility employees that are working around the clock to safely restore 

power. It is during these difficult times that we are all reminded of the critical importance of 

our nation's energy infrastructure, especially the electric grid. 

Holy Cross Energy, formed in 1939, is a not-for-profit, member-owned electric cooperative 

utility providing electricity, energy products and services to more than S9,000 consumers in the 

Western Colorado Counties of Eagle, Pitkin, Garfield, Mesa, and Gunnison. The more than 3,000 

miles of transmission and distribution lines that we maintain deliver energy to the farmers, 

ranchers and hard-working communities and towns of the Colorado Western Slope. Our 

workforce includes 158 skilled and dedicated employees committed to serving the energy 

3 
41 


needs of our member-owners, and we are governed by a seven-member Board of Directors 

that is democratically elected from the local communities in which they reside. 

Working together, our Board and staff make decisions on long-term investments and near-term 

operations designed to efficiently optimize our resources on behalf of the members we serve, 

providing them with safe, affordable and reliable energy supply. The landscape on which we 

are doing this is rapidly changing, however, and I am pleased today to share with you our views 

on how these changes will benefit our members and the nation as a whole. 

A Changing Landscape 

For the last century, our extensive, reliable electric power grid has fueled the nation's growth. 

Access to electricity is such a fundamental enabler for society that the National Academy of 

Engineering named "electrification" the greatest engineering achievement of the 20th century. 

Today's electric grid was built largely around a "hub-and-spoke" architecture consisting of 

several components, including: 

• large, central-station power plants; 

• a one-way transmission and distribution delivery system; and 

• fixed, predictable and passive customer loads. 

4 
42 


This architecture fit the purpose of the time- to provide safe, reliable and affordable supplies 

of electricity as an input to a growing economy. In more recent years, however, we have called 

upon the Nation's electric grid to take on additional challenges, including: 

• a changing and increasingly variable mix of electricity generation resources; 

• new opportunities for customers to participate in electricity markets with distributed 

energy and smart grid technologies; 

• growing consumer and business demands for a more resilient and reliable grid 

protected from all hazards (including weather, cyber and physical attacks); 

an increasing dependence of the electricity grid on interconnected digital information 

and control systems; and 

• an increasingly aging electricity infrastructure, much of which was first constructed 

many decades ago. 

Meeting these additional challenges will require modernizing our electric grid for the 21st 

century following a new architecture comprised of: 

• multiple sources of electricity generation of various shapes, sizes, and variability; 

• a two-way, dynamic delivery infrastructure; and 

• active, engaged customers that can both produce and consume energy as best fits their 

needs and the needs of the grid at the time. 

In 2015, I was pleased to be co-leading a team of experts from our National Laboratories that 

identified six key challenges in grid modernization: 

5 
43 


1. Development of devices (vehicles, appliances, storage, etc.) and integrated systems of 

devices (like microgrids) that can seamlessly provide grid-friendly energy services. 

2. Sensing and measurement technologies that can allow us to better monitor and predict 

the condition of the grid at any point in time and space. 

3. New approaches to real-time operations and control of the electric grid and the 

technologies connected to it, with the ability to scale from a few hundred large power 

plants to millions if not billions of connected devices on the grid of the future. 

4. Improved design and planning tools that can be used to develop new blueprints for 

electric grids that blend existing assets with new technologies across multiple scales. 

5. Technologies and practices for grid security and resilience that allow us to better identify 

threats and hazards (regardless of cause) and improve our ability to protect, respond 

and recover from those events. 

6. Institutional changes in policies, regulations, and business models that may be needed 

to enable new services to consumers. 

These ideas have been developed and implemented as the Department of Energy's (DOE) Grid 

Modernization Initiative, a multi-year collaboration among 14 DOE National Laboratories and 

regional partner networks of utilities, grid operators, technology firms, academia, and civil 

society organizations. This portfolio of Federally-funded activities will help set the nation on a 

cost-effective path to an resilient, secure, sustainable, and reliable grid that is flexible enough 

to provide an array of emerging services while remaining affordable to consumers. 

6 
44 


Several of the many projects supported by the Grid Modernization Initiative are already having 

a significant impact on how we think about the future electric grid: 

• In Hawaii, the electric utility is partnering with solar providers to use "advanced 

inverters" to reduce the impact from large amounts of rooftop solar on the local 

distribution grid. The advanced inverters can function as shock absorbers to the grid by 

modifying how they convert the DC power from the solar panels into the AC power 

needed on the grid or in the home. 

• In California, these advanced inverters are doing the same thing with utility-scale solar 

plants up to 300 MW in size. This allows a utility solar installation to provide more 

flexibility to the grid in the form of "ancillary services" such as ramping control and 

frequency response, which help keep the grid stable and avoid the need for backup 

generation capacity. Similar functions are now standard issue for all wind turbines. 

• In Vermont, the local utilities and their main technology providers are deploying a new 

form of software known as an Advanced Distribution Management System, or ADMS, to 

directly control energy storage on the distribution grid in new ways that avoid the need 

for system upgrades and optimize asset utilization. 

• In Washington State, two universities and a National Lab are teaming to form a multicampus network allowing for testing of "transactive energy" concepts that allow 

individual buildings to respond to real-time price signals with specific changes in their 

7 
45 


energy use that help the grid and also save money. 

• In Louisiana and Alaska, communities and villages are designing and deploying 

"microgrids" of local resources, including energy storage, to improve the resilience and 

reliability of their electricity supply where grid service either does not exist or is prone 

to impacts from natural events like hurricanes. 

These are but a few of the important projects comprising the Grid Modernization Initiative, 

which is a vitally important investment in our Nation's energy future, and one that I hope you 

will see fit to continue. 

Implications for Electric Cooperatives 

Because they are member-owned, member-governed, not-for-profit utilities, America's electric 

cooperatives like Holy Cross are naturally "consumer-centric". Through a variety of 

mechanisms we regularly hear from our members about their wants and needs for energy 

services, which are rapidly changing given the array of new technologies able to serve them. 

At Holy Cross, we have responded with an array of "consumer-centric" programs, particularly in 

the area of energy efficiency and renewable energy: 

8 
46 


• Through our "WE CARE" program we provide an array of energy efficiency services and 

incentives that are intended to achieve a 0.5%/year energy savings across our system. 

Under this program we provide: 

o free energy audits for existing homes and businesses; 

o rebates for residential lighting, thermostats and appliances; 

o rebates for commercial lighting, heating/ AC systems, and efficient motors; and 

o partnerships with incentives for our largest commercial/industrial members 

We also provide our members with "green power" options that enable them to 

purchase blocks of wind energy or local hydropower resources if they so choose. We 

are exploring expanding this program to include solar energy as well. 

We have nearly 30 MW of distributed clean energy resources on our system, including: 

o 11.5 MW of biomass fueled with beetle-kill salvage lumber from nearby forests; 

o 3.5 MW of community solar, including the first such community solar project 

anywhere in the nation; 

o 6 MW of small hydro resources; 

o 3 MW from coal mine methane; and 

o 6 MW of distributed and utility-scale solar. 

Additionally we have 10 MW in new solar under development, expected in 2018. 

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47 


We were one of the first electric cooperatives to have Advanced Metering Infrastructure 

fully deployed throughout our distribution system. 

o Our "smart meters" and related communications and control infrastructure 

allow us to detect outages in many cases before the member calls us. 

o We can also use this data for several purposes: 

to optimize our maintenance activities; 

to determine where best to install distributed energy resources; and 

to sequence our future investments to maintain a reliable grid. 

o In the future, we may be able to use this data to predict the future state of the 

grid in real-time, at a specific location, so that we can take steps to prevent 

outages and disruptions in service before they occur. 

Cooperatives like Holy Cross are benefiting their members across the country through an array 

of projects reflecting new technologies and new ideas. 

• In South Dakota, co-ops help ranchers deploy solar-powered stock wells in remote 

locations to avoid the need for expensive grid extensions and upgrades. 

• In New Mexico, a co-op installed a solar micro-grid on a community campus to provide 

extra reliability and access to generation resources desired by members. 

• In Minnesota, a co-op is providing a free water heater to members so it can be used as 

energy storage for power generated by solar and wind. 

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48 


• Seven Colorado co-ops (including Holy Cross) are partnering with a regional non-profit 

organization to construct community solar facilities dedicated to serving their lowestincome members. 

• In states around the country, co-ops are providing high-speed broadband service to 

consumers who otherwise lack access. 

As the future electric grid evolves towards a nst century future, cooperatives like Holy Cross 

will continue to invest in new technology, develop new programs and services, and evolve their 

businesses to meet the local needs of their consumers in light of local conditions, needs, and 

consumer preferences. Changing technologies, evolving public expectations and the immense 

diversity within the nation's electric system will require local decision-making, innovation and 

flexibility from our industry. We encourage the Committee to keep this principle in mind as it 

considers any future legislation affecting the electricity industry. 

I thank the Subcommittee for this opportunity to testify, and would be pleased to respond to 

any questions you might have today or in the future. 

11 
49 

Mr. UPTON. Thank you so much. 

Next, we have Mr. Val Jensen, Senior VP of Customer Operation, 

ComEd. Welcome. 

STATEMENT OF VAL JENSEN 

Mr. JENSEN. Thank you, Chairman Upton, Ranking Member 

Rush, Vice Chairman Olson, members of the subcommittee. My 

name is Val Jensen. I am senior vice president of Customer Operations at Commonwealth Edison, a electric distribution company 

serving about 3.8 million customers in Chicago and northern Illinois, and also one of six member utilities of the Exelon family of 

utilities serving about ten million customers in Delaware, Illinois, 

Maryland, New Jersey, Pennsylvania, and the District of Columbia. 

Thank you so much for the opportunity to testify today. 

And I am going to probably sound at this point in the panel like 

I am plagiarizing. I assure you I am not, but hopefully I can offer 

some insight into the issues my co-panelists have been talking 

about from the perspective of an electric utility. Change for our industry is not a choice. It is inevitable. It is imperative. And it is 

driven by four immutable truths. The first of these is that technology will continue to get better, faster, smaller, cheaper, more 

pervasive, and more powerful. 

Second, this technology will be ever more interconnected offering 

new opportunities for control both on the part of the customer and 

the grid itself. Data, the lifeblood of technology, will continue to 

proliferate exponentially offering opportunities to better understand our customers. 

And most importantly, customers have an inherent desire to exercise choice and control, something that has not been allowed to 

them for most of the history of our industry, but will be as technology improves. We know that these truths are rendering our industry’s business model obsolete. The model that will ultimately 

emerge will be more decentralized, distributed, and community-focused. 

The industry that we imagine will be obsessively focused on helping customers do their jobs or live their lives that are better, faster, 

cheaper, greener, and more customized. Historically, our business 

was to generate, distribute, and sell kilowatt hours, a linear process like a pipeline or an assembly line. But today, distribution utilities in competitive States like ComEd in Illinois act much more like 

platforms, entities that make it possible for other parties to exchange products and services. 

Today at ComEd, a customer essentially buys access to the grid 

and to a variety of energy-related services. They can purchase 

power and electricity. They can get access to energy efficiency programs. They can install rooftop solar and sell the output of that 

array to Commonwealth Edison, and they can share energy data 

with parties who offer other products and services. Tomorrow they 

will use our grid to buy and sell energy services among themselves. 

The value of this platform grows directly as a function of the number of transactions that occur on it and we believe it is in our business interest to promote as many of those transactions as possible. 

There is no useful conversation about the future of this industry 

that isn’t also a conversation with policymakers about the interVerDate Mar 15 2010 13:58 Dec 11, 2017 Jkt 037690 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X58PACONSUMERSSCANS120817\115X58PACONSUMERSPEN
50 

locking set of statutes, rules, regulations, and orders that together 

form the regulatory policy superstructure for our industry and 

there is no question that local, State, and national policymakers 

are vital to the transformation that serves the public interest. 

So I will leave you with a few thoughts for your consideration. 

First, we need a collective purpose that drives us forward, particularly when things seem most unclear as they may today in our industry. And to me that purpose is to maximize the net value that 

we create for our customers and to ensure that all customers can 

share in that value. And I don’t mean this as kind of a lofty policy 

preamble, but as a very real standard for judging the value of our 

investments. The old standard of simply minimizing costs sells customers short in a world in which value is proliferating. 

Second, we need to honor the pervasive uncertainty we face during this transition. The natural urge is going to be to hunker down 

and take actions that create the illusion of certainty, when what 

we need to do is place as many small bets as we can. Many will 

not pay off, but the more we place the higher the chance that one 

pays off big for us. We need policies that don’t prematurely close 

off options. 

And third, our federalist system remains a brilliant model for 

fostering innovation. We can argue with what any individual State 

might do, but the ability for different States to explore different approaches is enormously valuable to us. It reduces risk and makes 

the overall regulatory policy system much more robust. 

So again, we should be cautious about solutions in the name of 

certainty that freeze that experimentation and ultimately make the 

grid and its policy framework more rigid and vulnerable. I got involved in electricity policy almost 40 years ago because it seemed 

like an area that offered some clear opportunities to find practical 

solutions to tough problems and I haven’t been disappointed. In 

fact, I have been rewarded by living long enough and being given 

a job that presents me with what I think is the chance to participate in the greatest policy opportunity of all, the remaking of this 

industry in the image of the customers that it serves. 

Thank you very much again for the chance to appear. 

[The statement of Mr. Jensen follows:] 

51 


Val Jensen Summary of Written Testimony: Energy and Power Subcommittee September 26, 2017 

The utility industry is being reshaped by the progress of technology and the pull of 

changing customer preference and behavior. In order to create a lasting, technology-enabling 

clean grid that is affordable to customers while growing with them to fuel their changing 

expectations and needs, the industry must adapt to four core truths: !) Technology will continue 

to get smarter, faster. cheaper and more pervasive; 2) 71Jis technology will be ever more 

interconnected even as it becomes more distributed. and to some extent, autonomous; 3) Data, 

the lifeblood of technology, will continue to proliferate exponentially, and 4) Customers will 

increasingly demand the ability to exercise control over their lives by being given real choices. 

While we will continue to need strong, central energy generation and transmission, we 

must shift our delivery system from a pipeline model - moving central station power across 

wires to customers at the other end to a platform architecture, which is the business 

architecture of the 21st century. Under this model, the utility will move from energy delivery to 

energy democratization, using our infrastructure to create a market that customers can access to 

buy and sell energy and energy services. As with Facebook and the iPhone, the value of the 

platform is in the number of transactions it generates. 

This new platform business model is the foundation of the utility of the future, where the 

electric grid, as the enabling, organizing platform for the increasingly connected economy, can 

deliver new and unexpected value to our residential and commercial customers. 

To successfully implement this new vision, we need new policies that address: 1) How to 

set prices in a distribution services/platform business; 2) How to define standard service in a way 

that allows for customer customization, and 3) How to treat utility investments that carry risk. 
52 


Val Jensen Energy and Power Subcommittee Written Testimony September 26, 2017 

Good morning Chairman Upton, Ranking Member Rush, and members of the Energy and 

Power Subcommittee of the House Committee on Energy and Commerce. My name is Val 

Jensen and I am Senior Vice President for Customer Operations at Com Ed. We are one of tbe 

largest electric utility companies in the nation, delivering power to 3.8 million homes and 

businesses in Chicago and northern Illinois. Thank you for the opportunity to testify today as 

your Committee explores technology's role in empowering energy consumers. 

We have immersed ourselves in the policy implications of our dynamic energy 

environment, and I'm pleased to report that the Illinois legislature has provided us the 

opportunity to unlock new levels of value and choice for our customers. ComEd is completing a 

$2.6 billion investment program to modernize our electric grid with infrastructure investments, 

including a smart meter for every customer. At a time when our economy was in a trough, 

Com Ed created thousands of jobs through this grid modernization. This modernization program 

is also significantly improving service and reliability and giving customers more choice and 

control over their energy usc. 

ComEd now has access to an abundance of data regarding our customers' power usage 

and can use it to help them manage their energy usage, energy efficiency and bills, while 

preserving security and privacy. For example, our peak time savings program enables 

participants to earn a credit on their energy bill for voluntarily reducing energy use during peak 

time savings hours. Smart Meter Connected Devices give customers access to ncar real-time 

electricity usage information by connecting in-home wireless devices to their smart meter. Also, 

through hourly pricing, our customers can pay the hourly market price for electricity and manage 

energy costs by shifting energy use to lower-priced times. 
53 


Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

While we will continue to invest in the grid, technology is marching on and it is time for 

reinvention. We can, and we must, anticipate and embrace the inevitable advancement of 

technology and data, because it decreases costs and puts increasing control, convenience and 

choice into the hands of customers. Advances in solar generation and storage. electric vehicle 

technologies. and their supporting platforms, are giving consumers and businesses the 

opportunity to customize their energy sources. Consumers· ability to make better, more infom1ed 

choices continues to increase as prices of these technologies decrease. 

Our industry has a choice, too. Innovate - or go the way of the Rolodex and the pay 

phone. We believe that the electric grid is, and will continue to be, the foundation the 

backbone - for economies around the country. The one-hundred-year old grid powered our 

economy in the 20'11 Century while also generating vast improvements in quality of life. It 

connects massive generating stations capable of powering each and every machine and device 

that uses electricity in every home and business. The central question we must now address is: 

How can we make the next transformational step in order to create a lasting, technology-enabling 

clean grid that is affordable to customers while growing with them to tiJel their changing 

expectations and needs? 

I. KEY TRUTHS SHAPING THE CUSTOMER AND ENERGY LANDSCAPE 

The electric power grid network is enormous. representing hundreds of billions of dollars 

of investment. lt is 99.9 percent reliable. It is pervasive, adaptive and constantly evolving and 

being reshaped by the progress of technology and the pull of changing customer preference and 

behavior. 

As our utility network is at the edge of another evolutionary jump, Com Ed has embraced 

four core realities: 

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54 


Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

I. Technology will continue to get smarter, faster, cheaper and more pervasive --

Arguably the most important truth is that technology advancement underpins every significant 

societal improvement since tht: beginning of human history. The continued, inevitable 

advancement of the power of technology and decreases in its cost will put increasing control, 

convenience, and choice into the hands of customers. Current advances in solar generation, 

storage, and electric vehicle technologies, and in the organizing platforms that optimize these 

resources, arc giving consumers and businesses the opportunity for unprecedented customization 

of their energy sources, and their ability to make better, more informed choices continues to 

increase as the cost of these technologies decrease. This opportunity extends to nearly every 

aspect of our customers' lives as digitization. automation, and miniaturization offer people and 

businesses more control and flexibility in how they manage their daily lives and operations. 

Technology innovation provides new solutions to old problems, and is helping to break down the 

barriers to an energy future where customers demand - and deserve the speed and quality of 

service they receive in virtually every other aspect of their lives. We don't even know what the 

next new technology will be in !0 years, but we know it is coming and we know we need to be 

ready for it. 

2. Data is exploding -The mechanisms by which we capture data are improving. 

The number of devices that surround us, capturing personal, environmental, operational, 

relational, locational, and every other type of data are innumerable, ostensibly providing us 

everything we need to know. While all these devices provide data, it must still be organized into 

information that is useful and valuable through aggregation, analysis, and socialization on a 

platform that provides the necessary connectivity. Consequently, the more data we collect, the 

greater the utility we derive from the technology collecting and organizing that data, especially 

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55 


Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

with improvements in data analytics and artificial intelligence that enable the personalization of 

technology. The Nest thermostat and the Alexa personal assistant provide examples of data's 

ability to enrich our lives through devices that anticipate our needs. The data we collect from 

millions of smart meters in ComEd's territory, which we leverage to improve operational 

efficiencies, is also provided back to our customers through mechanisms such as Green Button 

Connect, which allows customers to share their usage data with third party providers. Through 

the smart meter program technology, Com Ed can also remotely check a meter for service trouble 

when a customer reports an outage. When a customer outage is reported, a signal or "ping" is 

sent to the smart meter. This reporting functionality was recently named Program of the Year for 

Customer Engagement at the 2017 DistribuTECH Conference. When used as a tool, data and its 

utilization lay at the intersection of commercial and consumer benefits. At the same time, utilities 

must increasingly recognize the necessity for responsible security of data and personal privacy. 

3. Everything is connected- Just as data imbues technology with greater utility, the 

amalgamation of data from similar and disparate spheres of our lives lends greater value to the 

data itself. This is a significant motivator for the increasing pervasiveness of connected devices 

in our homes, cities, and workplaces. In addition, the increasingly mobile nature of our lives, 

with advances in smartphoncs, tablets, wearablcs, and other mobile devices necessitates our 

ability to capture information and manage the functions of technology in a decentralized way. 

The expansion of the Internet-of-Things ("'oT") and artificial intelligence supports this, and as 

this network continues its dramatic growth, businesses and individuals will continue the cycle of 

technology innovation to find even more novel applications. 

4. Customers will increasingly demand the ability to exercise control over their lives by 

being given real choices - The velocity of technology innovation, the expansion of data capture 

4 
56 


Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

and analysis, and the ubiquity of connected devices have given our customers more choice, more 

control, and more convenience than ever before, and because of that, our customers expect more 

choice, more control, and more convenience as it relates to the products and services that they 

consume. 

These four truths have had a tremendous impact on the preferences of the customers and 

communities that we serve. Taken together, these truths also represent the powerful force that is 

rendering our existing business model obsolete. 

II. A NEW UTILITY BUSINESS MODEL 

Since its inception, a pipeline model has characterized the utility business. Our job was to 

distribute and sell kilowatt-hours and ancillary services a linear process. However, we 

envision a new business model that accommodates customer expectations and maximizes the 

value we are creating for our customers. communities, economy, and the environment. 

Here at CornEd, we're initiating our delivery system's shift from today's pipeline 

architecture- moving central-station power across wires to customers at the other end to a 

platform architecture. which is the business architecture of the 21st century. This new model is 

more decentralized. distributed, and democratic. 

Under this model, the utility will move tl·om energy delivery to energy democratization, 

using our infrastructure to create a market that customers can access to buy and sell energy and 

energy services. Utilities would then be compensated with fees on transactions and charges for 

services they provide. 

The success of any platform model of any business model actually - hinges on its 

ability to help customers do a job. The key is understanding what that job is. 

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57 


Val Jensen Energy and Power Subcommittee Written Testimony September 26, 2017 

Unfortunately, as an industry, we've largely forgotten or ignored that wisdom. We have 

been preoccupied with kilowatt-hours and kilowatts, volts and vars because producing those is 

our job. Our customers have their own jobs to do and just happen to need electricity and power 

and voltage to help do them. In most cases, they need less and less of the commodities our 

industry produces, and increasingly there are places besides the utility to get these commodities. 

Witness the fact that it takes 60 percent less energy to drive the same growth as it did in the midl970s. 

What isn't going away are customers' needs. In fact, those needs have proliferated and 

become increasingly sophisticated as the four technology truths show themselves throughout the 

economy. Satisfying customer needs producing energy services -still requires a variety of 

inputs like power, current, voltage, equipment, data and labor. Those inputs need to arrive with 

extremely low latency and very high reliability and resiliency. 

The emerging platform model fosters interactions between the utility, producers of 

products and services. and our consumers and energy producers. As \vith Facebook and the 

iPhone, the value of the platform is in the number of transactions it generates. Each breakthrough 

app we download increases the value of our smart phone with accessibility, convenience, and 

ironically communication. Value will be created and captured in dynamic and personalized 

ways without compromising the security, reliability, and resiliency of our electricity supply. That 

said, there will be the continued need for strong, central energy generation and transmission. 

Without it, the grid can't deliver on its promises to customers. 

The platform becomes the place customers can come to acquire the things they need to 

produce the energy services they want. Today, the utility platform provides some of these inputs, 

but if the platform remains limited in what it offers, value will be drained from the utility to fill 

6 
58 


Val Jensen Energy and Power Subcommittee Written Testimony September 26, 2017 

someone else's value pool. We need to re-envision our platform as the place where customers 

come to find everything they need to meet their energy service needs; however they want to meet 

them. 

IlL THE UTILITY OF THE FUTURE 

This platform is the foundation of Com Ed's vision of the Utility of the Future. As we seek 

to maintain the customer as the central motivation for everything we do as a company, we 

envision a future that accommodates these preferences and maximizes the value we are creating 

for our customers, our communities, and our economy. 

While we believe that the function of our industry, and the electric grid that we steward, 

are at the threshold of a fundamental evolution, there arc many elements of this transition to the 

utility of the future that resemble the beginnings of our industry. A primary motivator for the 

early innovations that would become the grid we have today was the invention of the lightbulb. 

The grid was merely a vehicle for extending the benefits of light productivity, and safety and 

security after daylight hours into the home and workplace. Similarly, our current reimagining 

of the future grid is largely driven by technology advances in photovoltaic systems and battery 

storage among other inventions. Technology and innovation are essential elements of the future 

grid. Again, advancing technology holds the potential to enhance productivity, and safety and 

security. 

Furthermore, while establishment of the grid served the major purpose of lighting the 

world at night, it made possible a myriad of additional innovations that could not have been 

conceived during the grid's early days. Electricity in the home made possible the electrification 

of nearly every aspect of daily life and supported the advent of refrigerators, washers, dryers, 

dishwashers, and on and on. In this way, it provided a platform upon which much of America's 

7 
59 


Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

mid-20tl' century economy was built. Likewise, as we look toward the future of the grid, while 

our primary objective will always be the provision of safe and reliable electric power to our 

customers, we allow for new ways in which the grid, as the enabling, organizing platform for the 

increasingly connected economy, can deliver new and unexpected value to our residential and 

commercial customers. We see a future where more of the economy is electrified in areas such 

as transportation, heavy machinery, and ports. 

The utility of the future will likely sec a greater proliferation of DER, distributed-energy 

resources. Much of this increase in DER penetration will be attributed to customization reflecting 

more customer choice, control, and convenience value propositions aligned with, for example, 

customer-sited generation and energy storage, or grid-sited energy storage. Increases in the 

adoption of DER may also provide an opportunity to mitigate climate change impacts. As it 

accelerates, this transition will impact the utilization of the grid, as customers and utilities come 

to better understand, measure, and apply energy use where it has the greatest value to all 

customers and communities, not just those with the means or desire for specific outcomes. 

The rise of DER will fundamentally change the role of consumers on the system. Given 

the intermittency of renewable energy sources, there will still be significant reliance on the grid 

by these customers, but with generation capabilities these consumers will be more appropriately 

recognized as prosumers (consumers AND producers). The grid could conceivably look less like 

a pipeline that delivers electrons from a central station to residential and commercial customers, 

and more like a network of prosumers relying on the organization and operational standards of a 

platform that optimizes their opportunities and provides the data and information needed to make 

informed decisions. 

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Val Jensen Energy and Power Subcommittee Written Testimony September 26, 2017 

Over time, with increasing numbers of active prosumers on this network, innovative new 

products and energy-linked services will develop, and a cycle of innovation, cost improvement, 

and economic development will be set in motion. This network, if appropriately planned and 

executed, should enable optimization of resources in real-time into the consumption point (with 

time/location/feature-based granularity), improving overall system utilization. A distribution 

market platform and other means of integrating this transaction-based or "transactive" market 

into distribution system operations will increasingly be needed to facilitate providing customers 

service beyond the existing standards. 

Prosumcrs will likely be able to transact with one another in both real-time and forward 

markets based on highly differentiated preferences regarding reliability, quality, environmental 

friendliness, and timeliness. These transactions may even occur at the device level, as the 

sophistication of the loT universe continues its dramatic expansion and smart devices in the 

home and workplace continue to proliferate. The degree to which these transactions arc 

automated or require human intervention will depend entirely on customer preference. 

Transactions on the grid of the future will not be limited to prosumers. There will be a 

host of additional market participants, including entire communities, which will transact on the 

grid for the purpose of developing their own energy-related solutions by providing value-added 

products and services. Products related to solar and energy storage or services related to energy 

efficiency ("EE") and demand response ("DR") can be offered in an increasingly customized 

way due to their access to increasingly granular customer data. The resulting interdependence 

inherent in these interactions enables market participants to not only gain value from, but also 

provide value to, one another and their communities. In this future, businesses of all sizes, 

situated across a broad range of industries and communities, are in a position to innovate, create 

9 
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Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

jobs, and drive the economy forward by developing and attracting business from the smallest 

incubator to the largest industrial plant. 

In sum, the powerful force of customer preference will shape the utility of the future and 

result in demand for access to a wide variety of services that the grid operator can effectively 

provide in such a way that it will no longer be characterized as a simple two-way exchange of 

value between the utility and the electricity consumer. Rather, it should evolve toward a platform 

serving the utility, producers of value-added products/services, and their consumers/prosumers. 

The linear two-way phone call, by way of example, evolves into a Skype platform that allows 

communication by many more participants in a variety of ways. 

IV. POLICY CONSIDERATIONS 

For this vision to succeed, and capture as much customer value as possible, we need 

policymakers at the state and local level, where we are regulated, as co-developers. After all, the 

utility industry will remain an industry imbued with the public interest. This commitment to the 

public interest also translates into an obligation to find ways for everyone, including the less 

fortunate, to enjoy the benefits of this new technologically advanced grid. 

The superstructure for this model is the interlocking set of statutes, regulations, rules and 

orders that constitute utility regulatory policy. Our industry is subject to that policy, and any 

transformation will continue to be the product of a complex choreography of public and business 

interest. 

The platform model represents not just a shift in value from the centralized to the 

distributed; it offers the opportunity to unlock significant new value through new types of 

10 
62 


Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

transactions that technology enables. But while technology might lead, regulation rules when it 

comes to how the value will flow. 

Our industry's existing business model was forged in a world that rewarded increasing 

electricity consumption, because average price decreased as sales increased. That world is gone. 

We don't expect to see sales growth return to any extent. New policies, then must address: 

How to set prices in a distribution services/platform business 

• How to define standard service in a way that incents us to customize service to align with 

customer needs, and 

• How to treat utility investments that carry risk 

It may be useful to look to the states for examples of policies that support customer needs 

and demands. Together, the Illinois legislature and ComEd have already looked beyond the 

Smart Grid. Working together with a wide range of stakeholders, we developed the Future 

Energy Jobs Act ("FEJA"), a statute that will be recognized as a landmark in our Utility of the 

Future scenario. 

The IL legislation allows utilities to capitalize and earn a return on energy efficiency 

program expenditures. When combined with new decoupling provisions, this means that energy 

efficiency is now as financially important to utilities as traditional grid investments. Under 

FEJA, funding for energy efficiency nearly doubles, from $250 million to $400 million annually 

by 2030, creating more than $4 billion in consumer savings and reducing the C02 equivalent to 

removing 18 million cars from the road. As a result, ComEd's customer energy efficiency 

program, already one of the largest in the country, will almost double in size. Since its inception 

in 2008, ComEd's energy efficiency program has saved customers over $2 billion. For the 

seventh time and fourth consecutive year, the U.S. Environmental Protection Agency awarded 

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Val Jensen Energy and Power Subcommittee Written Testimony September 26, 2017 

ComEd with the 2016 ENERGY STARIBJ Partner of the Year Sustained Excellence Award for 

its Energy Efficiency Programs. We look forward to continuing our significant progress in this 

arena. 

FEJA also made important changes to the state's renewable energy funding mechanisms. 

The net result is that we expect to see thousands of megawatts of utility-scale, community and 

rooftop solar developed over the next decade. Rebates for installation of smart inverters will be 

available to our customers. These rebates will also be capitalized, allowing us to effectively earn 

returns on distributed solar. 

Finally, FEJA will spur economic development as it provides up to $10 million in 

funding for job training programs across Illinois, as solar and energy efficiency jobs emerge in 

the years ahead. The Act also restarts ComEd's CARE programming to support veterans and 

active or disabled military personnel (CHAMP), seniors and families, local nonprofits, and lowincome customers. CARE programming will provide $50 million over five years in financial 

assistance. 

In total, the enactment of this !L statute transformed our distribution utility into an energy 

service utility and provided the incentive to continue building the platform that will enable more 

energy efficiency and distributed solar transactions. 

V. CONCLUSION 

The Utility of the Future is based on the continued, inevitable advancement of the power 

of technology and decreases in its costs that will put increasing control, convenience and choice 

into the hands of customers; the need to organize, utilize and share with customers the exploding 

level of data available on the Smart Grid; and the growth in interconnected devices that will 

provide customers with more choice, control and convenience- and to expect it. 

12 
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Val Jensen Energy and Power Subcommittee Written Testimony September 26,2017 

ComEd appreciates the opportunity to participate in the Committee's discussion of how 

customer demands are changing the utility industry, We're eager to work with the Committee 

and other stakeholders to develop a shared perspective on the need for and desired direction of 

change in the business and regulatory models to ensure the realization of the Utility of the 

Future. 

13 
65 

Mr. UPTON. Thank you. 

Mr. Sandford, Senior VP, North America Distributed Energy & 

Power, Direct Energy, thank you for being here. 

STATEMENT OF TODD SANDFORD 

Mr. SANDFORD. Thank you, Chairman Upton, Ranking Member 

Rush, Vice Chairman Olson, and members of the committee. Thank 

you for the opportunity to testify this morning. My name is Todd 

Sandford. I am a senior vice president with Direct Energy and I 

look after our Distributed Energy & Power group in North America 

and it really is a pleasure to be with you today. 

Direct Energy is North America’s largest competitive energy and 

energy services company and serving close to five million customers 

in the U.S. and Canada and our corporate vision is to provide energy and services to meet the changing needs of our customers. 

And there is no doubt that our customers’ needs are changing and 

that change is being empowered by technology in ways we couldn’t 

imagine just a couple of years ago. 

We now live in a world where a hospitality company like Airbnb, 

which owns no property, is worth more than the Hilton and Hyatt 

hotel franchises combined; or Uber, a company that maximizes the 

value of other people’s time and vehicles is now estimated to be 

worth $70 billion. Today’s consumer has very high and increasing 

expectations: convenience, personalization, ease, on-demand, and 

efficient. These are the standards by which so many of us are being 

measured now. 

And while regulators and policymakers can drive change, the 

greatest force for change today is consumer behavior and that is 

being aided and magnified by advances in technology. We at Direct 

Energy see two primary trends driving consumer behavior around 

energy: the digitization and distribution of energy. As our industry 

increasingly moves from an analog world to a digital one, Direct 

Energy is turning that digital data into unique insights that deliver value to both our residential and business customers. 

For residential customers, one example we see is our Direct Your 

Energy tool that uses customers’ smart meter interval data, 

disaggregates their electricity bill into the consumption and spending by appliance, and while it is a simple idea it is something customers haven’t seen before and they are engaging, they are learning, and they are taking action. 

In Texas we sell a smart-meter-enabled offered to residential customers called Power-to-Go. It is a prepaid energy product and these 

customers engage with us much more frequently with other customers. And the net result of that engagement is we see them 

using 14 percent less energy than their peer or comparative group. 

For business customers, advancements in technology are enabling most buildings to install cost effective, real-time energy monitoring devices. We offer an energy insight solution called Panoramic Power that lets our customers see exactly how their businesses use energy right down to the device or circuit level. Our typical building installation is generating 250 million data points a 

year. Compare that to 12 for a standard electromagnetic meter or 

about 35,000 for a smart meter. 

66 

This robust data set is being translated to real-time, actionable 

insights for our customers allowing them to reduce energy waste, 

identify equipment not operating properly, and improve operational 

efficiency. The insights and use cases around the digitization of energy are exciting and demonstrate clearly that customers will engage with energy when given the opportunity. 

The second trend that we see is around distributed energy. New, 

smaller, and cleaner sources of energy like solar, batteries, gasfired generators, combined heat and power to name a few, are 

being developed closer to the point of need. These sources are being 

linked to intelligent systems that help businesses manage demand 

and consumption. 

Today’s consumer can decide how much energy to take from the 

grid and how much to produce themselves. They can track and 

manage the use to become more efficient. They can store energy to 

use later. They can sell surplus energy back to the grid. They can 

get paid to reduce or delay their energy consumption and smooth 

out the peaks in their demand. All of this is allowing consumers 

to save on energy costs and get a more predictable and reliable 

supply. Customers are asking for and executing distributed energy 

products because it meets their most stated goals: cost savings and 

reliability. 

I look forward to your questions and thank you very much. 

[The statement of Mr. Sandford follows:] 

67 


Testimony of Todd Sandford 

Senior Vice President, North America Distributed Energy & Power 

Direct Energy 

Prepared for 

The House Energy & Commerce Committee 

Subcommittee on Energy 

"Powering America: Technology's Role in Empowering Consumers" 

Washington, D.C. 

September26, 2017 
68 


SUMMARY 

The electricity system is undergoing a fundamental, structural change. We are 

moving away from an exclusive and, in many ways, inefficient central power generation 

system to a system where generation is more distributed and variable, where consumers 

can better monitor and manage their energy use, and where new technologies and business 

models can thrive. Essentially, instead of a top down energy supply, technology is putting 

consumers in control of their energy usage and assets. 

Consumers can now decide how much energy to take from the grid and how much 

to produce themselves. They can track and manage their enerf,ry usage to become more 

efficient, store energy to use later, sell surplus energy back to the grid, and get paid to 

reduce or delay consumption in order to smooth out peaks in demand. All of this is 

allowing both residential and business customers to save on energy costs and gain a more 

predictable and reliable supply. 

We believe there are areas of focus that can help develop a smarter, more flexible 

energy system that helps put consumers in control of their energy usage and assets: 

Support modern grid infrastructure so that 1) consumers can use the technology 

that they are already investing in, and 2) the benefits of the digitization of energy 

can further be realized. 

• Oppose legislation or policies that would pick one winner to provide these products 

or services across a utility footprint. 

• Support the growth of new markets for flexibility especially at the local 

(distribution) level. 

2 
69 


TESTIMONY 

Chairman Upton, Ranking Member Rush, Vice Chairman Olson, and members of the 

committee, thank you for the opportunity to testify this morning. My name is Todd 

Sandford, and I serve as Senior Vice President of North America Distributed Energy & 

Power for Direct Energy. It is a pleasure to be here with you today. 

Headquartered in Houston, TX, Direct Energy is North America's largest competitive 

energy and energy services company, earning over $14 billion in U.S. revenue last year and 

serving close to 5 million customers in restructured power and gas markets across the U.S. 

and Canada. Our home services line of business includes a number of well-known regional 

providers of HVAC, plumbing, and electrical installation and repairs, and operates in all 50 

states. Direct Energy is a wholly owned subsidiary of Centrica plc, an integrated energy 

company headquartered in Windsor, England, which also owns a global connected home 

products business under the name Hive. Our corporate vision is to provide energy and 

services to satisfy the changing needs of our customers. 

Consumers and businesses are being empowered by technology in ways that we 

couldn't imagine just a couple of years ago. We now live in world where a hospitality 

company like Air BNB, which owns no property, is worth more than the Hilton and Hyatt 

hotel franchises combined. Uber, a company that maximizes the value of other people's 

time and vehicles, is now estimated to be worth $70B. It makes me wonder what the most 

valuable energy company in America in 5 or 10 years will look like - I suspect very 

different from the traditional players. 

Times change. Consumers change. Today's consumer wants their choice to happen 

immediately. Today's consumer wants to use the newest and coolest technology. Today's 

3 
70 


consumer isn't pulling out their checkbook to write a paper check at the store ... they're not 

even driving to the store. Today's consumer buys items by telling Amazon Alexa what they 

want, and it shows up at their home in two days. Convenient. Simple. Easy. Efficient. Those 

are the standards by which we are all measured now. And while regulators and policy 

makers can drive change, the greatest force for change today is consumer behavior ... aided 

and magnified by advances in technology. We at Direct Energy see two primary trends 

driving consumer behavior around energy today- the digitization of energy and the 

availability of distributed and designed energy. 

First, there is digitization- moving from an analog world to a digital one, both at the 

utility meter and beyond. This digitization allows for a deep and more meaningful 

understanding of customer usage. Moving from one monthly analog data point to 

thousands or millions of digital snapshots of energy usage is a fundamental 

transformation ... one we need to achieve our customers' goal of being more efficient energy 

consumers. At Direct Energy, we are turning that digital data into unique insights that 

deliver value to both our residential and business customers. 

For residential customers, we are doing this through our "Direct Your Energy" tool. 

Using our residential customer's smart meter interval data and engineering algorithms, 

which effectively act like a thumb print for the energy appliances in your home, we can now 

disaggregate your electricity bill into what you're spending by appliance. This product is 

automatically provided to all of our residential customers. It's a simple idea, but one where 

we see our customers engaging, learning, and taking action. 

In Texas we sell a smart-meter-enabled energy product called Power-to-Go that is 

commonly called a "prepaid" energy product. We've conducted a study with the help of an 

4 
71 


outside consulting firm that compared these customers' behavior to a control group who 

had traditional postpaid products over the years 2014 through 2016 and found significant 

behavioral ener&'Y efficiency. Customers on Power-to-Go do frequent transactions on their 

energy use just as they would with buying gas for their car and that engagement makes 

them more aware of their usage and more efficient. The study found an average energy 

efficiency benefit of 14% for customers on Power-to-Go. This energy efficiency finding 

excludes periods of disconnection, so this is not an efficiency from denial of service but a 

true behavioral efficiency. 

For business customers, advancements in technology are enabling most buildings to 

install cost effective, real time energy monitoring devices. Direct Energy offers an energy 

insight solution, Panoramic Power, that lets our customers see exactly how their business 

uses energy - right down to the device or circuit level. Our typical building installation 

today is generating over 250 million data points each year compared to 12 data points from 

a traditional electromagnetic meter and 35,000 data points from a smart meter. Through 

advanced data analytics and algorithms, this robust data set is being translated to realtime, actionable insights for our customers allowing them to reduce energy waste, identify 

equipment not operating properly, and improve operational efficiency. Let me give you a 

few examples. 

• In just two months, a school district identified the potential for annual energy 

savings of nearly $23,000. Our Panoramic sensors revealed that some rooftop air 

conditioning units, cafeteria food warmers, water heaters, and lights were operating 

during non-school hours. The data also showed that as much as 25 percent of the 

schools' electricity was being used by small appliances that were left plugged in at 

5 
72 


night and on weekends. It's not that the school district was intentionally using too 

much energy or didn't care; they simply didn't realize that power was being wasted. 

No big capital. No big building project. Just big savings. 

• A healthcare customer deployed the Panoramic solution in a relatively new, all 

electric building. It quickly discovered sub optimal sequencing of its electric boilers 

and reduced its annual spend by 50%. 

• A food manufacturer using the Panoramic insight identified an incorrect sequence of 

operation of its compressors. The result was an annual saving of over $100,000. 

• Finally, a manufacturing customer using the Panoramic insight discovered a 

conveyor motor was overloading and tripping out, which in turn was creating a 

bottle neck in their process. This never before available energy data helped this 

customer change their production process, resulting in a $250,000 annual savings at 

just one location. 

From a policy perspective, we must begin to really focus on grid modernization 

supported by a robust roll out of smart meters to further realize the benefits of this 

digitization, particularly at the residential level. Questions around access to customer data 

must also be addressed as data access and transparency are foundational to unlocking 

innovation in this space. Currently, access to a customer's energy usage data is regulated on 

a state by state basis. Our position is that any customer protections must be applied 

equally to all potential technolo&'Y suppliers, not just those subject to regulation by the 

state public utility commission. 

6 
73 


The second trend we see relates to distributed and designed energy. At a time when 

businesses are under pressure to manage costs, strengthen resilience, and ensure long 

term growth, technology is: 

• opening up new possibilities, 

• decentralizing energy supply, and 

• handing power back to the customer. 

New, smaller, and cleaner sources of energy (wind, solar, batteries, generators, combined 

heat and power) are being developed closer to the point of need. These sources are being 

linked to intelligent systems that help businesses manage demand and consumption. 

Consumers can now decide how much energy to take from the grid and how much to 

produce themselves. Consumers can track and manage use to become more efficient, store 

energy to use later, sell surplus energy back to the grid, and get paid to reduce or delay 

consumption in order to smooth out peaks in demand. All of this is allowing consumers to 

save on energy costs and get a more predictable and reliable supply. 

Here arc some examples of how we are helping our customers turn their energy 

challenges into a business advantage: 

• We helped a university customer upgrade and overhaul its energy infrastructure by 

installing solar, combined heat and power (CHP), new lighting, variable frequency 

drives, building controls, and a new boiler. The customer's goals for doing this were 

better reliability, cost savings, and carbon reduction. The customer had the project 

completed with no initial capital outlay and is saving about $500,000 per year. 

7 
74 


• A health and fitness customer was looking for better reliability and cost reduction. 

The customer installed a combined heat and power (CHP) system along with a 

standby generator. The CHP system is designed to run all the time and in parallel 

with the grid. In the event of a grid outage, the combination of the CHP and the 

standby generator can satisfy the peak load requirement ensuring the facility will 

remain open for its customers and community. In addition to the reliability benefits, 

the annual savings to the customer is around $250,000 a year. 

• Lastly, a grocer in an urban setting was looking for better reliability and didn't want 

to necessarily pay for it. Outages for this customer result in lost business when the 

store is closed and lost money due to food spoilage. The customer is located in an 

area where the grid operator was looking for customers that could reduce their load 

during certain times of the day. Direct Energy was just contracted by the customer 

under a structure where the customer will get the reliability certainty he is looking 

for at no upfront cost. We will do this by installing a generator and working with 

the customer to dispatch the asset in accordance with various local demand 

management programs and utilize the revenues earned through those programs to 

pay for the installation and maintenance of the generator. 

Conclusions 

The electricity system is undergoing a fundamental, structural change. We are 

moving away from the linear flow of electricity from large generators through networks 

and onto to passive consumers to a system where generation is more distributed and 

variable, where consumers can better monitor and manage their energy use, and where 

new technologies and business models can thrive. I hope I have demonstrated how Direct 

8 
75 


Energy is working hard to adapt to this new energy landscape by putting consumers in 

control of their own energy and deliver a more flexible power grid. 

We believe there are areas of focus for policy makers that can help develop a smarter, 

more flexible energy system that helps put consumers in control of their energy usage and 

assets: 

Support modern infrastructure so that 1) consumers can use the technology that 

they are already investing in, and 2) the full benefits of the digitization of energy can 

be realized. 

• Oppose legislation or policies that would pick one winner to provide these products 

or services across a utility footprint. 

• Realize the potential of larger energy consumers to benefit from a smarter ener!,'Y 

system. 

• Support the growth of new markets for flexibility especially at the local 

(distribution) level. 

Direct Energy looks to work with all of the players in this area, both old and new, to 

create a better 21st century economy fueled by a more consumer-driven, digitized, and 

personalized energy world. I want to thank the Committee for seeking input into our 

countries' evolving energy needs. Direct Energy stands ready to bring its unique, 

competitive, consumer-focused perspective to work with the broader energy industry and 

help drive our energy future forward. 

Thank you for your time and attention today, and !look forward to your questions. 

9 
76 

Mr. UPTON. Well, thank you all. Thank you all for your testimony. We will now move to questions from the dais here. 

Ms. Lamb, you talked about interactive devices, and how many 

States allow you to do that? For Michigan it is a rather recent phenomena, the legislation that Governor Snyder signed into law last 

year allows that to happen. But how many States allow you to do 

that and therefore, you know, figure out how many States don’t? 

Ms. LAMB. I actually will have to get back to you with the answer to that question. 

Mr. UPTON. Does anyone know the answer to that question? OK. 

All right, I look forward to your response back. 

Mr. Ganesan, you talked about 30 percent growth in jobs, three 

million around the country. What type of training do you insist on? 

Are there community colleges that help? Is this is a operation 

where not interns but journeymen and women go into the field? 

What type of training and how many jobs are actually available? 

If you had your way you would have x amount of jobs that are you 

looking to fill at this point? 

Mr. GANESAN. It is a great question. The vast majority of those 

three million jobs are in energy efficiency, so that is contractors 

who can go into houses, kind of take other trade training to make 

houses or other buildings more energy efficient. The vast majority 

of the jobs are in that sector. 

With respect to workforce training this is a major issue, a gap 

that needs to be addressed, and if I could give you an example from 

Michigan about this. There was a large wind turbine manufacturer 

that wanted to take some of the excess welding jobs from Detroit 

and from Michigan and reapply them to turbines, to welding turbines, but the skills associated with welding cars are very, very different than the skills associated for welding turbines. 

So that is a gap and that is the workforce development gap that 

needs to take place. In order to bring those jobs to Michigan that 

particular company had to finance training of those workers to repurpose them towards welding turbines. So your point is spot on, 

there is a workforce development gap to retrain workers who are 

in other sectors to capitalize into this sector. 

Mr. UPTON. So a quick question, and I don’t know if you know 

the answer to this. But as we look at the tragedy in Puerto Rico, 

maybe months without power, probably a mass, you know, migration to the States during this very troubled time, what type of technology did Puerto Rico have? We have heard about the inadequacies of the grid, you know, a whole host of things, but I am just 

thinking about, you know, these folks as they leave, forced to leave 

and move to communities around the country. Did Puerto Rico 

have any sizeable trained folks that maybe this would be an avenue for them? 

Mr. GANESAN. So I am not, I unfortunately am not a Puerto Rico 

expert, but a couple of general observations. I think as they rebuild 

their grid there are a lot of folks that can start to either get retrained into these new sectors or they can redevelop their grid in 

a more resilient way. And I agree with you that there is an opportunity. 

Mr. UPTON. So Mr. Jensen, as we see bad storms, a variety of 

things that usually the industry is very responsible, you know, they 

77 

team up to help the neighbor in need. You know, I see American 

Electric Power, I see Consumers Energy, I see DTE, I see, you 

know, Pepco, and others send trucks and crews to help wire communities when they have real difficulties. We saw that in Florida 

with Irma, we saw that in Texas. 

Puerto Rico is a different situation because you can’t drive there 

with those trucks and technicians. Do you know in terms of the industry itself what they have been able to reach out and help our 

citizens, our fellow citizens in Puerto Rico? 

Mr. JENSEN. Mr. Chairman, I do know that actually today a 

number of conversations are going on involving FEMA and the utility industry as the co-op industry as well as the investor-owned industry to try and figure out what the best response could be. Clearly it is difficult logistically to land equipment and personnel in 

Puerto Rico. I think part of the challenge is we just don’t know how 

bad it is yet in terms of the destruction. 

Mr. UPTON. It is pretty bad based on what we have seen on the 

news. 

Mr. JENSEN. It is. It will take months if not years to fully rebuild. So the industry is standing ready in force to help when it 

can, but to land people now would be counterproductive because we 

don’t have the equipment. 

Mr. UPTON. Last question, as I have 1 second left. Technology, 

talked about it, cyber, you know, as people sign up and see these 

new devices where is the needle on vulnerability in terms of 

cyberattacks on either the company providing that technology or 

the business or homeowner themselves in terms of protections so 

that things don’t go haywire at some point? 

Mr. JENSEN. Well, I think the experts will tell you that there is 

no system that is completely impregnable, but we spend about $10 

million a year on cybersecurity. They don’t honestly tell me much 

about what they do because for obvious reasons, but we have hired 

experts from NSA, the CIA, FBI. We have a very well developed 

defensive in-depth strategy for cybersecurity. When we do connect 

devices to the grid those cybersecurity experts pay special attention 

to ensure that we are not creating new portals into our system that 

would make us vulnerable. I would say it is probably the most important issue in most utilities today. 

Mr. UPTON. Thank you. The Chair will recognize Ranking Member Mr. Rush for 5 minutes. 

Mr. RUSH. I certainly want to thank you, Mr. Chairman. 

Mr. Ganesan, again I want to welcome you to this hearing, this 

very important hearing. In your written testimony you reference 

the 2014 polar vortex and other natural disasters and of course 

these are in the forefront of our minds and our attention. And you 

know that fuel diversity including battery storage and you also 

mentioned bringing more renewables on to the grid that it actually 

helps reliability and resilience. 

Can you discuss how adding advanced energy and greater fuel diversity helps make the grid more reliable while it also increases 

competition and drives down costs? And I would like to also hear 

from Ms. Butterfield on the role of energy storage in making the 

grid more reliable. 

78 

Mr. GANESAN. Thank you for the question, Mr. Rush. Fuel diversity as polar vortex shows is crucial to ensure that any one fuel 

source if it is compromised you can’t put yourself in a situation 

where the compromising of one fuel source leads to mass outages. 

During the polar vortex, which was a very rare and hopefully a 

phenomenon we are not going to see any time soon though these 

events seem to happen more and more frequently, coal piles froze 

which shows how cold it was. Mechanical equipment such as gas 

turbines and coal turbines froze given the significant cold. 

And what occurred to keep the lights moving was the fact that 

PJM brought in a diversity of different technologies including advanced energy technologies. It paid consumers to reduce their demand in demand response, which reduced the overall amount of 

electricity that the system needed, and they were able to draw on 

wind resources that didn’t have the same susceptibility to cold 

weather as natural gas and cold did. 

So fuel diversity is absolutely crucial. As you bring in more of 

these technologies including storage, which my colleague will talk 

about, it allows your grid to have a more diverse fuel sourcing so 

that you are not relying on one particular type of technology. And 

storage as will be discussed brings about a lot of different capabilities to deal with a lot of different types of weather events. 

Ms. BUTTERFIELD. Thank you for your question. Obviously lithium ion battery storage lasts for just so long, right, we have cell 

phones and we have now automobiles that run on lithium ion batteries. So in a situation where we want resilience in a community 

where we want to deal with a storm or outages after a storm we 

need a design that allows for microgrid or islanding. So in, for example, in Puerto Rico we have an island system that really got 

wiped out and, you know, on the mainland United States various 

grids would have been able to support that; in the case of Puerto 

Rico it cannot. 

So the new design of the system should be distributed and in a 

way that allows certain segments of the grid to come back up after 

a disaster. This is, you know, called a microgrid. And battery storage in a lot of these commercial buildings or even in homes can be 

tapped into that kind of backup or standby generation as you bring 

up other generation sources and it is a perfect solution to complement microgrids. Unfortunately, today our systems are really 

not designed that way, so as we rebuild or as we redesign systems 

they need to be compartmentalized like that. 

Mr. RUSH. Well, so are you suggesting then that as we go forward that that should be a part of the planning for the future, and 

how aggressive should we be in terms of trying to implement this 

new system? 

Ms. BUTTERFIELD. Right. We believe that energy storage and battery storage has a perfect application in a grid, in any grid, a big 

grid or a small grid, a microgrid, and that it can bridge the gap 

between outages or it can, you know, charge and discharge just at 

the right time in the grid. It can reduce the need for peaker plants 

that might only go on for 15 or 20 minutes. So a combination of 

battery storage within the grid is healthy. 

Mr. RUSH. I want to thank you, Mr. Chairman. I yield back. 

79 

Mr. OLSON [presiding]. The gentleman yields back. The Chair 

now calls upon the chairman of the full committee, Mr. Walden 

from Oregon, for 5 minutes. 

Mr. WALDEN. Thank you, Mr. Chairman. Again I want to thank 

our witnesses, really good testimony and most helpful. Pretty exciting about what is out there and what we are on the edge of. I 

toured one of the national labs, the one in Richland, Washington, 

with Secretary Perry earlier, I think it was in August we were 

there, and it is phenomenal the work they are doing and the work 

they are doing on battery storage and all that. So I think it makes 

you feel good about your investment here where we make some of 

these funding decisions and all to see it actually play out there. 

I guess as we talk about these hearings we are having on energy 

we want to make sure we get it right and that we understand fully 

what is happening in your world because you are living it every 

day, every electron. And what I would like to know is are the markets working? Are they serving their intended purpose and what is 

it we could do or should do if they are not? 

Now, my charge to the committee and the staff has been put the 

consumer first, and if the consumer is winning, that means you 

have got a competitive market. You have got choice. That will drive 

innovation. That should drive down price. I mean, that is if you believe in the market effects, which you all described are taking 

place. 

But I was intrigued by your comment that buried somewhere in 

an RTO is that storage doesn’t include battery, and I think most 

of us would shake our heads at that. So are there things like that? 

And what can we do, because I mean we can, in theory, write the 

laws. Now some of this is best at the local level or State level and 

I get that. But from a Federal perspective, from this committee’s 

perspective, what would you have us do that would be helpful? 

Mr. GANESAN. I don’t profess to have all the answers but I—and 

if I did, good on me. 

Mr. WALDEN. That is why we have other panelists. 

Mr. GANESAN. So the example that I used actually is a great illustration of the role of this committee. And just to give a little bit 

of background here, in that particular case, the rules of the RTO 

defined storage as a process that involved moving a flywheel, so it 

is a very, very old definition of what storage used to be and still 

used all over the country. 

Mr. WALDEN. Well, can they change that or do we have to? 

Mr. GANESAN. They can. The RTO can change that but it has 

been, I think, 10 or so years and there has been no progress in the 

change of the definition. It is an example of a very arcane definition that illustrates whether or not a facility can be built and 

whether that facility can get compensated for all the reliability 

services that it provides. 

Mr. WALDEN. Got it. 

Mr. GANESAN. So the one point I would make for a role for this 

committee is to embrace competitive markets, which you have. We 

embrace it. And I think that the role of this committee and FERC 

is to ensure that all the competitive markets in the United States 

do not have a technology bias. They simply, the RTOs set outcomes 

80 

and let the market and technologies come in to fill how to get to 

that outcome. 

Mr. WALDEN. All right. Can we just go down the panel and each 

of you just, what are your thoughts? And then I only have 2 minutes so. 

Ms. BUTTERFIELD. I will just offer one example in the California 

ISO obviously regulated by FERC we have a duck chart which is 

the shape that the solar provides the State. The belly of the duck 

is negative pricing. If we could charge our batteries and get paid 

to charge our batteries in the belly of the duck that would be a perfect market solution. Today we can’t do that. That is the kind 

of—— 

Mr. WALDEN. Is that a FERC issue or is that a State issue? 

Ms. BUTTERFIELD. It is a State issue, but the FERC NOPR that 

has been opened has to do with allowing distributed energy resources to participate in wholesale markets across the board. 

Mr. WALDEN. OK. 

Ms. LAMB. The technology platform that LO3 Energy is developing enables a local community energy marketplace. And so what 

policymakers can do is recognize and help streamline the integration of local community energy marketplaces with the wholesale 

markets and encourage communication and cooperation and interaction between those markets. 

And Federal policy can also clarify that distributed behind-themeter consumer energy assets can access energy markets on equal 

footing with in-front-of-the-meter energy assets and that distributed energy resources like batteries and thermal storage and active 

demand management can transact energy services just like traditional generation. And that will allow consumers to make choices, 

to exercise choice by selecting sources and suppliers of energy that 

are aligned with their values. 

Mr. WALDEN. All right. 

Dr. HANNEGAN. Mr. Chairman, you have hit on the first point 

which is with all of the differences in technologies and the differences in regional and customer needs the local decision making 

has to remain paramount. So I would encourage you not to think 

of this as a one-size-fits-all solution because each utility, each community is going to take on different paces of innovation and flexibility. 

And then the second thing related to that is keep in mind someone has got to keep the lights on. Someone has got to maintain the 

poles and wires. Someone has got to interact with the customer. 

Someone has got to provide that obligation to serve. And it is not 

clear how those functions get compensated, taken care for, and 

guaranteed in a purely market environment. There is some blend 

of the two that the committee will likely have to keep in mind. 

Mr. WALDEN. All right. 

Mr. JENSEN. I would offer two things, Mr. Chairman. First, we 

could probably debate forever what the right competitive market 

structure looks like, but there is no disputing the fact that customers have benefited to the billions of dollars from the markets 

that we do have. Our customers in the PJM zone certainly have. 

Secondly, I would say Federal support for R&D is absolutely essential. The work that the national labs have done, as you have 

81 

pointed out, has literally transformed our industry just creating the 

technology that is forcing the changes that we are now dealing 

with. So to maintain that investment in that precious resource, I 

think, is very important. 

Mr. SANDFORD. Quickly, I know we are short on time, but I 

would just say continue or really support the growth of new markets for flexibility. Everything that we have talked about today requires a level of flexibility bilateral that we have never had before 

and that is really what would allow customers to engage in energy. 

Mr. WALDEN. All right. I appreciate the indulgence of the committee to get all the way down the panel. Thank you. 

Mr. OLSON. The Chairman yields back. A point of personal privilege, Ms. Butterfield, I want to recognize the duck model. Our 

chairman is an Oregon Duck—well played. 

The Chair now calls upon the ranking member of the subcommittee, from California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. I thank the chairman. I thank the panelists, 

very interesting testimony, very enthusiastic testimony as well. I 

am going to start with Mr. Sandford. In your view, should we improve on the current patchwork of State-by-State regulations on 

consumer protections of smart meter data? 

Mr. SANDFORD. I think obviously data security and data privacy 

is a huge challenge for our industry and others. You know, I think 

from our perspective the most important thing is that it is a level 

playing field for everybody and that we are not just, you know, 

looking to impose a level of requirements on regulated bodies, but 

everybody who is accessing the data, I think, should play by an 

overarching level set of rules. 

Mr. MCNERNEY. So there should be maybe a Federal rule that 

preempts State-by-State regulations? 

Mr. SANDFORD. Yes. 

Mr. MCNERNEY. Thank you. In your experience, Mr. Sandford, is 

the electric sector properly utilizing the data that is collected from 

smart meters? 

Mr. SANDFORD. No. I mean the industry has come a long way, 

but there still is a very low penetration rate of smart meters and 

subsequently, you know, low use of that. I think, you know, the 

most important thing from engaging, which is a big step, is would 

we actually be bold enough to show all consumers real-time pricing 

and send price signals and invite that level of engagement? I think 

that would really unlock the power of the data that is coming out 

of these types of devices. 

Mr. MCNERNEY. Thank you. 

Mr. Jensen, do you believe there is adequate models and structures in place regarding the future of our electric grid? I mean you 

mentioned you didn’t think there was an overall purpose. Do you 

think there is out there some vision of what we should be doing? 

Mr. JENSEN. I would say at this point, Congressman, there is 

pervasive uncertainty. I don’t think any of us are quite sure where 

this is going to end up. I think the industry is beginning to coalesce 

around this notion of the platform business model and the utility 

becoming an enabler for customers and third parties to transact 

independently across that network, but I would be lying if I said 

there is unanimity across the industry at this point. 

82 

Mr. MCNERNEY. Well, do you think that the PUCs’ and the ISOs’ 

policies have kept pace with the development of technology? 

Mr. JENSEN. I don’t think any of us have kept pace with technology. I think it has been moving so quickly lately. I think commissions are making a very honest, sincere effort to understand the 

implications for their regulatory environments in their respective 

States. I know our Illinois Commerce Commission has been a leader in promoting innovation in our business. 

So I think everyone is trying to do what they can. I have never 

seen the industry so characterized by consensus around the need 

to work together as I do today. 

Mr. MCNERNEY. Well, that is good news, I guess. 

Ms. Lamb, what role will electric vehicles have on the grid and 

how can we increase their presence and capitalize on the potential 

benefits that they offer? 

Ms. LAMB. Sure. Electric vehicles are storage location for electricity that can interact dynamically with the grid and what we can 

do is enable, you know, a marketplace that allows owners of vehicles to transact that energy on the grid like other sources of energy. 

Mr. MCNERNEY. So there is a significant potential benefit from 

these—— 

Ms. LAMB. Certainly. 

Mr. MCNERNEY [continuing]. For the grid instability. 

Ms. Butterfield, it sounds like most of your customers are governments or businesses, and there aren’t too many residential customers in your model. Is that because businesses and governments 

have time-of-day pricing and residences don’t, or is there some reason you haven’t gone to residential customers? 

Ms. BUTTERFIELD. I think that is the primary reason, also scale. 

It is an early stage of our industry and so by putting a large battery and putting this complicated software into a larger facility it 

is much more cost effective when we can scale that way. 

Mr. MCNERNEY. OK, thank you. 

Mr. Ganesan, we have heard a lot about the potential benefits 

for energy storage to the electric system. How will FERC’s proposal 

to remove the barriers for storage and distributed energy resources 

in the market help consumers? 

Mr. GANESAN. Well, I think first it allows them to compete to 

provide services. It doesn’t mandate them on the grid, but I think 

that given the declining costs of storage, their ability to access the 

wholesale market through competition is what many types of storage need to simply get their product deployed. So it is a significant 

opportunity for them. 

Mr. MCNERNEY. Great. And I am going to go back to Mr. 

Sandford for my last question. How does the smart meter technology benefit consumer choice particularly in the retail markets? 

Mr. SANDFORD. Again I think for, you know, if I take an example 

from a business and a consumer residential separately, for a business customer, you know, we talked a little bit about demand response today. And now if I know more through smart metering or 

other device level exactly how much energy I am using, I really can 

proactively optimize my participation in some of the flexible proVerDate Mar 15 2010 13:58 Dec 11, 2017 Jkt 037690 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X58PACONSUMERSSCANS120817\115X58PACONSUMERSPEN
83 

grams that ultimately are benefiting the grid and do that with confidence. 

So demand response is looking for greater participation faster 

and that is scaring customers, but customers that are really armed 

with actually how their process runs, how much energy they use 

are much better prepared to participate. 

On the residential side, again a lot of our business customers pay 

time-of-use rates or pay a rate that is somewhat reflective of when 

they use it. Most residential customers kind of pay towards a 

curve, but we have had programs for residential customers trying 

to promote weekend use. So we have had free Saturdays, for example, as a program really trying to send a signal ahead of how everything gets settled out to consumers that using your dishwasher on 

a weekend is much more cost effective and better for the grid in 

trying to incent and push usage away. 

Mr. MCNERNEY. Thank you, Mr. Chairman. I yield back. 

Mr. OLSON. The gentleman yields back. The Chair now calls 

upon the vice chairman of the full committee, the chairman emeritus of the full committee and a fellow Texan, Mr. Barton, for 5 

minutes. 

Mr. BARTON. Thank you, Mr. Chairman. 

Mr. Sandford, your company is called North America, I think, 

Distributed Energy. Do you do business in all 50 States, or, I 

guess, 48 States? 

Mr. SANDFORD. So the company in North America is Direct Energy, and then we have got a group that I look after that does distributed energy and power and we look beyond some of the regulated States that our traditional supply business operates. Direct 

Energy is owned by a company called Centrica in the U.K., so that 

is a geographical distinction just in the hierarchy of our overall 

business. 

Mr. BARTON. But in the United States do you do business in both 

regulated and deregulated States? 

Mr. SANDFORD. We have energy—yes, we do. 

Mr. BARTON. OK. Do you see any differences of approach for your 

product in a regulated versus an unregulated State like Texas? 

Mr. SANDFORD. Yes. And so my answer is right that we do do 

business, but we do different business depending on whether a 

State is open for competition or continues to be regulated. So. 

Mr. BARTON. Then let me fine-tune it one more time. 

Mr. SANDFORD. Sorry. 

Mr. BARTON. Does this great new world that everybody is alluding to work in a regulated State? 

Mr. SANDFORD. It can work in a regulated State. I think today 

there is much more engagement, in more companies like ours, in 

those competitive markets with customers today. So I think it is 

happening in those areas quicker, but there is nothing stopping it 

from happening in a regulated State. 

Mr. BARTON. Well, the gentlelady Mrs. Lamb is operating this 

microgrid for L03 in Brooklyn, New York. I assume that is a regulated market; is that correct? 

Ms. LAMB. Certainly. And we have been working closely with our 

local regulators to enable a system, to transition over to a system 

84 

where community members and neighbors can transact energy over 

the public wires. 

And I would like to point out that—well, for example, we think 

that our technology can be the core of these new markets. It will 

ultimately be up to the utilities to manage those markets and set 

the rules for transactions. And we expect that because every jurisdiction has different needs that each utility will customize those 

markets to fit with the cultural and regulatory context that they 

are operating in. 

Mr. BARTON. Mr. Jensen, does Commonwealth Edison serve 

Brooklyn, New York? 

Mr. JENSEN. No, sir. 

Mr. BARTON. They don’t, OK. What is the utility that serves 

Brooklyn? 

Ms. LAMB. ConEd. 

Mr. BARTON. What is it? 

Ms. LAMB. ConEd. 

Mr. JENSEN. Consolidated Edison. 

Mr. BARTON. Consolidated, OK. All right, I had it wrong. Well, 

let me go back to Mr. Stanford. My staff says that you are a Texasbased company. Is that right? 

Mr. SANDFORD. Yes. Our headquarters in North America are in 

Houston. 

Mr. BARTON. Houston, OK. And you have a school district in 

Carrollton, Texas that saved, according to my staff, $23,000. Who 

paid for the initial cost to deploy that system, do you know? 

Mr. SANDFORD. The school district did. 

Mr. BARTON. The school district did. Is it proprietary how much 

it costs to deploy the technology? 

Mr. SANDFORD. I don’t have the price point for that. Generally 

speaking—and that was the Panoramic Power device level circuit 

breaker technology I talked about earlier today—we generally talk 

to customers and expect them to see 10 to 15 percent savings on 

their bill. Generally we are looking at a 6- to 9-month payback on 

something like that. 

Mr. BARTON. 6- to 9-month, that is great. 

My last question I will go back to Ms. Lamb. I am co-chairman 

of the Privacy Caucus. And if I understand correctly, your technology requires your consumers to give up a lot of their privacy 

rights; is that true or not true? 

Ms. LAMB. No. In order to operate a blockchain all of the users 

do have to have access to a single ledger, but the users in that 

ledger can be anonymized and so that they are only identified by 

our randomly generated alpha-numeric code. So it actually does 

allow consumers to have more choice over what they do with their 

energy, but does not require it to be public. 

Mr. BARTON. Well, the data that your program collects, is it monetized in any way? Do you sell it to other entities or keep it totally 

in-house? 

Ms. LAMB. It is a private blockchain which means that the data 

is used to settle the market internally. 

Mr. BARTON. So you don’t collect it and—— 

Ms. LAMB. Sell it to others? 

85 

Mr. BARTON [continuing]. Offer it for sale to people that might 

want to use it to market? 

Ms. LAMB. No. So individual users are not, do not need to be 

identified. They can remain anonymous. 

Mr. BARTON. OK. Thank you, Mr. Chairman. 

Mr. OLSON. The gentleman’s time is expired. The Chair now calls 

upon another gentleman from Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and thank you and the 

ranking member for having this hearing today. While I am glad to 

hear from our experts today on how technology is empowering our 

consumers, I would first like to use some of my time to address a 

serious issue that is happening in our district in the Houston area. 

While Houston has begun to recover from the terrible effects of 

Hurricane Harvey, we are not receiving the clear help communication from the EPA in regards to possible environmental disasters. 

EPA has removed 517 containers of unidentified potentially hazardous material from supersites in Texas which the agency reviews 

to provide any information about the nature of the waste or the 

threat to human health, especially the San Jacinto Waste Pits—it 

is in Congressman Babin’s district—and also the U.S. Oil Recovery 

in Pasadena, which these are superfund sites and the one in Pasadena is in my district. The one in San Jacinto Waste Pits has been 

in and out of our district over a number of years. 

EPA has not been forthcoming in response to the benzene leak 

at the Valero refinery in our district which might now be more 

than double than what initially was reported. Our office has been 

pressuring EPA for answers, but all we receive is radio silence. Our 

administrator, Mr. Pruitt, still has not appeared before the committee to date, an unprecedented absence this fall under a new administration. Congress has oversight over Federal agencies, it is 

time we start answering questions about the job they are supposed 

to be doing. 

Now to the issue of the day, the power industry is undergoing 

a major transformation due to the technological information, innovation, and changing consumer preferences. While technology provides the ability for continued grid optimization, consumer expectations are also shaping consumption and generation as they continue to take more control over their energy habits. 

Mr. Sandford, I am glad to hear your unique perspective as a retailer when it comes to these issues, particularly since you serve 

in the Texas market in our district. In your testimony you talk 

about other changing markets like hotel industry, transportation 

industry that have undergone shifts in the last 10 years. Can you 

talk about how digitalization in the retail market has changed that 

landscape? 

Mr. SANDFORD. So I think again I come back to a handful of examples where we see customers choosing to engage in energy and 

at the early stages generate, you know, significant efficiencies in a 

market where we are, you know, challenged to think about not only 

the traditional delivery model but how much supply do we need to 

build new power plants. 

And there is great latent efficiency opportunity out there and the 

digitization is really empowering customers to take advantage of 

86 

that and actually save themselves some money and take some 

stress off the grid near term. 

Mr. GREEN. Well, not only for individual consumers but your 

business customers, they realize that they can control their energy 

costs. 

Mr. SANDFORD. Correct. 

Mr. GREEN. Do you find that the demand from consumers for 

data, does that demand drive consumer habits? How does this play 

into the Power-to-Go program you offer? 

Mr. SANDFORD. So the Power-to-Go program is really a fantastic 

success because it is a prepaid program. And in a lot of markets 

customers that have some of the worst credit wind up paying the 

highest energy prices and so by a prepay program you are now, you 

know, offering customers a lower cost option. And we are seeing 

our customers on that program on average engage or make five to 

six payments a month and so they are engaging with energy, it is 

top of mind. 

And I alluded to in my testimony we have seen a 14 percent reduction against a control group, so just that level of engagement, 

daily text what is my balance, not only are we offering a more affordable rate to those customers, we are actually helping them use 

less energy. 

Mr. GREEN. Typically when a State or a city is trying to encourage an industry to move there, energy costs are one of the big 

issues. And would you say that because industry can control their 

costs now or at least know what their costs will be it is a plus for 

a State like Texas? 

Mr. SANDFORD. Definitely. 

Mr. GREEN. Right now, and I want to access the consumers’ energy, usage data is regulated on a State-by-State basis. Does Direct 

Energy in its other States do you find certain frameworks are better suited than others when it comes to regulating the energy 

usage data? 

Mr. SANDFORD. I alluded to earlier in an answer that I mean ultimately what we are looking for is a level playing field. But you 

know that part of the business is not something I am a resident 

expert on, but we certainly can get you a follow-up answer. 

Mr. GREEN. OK. Well, I am almost out of time. But my next 

question would be do you feel like there is a Federal framework in 

this space or if so what should it look like? Of course I come from 

an area if it ain’t broke don’t fix it, but should there be a Federal 

framework in this space? 

Mr. SANDFORD. On the data, consumer privacy of the data? 

Mr. GREEN. Yes. 

Mr. SANDFORD. Yes. Again I think I would defer to providing you 

some written answers to that question. 

Mr. GREEN. OK, thank you. Thank you, Mr. Chairman. 

Mr. OLSON. The gentleman’s time is expired. The chairman now 

calls upon himself for 5 minutes. The Texas run continues. 

First, I would like to start by thanking you, Mr. Sandford, and 

all the people at Direct Energy. As you know you all played a big 

role in helping most of the power stay on as Hurricane Harvey hit 

my hometown and my home State not once but twice. Hit us headon. It would be the most expensive hurricane in American history. 

87 

280,000 Texans lost their power and that is a lot, but in terms of 

our population that is .01 percent. That is amazing. Thank you 

very much. Puerto Rico, we know, will be much worse. They may 

have lost all their power for up to 6 months, a half of a year. 

Mr. Sandford, Mr. Ganesan mentioned reliability in a disaster in 

his testimony, but some storms like Harvey and Irma and Maria 

are just too strong. Can you talk about how next generation energy 

can help improve the strength of our grid during natural disasters, 

lessons learned from Harvey maybe already and Maria or even 

Irma? 

Mr. SANDFORD. Yes. I mean there are some great examples in 

Texas of customers that have had, you know, gas-fired and diesel 

standby generators that have been able to keep stores open for 

their communities and have been able to kind of be a presence at 

a time of need. Certainly as we see in the business space, consumers looking for a level of reliability we see consumers opting for 

a baseload application like a combined heat and power that really, 

you know, ensures that regardless of what happens to the transmission and distribution wires as long as natural gas is flowing 

they have got power. 

And a lot of them will accompany that with a standby generator 

to kind of top up their peak demand and have absolute confidence, 

you know, that for days in an event like that they can keep their 

businesses open. And a lot of them, you know, consider themselves 

strong foundations of the community and not only from a business 

continuity perspective but from public good perspective that is very 

important to them. 

Mr. OLSON. Anyone else want to comment on that the importance of reliability in an emergency situation, a disaster? Mr. 

Ganesan, I know it was in your testimony. 

Mr. GANESAN. Yes, absolutely. So if you look at examples, I think 

it is too early for me at least to comment on the disasters that have 

struck your district and others recently. But if you look at recent 

ones in 2014, like polar vortex, it is this diversity that allowed certain assets to stay on line during key times. So if you look at the 

hospitals in New York during Superstorm Sandy, they stayed on 

line by microgridding, by using combined heat and power, and a litany of other resources and those are the types of lessons that we 

can apply going forward. 

Mr. OLSON. Mrs. Butterfield, do you care to comment on that reliability of the grid in an emergency? 

Ms. BUTTERFIELD. I concur with Mr. Ganesan. I will say that you 

know, the idea that military bases or universities or hospitals that 

can become community locations, even churches, and as we design 

our communities to have these resilient places in the community it 

is very helpful. 

Mr. OLSON. Mrs. Lamb, care to comment, ma’am, on our grid in 

an emergency? 

Ms. LAMB. Sure. And I agree with my colleagues here and I 

would point out that the type of community energy marketplace 

that we are developing helps enable the installation of these types 

of distributed energy assets. And so enabling a community energy 

marketplace where these assets can be used and monetized all the 

88 

time obviously makes them more available during an emergency as 

well. 

Mr. OLSON. It sounds like to your model having power generation 

stations, smaller ones, scattered all over is much more reliable. For 

example, Puerto Rico might have power to the island with power 

right now that they don’t have, so that is maybe let’s—going forward. 

Dr. Hannegan, your comments about our grid in an emergency? 

Dr. HANNEGAN. I think the key here is to think of grid and reliability in the same breath as you think about your disaster preparedness. So identify those vital resources you are going to need 

as part of your recovery strategy and then build whether it is a 

microgrid, whether it is storm hardening, whether it is backup supplies that can be moved in, you have got to incorporate that into 

your overall disaster preparedness. 

Mr. OLSON. Thank you. Mr. Jensen? 

Mr. JENSEN. Yes, sir. In addition to the ideas offered so far, I 

think there is a serious role for grid hardening. I think if you look 

at a lot of the damage it is a function of infrastructure that perhaps hadn’t been as strong as it could have been. We have embarked on a major rebuilding program on our grid to have reduced 

seven million customer outages as a result of just making the core 

infrastructure stronger. 

Mr. OLSON. Well, I think back home they have done this. They 

have buried a lot of power lines instead of put up on poles, because 

poles tend to break in heavy winds and floods. 

So my time is expired. Now I call upon the gentleman from 

Pennsylvania, Mr. Doyle, for 5 minutes. 

Mr. DOYLE. Thank you, Mr. Chairman, and thank you for holding this hearing today. I want to take this opportunity to welcome 

another Pittsburgher, Todd Sandford, before our committee today. 

Glad to have you here, Todd. 

Let me ask you. I know Direct Energy has worked with many 

businesses in or near my district including Excela Health, Carnegie 

Robotics, and the home ice for the back-to-back Stanley Cup champions, the Pittsburgh Penguins. Yes, thank you. PPG Paints Arena, 

I also want to point out, was the first LEED Gold Certified major 

sports venue in the country. 

Mr. Sandford, can you explain how demand response programs 

affected the Arena’s power use and any other benefits to the arena? 

Mr. SANDFORD. Yes. I mean they are a fantastic partner and they 

have done some great things with that arena including hosting 

some really good hockey teams. But clearly, you know, the great 

thing about their participation in demand response is it hasn’t impacted their power usage at all, right. And that is one of the values 

that it has actually helped and it helps the grid locally but is very 

manageable by that customer. 

So that is a very progressive customer looking to do everything 

they can from an environmental and efficiency perspective and saw 

demand response and see demand response as a very practical, 

nonintrusive way where they can actually earn some revenue by 

not using energy when it is most needed by the grid. 

Mr. DOYLE. Excellent. I also appreciate you featuring combined 

heat and power systems in your testimony. You know, a 2016 study 

89 

from the Department of Energy found that Pennsylvania ranked 

fourth nationally in potential onsite generation. The Mid-Atlantic 

CHP Technical Assistance Partnership, which is headquartered at 

my alma mater Penn State, estimates that there are over 12,700 

potential CHP sites in our home State. However, there are only 168 

currently operating. These existing sites and systems create good 

jobs and significantly reduce carbon emissions, avoiding 248 million 

metric tons of CO2 per year. 

So tell me, what makes Pennsylvania such a good State for CHP 

and what can we do at our committee to increase deployment of 

these systems? 

Mr. SANDFORD. So one of the big drivers of the economics behind 

CHP is really the spark spread, and Pennsylvania and the Northeast are, you know, is one of the most attractive markets nationally 

for spark spread. So there is a good foundation. There are a number of Federal and some State programs to promote and incent 

CHP, you know, which is fantastic. 

And then there still is tremendous untapped opportunity to really convey the message to kind of first-time adopters who haven’t 

had CHP on their premise that are great applications to start to 

kind of understand the role of reliability and some of the other engagement tools we have talked about today, how now might be an 

even better time to think about CHP than in the past. 

Mr. DOYLE. Thank you. 

Mr. Ganesan, you highlighted the deployment of incredible cost 

savings of distributed energy resources in Brooklyn. As you explained, the cost of that project went from $1 billion down to a projected cost of 200 million. Now that is for an area that is experiencing an incredible population and economic boom. How can this 

be applied to more established cities? Does the rapid growth contribute to this dramatic decline in costs and deployment? 

Mr. GANESAN. I think that that particular example is a testament to the regulators as well as the local utility who were able 

to kind of piece together a solution to a complicated problem by 

bringing in different types of distributed technologies as opposed to 

simply the usual solution which is to build out additional capacity 

there. 

So I think that the lesson that can be applied elsewhere is, you 

know, a collaboration at all levels including, you know, utilities, 

vendors, regulators. That is the way that you can get these technologies deployed and lower the cost for consumers. 

Mr. DOYLE. Thank you. 

Mr. Jensen, in your testimony you explain that because of the 

new existence of consumer producer, you know, a cycle of innovation, cost improvement, and economic development will be set in 

motion. So tell me, how do we as policymakers accelerate this 

cycle? 

Mr. JENSEN. Well, one way, Congressman, I think, is again by 

your support for the U.S. Government’s R&D structure. The technology that is driven out of the labs has been absolutely instrumental to everything we do not just on the consumer side but on 

the utility reliability side as well. That I think is probably the single most valuable investment the Federal Government has made is 

in that lab structure and the technology that it has produced. 

90 

Mr. DOYLE. Yes. And I hope my colleagues are paying attention 

to that. We see more and more resources being taken away from 

Federal research. And because of the downward pressure on our 

budgets on nondefense discretionary spending that pot of money 

keeps going down this way. And I think it is penny wise and pound 

foolish for us to be cutting resources for R&D in this country. 

So thank you for your testimony. Mr. Chairman, thank you. I 

yield back. 

Mr. UPTON. The gentleman yields back. The Chair would recognize Dr. Murphy for 5 minutes. 

Mr. MURPHY. I appreciate that Mr. Chairman. Since we had a series of Texas questions it is only appropriate we have a couple of 

Pennsylvania ones as well. 

I want to address my first question to Mr. Stanford on this. We 

talked a little bit before of this about the low-hanging fruit of dealing with emissions, et cetera, is really conservation which is what 

your company works with. You showed me a little device. Could 

you have that with you that tell me how that works that a homeowner can use this, or is this more of a corporate—tell me how that 

works. 

Mr. SANDFORD. Yes. I mean today this is really a business application, but it could be used in a house, and this is our Panoramic 

Power. I talked earlier about our real-time device capture and this 

is a wireless current transformer that you can put on a circuit 

breaker or isolate a piece of equipment. And this signals real-time, 

six-times-an-hour data feeds up to the Amazon web and allows customers to see real-time what their energy is. 

And so it is really important, you know, for the 90-plus percent 

of nonresidential businesses that building controls today are costprohibitive for, this is a really powerful behavioral tool that allows 

customer to get alerts on their phone real-time, their air conditioning is running at an hour when they said that their air conditioner shouldn’t be running, to take action. Rather than a report 

45 days after the fact telling you what you should have done, it can 

tell you the next morning that that decision to not do anything cost 

you $75. 

Mr. MURPHY. So given that, have you worked out metrics in 

terms of if a number of businesses or residential facilities use this 

what we are looking at in terms of actually reducing how much energy has to be produced on the grid by power plants if—— 

Mr. SANDFORD. You know, we haven’t done the math, but I stated earlier what we are seeing with all of our deployments on average is Customer seeing in the 10 to 15 percent reduction and that 

is on the behavior. There are ancillary benefits of predictive maintenance and operational benefits to some manufacturing customers 

that would be on top of that. 

Mr. MURPHY. So given this, I mean our grid it is a strange thing 

to say, but sometimes the way our power plants and grid is set up 

it is based upon an assumption of inefficiency. I mean yours is 

working towards efficiency. And given that since there is the principle there is always in equal ops a reaction, my understanding is 

that part of the problem is, is the benefits associated with these advanced energy technologies may also be that there could be some 

91 

increased electricity costs, displacement of baseload resources, or 

decreased system reliability. Am I correct on that? 

Any other panelists may also answer that too, perhaps Mr. Jensen or Dr. Hannegan. Am I correct in that, that there are also 

some problems that could occur and how do we deal with that? 

Mr. SANDFORD. I mean clearly the whole grid is a delicate balance of supply and demand, and if consumers are really empowered 

and engaged and significantly change not only the amount of energy they use but when they use it there are certainly ramifications to the grid. But those could be net positive or negative depending on the situation. 

Mr. MURPHY. Mr. Jensen, do you have a comment on that? 

Mr. JENSEN. I think with respect to energy efficiency technologies 

there is nothing but upside for the grid and for our customers. We 

have estimated over the next 13 years we will save $4 billion for 

customers. That may result in some increase in price just because 

of the strange economics of the utility business, but overall cost for 

customers will fall by $4 billion. So from our perspective, energy efficiency is the first best option. 

Mr. MURPHY. Dr. Hannegan? 

Dr. HANNEGAN. In terms of operating the grid there is a tremendous amount of potential in that federally funded R&D that we 

have been supporting to take the advanced metering data, the grid 

sensor data from devices like the one Mr. Sandford showed and incorporate that into software that I referred to in my testimony, advanced distribution management software, and then the same at a 

building level to actually provide the sheet music for the storage 

and the electric vehicles and the solar panels and everything to 

work in balance. 

And when you do that, what we are finding is you actually have 

a more reliable solution not a less reliable solution because you are 

able to separate and then reconnect to the grid at times where it 

makes sense to operate as a microgrid versus connect into the larger scale resources. 

Mr. MURPHY. Now it was also referenced too that sometimes with 

the overproduction of power referencing that some utilities would 

offer or are offering customers an opportunity of free electricity on 

weekends when they could adjust that. Does that over time mean 

that energy companies would say let’s just produce less, we don’t 

need as many power plants? Is that another issue that comes up? 

Dr. HANNEGAN. It ends up increasing the asset utilization so you 

are able to more optimize the amount of resources that you are providing. You can optimize when and where and how you provide 

them. So platforms like Ms. Lamb’s blockchain now allow for trading among customers at a level below where we would trade with 

each other as utilities. 

You heard Mr. Sandford talk about their Saturdays program. I 

think that creates the opportunity for us in the utility space to design new programs, perhaps a flat rate program for our low and 

middle income consumers that takes the variable cost of energy 

and makes it a fixed one. 

Mr. MURPHY. What is fascinating about this whole thing, Mr. 

Chairman, is that energy use was very often passive for the residential customer and commercial customer; now it is very much acVerDate Mar 15 2010 13:58 Dec 11, 2017 Jkt 037690 PO 00000 Frm 00095 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X58PACONSUMERSSCANS120817\115X58PACONSUMERSPEN
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tive. Perhaps the democratization of the whole process, everybody 

with data has a vote in this process. Do you want to use it or not 

use it; higher price, lower price. Tremendous responsibility and 

really pretty a cool thing for consumers. 

Thank you, Mr. Chairman. I yield back. 

Mr. GRIFFITH [presiding]. I thank the gentleman and now recognize the gentleman from Iowa, Mr. Loebsack, for 5 minutes. 

Mr. LOEBSACK. Thank you, Mr. Chair. This has been a great 

panel. One of the advantages of sitting so far down is that I get 

to hear a lot of really great things from you folks and from my colleagues. 

I do want to state at the outset, along with Mr. Doyle and I am 

sure others here, the importance of this Federal R&D. I think Federal support for R&D, I really do believe that is really, really critical and I hope that we can continue to get really great bipartisan 

support for that. So thanks for those of you here who have expressed that concern that we consider to support R&D at the Federal level. 

I do want to begin, Mr. Ganesan—is that how we pronounce 

that? 

Mr. GANESAN. Exactly. 

Mr. LOEBSACK. All right, thank you. You mentioned that the cost 

of wind and solar has been dropping over the years. You may know 

that in Iowa, and the poor folks here they get to hear me talk 

about this all the time. But, you know, upwards of 37 percent of 

our electricity in Iowa is generated by wind. We are increasing our 

production of electricity via solar as well. I just did a solar farms 

tour not long ago in one of my counties. 

In terms of the cost for wind and for solar, you know that the 

PTC and the ITC, for example, are on kind of a 5-year phase out, 

if you will. How much are we talking about here as far as those 

credits? How has that contributed to the reduction in the cost of 

solar and wind? And it is great for consumers obviously. That is 

the bottom line for me. And if those were to be phased out entirely 

what are we looking at? 

Mr. GANESAN. So as you mentioned they are phasing out. They 

are on a phase-out trajectory that Congress agreed to. The market 

has priced that in. After they phase out there is no need for additional tax credits for those technologies. At this point right now, 

even if you have removed the value of the ITC and the PTC, wind 

resources in Iowa are cost-competitive with other generation 

sources. So the phase out is working and the market is working as 

well for those resources. 

Mr. LOEBSACK. And I guess we should credit the credits in that 

sense too for helping to create those industries in the first place. 

Mr. GANESAN. That is right. That is right. Those credits, when 

they started in play several decades ago now, they started spurring 

an industry and then the industry has matured to the point where 

it is cost-competitive now. 

Mr. LOEBSACK. Thank you. I want to move on to rural co-ops. 

And Dr. Hannegan—and I—well, of course as in so many rural 

parts of America we have so many of these RECs that are doing 

a great job, provide a great source of energy and great jobs. That 

is a big part of it. Going forward, when we talked about sort of all 

93 

these technological changes that RECs can incorporate as well, any 

idea of what kind of effects that might have on the jobs that now 

exist with respect to these RECs? 

Dr. HANNEGAN. Thank you for that question, Congressman. 

Many of our rural co-ops have extremely small staffs by the measure of my colleague here from Chicago, and one of the challenges 

that we are facing is how do we retrain—and we talked a lot about 

workforce training and retraining from other fields. 

But even in the position that they are in today, how do our linemen now do their work in light of all these new technologies coming on to the grid? How do our member service coordinators interact with these new customers that see things on the TV or read 

about something in a magazine and say I want this? How do we 

rethink our business model which at its core is about service to the 

member and kind of giving the members what they want? How do 

we rethink that and then maintain the financial viability because 

we are such a great employer and such a pillar in our communities? 

So it is forcing us to really rethink the cooperative principles in 

a new light. And all of us are working together collaboratively to 

sort through this. I will say it is very exciting because the technologies are evolving in such a way that now we have access to 

these wind and solar and renewable resources and these distributed generation technologies where the price points really are 

watched. And so we can now engage and think about new opportunities that we might not have even a decade ago. 

Mr. LOEBSACK. And how to retrain workers as well. 

Dr. HANNEGAN. And how do we train workers to deal with those 

and how do our members some of whom aren’t, you know, advanced technology experts either, how do they see the potential to 

get their needs met in a lower cost, more reliable, and perhaps 

more sustainable way. 

Mr. LOEBSACK. Right. And I don’t have a lot of time left. I don’t 

really have another question, but I do want to reiterate what has 

been said. Already my friend, Dr. Murphy from Pennsylvania, he 

and I agree on a good number of things and one of them is this 

democratization I think that he mentioned of individuals. It is one 

thing to talk about businesses and having more control over, you 

know, their energy consumption and what have you, but individual 

consumers in homes need to have more control as well. And I really 

hope that we can continue to advance the technology on that front 

too. 

I like some of these ideas about the weekend, you know, doing 

certain things on the weekend. We need to have more of that and 

more educational opportunities for individual consumers in residential areas too. So thanks to the panel and thank you, Mr. Chair, 

and I yield back. 

Mr. GRIFFITH. I thank the gentleman and now recognize Mr. 

Latta of Ohio for 5 minutes. 

Mr. LATTA. Well, thank you, Mr. Chairman. And thanks very 

much to our panel for being with us today. It has been a very good 

panel discussion today. 

And Dr. Hannegan, if I could, we are not picking on you here 

now, but my district has the largest number of electric co-ops in 

94 

the State and in your testimony you mentioned the electric coopters are naturally consumer-centric because they are memberowned, member-governed, and not-for-profit utilities. 

Would you discuss the process, and again this is—we have been 

kind of going around talking about this in different ways—but 

would you discuss the process that you use to determine which 

technologies to deploy to benefit consumers? And referred from Mr. 

Sandford a little bit earlier of the different devices with his testimony with Dr. Murphy, but are your consumers seeking a more active and dynamic role in the energy usage out there? 

Dr. HANNEGAN. Thank you, sir. I appreciate that question. Cooperatives are very heavily embedded in the communities that they 

serve. We are at the town parades. We are at the city hall meetings. We are at the local picnics and events. Folks stop by to pay 

their bill, still, with a check. Not everybody is paying electronically. 

And some folks even use that as an opportunity to connect with 

their neighbors. 

We have annual meetings and open board meetings where attendance from the community comes in and gives us all sorts of 

feedback. I and my senior team are also out there with our large 

customers, our towns, our communities, and even our individual 

folks that call in for a service outage. So we have no shortage of 

feedback and input as to what kinds of things our members desire 

and I know the same is true for other cooperatives. 

The challenge is that a lot of times when we hear from them in 

terms of different demands for things again it comes, as I mentioned in the previous question, in the form of reading an article, 

something in the newspaper and well, can we get that here? And 

I think that is forcing a pace of innovation on America’s cooperatives that really needs to be tempered by the local needs of the 

communities that we serve and their willingness to pay, their ability to absorb risk, and that is the challenge of cooperative boards 

all throughout the country is to make sure that we strike that balance appropriately. 

Mr. LATTA. Ms. Lamb, if I could ask you. In this past Congress, 

Peter Welch of this committee and I had the Internet of Things 

Working Group, but what other potential applications exist for the 

internet of things within the electricity sector and how would this 

lead to greater benefits for the consumer? 

Ms. LAMB. Well, distributed energy marketplaces that is enabled 

by the internet of things through blockchain will allow customers 

to choose, you know, based in response to market signals that are 

generated from that marketplace allow them to choose the source 

of their energy and time when they use that energy and to choose 

how much they are willing to pay for it. 

So for example, imagine a community energy marketplace where 

a neighborhood resident might choose to run their dishwasher or 

washing machine at a time when the peer-to-peer market has the 

lowest cost of energy, or a department store might dial back on air 

conditioning when a local utility transformer is overloaded because 

that local market is sending them the accurate price signal just 

making the entire local grid function more efficiently. 

Mr. LATTA. Well, thank you very much. 

Mr. Chairman, I yield back the balance of my time. 

95 

Mr. GRIFFITH. I thank the gentleman and recognize the gentleman from New York, Mr. Tonko. 

Mr. TONKO. Thank you, Mr. Chair. Certainly I want to thank our 

witnesses for testifying. We have heard some great examples of 

how technology has tremendous potential to improve efficiency, resiliency, reliability, and flexibility while empowering our consumers 

and our businesses out there, so I think this is the hallmark of a 

modernized grid. 

Before I ask questions I do want to associate my voice with the 

comments heard earlier today about Puerto Rico, Virgin Islands, 

and the territories in general and the need to have a sense of urgency that addresses this issue. Waiting until October until we perhaps agree on a bill is one thing, but there needs to be, I think, 

a spin-up immediately coming from this administration from the 

President. Focus on this as a high priority. People will be dying 

without the assistance here, literally. And so I underscore that 

with those comments made by my colleagues earlier. 

Mr. Ganesan, how much has consumer preference and in particular corporate consumer preference contributed to innovation 

and deployment of advanced energy technologies? 

Mr. GANESAN. Significantly. I think that we have seen just as an 

example data centers and of driving huge amounts of renewables 

coming on the grid. We see other large corporations doing other 

types of microgridding on more distributed resources. It is a major 

function. It is a major reason why there is such an increasing 

amount of advanced energy on the grid. 

Mr. TONKO. Thank you. My district is home to a high-tech, precision manufacturing that needs not just reliable power but quality 

power. Even a flicker of the lights can throw off their processes and 

cost them significantly. One solution they obviously reach to is exploring the microgrid. 

So Mr. Ganesan and Ms. Lamb, can you explain the potential for 

microgrids to ensure power for facilities where an outage is not an 

option, whether it is a military installation, a hospital, or this sort 

of precision manufacturer? 

Ms. LAMB. Sure. So again as several of my colleagues have mentioned, a grid that relies on a wide variety of energy resources is 

much more reliable. And those distributed resources can be distributed generation, active demand management, or microgrids that 

can function in isolation. And to the extent that a local marketplace enables these energy resources to be developed and deployed 

and to function in real-time in a self-executing way so that the different loads and generation on the grid can respond in real-time, 

you know, that is exactly the sort of energy future that we are hoping to enable. 

Mr. GANESAN. If I could just answer that, I think there is a reason why data centers are going, or use advanced energy technologies and that is because they care about green, but not green 

environmentally. One minute of data center outages costs about 

$10,000, so having a multitude of advanced energy technologies 

helps hedge the risk of local reliability problems. 

Mr. TONKO. All right. When I was at NYSERDA—before this job 

I headed NYSERDA and data centers were a prime focus because 

of the energy usage. Mr. Ganesan again, do you believe that all the 

96 

benefits of advanced energy resources, the reduced emissions and 

air pollution, increased reliability and resiliency amongst others, 

are adequately compensated by the market currently? 

Mr. GANESAN. I think the simple answer is no. I think that there 

are a whole host of services that advanced energy provides in terms 

of resiliency, reliability, not even going into the environmental 

sphere, that are not compensated in the market. When you price 

in other environmental attributes, it is a very State-by-State issue. 

Mr. TONKO. Are there other incentives that could ensure that 

these technologies are being property valued? 

Mr. GANESAN. Well, I think a lot of this is a State issue, but 

when you are talking about wholesale markets or competitive markets that Congress oversees, I think ensuring that some of the attributes of advanced energy are eligible for compensation is the key 

way to get there. 

Mr. TONKO. And Ms. Butterfield, cost-competitive storage resources are going to build much more reliability and resilience into 

a modernized grid, but I would like you to clarify something. We 

often think of storage in conjunction with wind and solar since it 

is a nice complement to those variable resources, but storage for 

the most part is fuel neutral, is it not? 

Ms. BUTTERFIELD. Absolutely fuel neutral. You can connect it to 

a storage system, but you can just have it connected to the grid. 

Mr. TONKO. OK. And so is storage able to provide significant benefits to the grid even in areas of the country without high penetration of renewable resources? 

Ms. BUTTERFIELD. Absolutely. 

Mr. TONKO. Well, I thank you for that. I just wanted to clarify 

that. It should be clear that advanced energy technologies are not 

being supported or adopted because of some environmental policy 

agenda. They provide tremendous benefits to the grid in all areas 

of our country and are desired by consumers especially businesses 

that know reducing their energy bill is going to save them money 

and in the case of the private sector make them more competitive. 

So as we go forward I hope we keep that in mind. 

And with that I yield back, Mr. Chair. 

Mr. GRIFFITH. I thank the gentleman and recognize the gentleman from West Virginia, Mr. McKinley. 

Mr. MCKINLEY. Thank you, Mr. Chairman. Unfortunately, Peter 

Welch is not here and he and I have been co-chairing, for the last 

5 years we have been co-chairing the Energy Efficiency Caucus. 

So Mr. Jensen, we agree with the potential of $4 billion in savings with that, something we have been advocating for some time, 

and so I applaud your comments that several of you have made 

about energy efficiency with that. But I would like to spend the 

bulk of my time dealing with the issue of the microgrids as it relates to rural America. 

Oddly enough, I haven’t heard that term used here with you all 

when we are talking about rural areas. I have heard about Brooklyn, St. Louis, Boston, New York and elsewhere about the 

microgrid, but I want to see, I would like to understand more about 

how that would work in rural areas. Because we don’t have a good 

track record in West Virginia that the aversion and the lack of 

97 

cost-effectiveness we can’t get broadband into every community. We 

can’t get good cell phone service. 

So I am curious about how we might be able to incentivize, or 

what are the advantages or incentives that might be necessary to 

develop microgrids in some of these little communities that we 

have, if there is—if I guess the framework would—the advantages 

of having a microgrid system? So would someone—I would think— 

I would think it would be cost-effective to have a thousand-megawatt facility operating keeping my cost down as low versus a 50- 

megawatt facility, I have got to think the cost is going to be higher. 

And in West Virginia despite what Mr. Ganesan said earlier, I 

think in that PJM market when the polar vortex hit I don’t know 

of, I am unaware of any coal-fired power plant that went down in 

West Virginia. I am aware of gas-fired facilities that shut down. So 

if someone could tell me a little bit about the advantages or what 

would we need to do congressionally to help if this microgrid system could work in rural areas. 

Dr. HANNEGAN. Congressman, I would be happy to take that one 

on. We serve rural areas. That is what rural cooperatives do and 

there are a number of examples where microgrids or microgrid-like 

activities are already creating great value for our members. 

One of them in New Mexico, a rural part of New Mexico, the cooperative there installed a solar-fueled microgrid on the community 

college campus that was nearby and did so in a way where that 

generation resource, when it wasn’t serving the needs of the community college, provided energy supply to the surrounding community. And the resulting economics were comparable with what you 

would get from bringing this community into the grid. Extending 

the lines out there which are significantly costly and time-consuming in a lot of jurisdictions, instead of doing that they decided 

on a local set of resources because the economics were comparable 

and they were also able to provide a service, not just the community, the college, but to the community. 

The same is true in places like Alaska and other parts of the 

country that have rural-like features where you are improving resilience and reliability of supply at a comparable cost point without 

having to extend the infrastructure in an expensive way. 

The other area where we look at it in our service territory is for 

natural hazards. So we don’t have hurricanes, but we have snowstorms and other severe weather events in Colorado, places where 

there are tornadic activities in the Midwest and increasingly up 

and down the East Coast. And they also want to harden their infrastructure and Mr. Jensen can speak to that. And there a 

microgrid solution helps in addition to the grid supply, because you 

can have the power plants generating in bulk and certainly the 

economy of scale helps there, but if you have no way to get that 

power to the consumer then a local solution is the better option. 

Mr. MCKINLEY. If you would, please, I don’t think you have it 

here today, but I would like to understand maybe a listing of some 

of the microgrid systems in rural America. Because again I am 

working under the premise if we can’t get broadband why do we 

think we are going to have a microgrid system? 

Dr. HANNEGAN. We would be happy to provide that for the 

record. 

98 

Mr. MCKINLEY. Provide some examples of that so we can learn 

from that. 

Dr. HANNEGAN. Absolutely. 

Mr. MCKINLEY. OK. Mr. Chairman, I yield back the balance of 

my time. 

Mr. GRIFFITH. I thank the gentleman and recognize the 

gentlelady from Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman. And thank you to our 

witnesses today for an outstanding hearing. 

I think the transformation of electric power generation and the 

modernization of the grid is one of the most exciting areas of public 

policy right now. And there are extraordinary benefits to distributed energy, microgrids, smart meters, storage, and management. 

They include cost savings to consumers, higher paying jobs in these 

new sectors, and greater resiliency for the grid overall. 

Last Congress I sponsored the Clean Distributed Energy Grid Integration Act. I am updating that bill right now based upon because the technology evolved so quickly. And I recommend you take 

a look at that bill and give me some recommendations on it because we have to do better here in America and I heard what you 

said, it is inevitable. The technology is moving quickly. We have to 

think about the architecture of how we—of our new grids. 

And now we have an opportunity, one we didn’t ask for, but one 

that is upon us with as we begin to understand the devastation 

from Hurricane Irma, from Hurricane Maria, it appears that we 

have never had an electric grid as decimated as we do now, in 

Puerto Rico especially. And I was reading a little bit from 

Bloomberg that said that in Puerto Rico the power plants are clustered along the southern coast and they have large transmission 

lines across the country. The fact that they will be without electricity from 4 to 6 months, just put yourself in the shoes of the people that live there and how they recover. 

So I appreciate the comments of Chairman Upton, Mr. Olson, 

Mr. Rush, and my colleagues here today. We need to harness everything we know about the modern grid to put it to work now, especially in Puerto Rico. The electric utility leaders in America need 

to help us do this. Usually in emergency aid packages, you know, 

they are focused on repairs, but now they are more and more focused on resiliency for the future. 

In the past, and I know in Superstorm Sandy in that emergency 

aid package there was no line item, really, for the Department of 

Energy. It seems like it is time now to begin to really focus on rebuilding the grid there in a modern way. And we need to do it right 

because you are asking taxpayers all across America to fund these 

emergency aid packages and why would we rebuild the grid? It was 

already known as Bloomberg reported, it was kind of an aging, outdated grid. It had already the Puerto Rico Energy Commission and 

Puerto Rico Electric Power Authority already were in great debt 

owing billions of dollars to bond holders. 

So if you are going to ask American taxpayers to help rebuild the 

grid, we need to do it so that it is resilient for the future so that 

you don’t keep calling upon emergency aid packages, that this is 

going to work to help rebuild the island, the economy there, serve 

the people for the future. Can you all comment on that? Can you 

99 

give us, get into a little more granularity on what you would recommend as an emergency process to focus on? 

We have FEMA with some DOE personnel and electric utility operators there now, but who would like to explain what would be 

needed in the near term? Is this a competition type of thing? Is the 

DOE in the lead based upon the technological tools they have? Who 

can make some specific recommendations for us? 

Dr. HANNEGAN. Congresswoman, I think you hit on it with your 

last point. There is a tremendous growth in capacity of our grid design and planning tools now to integrate both the traditional utility 

solutions—the power plants, the transmission lines—with these 

new distributed energy technologies that are emerging onto the 

scene. 

Under the Grid Modernization Initiative there is a series of 

projects that DOE is supporting with the national labs and utility 

partners that are employing these new tools. One suggestion, just 

off the cuff, might be to inquire with the Department and the labs 

as to would they be able to deploy these new tools in support of 

redesigning the Puerto Rican grid for much more resilience to this 

kind of activity going forward. It is now sadly a blank sheet of 

paper. 

So can we rebuild and rebuild better as we have done in other 

communities that have been hit by tornadoes or winter storms or 

Superstorm Sandy as you mentioned? 

Ms. CASTOR. Who else can make some specific recommendations 

for us as we move forward? Mr. Jensen, I see you thinking it over. 

Mr. JENSEN. Yes, I am thinking. I am not sure I am coming up 

with a great response. I think Dr. Hannegan sort of hit it on the 

head. We have the know-how and the resource in the continental 

United States to do this is in the right way in a way that will make 

that system much more resilient. I think the challenge is how do 

you marshal those resources and provide some assistance in the 

near term? I think the concern is that we will be overwhelmed with 

just the problem of getting some basic power back up to those folks. 

But I think we have learned lessons in places like Haiti with the 

earthquake and so forth where rather than trying to come in and 

solve the big problem all at once, by solving smaller problems you 

can actually build a more sustainable solution for the long run. 

Ms. CASTOR. Very good. Thank you and I yield back. 

Mr. GRIFFITH. I thank the gentlelady and recognize the gentleman from Michigan, Mr. Walberg. 

Mr. WALBERG. Thank you, Mr. Chairman, and thanks to the witnesses for being here today. 

Ms. Butterfield, recently this subcommittee held a hearing to examine the issues relative to PURPA reform. I have been very interested in that myself feeling that there is potentially some significant modernization we can do in reform with PURPA. Do you believe that your storage technologies should qualify under PURPA 

as a qualifying facility? 

Ms. BUTTERFIELD. Probably not. We are sited behind the meter 

and we typically do not export to the grid. You know, in the changing policy landscape it is possible that a system sited at a customer’s facility could export to the grid. At this time it is the paperwork and the registration is just too cumbersome. 

100 

Mr. WALBERG. I appreciate that. It is good to know where people 

are positioned in the field as we look toward that, so thank you. 

Mr. Jensen, in your testimony you state the electric industry has 

a choice, either innovate or go the way of the Rolodex and the pay 

phone. I know of both of those. 

Mr. JENSEN. So do I, yes. 

Mr. WALBERG. So do you feel there are some within the electric 

industry hesitant to innovate even despite all the benefits it could 

bring consumers, and if so, why? 

Mr. JENSEN. I don’t know that I would characterize it as hesitant 

to innovate. I think everyone recognizes the need to do that. I think 

depending on the structure of your company given the jurisdiction 

that you operate in you will have different incentives to put that 

innovation into place and offer it to customers versus use it on the 

grid. 

We have the advantage of being in a competitive State. We don’t 

own any generation at Commonwealth Edison, and so it is much 

easier for us to align with what our customers are trying to do and 

to try and deploy that information for their benefit. 

Mr. WALBERG. Mr. Sandford, in your testimony you explain that 

one of the primary trends driving consumer behavior is 

digitization. How does moving from the analog world to a digital 

world affect the way consumers interact with the grid? 

Mr. SANDFORD. Yes. So I think it is about empowering customers 

to understand that they have choices and give them actual signals 

to act on their choices. I think in the traditional analog world our 

customers were, you know, largely data ignorant and they didn’t 

know exactly how they were using it. It wasn’t something that they 

chose and, you know, it is really exciting to see at both the residential and business level when given the tools and the insights and 

the visibility to see customers positively engaged and for their own 

benefit. 

Mr. WALBERG. What causes them to do that more significantly? 

Mr. SANDFORD. I think, I mean I come back to for the business 

customers it is all about cost savings and reliability and if you can 

show me a way to learn more about how to run my business more 

efficiently either by using less energy or changing my process I am 

going to do that. 

I think for residential customers, the Power-to-Go example I 

have cited earlier today in my testimony, it is really about a customer who, you know, that next dollar that he or she is spending 

on energy is a precious, scarce dollar, and if they can do anything 

in their power to go put that to a better use, they are going to do 

that. And so I think you are going to have people driven by different factors. 

Mr. WALBERG. Thank you. Mr. Chairman, I yield back. 

Mr. GRIFFITH. I thank the gentleman. And, seeing no Members 

on the other side of the aisle, I recognize myself for 5 minutes. And 

thank you all very much. It has been a very interesting hearing. 

I have been really interested in some of the comments about 

rural areas and Puerto Rico because I think as we rebuild that grid 

system we may learn some things for the rural areas as well. I represent a district somewhat like Mr. McKinley’s who brought that 

issue up earlier. Mountainous areas of western Virginia as opposed 

101 

to West Virginia, but I do think we may be able to learn some 

things and hopefully we will be able to help the folks in the U.S. 

territory of Puerto Rico as well as learning some things that might 

help my district. 

I was, you know, it was interesting when we asked and I am not 

going to ask you all to give it to me today necessarily, but if you 

can think of some other aspects for rural microgrids that would be 

helpful. Because, you know, I have some small areas that might be 

30 to 45 minutes, maybe even an hour from the nearest community 

college. That was one of the examples. 

And you have a mountain or two in between the two, which is 

why I think Puerto Rico makes sense because all the production is 

one side of the mountain apparently, or most of it, and they are 

shipping it to the other side. But let me ask you about that in another way, because we are looking at some projects in my district 

where we create maybe a hydro pump storage inside of an existing 

or prior use coal mine using that for peak production. 

Could that also be used to shore up the grid as a microgrid within the region in the event that there was some, a snowstorm was 

mentioned. That is certainly a problem for us from time to time. 

Occasionally windstorms where trees come falling down or in the 

snowstorms, you know, sometimes you lose, a piece of the mountain 

comes falling down onto your grid. 

So anybody want to comment on those thoughts or any thoughts 

that you all might have that you would like to add to your previous 

comments on rural? 

Dr. HANNEGAN. I am happy to jump in, Congressman. We at 

Holy Cross have actually three megawatts of our generation coming from capturing the methane, the natural gas coming out of a 

no longer operational coal mine. And so, for your part of the State 

as well as Congressman McKinley’s State of West Virginia, there 

is a lot of hidden generation opportunity there that also by the way 

does a fair amount of environmental good. 

We also have cooperatives all throughout the West that are using 

irrigation ditches that run at the top of the hill. They are diverting 

some water down through a micro-hydro turbine that is anywhere 

from 10 to 100 kilowatts in size and that provides the local generation for that part of their community. 

Mr. GRIFFITH. So it doesn’t go to the general grid, it stays in that 

area most of the time. 

Dr. HANNEGAN. And that is one of the principles you may look 

at for those microgrids that are completely self-contained, if a combination of distributed solar, if they have access to local resources 

like a coal mine methane or hydro, you design around that and ask 

how do we then pair that generation with energy efficiency and 

smart design and the things you are hearing from my colleagues 

to make supply and demand equal out in that area. 

Mr. GRIFFITH. So what would you do though, because what we 

are looking at and nobody has signed on the dotted line yet is a 

closed-loop hydro system inside of a mine. But right now the plan 

would be is that that storage that we are using that power storage 

would be for peak periods in the more urban areas in PJM, not for 

my folks in southwest Virginia. 

102 

So how would you hook that in because—and let me throw another wrinkle in this—most likely it would be, the people who 

might build this facility are not the people who provide the electricity in that particular area of the world. And we are still predominately a controlled State, regulated State. 

Dr. HANNEGAN. As any of my co-panelists will tell you, it is always about where can you have the most economic value for the 

resource that you are building. And I think in the case of the developers of the project, you reference they are looking at that peak 

market in PJM and saying that is where the profitability may 

exist. The question is do they get a similar value of profitability by 

providing services to the local community, and if not, are there 

changes in the design of that local microgrid that may encourage 

that profitability? 

So when I referred earlier to the design and planning tools that 

the labs are developing, our typical design and planning tools don’t 

look at both sets, both the bulk power grid and the microgrid. We 

are getting there now and that would be something that your local 

communities might want to look into with the help of one of the 

national labs that happens to be nearby. 

Mr. GRIFFITH. All right. I appreciate that very much. Thank you 

all so very much. I will now yield back my time, and it appears 

that it is time to close the hearing as well. 

So, pursuant to committee rules, I remind Members they have 10 

business days to submit additional questions for the record, and I 

ask that witnesses submit their responses within 10 business days 

upon receipt of those questions. And without objection—no objection—the subcommittee is adjourned. Thank you all so very much. 

[Whereupon, the subcommittee was adjourned at 12:18 p.m.] 

[Material submitted for inclusion in the record follows:] 

103 


GREG WALDEN, OREGON 

CHAIRMAN 

Mr. Arvin Ganesan 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

~ongrc~~ of tbe 'ijltntteb ~tate~ 

:i!}ou!lc of l\cpre!lentatibe!l 

COMMITIEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 

October 30, 2017 

Vice President, Federal Policy 

Advanced Energy Economy 

1000 Vermont Avenue, N.W.; Third Floor 

Washington, DC 20005 

Dear Mr. Ganesan: 

Thank you for appearing before the Subcommittee on Energy on Tuesday, September 26,2017, 

to testify at the hearing entitled "Powering America: Technology's Role in Empowering Consumers." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to penn it Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (1) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions with a 

transmittal letter by the close of business on Monday, November 13, 2017. Your responses should be 

mailed to Allie Bury, Legislative Clerk, Committee on Energy and Commerce, 2125 Rayburn House 

Office Building, Washington, DC 20515 and e-mailed in Word format to Allie.Bury@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

Fred Upton 

Chairman 

Subcommittee on Energy 

cc: The Honorable Bobby L. Rush, Ranking Member, Subcommittee on Energy 

Attachment 
104 


the business voiee of advanced energy 

Chairman Fred Upton 

Energy Subcommittee, House Energy and Commerce Committee 

2125 Rayburn House Office Building 

Washington, DC 20515 

Dear Chairman Upton, 

Thank you for your question regarding our thoughts on technology-neutral policy at the federal 

and state level. Please note that Arvin Ganesan is no longer with Advanced Energy Economy. As 

AEE's Head of Congressional Affairs, I will answer the question addressed to him. For reference, I 

have included your question below. 

1. You testified that electricity policy at the Federal level should be technology-neutral. 

However, you are aware that several of the RTO and ISO markets are currently 

considering market changes to accommodate certain State policies that favor 

specific types of generating resources. What are your thoughts on this issue? 

As stated in AEE's written and oral testimony to the Committee, we believe that the federal 

government should encourage technology-neutral markets. Markets that allow for competition 

between all technologies benefit both the grid and consumers by allowing all energy resources to 

provide valuable grid services based on price and performance, rather than by characteristics of 

any particular resource. Markets should value resources based on what they provide, not what 

fuel or technology they utilize. Policies, such as the Department of Energy's proposed rulemaking 

on grid resilience, written to favor one or two resource types based on arbitrary characteristics, 

like on-site fuel supply, should be opposed by Congress and rejected by the Federal Energy 

Regulation Commission (FERC). 

We are aware of RTO and ISO markets that are considering market rule changes to accommodate 

certain state policies. First, we support a state's right to enact policies within its lawful authority. 

While we do not always agree with a particular policy, we do believe that a state has the right to 

enact policies within their traditional authorities, including with respect to generation resources 

used to serve customers and the environmental impacts of energy production. Second, we 

generally support efforts by RTOs and ISOs to reform their markets to address the rapid 

transformation of the energy system, namely increased usage of advanced energy resources, 

including demand response, natural gas, wind, solar, and storage, among others. We strongly 

support efforts by RTOsjiSOs and FERC that seek to reduce market barriers to advanced energy 

resources, such as energy storage and aggregated distributed energy resources. 

Any market rule changes proposed by an RTO/ISO to address changing conditions on the grid 

should not preclude technologies from competing to provide a grid service. For example, in 

response to the Polar Vortex, PJM enacted a "Capacity Performance" market construct that 

essentially requires all capacity resources to be available on a continuous basis year-round (or 

face potentially significant non-performance penalties). While we applaud the efforts of PJM and 

other RTOs to continually address risks to grid reliability, this rule effectively precludes many 

www.aM.net @aeenet Washington DC San Francisco Boston 
105 


advanced energy resources, particularly seasonal demand response resources, from participating 

in the PJM market and providing reliability benefits to the grid. Ironically, demand response was 

relied upon by PJM during the Polar Vortex to maintain reliable service and was credited- along 

with wind energy- with keeping the lights on. 

Congressional Affairs 

Advanced Energy Economy 

dreed@aee.net I 570-877-3549 

AEE OFR I 2 
106 


GREG WALDEN, OREGON 

CHAIRMAN 

Ms. Monica Lamb 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

C!CongttS'S' of tbt mtntteb ~tateS' 

j!)ouile ot l\epreilcntatibeil 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 

October 30, 2017 

Director, Regulated Markets 

L03 Energy 

621 Degraw Street 

Brooklyn, NY 11217 

Dear Ms. Lamb: 

Thank you for appearing before the Subcommittee on Energy on Tuesday, September 26,2017, 

to testify at the hearing entitled "Powering America: Technology's Role in Empowering Consumers." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (1) the name of the 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions with a 

transmittal letter by the close of business on Monday, November 13, 2017. Your responses should be 

mailed to Allie Bury, Legislative Clerk, Committee on Energy and Commerce, 2125 Rayburn House 

Office Building, Washington, DC 20515 and e-mailed in Word format to Allie.8urvliilmail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

Z-!~ Chairman 

Subcommittee on Energy 

cc: The Honorable Bobby L. Rush, Ranking Member, Subcommittee on Energy 

Attachment 
107 


L03ENERGY 

The Honorable Fred Upton, Chairman 

The Honorable Bobby Rush, Ranking Member 

Committee on Energy and Commerce, Energy Subcommittee 

2126 Rayburn House Office Building 

United States House of Representatives 

Washington, DC 20515 

Dear Chairman Upton and Ranking Member Rush: 

November 13, 2017 

Thank you for inviting me to testify on behalf of L03 Energy at the hearing on 

September 26, 2017 titled "Powering America: Technology's Role in Empowering 

Consumers." We were honored and delighted to have the oppor~unity to explain our 

technology application and how it can engage consumers in the electric grid, giving 

them more choices in how and when to use electricity. 

Attached please find the responses of L03 Energy to the additional questions 

for the record. Feel free to contact me should you or any Member of the Committee 

have further questions regarding L03 Energy, transactive energy, or blockchain. 

Sincerely, 

Monica Lamb 
108 


Committee on Energy and Commerce 

Subcommittee on Energy 

Powering America: Technology's Role in Empowering Consumers 

Responses to Additional Questions for the Record by L03 Energy 

Questions from Chairman Upton 

1. Question: What involvement did the State Public Service Commission, 

New York ISO, and local utility have in your Brooklyn Microgrid 

project? 

Response: 

L03 Energy has selected New York as the location for its initial project because 

the state's Public Service Commission ("PSC") and Independent System Operator 

("NY! SO") had already begun to implement new regulations and pilot projects that 

encourage distributed energy resources to participate in a dynamic marketplace for 

distributed energy services. The PSC initiated the Reforming the Energy Vision 

process in 2015, and NY ISO began releasing information regarding its pilot program 

for distributed energy resources in early 2017. These are ongoing processes 

undertaken by the PSC and NY! SO, and are not specifically related to the Brooklyn 

community energy network under development by L03 Energy. The project will 

operate within the existing regulatory structures and pilot programs established by 

these entities, in cooperation with Consolidated Edison as the distribution services 

provider in the local area. 

(a) Question: Do you see a need for new policies or regulations related to 

blockchain energy platforms? 

Response: 

In order to facilitate the implementation of dynamic markets that will 

encourage the deployment of distributed energy resources and infrastructure 

upgrades in the most efficient manner, Federal policy can help to streamline the 

integration of new community energy marketplaces with the existing competitive 

wholesale markets operated by the Independent System Operators and Regional 

Transmission Organizations under FERC's jurisdiction, for example, through 

NYISO's initial pilot program described above. 

Federal policy can clarify that behind-the-meter consumer energy assets 

should access energy markets on equal footing with in-front-of-the-meter energy 

assets, and that distributed energy resources like batteries, thermal storage, active 

demand management, microgrids, and other hybrid energy resources can transact 

energy services in the same manner as traditional generation. 
109 


GREG WALDEN, OREGON 

CHAIRMAN 

Mr. Val Jensen 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

<!Congres-s of tbe Wnfteb ~Mates 

~ou!ie of ll\epre!icntatibc!l 

COMMITIEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 

October 30, 2017 

Senior Vice President, Customer Operations 

CornEd 

P.O. Box 805379 

Chicago, IL 60680 

Dear Mr. Jensen: 

Thank you for appearing before the Subcommittee on Energy on Tuesday, September 26, 2017, 

to testify at the hearing entitled "Powering America: Technology's Role in Empowering Consumers." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains 

open for ten business days to permit Members to submit additional questions for the record, which are 

attached. The format of your responses to these questions should be as follows: (1) the name ofthe 

Member whose question you are addressing, (2) the complete text of the question you are addressing in 

bold, and (3) your answer to that question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions with a 

transmittal letter by the close of business on Monday, November 13, 2017. Your responses should be 

mailed to Allie Bury, Legislative Clerk, Committee on Energy and Commerce, 2125 Rayburn House 

Office Building, Washington, DC 20515 and e-mailed in Word format to Allic.Buryia)mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

Sincerely, 

1(-::;!tfo Chairman 

Subcommittee on Energy 

cc: The Honorable Bobby L. Rush, Ranking Member, Subcommittee on Energy 

Attachment 
110 

Æ 


November 13, 2017 

Allie Bury 

Legislative Clerk 

Committee on Energy and Commerce 

2125 Rayburn House Office Building 

Washington, DC 20515 

Dear Ms. Bury: 

ComEd. An Exelon Company 

I am responding to the Honorable Fred Upton's October 30,2017 correspondence in which he posed an 

additional question to me in connection with my September 26, 2017 testimony before the 

Subcommittee on Energy's hearing entitled "Powering America: Technology's Role in Empowering 

Customers." 

Question: 

1. With little to no growth in electricity consumption, you're confident that our traditional utility 

business model is 11gone." As new sources of electricity generation attempt to compete in this 

environment, is financing easily available to these developers or are these proposals seen as 

too risky? 

Answer: 

The availability of financing for new generation depends on many factors including the type of 

generation, state and federal incentives (e.g. tax credits and, renewable energy credits), the 

creditworthiness of the developer, the state of credit markets generally and the market into 

which the output of the generation will be sold. Apart from temporary constrictions due to 

general credit tightness and uncertainty over state and federal policy, financing has been 

available for generation so long as developers can demonstrate the marketability of the output. 

Thank you for your interest. 

Sincerely, 

-

Val R. Jensen