U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

73–745 2012

THE FUTURE OF THE GRID: PROPOSALS FOR 

REFORMING NATIONAL TRANSMISSION POLICY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 12, 2009 

Serial No. 111–48 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


rfrederick on DSK5VPTVN1PROD with HEARING
COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

(II) 


rfrederick on DSK5VPTVN1PROD with HEARING
(III) 

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

EDWARD J. MARKEY, Massachusetts, Chairman 

MICHAEL F. DOYLE, Pennsylvania 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

BARON HILL, Indiana 

DORIS O. MATSUI, California 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan 

RICK BOUCHER, Virginia 

FRANK PALLONE, New Jersey 

ELIOT ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

JANE HARMAN, California 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

JOHN BARROW, Georgia 

DENNIS HASTERT, Illinois 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

STEVE BUYER, Indiana 

GREG WALDEN, Oregon 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

MICHAEL C. BURGESS, Texas 


rfrederick on DSK5VPTVN1PROD with HEARING

rfrederick on DSK5VPTVN1PROD with HEARING
(V) 

C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachussetts, opening statement ................................................... 1 

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

opening statement ................................................................................................ 3 

Hon. Jay Inslee, a Representative in Congress from the State of Washington, 

opening statement ................................................................................................ 6 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 7 

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 9 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 10 

Hon. Steve Scalise, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 11 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 12 

Hon. Jane Harman, a Representative in Congress from the State of California, opening statement .................................................................................... 13 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 13 

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

New Jersey, opening statement .......................................................................... 14 

WITNESSES

Jon Wellinghoff, Chairman, Federal Energy Regulatory Commission ................ 15 

Prepared statement .......................................................................................... 18 

David C. Coen, First Vice President, National Association of Regulatory Utility Commissioners on Behalf of NARUC ............................................................ 26 

Prepared statement .......................................................................................... 28 

Lauren L. Azar, Commissioner, Wisconsin Public Service Commission ............. 47 

Prepared statement .......................................................................................... 50 

Paul J. Hibbard, Chairman, Massachusetts Department of Public Utilities ...... 63 

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

Richard Halvey, Energy Program Director, Western Governors’ Association .... 73 

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

Ralph Izzo, Chairman and CEO, Public Service Enterprise Group .................... 118 

Prepared statement .......................................................................................... 121 

James Nipper, Senior Vice President, American Public Power Association ....... 123 

Prepared statement .......................................................................................... 126 

Glenn English, CEO, National Rural Electric Cooperative Association ............. 144 

Prepared statement .......................................................................................... 147 

Reid Detchon, Executive Director, Energy Future Coalition ............................... 155 

Prepared statement .......................................................................................... 157 

Joseph Welch, President and CEO, ITC Holdings Corporation ........................... 173 

Prepared statement .......................................................................................... 175 

Chris Miller, President, Piedmont Environmental Council ................................. 212 

Prepared statement .......................................................................................... 214 

David Joos, CEO, CMS Energy Corporation ......................................................... 229 

Prepared statement .......................................................................................... 231 

SUBMITTED MATERIAL

Letters of June 11, 2009 from FERC to Mr. Markey, submitted by Ms. 

Baldwin ................................................................................................................. 251 


rfrederick on DSK5VPTVN1PROD with HEARING

rfrederick on DSK5VPTVN1PROD with HEARING
(1) 

THE FUTURE OF THE GRID: PROPOSALS FOR 

REFORMING NATIONAL TRANSMISSION 

POLICY 

FRIDAY, JUNE 12, 2009 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:24 a.m., in Room 

2123, Rayburn House Office Building, Hon. Edward J. Markey 

[chairman of the subcommittee] presiding. 

Present: Representatives Markey, Inslee, Butterfield, McNerney, 

Welch, Pallone, Green, Capps, Harman, Baldwin, Matheson, Barrow, Waxman (ex officio), Upton, Whitfield, Pitts, Scalise and Barton (ex officio). 

Staff Present: Matt Weiner, Legislative Clerk; John Jimison, 

Senior Counsel, Energy; John Beauvais, Counsel; Jeff Baran, Counsel; Melissa Bez, Professional Staff Member; Mtichell Smiley, Special Assistant; Caren Auchman, Communications Associate; Andrea 

Spring, Minority Professional Staff; Mary Neumayr, Minority 

Counsel; Peter Kielty, Minority Legislative Analyst; and Amanda 

Mertens Campbell, Minority Counsel. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. Welcome, ladies and gentlemen, to the subcommittee on energy and environment on this very, very important 

hearing on the future of the grid and the proposals for reforming 

the National Transmission Policy. There is no more central issue 

to resolve here than this question. 

Three weeks ago, the Energy and Commerce Committee passed 

the American Clean Energy and Security Act of 2009. This landmark legislation on which the House will soon vote will revolutionize our Nation’s energy policy, creating millions of clean energy 

jobs, saving consumers billions of dollars in energy costs, and 

unleashing trillions in new investment. 

The 21st Century grid will play a central role in this revolution. 

Wheeling the country’s vast wind solar and geothermal resources 

to market. Enabling the electrification of our transportation system 

and multiplying energy productivity through smart-grid technologies. 

The Waxman-Markey bill recognizes this role by establishing a 

new framework to plan the grid of the future. We task the Federal 

Energy Regulatory Commission with establishing national grid 


rfrederick on DSK5VPTVN1PROD with HEARING
2 

planning principles which it will use to support and coordinate regional planning processes across the country. 

Within 3 years, the commission must report back to Congress on 

the results of this effort together with recommendations for further 

congressional action if necessary. Some believe we should go further by substantially expanding Federal authority to plan and site 

new transmission lines. That includes overriding State decisions to 

reject proposed lines and using Federal eminent domain authority 

if necessary. I think we need to look closely and skeptically whether such a step is warranted at this juncture. 

I urge caution for three reasons. First, if it ain’t broke, don’t fix 

it. As several of our witness emphasize, there are a number of innovative and promising bottom-up planning processes now underway from New England to the Midwest to the West. We should 

give those processes time to succeed. 

Moreover, as Commissioner Azar’s testimony emphasizes, one of 

the greatest obstacles to developing the grid of the future is not a 

lack of Federal authority but rather uncertainty as to what energy 

policy that grid must serve. By establishing a national renewable 

electricity standard, a firm cap on carbon pollution, and efficiency 

programs that will dramatically curb growth in electricity demand, 

the Waxman-Markey bill will provide this certainty needed to 

guide private, State and regional development of the transmission 

system of tomorrow. 

Second, look before you leap. Transmission is amongst the most 

complex and controversial aspect of energy policy. Today’s hearing 

is literally the first hearing in this committee in this Congress or 

the last Congress on transmission. We cannot afford to take a 

ready-fire-aim approach in this area. 

Further there appears to be little common grounds amongst core 

stakeholders. To give just one example, we invited the Edison Electric Institute, which represents investor-owned utilities that own 

most of the Nation’s transmission system, to testify today. EEI cordially declined, in part because it was unable to agree on a witness 

that could represent the disparate views of its membership. The 

testimony before us confirms that it is very tough to find agreement in this area. 

And third, to a man with a hammer, everything looks like a nail. 

Precipitous action could result in a policy that is ill-suited to address the problems at hand and could lead to perverse consequences. For example, the Western Governors’ Association will 

testify today that, ‘‘Western Governors see little benefit in preempting State transmission line permitting processes,’’ because, 

‘‘the major hurdle for permitting transmission in the West has been 

securing permits from Federal agencies.’’ 

In other words, it is the Federal Government, not the States that 

is the problem from the perspective of the Western Governors. 

Several witnesses in the East emphasize that Federal planning 

or siting authority could actually undermine regional efforts to developing renewable resources and encourage expansion of high carbon generation in the Midwest. 

We need to take time, take a careful look at this and see what 

really makes sense. Today’s hearing is an excellent beginning to 


rfrederick on DSK5VPTVN1PROD with HEARING
3 

this process. We have a great line up of witness, and I look forward 

to their testimony. 

I would like now to turn to a matter related to the subject of today’s hearing which has been brought to my attention. After I 

agreed last month to hold an oversight hearing on the subject of 

electricity transmission and the question of whether to adopt additional new legislation in this area in addition to the regional transmission planning language that is already in the Waxman-Markey 

bill, I directed my staff to obtain additional information about two 

important provisions of the 2005 Energy Policy Act that also dealt 

with transmission and which are directly relevant to today’s hearing. 

As part of that effort, the subcommittee sent two letters to the 

Federal Energy Regulatory Commission. The first letter, dated 

June 3rd, dealt with the impact of the 2005 bill’s incentive rate 

provisions on the construction of new transmission around the 

country. That letter was sent out last week. 

The second letter, dated June 9th, dealt with the impact of 2005 

bill’s repeal of the Public Utility Holding Company Act on the construction of new transmission. That letter was sent out Tuesday. 

Neither of these letters were related in any way to the allocation 

hearing that the subcommittee held on Tuesday on MidAmerican 

Holding CEO David Sokol’s testimony before the subcommittee. 

They were being drafted prior to our even being aware that Mr. 

Sokol would be invited by the minority to be a witness at the Tuesday hearing. Both letters were aimed at helping the subcommittee 

better understand the impact of previously adopted transmission 

legislation. 

The PUHCA letter contained 8 questions, two of which reference 

Mr. Sokol’s earlier testimony before Congress in support of PUHCA 

repeal. Mr. Sokol was one of the leading proponents of repealing 

PUHCA, which is why his prior testimony was relevant to the 

issue. 

However, these questions were in no way seeking to target Mr. 

Sokol or to intimidate him in any way for his appearance before 

the subcommittee earlier this week. 

The day following the release of the PUHCA letter, I heard from 

Representative Barton that minority members of the subcommittee 

had concerns about the questions relating to Mr. Sokol and the 

timing of the letter’s release. In response to those concerns, I made 

it clear that there was no attempt or intent to intimidate any witness. 

In addition, to make it absolutely clear that this was the case, 

I sent a second letter to FERC clarifying that the FERC should respond to the subcommittee’s questions generically and not just look 

at MidAmerican specifically. 

I shared a draft of that letter with Mr. Barton’s staff and Mr. 

Terry’s staff on Wednesday night immediately after they brought 

this issue to my attention. I responded immediately to their concerns. 

And finally, I reached out to Mr. Sokol to inform him of what my 

intent was, to clear up the misunderstanding, and to make it absolutely clear that neither he nor his company are the focus of the 

subcommittee’s inquiry. 


rfrederick on DSK5VPTVN1PROD with HEARING
4 

So I want to say to Mr. Barton, to Mr. Upton and to the members 

on the other side of the aisle publicly what I have already said to 

them privately, that I would never seek to intimidate or retaliate 

against a person from having to come in and testify before this subcommittee. I value hearing the perspectives that all of our witnesses bring to the issues that we are considering. 

I regret any misunderstanding or misimpressions that the contents of the letter or its timing may have raised. That is why I immediately after learning of the minority’s concerns prepared a second letter to the FERC to direct them to respond generically to the 

questions rather than focusing on MidAmerican. That is also why 

I contacted Mr. Sokol directly, to let him know of my intentions 

and to express my apologies, which I have done. 

Joe and Fred and the other members, I just want to let you know 

that I have the personal greatest regard for you and that in no way 

do I want to leave any impression at any time that we would conduct hearings that were not fair and open to all of the members 

of this subcommittee or to the witnesses who appear before this 

committee. And I just want to make that very clear, very publicly 

at this hearing. 

I now turn to recognize the ranking member of the subcommittee 

the gentleman from Michigan, Mr. Upton. 

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

Mr. UPTON. Thank you, Mr. Chairman. 

And I, like many members on this side, do value your friendship. 

I realize we are adversaries, good adversaries, on a number of 

fronts, and we have been together on a number of fronts. 

And I know, as we have talked about this privately that it is very 

important that there is no intention to intimidate or pressure witnesses to testify in something that they perhaps don’t believe in. 

And I for one appreciate your statement this morning. 

I also appreciate you calling for the hearing today on National 

Transmission Policy. The electricity grid is of vital importance to 

our Nation. We all know that. 

However, it is an area that is often overlooked, as evidenced by 

the fact that there were only minor mention of transmission in the 

Waxman-Markey climate bill and the fact that today, weeks after 

the climate bill has been passed out of committee, we are having 

our first really big transmission hearing. 

We do have a long and distinguished panel today. I would like 

to thank all of our witness for joining us. 

I would like to give special recognition to the heads of two Michigan-based companies, Dave Joos and Joe Welch. I know that ITC 

and CMS do not exactly see eye to eye on this issue, but I know 

that they have Michigan’s interest at heart. And I would hope that 

we could all work together on this issue as we move forward. 

This committee passed a sizable renewable electricity mandate 

without any consideration to the question of getting the renewable 

electricity to population centers. The strongest winds are concentrated in low population areas. The strongest sun exposure is 

found in low population areas as well. Existing transmission lines 

are centered in areas of high population, and there are inadequate 


rfrederick on DSK5VPTVN1PROD with HEARING
5 

high voltage lines to the areas with the most abundant sources of 

renewable power. 

If we are going to be serious about renewable power, we have to 

revamp the grid. And to properly do so, we will have to block the 

lawsuits from environmental groups that have increased costs and 

blocked much-needed transparency lines. 

But let’s put it in perspective. According to DOE, it would cost 

$60 billion, yes B as in big, in new transmission lines to reach the 

20 percent mark for wind power. Al Gore’s lofty goal of fossil fuel 

electricity would cost perhaps as much as $400 billion in transmission lines. And if we are serious, we must block the lawsuits 

and make real investments in the needed infrastructure. 

A good example of these lawsuits is found in California. The proposed Sunrise Powerlink in southern California will connect the region to existing and proposed renewable energy sources, whether 

they be wind, solar or geothermal, located east of San Diego. Energy experts estimate that there is perhaps as much as 2000 

megawatts of geothermal power and tens of thousands of 

megawatts in solar available in the area. However, without new 

power lines, the clean, green energy could not be delivered to its 

customers. 

Studies show that the line will reduce greenhouse gas emissions 

by as much as 1.3 million tons. Yet various environmental groups, 

like the Sierra Club, are fighting it, well documented in publications like the Wall Street Journal. The areas that are best for 

wind, power and solar are often in these very remote areas, away 

from population centers. 

Transmission lines are needed to get electricity from wind and 

solar farms to consumers. And I feel it is a mistake to legislate a 

costly renewable mandate without addressing the transmission 

issue. 

With all of that said, we must also recognize that many renewable energy sources are unreliable and can bring instability to the 

grid. Transmission lines cannot distinguish between the green electrons or the brown ones. So we just can’t be planning a transmission system for renewables. We have to take all sources into account, wind solar, nuclear, hydro, coal, clean coal and everything 

else. Changes need to be made to the current regulatory system. 

FERC can provide a backstop, but we not completely abandon the 

State and local process. 

We must also be mindful of the cost. Renewable power is not 

free. Transmission lines are not free. 

Consumers deserve to know what the real costs are of any policy 

and understand exactly what they are going to pay for and what 

they are getting for their hard-earned money. Consumers will already be saddled with rate increases, and these costs will only go 

up under the Waxman-Markey bill. Transmission policy shouldn’t 

add to those burdens. 

I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Washington State, Mr. 

Inslee. 


rfrederick on DSK5VPTVN1PROD with HEARING
6 

OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON 

Mr. INSLEE. Thank you, Mr. Chair, and thanks both for holding 

this hearing and your great work in assembling the Waxman-Markey bill. 

I think that bill is tremendous mosaic of using multiple tools to 

solve our energy problems. But it really is missing one critical 

piece, and that is the piece that will help us spur the development 

truly of a 21st Century national grid. And I think we have to recognize that today, despite tremendous efforts of people in this field, 

we have a grid fit for the 19th or 20th Century, but not for the new 

challenges of the new American energy policy. 

And the way I would categorize that new challenge is that we 

used to be able to move our energy components around by truck 

and rail. We could move coal to the site we wanted to generate 

electricity. We could move natural gas to the site where we wanted 

to generate electricity or heat, but we cannot ship photons on rail 

cars, nor can we ship wind by packages by truck. They have to be 

generated—the electricity has to be generated in fact where they 

are located. 

Our existing policy on the grid is satisfactory for the first scenario but not the second. So I have now been at this for some time 

hoping to advance our ability to plan, site and finance a new grid 

system that is fit for the 21st Century. I have introduced H.R. 4059 

and made some progress in the bill and hope to make further 

progress in the hopes to achieve this goal in this energy bill. 

I want to make note of several things. Number one, our grid system is doing good work today. I am not sure you could say the grid 

is broken, but you can have a horse-and-buggy system that is working but not fit for today’s new world. And we know that it will not 

be fit for the challenges of tomorrow. So while it may not be broken, it is certainly not fit for what we are now asking it to do. And 

it is my belief that if we are going to meet our appropriate and necessary 15 percent renewable energy goal, we will need to allow 

transmission to move forward. 

Second, I would point out that the reason we are here today and 

the reason we need to act today is that this is the only vehicle moving out of town, and it will be the last chance and only chance to 

really move forward on this effort, and we can’t move forward with 

a renewable electrical standard without a transmission piece. 

So I think Lincoln’s old quote fits, as our case is new, so should 

we think anew. And thinking anew means Federal backstop authority in the event that regional governments are unable to site 

these necessary facilities. And the reason national backstop authority is necessary is twofold. 

Number one, our grid has always been designed to respond to 

local and regional interests, but with the challenges of global 

warming and national security needs, we have a national need for 

a national grid. 

And second, we know that, while all of our constituents love electricity, virtually none of them love electrical lines. There is a time 

and a place where Uncle Sam needs to step in to overcome at times 

the reluctance of all of us to bear with some of the onerous aspects 


rfrederick on DSK5VPTVN1PROD with HEARING
7 

of moving electricity. It is simply necessary, and we know we cannot wait decades to move these electrons. 

I am excited about hearing the testimony. 

Mr. Chair, thank you, and I hope we get this job done in this bill. 

Thank you. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Kentucky, Mr. Whitfield—I am sorry, the ranking member of the full committee the 

gentleman from Texas, Mr. Barton. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. 

Since we have an oversight hearing on upstairs, it helps me if 

I could give my statement. 

I am going to give a double statement, kind of a bifurcated statement. I will talk a little bit about this hearing and then I want to 

comment on your personal comments, because I think we need to 

elaborate on that a little bit. 

But first, on the hearing before us, it is a scary thing when I 

agree with Jay Inslee, but I do agree with Congressman Inslee. His 

amendment in the committee on the climate change bill was directed, as I recall, towards green energy or clean energy for transmission. But once you have generated that electricity, whether it 

is by wind, solar or even coal power, electricity is electricity, and 

it is going to go on the same wires. And the wires don’t know what 

the source of the generation was. 

So we do need to update our transmission grid. We started that 

in the Energy Policy Act of 2005. And I thought we had bipartisan 

support, and it became law. The Fourth Circuit has ruled recently 

that parts of EPAct are not as they should be. I disagree with that 

court ruling, and I hope that the Supreme Court will overturn it. 

But in any event, I agree with Congressman Inslee that we do 

need to modernize our grid. We do need to give FERC more authority, in my opinion, to make decisions in interstate commerce when 

the States can’t do it themselves. We tried to do that in EPAct. If 

that is not the right way to do it, perhaps we can try it a little bit 

different way. 

In the Natural Gas Act, we give the right of eminent domain to 

the FERC. Now, I don’t know that we need to go that far for electricity transmission. There is, in all probability, a middle ground 

where the States and the FERC can work together. 

But in any event, Mr. Chairman, this is a good hearing, and 

hopefully out of this will come some consensus on both sides of the 

aisle about what to do legislatively. 

Now let me comment on what you said, Mr. Chairman Markey, 

when you were talking about the letter of June the 9th and the 

comments towards the CEO of MidAmerican, David Sokol. 

First of all, I am very appreciative of what you have said, that 

it was not intended to intimidate Mr. Sokol and that you have 

called him and taken steps to make sure that to correct what you 

say was a misunderstanding. To say that publicly means a lot, and 

I appreciate you doing that. 


rfrederick on DSK5VPTVN1PROD with HEARING
8 

But let me elaborate on why people like myself have expressed 

concerns. You can’t make the best public policy if you don’t have 

witnesses come before this committee and give their full honest assessment of whatever the issue is that is before this committee. 

If we adopt a standard that the only witnesses that are going to 

be received are witnesses that testify to the side of the question 

that the majority is supporting, you don’t really have a full and fair 

debate on the issue. 

And in the instance that you alluded to, David Sokol represented 

a point of view that was contrary to the majority’s position on the 

climate change legislation and the allocation system that is a part 

of that, the allowance system. That is a side that needs to be presented to the American people. 

Now it may be serendipity, and it may be inadvertent, but within 

2 hours of him giving that testimony, a letter was sent under your 

signature to the chairman of the Federal Energy Regulatory Commission, who is sitting before us today, asking six generic questions 

and two specific questions about David Sokol and his company. 

And the chairman of the FERC was asked to respond in writing 

to you by close of business yesterday. How can that not be perceived as an attempt to intimidate? Testified in the morning adverse to the position of the majority, received a letter that was sent 

in the afternoon to the chairman of the regulatory commission with 

jurisdiction over your industry and your company asking probing 

questions about the conduct and business decisions of your company. 

Now, I take you at your word when you say that that was not 

intended and you are beginning to take steps to correct it, but what 

upsets myself and the others on the minority is that we do not accept that we can develop the mechanism where we allow any Member, majority or minority, to threaten, to intimidate, to abuse the 

power of the office that we are given by the people of our congressional districts on behalf of the people of the United States of 

America. 

Now you are already taking steps to correct the perception that 

perhaps intimidation was being attempted, and I commend you for 

that. You are going to get a letter from myself and Mr. Upton and 

other members on the minority later today asking that we consider 

those discussions to make sure that we make it absolutely clear 

that any citizen of this country that comes before this committee 

can testify to whatever they believe is the truth as they know it 

without fear of intimidation or retribution. 

And I think Members on both sides of the aisle will share that 

goal. If we are absolutely certain that that is the way it is going 

to be, then nothing else will be said. 

But again, you and I have been friends for 25 years, and I hope 

we are going to be friends for another 25 if we both live that long. 

I have nothing but the upmost personal and professional respect 

for you and your conduct. And I am honored to sit on the same 

committee as you. I have sat in that chair as chairman of this subcommittee, so I think we can get this worked out. But it is a serious issue, and it deserves serious consideration. And to your credit, 

you are giving it that serious consideration. 

With that, Mr. Chairman, I yield back. 


rfrederick on DSK5VPTVN1PROD with HEARING
9 

Mr. MARKEY. I thank the gentleman very much. And I thank the 

gentleman for his words. 

The Chair now turns and recognizes the gentleman from California, Mr. McNerney. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

I want to thank you for holding this hearing. This is a complex 

and difficult issue. I want to thank the panel for appearing this 

morning, in particular the chairman of the FERC. I had the opportunity to visit the FERC this week, and it was a good, worthwhile 

use of my time. 

This issue is complex and difficult, as I just said. It has economic 

challenges, technical challenges and political challenges. And I believe the outcome will be best if we do our homework, consider the 

challenges and devise a rational and bipartisan plan. So thank you 

for appearing, and I look forward to your testimony. I hope I can 

stay most of the time this morning. 

And with that, I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognize the gentleman from Kentucky, Mr. Whitfield. 

Mr. WHITFIELD. Thank you, Mr. Chairman. 

We look forward to this hearing today and welcome the witnesses, and we look forward to their testimony. 

I just want to make a couple of points. If the advocates for a renewable energy mandate are successful, there is going to be large 

portions of the Midwest that do not have solar, do not have wind 

power sufficient to meet their needs. It is going to be extremely difficult for them to meet this 20 percent renewable mandate without 

some Federal involvement regarding the siting, financing and the 

building of additional transmission lines. 

And particularly when you consider the Department of Energy’s 

20 percent wind energy by 2030, saying that they are going to have 

to build at least 12,000 miles of new transmission lines to meet 

that need and then on top of that, when you consider this recent 

Fourth Circuit Court of Appeals decision that Ranking Member 

Barton mentioned which does make it more difficult for FERC to 

operate in this area, I do think we have some significant issues. 

And I hope this hearing can help us resolve those. 

I yield back the balance of my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentlelady from Wisconsin, Ms. Baldwin for an opening statement. 

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN 

Ms. BALDWIN. Thank you, Mr. Chairman. 

Transmission is critical to our Nation’s electrical system. And I 

certainly support grid expansion. 

I have significant concerns however about many of the recent 

Federal proposals that jeopardize State and regional efforts to develop the transmission grid. Specifically these efforts ignore 

progress and may actually slow investments being made in States 

like Wisconsin and other in the Midwest. 


rfrederick on DSK5VPTVN1PROD with HEARING
10 

Over the last 7 years my home State of Wisconsin, the Wisconsin ratepayers have supported more than $2 billion in investments in 

our transmission system. These actions have and will continue to 

improve reliability and increase the flow of renewable energy in 

Wisconsin and our neighboring States. 

Congress must ensure that we are not undermining the existing 

processes if we are going to venture into the transmission arena, 

especially when sensitivities already exist to State authority, cost 

allocation, safety and eminent domain issues. 

As we examine these issues there are some questions and challenges that we must keep in mind. Who is going to pay for this? 

Will those not receiving the benefits of transmission have to pay 

for cost of lines traversing this country? 

I am hearing strong concerns about the designing our transmission system for one specific purpose. It is not the just of transmission planners or transmission companies to choose the types of 

generation that may interconnect with the transmission system. 

Transmission is needed, plain and simple, regardless of the type of 

generation. 

Where I come from, transmission is a sensitive subject. It will be 

very difficult to convince Wisconsinites and other Americans that 

in the name of national interest, the Federal Government is taking 

their property to essentially stretch an extension cord across it to 

power a larger urban area many, many miles away. So what will 

this process be like for public input if it is a Federally directed 

process? 

While the siting of underground transmission lines may be easier 

than that of above-ground lines, the costs are significantly increased, perhaps as much as $3 million per mile. So mandating 

technologies on States and regions has significant ramifications. 

Again I share the goal of ensuring that critical new investments 

are made in our transmission system, but we must proceed with 

caution, not undermining existing efforts that are already working 

in this process. 

Thank you, Mr. Chairman. I yield back. 

Mr. MARKEY. The gentlelady’s time has expired. 

The Chair recognizes the gentleman from Pennsylvania, Mr. 

Pitts. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. PITTS. Thank you, Mr. Chairman. 

Thank you for holding this hearing on our National Transmission 

Policy. 

The official report on the 2003 Northeastern Blackout concluded 

that, ‘‘As evidenced by the absence of major transmission projects 

undertaken in North America over the past 10 to 15 years, utilities 

have found ways to increase the utilization of their existing facilities to meet increasing demands without adding significant highvoltage equipment.’’ 

Clearly there is a significant need for an increase in transmission 

capacity. This need is amplified as we consider adding more and 

more renewable energy to the grid. And while I am fully supportive 


rfrederick on DSK5VPTVN1PROD with HEARING
11 

of adding more transmission capacity, I believe we do need to keep 

in mind legitimate desires of localities to preserve green spaces and 

historic sites. 

My district includes some of the most pristine historic landscapes 

in the Mid-Atlantic. My district also has some of the most productive farm land in the United States. Chester County, the home of 

Valley Forge and the Brandywine Valley where I come from is one 

of William Penn’s original three counties. 

The tradition of preserving land and being good stewards of the 

earth have been passed down from generation to generation. We 

are not against progress, but we want to protect our heritage and 

be wise about how we use and develop the land we have. 

Having the needed energy to turn on lights and heat water is 

critically important to the quality of life of every American. However, the preservation of our historic resources and natural environment of people’s communities contributes to our quality of life 

as well. We need to ensure that all stakeholders are included in deciding where and when transmission lines are sited. 

Dialogue and compromise are key in this issue. Indeed, it is critical to strike a delicate balance between the crucial electricity 

needs of the country while at the same time maintaining the historic open space areas that make our country beautiful and unique. 

As this committee continues to consider this issue, I hope that we 

hear from all affected parties and work towards viable solutions. 

Mr. Chairman, I am grateful for the opportunity to discuss this 

issue. And it is my hope that today’s hearing is only one in a series 

of hearings on this issue to ensure a robust and well rounded approach to our National Transmission Policy. 

And I look forward to hearing from our witnesses, and I yield 

back. 

Mr. MARKEY. Great, I thank the gentleman. 

The Chair recognizes the gentleman from Vermont, Mr. Welch. 

Mr. WELCH. Thank you, Mr. Chairman. 

I actually want to get my microphone to work here. 

I am proud that we have here today as one of our witnesses, 

David Coen. David is a member of the Public Service Board in 

Vermont, serving on his third term. And he has been appointed by 

Republican and Democratic Governors alike. He has done a tremendous job. He is now the vice president of the National Association of Regulatory Utility Commissioners. 

David is acutely sensitive to the particular needs of rural utilities. We are a small State, but this issue of transmission is incredibly important to us as it is all around. 

So I want to welcome him and thank you, Mr. Chairman for inviting David to be here and add to the testimony. Thank you. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Louisiana, Mr. Scalise. 

OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. Thank you, Mr. Chairman. 

Renewable energies will play an important role in the future of 

our national energy policy, and I support the development of reVerDate Mar 15 2010 05:20 Jun 30, 2012 Jkt 073745 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 E:\HR\OC\A745.XXX A745

rfrederick on DSK5VPTVN1PROD with HEARING
12 

newable sources of energy. As a matter of fact, Republicans have 

drafted legislation, the American Energy Act, which will invest 

heavily in the development of renewable sources of energy. 

As we explore the advancement and promotion of energy sources 

like wind similar and hydro, and as the Congress and this administration discuss the future of our national grid and its capacity, we 

must not neglect that many of these renewable sources of energy 

are intermittent and need to be backed up by other sources of energy. And we would be remiss if we do not emphasize diverse the 

importance of diversifying our energy portfolio in ensuring that nuclear power is part of any comprehensive policy we discuss. 

Wind and solar power still need to overcome fundamental obstacles and we cannot today exclusively rely on these sources of energy alone to power our Nation. When the wind stops blowing and 

the sun stops shining, our hospitals that care for our families and 

schools that teach our children must continue to have reliable 

sources of energy that ensure that the life-saving equipment and 

the lights stay on. 

Transmission infrastructure, planning, and siting policies are all 

important to this conversation as is the regulatory framework that 

will surround these policies. I believe it is also important for the 

Congress to carefully weigh regional considerations as we further 

discuss this issue. 

I look forward to today’s hearing, and I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from North Carolina, Mr. 

Butterfield. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. Thank you very much, Mr. Chairman. 

I will move one seat down so I can have the benefit of this microphone. 

Thank you for convening this hearing. I particularly want to 

thank the five witnesses who have come forward today to make 

their testimonies available. 

It goes without saying, Mr. Chairman, that I support the expanding of the grid using 21st Century technology. We certainly must 

do that. 

Waxman-Markey takes dramatic steps to further the growth of 

renewable electric generation. The nationwide RES standard demands use of those sources, and the price signals sent from a carbon cap will further the use of clean fuels. 

As we move forward, Mr. Chairman, we must focus on developing 

policies that ensure electricity generated from these new sources 

gets to the load centers that demand them. And this means we 

must address the deficiencies in our transmission grid that will 

delay us from reaching our full, renewable generation potential or 

hamper grid efficiency. 

There are a number of challenges to improving transmission, but 

siting will be particularly difficult to overcome. Balancing the Federal and State and regional and regional and local stakeholder 

needs and interests will be difficult but critical to the completion 


rfrederick on DSK5VPTVN1PROD with HEARING
13 

of a modernized grid. Comprehensive planning, cost allocation and 

ownership will also present challenges, as we have heard today. I 

applaud the collaborative nature of this subcommittee and look forward to discussing the issue further. 

I yield back. 

Mr. MARKEY. I thank the gentleman. 

The Chair recognizes the gentlelady from California, Ms. Harman. 

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. HARMAN. Thank you, Mr. Chairman, we are debating on the 

floor a bill to have the FDA regulate tobacco, and I have to say it 

is a long time in coming, and I am absolutely thrilled that we will 

finally, I believe, pass it, and it will become law very soon. 

So while I am celebrating about that, I am thinking about another hard issue, this one, which require all of us to step up and 

think about some risky strategies to make certain that the promise 

of renewable energy and the absolute need for transmission of electricity throughout the country can be accomplished. I think anything we do in this committee will make us a few friends and make 

us a few enemies. And that applies to us regardless of which party 

we are in and which region we are from. 

But I think we have to step up, as many people finally have 

stepped up in both parties to the need to regulate tobacco. 

I just want to point out some of the obstacles. The U.S. electric 

transmission system encompasses about 167,000 miles of high voltage transmission lines and another 300,000 miles of lower voltage 

lines. The grid is operated by approximately 130 balancing authorities, which are typically utilities that own transition systems and 

operate control centers to monitor and control the grid. 

Those transmission systems are owned by several hundred private and public entities, so let’s just start with that. It is incredibly 

complex. And if we don’t get a handle on that and don’t step up 

to the tough decisions, we won’t solve the problem. 

But I would close by saying that if we really want renewable energy in this country, we really have to fix the grid. 

Thank you, Mr. Chairman. 

Mr. MARKEY. The gentlelady’s time has expired. 

The Chair recognizes the gentleman from Texas, Mr. Green. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, and I have a full statement I would like to place into the record. 

And just a little history, in the 2005 Energy Act, we actually provided for the Federal transmission corridors that are so needed. 

And like my colleagues, some of my colleagues, have said, we disagree with the court decision. 

Hopefully it will be overturned by the Supreme Court, but there 

are things that we can do that may help, Mr. Chairman. 

I appreciate both Mr. Inslee’s legislation and to expand and have 

a national grid. We know that, and it can’t be just limited to renewables because those electricity protons don’t decide where they 


rfrederick on DSK5VPTVN1PROD with HEARING
14 

come from; they just go down those lines, so that is why I am 

happy to be part of the hearing. And, again, I would like my full 

statement to be placed in the record, and again, I support our effort 

to expand the national grid. 

I have a huge transmission corridor right behind my neighborhood, and I guess, in Texas, we don’t have any problem with pipelines or transmission grids because our PUC just approved $5 billion for the renewable fuel electricity to come from west Texas to 

our urban market. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from New Jersey, Mr. Pallone. 

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

Mr. PALLONE. Thank you, Mr. Chairman. 

I want to first thank you for all that you have done on this issue. 

I mean, I know it has been so many years, and we finally passed 

a bill out of committee, and I know that we will pass it on the floor 

and send it to the President eventually. 

I wanted to point out that Ralph Izzo, chairman and CEO of the 

Public Service Enterprise Group, a New Jersey based energy company will be testifying on today’s second panel. And under Ralph’s 

leadership, PSE&G has been a leader in renewable energy investments throughout the State of New Jersey. 

Today the committee will address policy proposals for transmission planning, cost allocation and siting authority. A strong 

transmission grid is essential to ensure energy reliability and to 

move clean, renewable energy from remote locations to population 

centers. 

I think we can all agree that planning and investing in a reliable 

grid is a national priority. With that said, we need to be very careful how we craft any National Transmission Policy. Too main areas 

of concern for the northeast and specifically for New Jersey are 

how to site new transmission lines and how to pay for those new 

lines. 

It is critical that States like New Jersey have authority over the 

siting of new transmission lines that would run through the State. 

Giving FERC greater authority to site high-voltage electric transmission lines will generate widespread local opposition. Any new 

transmission legislation must give States adequate authority over 

siting to ensure that States can protect properly the environment 

and cultural and historical sites. 

Another issue that will affect my State is cost allocations, specifically how do we craft legislation that encourages investment in 

new transmission lines to move renewable energy, such as wind, to 

population centers? I believe we should think regionally. New Jersey has tremendous potential to meet our renewable energy goals 

through solar and offshore wind. It does not make sense for New 

Jersey ratepayers to subsidize the cost of moving wind from the 

Midwest to the East Coast, a cost of $10 million per mile. This 

could slow development of alternatives closer to home. 


rfrederick on DSK5VPTVN1PROD with HEARING
15 

I believe the transmission provisions passed in the American 

Clean Energy and Security Act provide a balanced approach that 

respects regional differences and local concerns. Before we pass 

comprehensive transmission legislation, we must consider how it 

will affect the economies of local renewable energy projects and 

whether it provides adequate siting authority for the States. 

Again thank you, again, Mr. Chairman. 

Mr. MARKEY. I thank the gentleman very much. 

The Chair recognizes the gentleman from Georgia, Mr. Barrow. 

Mr. BARROW. I waive. 

Mr. MARKEY. The gentleman’s waives his opening statement. 

All time for opening statements has been completed. 

We will now turn to our very distinguished panel. 

STATEMENTS OF JON WELLINGHOFF, CHAIRMAN, FEDERAL 

ENERGY REGULATORY COMMISSION; DAVID C. COEN, FIRST 

VICE PRESIDENT, NATIONAL ASSOCIATION OF REGULATORY 

UTILITY COMMISSIONERS ON BEHALF OF NARUC; LAUREN 

L. AZAR, COMMISSIONER, WISCONSIN PUBLIC SERVICE COMMISSION; PAUL J. HIBBARD, CHAIRMAN, MASSACHUSETTS 

DEPARTMENT OF PUBLIC UTILITIES; AND RICHARD 

HALVEY, ENERGY PROGRAM DIRECTOR, WESTERN GOVERNORS’ ASSOCIATION 

Mr. MARKEY. And our first witness, who is John Wellinghoff. He 

is the chairman of the Federal Energy Regulatory Commission, 

which oversees wholesale electric transactions and interstate electric transmission and gas transportation in the United States. He 

is also cochair of the Demand Response Collaborative launched 

jointly by FERC and the National Association of Regulatory Utility 

Commissioners. 

We thank you so much for being here in your first appearance 

before our committee. 

We welcome you, sir. Whenever you are ready, please begin. 

STATEMENT OF JON WELLINGHOFF 

Mr. WELLINGHOFF. Good morning, Mr. Chairman. 

Mr. MARKEY. Could you push the mike a little closer and turn 

it on? 

Mr. WELLINGHOFF. Thank you Mr. Chairman, Ranking Member 

Upton, and members of the subcommittee. 

First, I have two quick preliminary issues. One is I would like 

to recognize and thank my colleague, commissioner Phil Moeller 

who is here with me today, and I would also like to request that 

my full pre-file testimony be placed in the record. 

Mr. MARKEY. Without objection, so ordered. 

Mr. WELLINGHOFF. The following is a summary of that testimony. 

I appreciate the opportunity to appear before you today to discuss our Nation’s electric transmission grid. 

Mr. Chairman, your invitation for this hearing envisions, ‘‘A 

transmission system that will serve the goals of substantially reducing greenhouse gas emissions, developing renewable energy resources and improving energy efficiency while preserving or enhancing reliability.’’ 


rfrederick on DSK5VPTVN1PROD with HEARING
16 

A transmission system that meets the goals you have articulated 

will result from a strong and smart electric grid that can assist in 

promoting field diversity, reducing greenhouse gas emissions, 

strengthening our national security, revitalizing our economy, enhancing competition and ensuring reliability. Such a reliable and 

robust transmission grid is essential to allows regions, States and 

our Nation to meet these goals. 

The commission has taken a number of important steps in recent 

years to promote the development of such a transmission system. 

For example, in February of 2007, the commission issued Order 

890, which among other things required open, transparent, and coordinated regional planning; required evaluation in that planning 

of demand resources on a comparable basis to other resources. 

The commission also approved an initiative proposal from the 

California independent system operator to better allocate costs of 

facilities needed to interconnect location constrain resources, such 

as wind and solar, to the transmission grid. 

Nonetheless, I believe there are gaps in the commission’s statutory authority. The absence of an adequate regulatory framework 

is the principal obstacle to developing the transmission system to 

support the goals have you outlined. 

If we are to overcome that obstacle, we need a national policy 

commitment to develop such a transmission system. In developing 

that policy, Congress should consider three closely related issues: 

planning, siting and cost allocation. 

First, the scope of existing regional planning initiatives needs to 

be expanded. To achieve greater benefits and efficiencies, we must 

create a structure that includes coordination on an interregional 

basis. Such coordination will facilitate, for example, the development of facilities, transport power from areas rich in renewable energy resources to load centers, as well as the deployment of distributed resources and key smart-grid equipment and systems. 

Second, States should continue to have the opportunity to site 

transmission facilities, but transmission developers should have recourse to the commission as a Federal siting authority under appropriate circumstances. Federal siting authority would be helpful, 

even if limited only to transmission facilities needed to reliably 

meet renewable energy goals. 

Third, if Congress determines there are broad public-interest 

benefits in developing the transmission system necessary to meet 

the goals discussed, then Congress should consider clarifying the 

commission’s authority to allocate costs of such infrastructure to 

the load-serving entities within an interconnection or part of an 

interconnection where it is appropriate to do so. Of course, the commission would need to ensure, as it does today, that these costs are 

allocated fairly to the appropriate entities and that due deference 

is accorded regions that work together to develop cost-allocation 

mechanisms that garner broad support. 

Finally, it is important to recognize the issue is not how to 

choose between nearby renewable or more distant renewable resources. Both should be part of the mix of energy resources to 

achieve our national goals. And appropriately allocating the costs 

of transmission facilities needed to connect remote resources should 


rfrederick on DSK5VPTVN1PROD with HEARING
17 

not disrupt the implementation of State policies or disadvantage 

local renewable or other distributed resources. 

Rather, full planning analysis that reveals respective costs of alternative resource scenarios and a fair cost allocation of necessary 

transmission to reliably deliver those resources to loads will eliminate a barrier to the development of new clean resources and thus 

will facilitate competition. Such a measured approach should inform consumers of the least-cost sustainable resources options to 

meet State and national environmental, economic and security objectives. And enacting a regulatory structure that enables such an 

approach to be implemented will ensure our national energy goals 

can be achieved. 

Thank you, again, for the opportunity to appear before you, and 

I would be happy to answer questions that you may have. 

[The prepared statement of Mr. Wellinghoff follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
18 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 22 here 73745A.001
19 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 23 here 73745A.002
20 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 24 here 73745A.003
21 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 25 here 73745A.004
22 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 26 here 73745A.005
23 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 27 here 73745A.006
24 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 28 here 73745A.007
25 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 29 here 73745A.008
26 

Mr. MARKEY. Thank you, Mr. Wellinghoff, very much. 

Our next witness is David Coen. He is the first vice president of 

the National Association of Regulatory Utility Commissioners. Mr. 

Coen has also served as a member of the Vermont Public Service 

Board since 1995 and has continued. He has served in a variety of 

regional and national leadership positions, including the Chair of 

the Consumer Affairs Committee of the New England Conference 

of Public Utility Commissioners. 

We welcome you, sir. Whenever you are ready, please begin. 

STATEMENT OF DAVID C. COEN 

Mr. COEN. Good morning, Chairman Markey, Ranking Member 

Upton and members of the subcommittee. My name is David Coen. 

I am a member of the Vermont Public Service Board. I also serve 

as the first Vice President of the National Association of Regulatory Utility Commissioners, also known as NARUC. 

I am honored to have this opportunity to appear before you this 

morning and offer a State perspective on transmission. In addition, 

I would like to thank Representative Welch for his kind introduction and his service to our State. He is certainly my favorite Congressman from Vermont. 

At the State level, we deal with transmission planning and siting 

requests regularly. And I can tell you that the issues and concerns 

are not policy or procedural, but multifaceted and do not lend 

themselves to a one-size-fits-all solution. 

State commissioners are obligated to act deliberately to ensure 

that any new projects will benefit the public. This means regulators 

must determine whether a demand response, energy efficiency or 

perhaps a local renewable energy source is more appropriate than 

putting steel transmission towers in the ground. 

A major impediment to siting energy infrastructure is the great 

difficulty in getting public acceptance. As a country, we want our 

electricity to be affordable, reliable and increasingly clean. But we 

also want to ensure that transmission infrastructure does not impact our quality of life. 

Public hearings on transmission lines are always packed with 

concerned ratepayers and landowners with nearly all of them in opposition to the project. I can assure you that no level of Federal involvement will make this go away. Still, the State and local level 

provides an important venue for all parties to be heard. State regulators know the geography and citizenry better than any Federal 

agency can. Our processes are transparent and give all parties a 

voice. What some interests may consider roadblocks or impediments we consider due process. 

Let me say a few words about what we are doing in Vermont. 

Vermont has a transmission planning process that analyzes potential transmission constraints over a 20-year horizon and considers 

various alternatives, including distributor generation and targeted 

energy efficiency programs that would address any identified reliability issues. The process ensures that solutions to transmission 

constraints serve the long-term needs of consumers at the lowest 

cost. 

After decades without any major transmission investment, the 

public service board has approved three major transmission 


rfrederick on DSK5VPTVN1PROD with HEARING
27 

projects from 2005 through 2008, with total projected capital investment over half a billion dollars. At the regional level, these decades without any major transmission investment, nearly $4 billion 

of transmission infrastructure has been placed in servicing New 

England since 2002. 

Despite the activity on the State and regional level, there is momentum in Congress to provide the Federal Government with 

broader transmission authority, although we are just 4 years removed from the enactment of the Energy Policy Act of 2005. EPAct 

gave the Federal Energy Regulatory Commission ‘‘backstop’’ siting 

authority in specific areas designated by the Department of Energy. Not enough time has passed to determine whether this law 

needs to be revisited, but the Congress is addressing this issue nevertheless. 

NARUC recently updated our transmission policy in anticipation 

of Federal action. We believe that a bottom-up State- and regionaldriven approach is the most appropriate model going forward, 

while we are not convinced that the case has been made for expanded Federal authority. 

If Congress chooses to act, we recommend the following principles: 

Any such additional authority granted to FERC by the legislation 

allow for primary siting jurisdiction by the States and provide the 

FERC’s backstop siting authority be as limited as possible; 

In no event should FERC be granted any additional authority 

over the siting or construction of new interstate transmission lines; 

In no event should FERC be granted any additional authority to 

approve a new interstate transmission line that is not consistent 

with a regional transmission plan developed in coordination with 

affected State commissions or other siting authorities or regional 

planning groups; 

In no event should FERC be granted any additional authority to 

approve a new interstate transmission line unless there is already 

in place either a cost allocation agreement among all the States 

through which the proposed project will pass governing how the 

project will be financed and paid for, or a FERC-approved cost allocation rule that covers the entire route of the proposed project; 

In no event should any legislation allow FERC to preempt State 

authority over retail rate-making, the mitigation of local environmental impacts under State authority, the interconnections to distribution facilities, the siting of generation or the participation by 

affected stakeholders in State and/or regional planning processes; 

and 

In no event should any legislation preempt existing State authority to regulate bundled retail transmission services. 

In conclusion, the electric transmission system must have the capacity to meet the growing energy needs of the Nation regardless 

of the generation source. The solutions to the challenges will not 

come quickly or easily and will require the cooperation of all stakeholders including State and Federal governments. 

Thank you and I look forward to your questioning. 

Mr. MARKEY. We thank you very much. 

[The prepared statement of Mr. Coen follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
28 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 33 here 73745A.009
29 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 34 here 73745A.010
30 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 35 here 73745A.011
31 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 36 here 73745A.012
32 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 37 here 73745A.013
33 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 38 here 73745A.014
34 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 39 here 73745A.015
35 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 40 here 73745A.016
36 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 41 here 73745A.017
37 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 42 here 73745A.018
38 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 43 here 73745A.019
39 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 44 here 73745A.020
40 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 45 here 73745A.021
41 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 46 here 73745A.022
42 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 47 here 73745A.023
43 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 48 here 73745A.024
44 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 49 here 73745A.025
45 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 50 here 73745A.026
46 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 51 here 73745A.027
47 

Mr. MARKEY. I am now going to turn to Congresswoman Baldwin 

to introduce our next witness. 

Ms. BALDWIN. Thank you, Mr. Chairman. 

I am pleased to welcome a very special constituent to our hearing 

today. In 2007, Governor Jim Doyle appointed Lauren Azar to the 

Wisconsin Public Service Commission. As a commissioner, she has 

played a leading role in confronting the challenges associated with 

transmission development. Just yesterday the Wisconsin PSC sited 

a very significant transmission line. 

Lauren also serves as President of the organization of MISO 

States where she is leading a regional planning and cost allocation 

effort for developing electrical transmission over the Midwest ISO 

region, which includes 13 States and one Canadian Province. 

Prior to her appointment to the Wisconsin PSC, Commissioner 

Azar worked as an attorney and practiced extensively in the areas 

of electric and water utilities representing both ratepayers and utilities. She helped create the Nation’s first stand-alone transmission 

company, American Transmission Company, otherwise known as 

ATC, and helped to site a 210-mile extra-high-voltage line in Wisconsin and Minnesota. 

In addition to all of these credentials, I can also tell you that I 

know what she eats for breakfast and what she grows in her vegetable garden because for those of you who don’t know, Lauren is 

also my partner. And it is a thrill and a very proud moment to 

have her here to testify based on her significant expertise on the 

issues before us. 

I welcome her to our subcommittee. 

Ms. AZAR. Thank you, Congresswoman. 

Mr. MARKEY. We welcome you. Whenever you are ready please 

begin. 

STATEMENT OF LAUREN L. AZAR 

Ms. AZAR. Thank you, Mr. Chairman, Ranking Member Upton, 

and the members of the subcommittee. Thanks for inviting me to 

appear at this hearing on the future of the grid. And my primary 

messages for today are, number one, before a transmission grid can 

be cost effectively planned, Congress must define the goals for that 

grid; number two, States with technical assistance from the regional and utility transmission engineers should plan the grid and 

site transmission lines; three, Congress should define the framework through which the States will design and site the grid—if the 

States fail, then it is appropriate for the Federal Government to 

step in; and four, Congress should agree to do no harm by not selecting a specific grid design or technology and by not selecting a 

specific cost allocation. 

As to point number one, Congress should define the goals. The 

renewable energy standards and carbon limits that Congress may 

set will define the generation portfolio that our Nation will need to 

develop. With clear identification of RES and the carbon mandates, 

the States can begin designing the transmission grid that is necessary for that generation portfolio. 

Point number two, States should develop the plan and site the 

lines. There are a variety of reasons why a State-led process will 

lead to better results than a federally led process, and these reaVerDate Mar 15 2010 05:20 Jun 30, 2012 Jkt 073745 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 E:\HR\OC\A745.XXX A745

rfrederick on DSK5VPTVN1PROD with HEARING
48 

sons include, first, State commissions have the ultimate responsibility for retail electric rates; second, planning must accommodate 

State choices for generation in demand side programs, the distribution decisions that they have made; third, planning must incorporate the designs for the existing State transmission and distribution systems; and lastly, State decision-making allows more complete public information, participation, and acceptance. 

Point number three, Congress should define the process. Congress could define the parameters for a State-led process. Such parameters could include the following: 

Essentially, require the States to participate in regional planning 

initiatives to design a grid that will meet the congressional mandates; 

Set strict but reasonable deadlines for the planning product and 

the siting of lines in that plan; 

Ensure that parties who will profit from this grid build-out do 

not make the decisions for that build-out; and 

Lastly, if States do not complete the plan or the siting of the 

lines in that plan, then the Federal Government should intervene. 

Point number 4, Congress should do not harm. I ask you to take 

a Hippocratic oath today, and such an oath would require you not 

to do two things. Number one, do not pick technologies or plans. 

While the moniker ‘‘transmission superhighway’’ sounds good, depending on the goals of Congress it may not be what we need. I 

suspect one-size-fits-all solutions such as the 765 grid overlay will 

not be cost effective, will likely be oversized and will harm some 

areas. 

As an aside, the parties who are advocating for a 765 grid overlay are the very parties that will make a lot of money off of that 

plan. 

And the second point about not doing harm is, do not select a 

specific cost allocation for the grid. Because cost allocation should 

be tailored to the plan developed, Congress should not preselect 

such an option. If Congress mandates a specific cost allocation, it 

will be indirectly endorsing a specific type of design. For instance, 

endorsing a so-called ‘‘postage stamp’’ which allocates the costs 

evenly over a very large area is more appropriate for an alternating 

current solution than a direct current solution. 

In conclusion, I ask Congress to promptly set renewable standards and carbon limits so that the problem is defined. I also ask 

that Congress essentially lock the States in a room and instruct 

them to solve the problem within a specified time period. 

The $80 million already appropriated under the ARRA will provide the funding necessary to conduct this endeavor. After being 

locked in the proverbial room for a reasonable period of time, if the 

States are unable to design a transmission grid meeting the congressional mandates, then the Federal Government should step in. 

The same framework should also be applied to transmission siting. 

I see I still have 43 seconds, so I will quickly provide a quick 

summary of some of the efforts that are currently happening within the States as far as regional planning and siting. The chairman 

and Congresswoman Baldwin already referenced one of them, 

which is namely the organization of MISO States, and that is the 

Midwest Independent System Operator. The States within that 13– 


rfrederick on DSK5VPTVN1PROD with HEARING
49 

State region and one Canadian Province are currently developing 

a regional plan and cost allocation process, and we expect to have 

that done by the end of the year. 

More, I think, importantly to this committee’s work, in the 

ARRA, Congress identified they wanted to have interconnectionwide plans. And on May 15, leaders from the eight different regions 

within the eastern interconnection met to begin the process of planning on a interconnection-wide basis. At the end of this month, we 

expect to have all 40 States present at a meeting in which we will 

begin to discuss just how we expect to go forward in that process 

and what the States’ role should be in that process. 

Thank you very much, Mr. Chairman. 

Mr. MARKEY. We thank you very much for being here today and 

for your testimony. 

[The prepared statement of Ms. Azar follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
50 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 55 here 73745A.028
51 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 56 here 73745A.029
52 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 57 here 73745A.030
53 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 58 here 73745A.031
54 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 59 here 73745A.032
55 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 60 here 73745A.033
56 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 61 here 73745A.034
57 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 62 here 73745A.035
58 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 63 here 73745A.036
59 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 64 here 73745A.037
60 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 65 here 73745A.038
61 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 66 here 73745A.039
62 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 67 here 73745A.040
63 

Mr. MARKEY. Our next witness is Paul Hibbard. He is the Chairman of the Massachusetts Department of Public Utilities. Chairman Hibbard previously worked for the Massachusetts Department 

of Environmental Protection. 

We welcome you, sir. Whenever you are ready, please begin. 

STATEMENT OF PAUL J. HIBBARD 

Mr. HIBBARD. Thank you, Mr. Chairman. I also want to thank 

the members of the subcommittee for inviting me here today to talk 

to you about this critical topic. 

On behalf of Governor Deval Patrick and the Commonwealth of 

Massachusetts, I want to thank you all for your leadership in addressing our energy challenges and global climate change, and for 

your wisdom in addressing both at the same time in the ACES legislation. We support your efforts and encourage Congress to move 

forward with the ACES legislation expeditiously. 

On transmission, we think that ACES has got the transmission 

planning and siting question exactly right. In its current form, it 

presents a measured and sensible approach that supports the continued and vital primary role of State and regional resource planning in siting efforts and expands the role of FERC to coordinate 

regional planning across a broader geographical footprint and with 

an added focus on national energy policy. But most importantly, it 

does so without jeopardizing the critically important role of competition in wholesale energy markets. 

In contrast, I have serious concerns with the more aggressive 

proposals that have been put forward to expand Federal authority 

in transmission planning and siting. At their core, these proposals 

appear to put FERC in three roles: 

First, in the role of requiring the development in a short period 

of time of interconnection-wide plans like the JCSP, ostensibly to 

access renewable resources; 

Second, it puts FERC in the role of deeming transmission included in such plans as needed for the public convenience and welfare triggering the siting override and eminent domain authorities; 

and 

Third, it puts FERC in the role of approving or imposing the allocation of associated costs on a broad basis across all load. 

Under these proposals, FERC’s traditional authority is expanded 

to where it becomes a de facto central planning authority to select 

and direct the build-out of renewable generating resources across 

the Nation, potentially diminishing the development of the abundant level of demand reduction and renewable resources that are 

available at the local level in all of our regions. 

Developing renewable resources locally is a top priority for the 

Commonwealth, as I am sure it is for States across the country. We 

believe that renewable resources in our State and along the eastern 

seaboard, both onshore and offshore, represent one of our Nation’s 

most promising yet underdeveloped renewable resources, sources of 

energy. 

While offshore wind installation costs currently exceed those of 

onshore installations, these resources are much closer to our load 

centers. And research and development efforts that are focused on 

reducing costs and improving reliability promise to make offshore 


rfrederick on DSK5VPTVN1PROD with HEARING
64 

wind competitive with distant but onshore wind farms on a delivered cost of power basis. 

As regional onshore projects move forward and offshore wind 

moves into commercialization in the United States, they all must 

have the opportunity to compete on an even playing field with the 

onshore and more remote sources of renewable power and not be 

disadvantaged by upfront transmission subsidies. 

The threat that unsubsidized local renewables would be unable 

to compete in fact has been taken very seriously in our region and 

beyond. A bipartisan group of 11 Governors representing every 

coastal State from Maine to Virginia, as well as Vermont, recently 

joined together to raise these concerns in a letter to the committee 

chairman. 

A top-down central planning process is in stark contrast to how 

free markets are supposed to operate. In our region and at the direction of FERC, to ensure fair competition, all generating resources, renewable or otherwise, are responsible for all development costs, including the costs of environmental compliance and 

the costs of delivering their power reliably to load. In this competitive market context, it is the lowest-cost provider, based upon the 

price at retail, that prevails ensuring that society’s electric reliability and environmental goals are met at the lowest possible cost. 

Notably, this is the design principle under ACES, where the 

prices offered by fossil fuel resources will be higher and less competitive due to the additional marginal costs associated with purchasing carbon allowances, and the price offered by renewable resources will be lower and more competitive due to the additional 

marginal revenues associated with the generation of renewable energy credits andother incentives. In this framework there is no 

need for a central planning decision to force development or to pick 

the winning resources because, by definition, the cost of carbon allowances and the value of renewable energy credits will rise to levels that are needed to support the resources that must come on line 

in order for our Nation to meet our carbon cap and our renewable 

resource floor. 

This is the way it is supposed to work and indeed has worked 

in emission markets over the past couple of decades. By suggesting 

that FERC needs to engage in resource planning to build transmission to preselected renewable resources is to concede at the outset that the free market structure for emission control and renewable control contained in ACES will fail. 

In my view, the more aggressive proposals for transmission legislation, thus, are about much more than siting. They force the Federal Government into an administrative role of central renewable 

resource planning, a role that I believe in the long run will damage 

the operation of competitive markets, suppress the technological innovation and creativity that come from the operation of competition, and ultimately will result in our meeting our climate objectives at prices to retail consumers of electricity that are higher 

than they otherwise would need to be. 

So I want to, again, thank the members of the committee for this 

opportunity and look forward to questions 

Mr. MARKEY. Thank you Mr. Hibbard. 

[The prepared statement of Mr. Hibbard follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
65 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 71 here 73745A.041
66 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 72 here 73745A.042
67 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 73 here 73745A.043
68 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 74 here 73745A.044
69 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 75 here 73745A.045
70 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 76 here 73745A.046
71 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 77 here 73745A.047
72 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 78 here 73745A.048
73 

Mr. MARKEY. Now we have one final, very important witness representing the Western State Governors, who I think we should all 

hear from before we cast our vote on the floor on the last vote of 

the day. Then we will reassemble after that roll call. But I think 

since we are all here right now that we will hear from Rich Halvey, 

who is the Energy Program Director for the Western Governors’ 

Association and representing those Western Governors before this 

subcommittee today. 

We welcome you, sir. Whenever you are ready, please begin. 

STATEMENT OF RICHARD HALVEY 

Mr. HALVEY. Thank you, Mr. Chairman, members of the committee; thank you for the invitation to testify here today. 

Over the last 8 years, the Western Governors’ Association has assumed a strong leadership role in defining policies for transmission 

planning, cost allocation and regional cooperation. In 2002, a protocol governing cooperation among State and Federal agencies in 

the siting and permitting of interstate transmission lines in the 

Western United States was developed and signed by the WGA, the 

Departments of Energy, Interior and Agriculture, and the Council 

on Environmental Quality. 

In June 2006, the Western Governors’ Association published a report that explained that while vast resources, renewable resources, 

exist throughout the West, many reside in remote areas without 

ready or cost-effective access to transmission. Lack of transmission 

access was and remains the greatest impediment to the rapid development of utility-scale, renewable, rich resource areas. 

In April 2008, the Western Governors partnered with the United 

States Departments of Energy, Interior and Agriculture and the 

Federal Energy Regulatory Commission to create the Western Renewable Energy Zones project. This project will ultimately identify 

those areas with the highest potential for large-scale, cost-effective, 

renewable energy development across the Western region and the 

high-voltage transmission that would ensure this electricity can be 

delivered to demand centers. 

This coming Monday, the Western Governors’ Association will be 

releasing the project phase one report quantifying the potential of 

the richest renewable resource areas. 

WGA will continue to work on the project over the next 2 years. 

We are partnering with utilities and the Western Electricity Coordinating Council to evaluate transmission needs to move power 

from preferred renewable energy zones. We will be working to improve the integration of wildlife and environmental values in decisions on the development of generation and transmission associated with these renewable energy zones. 

Ultimately, we will propose conceptual transmission plans to 

move electricity from the most desirable zones to markets. We will 

work with load-serving entities to coordinate purchasing for the desirable renewable energy zones and to foment interstate cooperation for renewable energy generation and transmission. 

The Western Governors support the development of interconnection-wide transmission plans. However, if the Federal Energy Regulatory Commission is given the authority to approve such plans, 

Congress needs to set explicit criteria by which FERC evaluates 


rfrederick on DSK5VPTVN1PROD with HEARING
74 

these plans. At a minimum, statutory criteria should require that 

the States approve electricity future scenarios to be studied and approve interconnection-wide plans corresponding to the future scenarios. 

Even with the success of our past efforts, the Western Governors 

recognize that we need help from the Congress. I will mention four 

positions the Governors have consistently emphasized as necessary 

elements of transmission planning, cost allocation and regional cooperation where legislation will be critical: 

First, the Federal Government should be responsible for ensuring 

that near-term projects proposed to serve large geographically constrained low-carbon resource areas are adequately sized to meet 

long-term needs. When we know future demand will materialize, 

action by the Federal Government to correctly size lines will help 

projects capture economies of scale in building transmission and 

avoid environmental impacts from the construction of multiple 

lines to the same area. We propose that the Federal Government 

pay for the incremental cost of building higher capacity lines to 

these areas. 

Second, Congress should redirect the implementation of sections 

1221 and 368 of the Energy Policy Act of 2005 to preserve important transmission corridors and ensure the timely siting and permitting of large transmission lines to move geographically constrained low-carbon generation. Specifically, once higher priority 

zones and associated conceptual transmission have been identified, 

Congress should direct Federal land management agencies to use 

those results when evaluating and designating corridors. 

Third, the Western Governors see little benefit in FERC preempting State transmission line permitting processes. The major 

hurdle for permitting transmission in the West has been securing 

permits from Federal agencies. The implementation of Federal law 

has resulted in lengthy and inflexible Federal permitting processes. 

Enabling FERC to preempt State siting processes will not fix the 

underlying problem. 

I would like to mention the limited instances in which the Governors could agree with FERC backstop siting authority. 

It must be demonstrated that the transmission line is needed to 

meet national carbon and renewable generation requirements; comports with an interconnection-wide transmission plan; is right sized 

to meet the long-term needs for geographically constrained low-carbon generation; is the lowest cost option to meet long-term needs 

and where the State has failed to make a decision within a reasonably set statutory period. 

Finally, the Western Governors believe the current system for 

cost allocation in the West has worked well, and we believe it will 

continue to be adequate for the future. The exception, of course, 

would be the cost allocation as it applies to the kind of right sizing 

we described. 

We are attaching two letters to our testimony and we ask that 

they be included, two letters that the Western Governors have sent 

to the Congress in 2009 regarding transmission issues. 

Thank you for the opportunity to talk with you today.Mr. MAR- KEY. Thank you, Mr. Halvey, very much. 

[The prepared statement of Mr. Halvey follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
75 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 84 here 73745A.049
76 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 85 here 73745A.050
77 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 86 here 73745A.051
78 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 87 here 73745A.052
79 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 88 here 73745A.053
80 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 89 here 73745A.054
81 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 90 here 73745A.055
82 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 91 here 73745A.056
83 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 92 here 73745A.057
84 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 93 here 73745A.058
85 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 94 here 73745A.059
86 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 95 here 73745A.060
87 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 96 here 73745A.061
88 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 97 here 73745A.062
89 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 98 here 73745A.063
90 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 99 here 73745A.064
91 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 100 here 73745A.065
92 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 101 here 73745A.066
93 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 102 here 73745A.067
94 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 103 here 73745A.068
95 

Mr. MARKEY. I think this is about as important a hearing as we 

are going to have this year. We appreciate the opening statements 

from the witnesses. 

There are 5 minutes left on the House floor for us to cast our 

vote. And so what I will recommend is that we reconvene this hearing in 15 minutes and then we will begin with questioning of the 

witnesses by the subcommittee members. 

The subcommittee stands in recess. 

[Recess.] 

Mr. MARKEY. Welcome back, ladies and gentlemen, and we would 

ask all of the witnesses to please be reseated. And I would ask that 

the rear door be closed so that we can have the attention of all of 

our audience on the witnesses. Thank you. 

So the Chair will recognize himself. And I will ask you, Mr. 

Halvey, to please elaborate on your testimony that permitting on 

Federal lands is the major obstacle to siting transmission in the 

West. 

That issue is not generally within this committee’s jurisdiction, 

but rather within the jurisdiction of the Committee on Natural Resources. But I don’t think this is a widely understood kind of political reverse takedown that it is not the problem that the Federal 

Government has with the States, but the problem the States have 

with the Federal Government as represented by the management 

of the Federal lands, especially across the West. 

Could you elaborate on that and perhaps give us some specific 

examples? 

Mr. HALVEY. Sure. Thank you, Mr. Chairman. 

Let me mention a couple of things. At a meeting of the Western 

Governors in February, Governor Otter from Idaho made the statement very clearly that in those instances where we have the opportunity to site transmission lines and not go through Federal lands, 

we are often going to want to exercise that. 

There are a couple of issues, I think, that come to mind in terms 

of permitting with Federal lands. One, if you live in the West, it 

is difficult to avoid Federal lands. Many of the States are covered 

with lands under Federal jurisdiction, both the Department of Interior and the Department of Agriculture. So that is certainly an 

issue. 

Second, there is no priority system for dealing with lease applications. It is on a first-come, first-served basis. 

One of the things they are doing with the Western Renewable 

Energy Zones is really pointing out what we think is a critical 

issue, which is that there are places that are really better for not 

only locating renewable energy, but there are also transmission 

corridors that are going to be more important in moving that renewable energy. We believe that there ought to be some kind of a 

way to recognize that priority and to do the transmission work, the 

permitting work that is necessary to get those facilities located. 

We think, in many cases, it is not unusual to see 5, 7 or even 

10 years to locate transmission lines when they go through Federal 

land. 

Mr. MARKEY. Would you repeat that fact? 


rfrederick on DSK5VPTVN1PROD with HEARING
96 

Mr. HALVEY. Yes. That it is not unusual to see 5-, 7-, 10-year 

time periods in terms of getting lines approved through Federal 

lands. 

Mr. MARKEY. So when the States go to Federal agencies, it takes 

5 to 7 to 10 years? 

Mr. HALVEY. There are certainly instances where it has taken 

that long. 

Many of the applications that we see now, that are going through 

that process—in fact, Governor Rounds from South Dakota was 

talking about a line to run from South Dakota to Minnesota. At one 

of our meetings he mentioned that they have been working on it 

for 2 years, and they have had very little success in moving it 

through the Federal permitting process; and he sort of got the response of a chuckle from people in the audience, essentially suggesting, 2 years, you have barely started. 

And so I think there is a great frustration on the part—— 

Mr. MARKEY. So what you are saying is that the States were 

working together cooperatively to try to find a solution to that regional, North Dakota-Minnesota issue, but because of the Federal 

Government, there was a multiyear delay in getting to a point 

where the issue could be resolved. 

Mr. HALVEY. That I think is the sense of the Western States that 

the Federal permitting process is difficult, it is onerous, it is time 

consuming, and in many cases there are requirements that don’t 

add any value to the permitting process. 

We would hope to see something that one would recognize those 

areas that have a priority because of the richness of their renewable resources, but more than that, recognize that if we are going 

to meet any requirements for renewable portfolio standards or carbon reduction, we have got to do a much better job of matching up 

how long it takes to do renewable development with how long it 

takes to get the transmission to those developments. 

Mr. MARKEY. So again, not to make too fine of a point of this, 

but you are saying that out West it is very difficult, if you are dealing with the remote areas where the wind and the sun might be 

strongest—geothermal, as well—to create any kind of a transmission system without at some point confronting this Federal 

issue. 

Mr. HALVEY. That is absolutely true. 

Mr. MARKEY. And no matter how cooperative the States are—and 

your testimony is that in most instances when States are trying to 

resolve these issues, the Federal Government serves as an impediment sometimes of such a nature as to just paralyze the process? 

Mr. HALVEY. That is correct. 

Mr. MARKEY. That is very helpful to us. Thank you. 

Let me now turn and recognize the gentleman from Kentucky, 

Mr. Whitfield. 

Mr. WHITFIELD. Thank you, Mr. Chairman. 

And thank you all for your testimony. 

Mr. Wellinghoff, back in April of 2009, the New York Times 

quoted you in an article saying that new coal and nuclear plants 

may be unnecessary. And I know that Chairman Barton and Mr. 

Walden and some others have sent you a letter about that. And I 


rfrederick on DSK5VPTVN1PROD with HEARING
97 

have not had an opportunity to read your response, but you are 

certainly not opposed to coal and nuclear power, I am sure of that. 

Mr. WELLINGHOFF. That is correct. I am not opposed to coal and 

nuclear power. 

Mr. WHITFIELD. Since I didn’t even read the New York Times article, would you basically explain what you were referring to when 

you made that statement? 

Mr. WELLINGHOFF. I would be happy to. Thank you for the question. 

I was referring basically to a scenario where, if we look at the 

diversity of the number of renewable resources, which would include, potentially, Midwest wind, that may have a diversity of delivery from offshore wind and include solar and geothermal, biomass; and also include the demand side, looking at demand response, energy efficiency, distributive generation, combining these 

things together with a smart grid. 

And the whole answer was—in the response was, in the context 

of the smart grid, if you combine these things together it may, in 

fact, be possible with a smart enough grid to effectively provide 

these renewables as if they are base load, displacing base load; and 

that was the context of my statement. 

Mr. WHITFIELD. When you talk about a ‘‘smart grid,’’ do you have 

any idea or thoughts, or have you seen any studies about what the 

cost would be to complete transformation to a smart grid? 

Mr. WELLINGHOFF. I have seen cost estimates anywhere from 

$50 to $60 billion up to $200 billion. 

Mr. WHITFIELD. And to reach the scenario that you referred to 

in the New York Times article that you just explained, in what sort 

of time frame would you view this transformation taking place? 

Mr. WELLINGHOFF. At least a 10-to-15-year time frame. 

Mr. WHITFIELD. Now on the Fourth Circuit Court of Appeals decision, have you all appealed that decision? Has FERC appealed 

the decision? 

Mr. WELLINGHOFF. Let me check with my counsel. 

It is due in July. We haven’t yet made a decision. We are looking 

at it now. 

I will tell you, though, I personally disagree with the Fourth Circuit decision. 

Mr. WHITFIELD. Well, I know there are many of us that hope you 

will appeal, but that is a decision that you all make, of course. 

Mr. Coen, Ms. Azar, Mr. Hibbard, can you tell me the last—when 

the last new transmission line was built in each of your States? 

Mr. COEN. We are actually, in Vermont, in the process of upgrading most of our transmission systems. So we actually have ongoing 

projects as we speak. 

The most major transmission line that has ever been sited in 

Vermont, the docket ended 2 years ago, and the line is currently 

almost complete today. 

Mr. WHITFIELD. And how many miles is that line? 

Mr. COEN. Well, this is Vermont. The line was 60 miles. 

Mr. WHITFIELD. And what about you, Ms. Azar? 

Ms. AZAR. Just yesterday, we approved a 32-mile, 345kV line 

that costs about $220 million through the city of Madison. So, in 


rfrederick on DSK5VPTVN1PROD with HEARING
98 

other words, the three commissioners essentially sited a transmission line through their backyards. Over the last 8 years, we have spent $2.5 billion upgrading or 

creating about 1,700 new miles of transmission in the State of Wisconsin. We have construction going on all over the State. A line 

was just energized, I believe last week, which was over 100 miles 

long. 

And as Congresswoman Baldwin indicated, before I became Commissioner I was on the other side. I was getting permits for a 210- 

mile line between Minnesota and Wisconsin, and that line has been 

energized. 

Mr. HIBBARD. In Massachusetts, our most populous area, of 

course, is the Boston region and it is where our heaviest electrical 

load is. And over the past 10 years we have sited and had constructed a number of transmission enhancements to support the 

flow of power into Boston, including two major 345kV lines to 

eliminate the constraints between Boston load pockets and the remainder of Massachusetts. 

Mr. WHITFIELD. One other question to you three: With the anticipated increase in demand of electricity needs over the next 15 or 

20 years, do you think the existing system is adequate in your 

State? 

Ms. AZAR. With regards to the increase in demand, we continually update our systems. So we are going to continue to do updates. We have been doing updates all along. I don’t think that 

process ever stops. 

Mr. COEN. In Vermont, we have actually been able to mitigate 

any increase in our load over the last 5 years with energy efficiency. So I would say, offhand, that with the completion of what 

is called the Southern Loop in a couple of years, I think our transmission grid will be adequate for the next 10 to 15 years. 

Mr. WHITFIELD. Mr. Hibbard? 

Mr. HIBBARD. I would give a similar answer. The answer to your 

question is ‘‘yes.’’ When we look at potential scenarios for load 

growth over time within Massachusetts, and indeed within the 

New England region, we see that the transmission system, including what is existing today and what is in the process of going 

through the regional planning process in siting, will be more than 

adequate to support the movement of power throughout our region 

for a decade or two. 

Mr. WHITFIELD. Mr. Chairman, I see I have gone 1 minute 25 

seconds over. 

Mr. MARKEY. I thank the gentleman. 

By the way, we will be having a second round and perhaps a 

third round of questions of the witnesses if the gentleman is interested. 

Let me turn and recognize the gentleman from Washington 

State, Mr. Inslee. 

Mr. INSLEE. Thank you. I would like to put in the record, with 

no objection, a letter from the University of California, Berkeley, 

from Dr. Dan Kamen, a letter describing the reason and appropriateness of expanding new transition lines—if I can put that in 

the record. 

Mr. MARKEY. Without objection, it will be included in the record. 


rfrederick on DSK5VPTVN1PROD with HEARING
99 

[The information was unavailable at the time of printing.] 

Mr. INSLEE. Chairman Wellinghoff, I wanted to ask you to expand on your thoughts on how FERC could implement—if it does 

receive backstop siting approval, how it could implement a greenhouse gas performance interconnection standard for new transmission and/or some criteria associated with compliance or fulfillment of the Nation’s renewable energy goals. 

Several of the other witnesses made reference to something of 

that nature. Could you tell us how you think that could work? 

Even though we have heard the physical explanation and that an 

electron is an electron is an electron, how could this function? 

Mr. WELLINGHOFF. Thank you, Congressman Inslee. 

First of all, we have initiated a rule-making, and certainly as 

part of that, all stakeholders would have an opportunity to provide 

any proposals as to how to implement such a greenhouse gas performance standard. But in doing so, there are a couple ways it 

could be done. 

Certainly, in looking at the current emission permits from the 

generation stations—from those, it is based on known items such 

as model and configuration of the generator and its mission control 

equipment and composition of fuel and the approximate run time 

of the generator. 

You could take from that also the annual emissions are typically 

capped by a permit that can be used as the baseline to determine 

compliance. 

So we could take compliance, I think, from their current permit 

applications, or new permit applications from generating stations, 

and take that data, put it into a database and ultimately from that 

use it to determine a greenhouse gas performance standard for particular plants that were into the interconnect. 

Mr. INSLEE. So you can obviously do that for particular plants, 

but could you effectively reference that to particular lines? In other 

words, are the plants specific enough to the line that this type of 

standard could be applicable to lines? 

Mr. WELLINGHOFF. I think you would have to do that by regions, 

because it is all a matter of sort of displacement. You are not really 

delivering electron A to point B necessarily over an AC line. It is 

really pushing one electron down the road. 

So I think you would have to do it basically on a regional basis, 

but I feel that we can do it, yes. 

Mr. INSLEE. Thank you. 

Commissioner Azar, I appreciated your comments, first off, about 

the appropriateness of Federal backstop authority and its general 

view, that I share, that it is appropriate. And I appreciate your 

views on that because of your incredible background in this area. 

But I also appreciate you making reference to the necessity of 

considering demand-side issues when you do siting and planning. 

And I want to make sure you are aware that in the ACES bill, we 

do have a very specific policy that is a policy of the United States 

and regional electrogrid planning to meet these objectives should 

take into account all significant demand-side and supply-side options. 


rfrederick on DSK5VPTVN1PROD with HEARING
100 

Do you want to comment on that? Is it a good idea? Is there anything we should do to expand on that to make sure we consider 

that is part of our planning process? 

Ms. AZAR. It is a very good idea. And my point in raising it is 

that those kinds of solutions are oftentimes best made at the State 

level because the States are going to understand how they are 

going to be setting up their distributed generation, how they are 

going to be setting up their energy efficiency and conservation 

measures, better than the Federal Government. 

So that was the point I was trying to make with regards to why 

I thought a State-led process would be better with regards to those 

specific items. 

Mr. INSLEE. Thank you. 

Chairman Hibbard, I wanted to ask you about cost allocations. 

I am told that recently there has been a 345kV end star reliability 

project in transmission in the Boston area, and I am told that the 

total cost of that was $334 million and 325 of that was spread 

across New England in a cost allocation system; only 3 percent was 

assigned directly to the Boston area ratepayers. So regional cost allocation seems to work at least in your area. 

If cost allocation in general of that nature seems to be acceptable, should we not be able to fashion some other cost allocation 

more widely? 

Mr. HIBBARD. Certainly. 

Thank you, Congressman. I think it is instructive when thinking 

about the cost allocation issue to draw a very clear line between 

transmission projects that are needed to maintain grid reliability 

and transmission projects that are essentially for the benefit of 

generation developers. 

In the New England system, we have exactly that split. If, 

through the regional planning process, lines are identified that are 

needed to maintain reliability on a regional basis—and the end 

star line in Boston was exactly one such line—then we support the 

socialization of costs across the entire region, because it benefits 

everyone within the region to maintain the reliability of the grid. 

So the cost of the end star line is shared by everyone in New 

England. In Massachusetts, we are about half of the load; we pay 

about half of the bill. Similarly, the project that Commissioner 

Coen referred to in Vermont, other projects that are on the books 

in New Hampshire and Maine and Connecticut, all focused on reliability of the grid, projects for which even though they are not 

within Massachusetts, Massachusetts consumers will pay half of. 

It is a vitally important component of cost allocation that when 

looking at reliability there be a willingness within an integrated 

power grid to share that cost across load. 

The distinction I want to make here is that the issue of cost allocation for building lines to interconnect generation resources departs from that. We want—in order for our consumers to be protected, we want the cost of developing generation, including the 

cost of meeting compliance measures, the cost of delivering power 

reliably to load and making sure you don’t adversely impact the reliability of the system to be borne by the generation developer and 

included in the price that they are charging customers. 


rfrederick on DSK5VPTVN1PROD with HEARING
101 

Mr. INSLEE. I just want to comment, I think this is a new approach that some of us are suggesting, because there is a new national need just as important for reliability and that is to prevent 

the Earth from turning into toast. So that is the reason for our 

thinking. 

Thank you very much. 

Mr. MARKEY. The gentleman time’s has expired. 

Again, there will be a second round of questions for all members 

who are interested. 

The Chair recognizes the gentlelady from the State of Wisconsin. 

Ms. BALDWIN. Thank you, Mr. Chairman. And I want to direct 

this question to Commissioner Azar. 

One of the proposals that we hear a lot about on Capitol Hill is 

the possibility of a 760kV line, often known as the ‘‘transmission 

super highway.’’ And I would like to hear your insights on how a 

765kV overlay might affect a State profile like a State of Wisconsin, and if you could, describe any concerns that you might have 

that it would be detrimental to Wisconsin or others. 

Ms. AZAR. Thank you, Congresswoman. 

When you add a high voltage overlay into a State, you have got 

to make sure that the underlying system is built up to accept that. 

In Wisconsin, as both you and I have noted, we have spent billions 

of dollars at this point in time designing a specific kind of system. 

The American Transmission Company has designed a 345kV system. If there is a 765 overlay built into Wisconsin, it is essentially 

going to mess up our very deliberate 345kV design. So we are going 

to have to build up our underlying grid. 

That being said, ultimately, if Congress gives us the mandates 

and the group of States decide that the best thing to do would be 

a 765 grid overlay, then we are going to need to accommodate that. 

But I think there are better ways to do it. 

The one-size-fits-all will likely be, in my estimation, probably 

oversized and not cost effective. The one way in which I think 

about a 765 grid overlay is, you have got somebody with a hose on 

one side of the swimming pool and he has to get the water to the 

other side of the swimming pool, there is a drain at the other side 

of the swimming pool. There are two options he has got. One, he 

can extend a hose, or the second option is, he fills up the swimming 

pool. And the 765 grid overlay is more akin to filling up the swimming pool than extending the hose. 

I think there are better ways to do it than one-size-fits-all. The 

bottom line is—the primary message is, we need to do the calculus. 

We can figure this out. A tailor-made answer is better than a sort 

of a generic answer. 

Ms. BALDWIN. Another proposal that we hear a lot about that has 

been floated is making RTOs the final decision-makers with regard 

to transmission decisions. And I wonder how you would analyze 

this as an option. Do you think that RTOs have all the correct interests in mind when they would approach these sort of decisions? 

Ms. AZAR. You know the decision-maker, in selecting the plan for 

the grid, needs to be beholden to only one interest and that is the 

public interest. The RTOs have got a lot of different stakeholders. 

And they are very adept, and I compliment them on trying to balance the competing needs of the stakeholders. 


rfrederick on DSK5VPTVN1PROD with HEARING
102 

But I can speak for the Midwest Independent System Operator. 

They actually have a contractual obligation to their transmission 

owners to maximize the revenues of the transmission owners. And 

when you have got those kind of interests, they will not be thinking 

about the public interest when they are making their decisions; 

they will be thinking about their contractual obligation to the 

transmission owner. 

So, no, I do not believe the RTOs should be the ultimate decisionmaker in this. That being said, their expertise with regard to planning and their planning engineers absolutely needs to be involved 

in this process. 

Ms. BALDWIN. I don’t know if Mr. Coen or Mr. Hibbard have any 

comments on that same question. 

Mr. COEN. I would concur with Commissioner Azar’s comments 

as well. 

Mr. HIBBARD. As would I. 

Ms. BALDWIN. Mr. Chairman, I don’t have any other questions at 

this time. 

Mr. MARKEY. Great. I thank the gentlelady. 

The Chair will recognize himself for another round of questions. 

Let me move to you, Mr. Hibbard, so that we can put this out on 

the table. 

A lot of people, when they think of the solar revolution, they 

think, well, we are going to bring it in from the deserts of the 

United States and bring it into the cities of our country. And that 

is true. And they also think that when we consider wind, we are 

going to go out to the prairies of the United States and we are 

going to bring it into the cities in order to provide the electricity. 

But people don’t really think about the oceans as much a source, 

in the future, of renewable electricity. And you made a reference 

to all of the Eastern States’ Governors from Maine down to Virginia, who are very concerned that their plans for bringing in wind 

off of the coastline or other renewable sources might be undermined by this kind of a proposal. 

Could you talk about that and talk about what your vision is— 

that is, all of these Governors’—in terms of what the long-term renewable prospects are for the East Coast? 

Mr. HIBBARD. Certainly. And thank you, Mr. Chairman. 

In Massachusetts and I think throughout the New England region, we are strongly supportive of the climate goals that are inherent in the ACES legislation and the renewable goals—certainly, in 

Massachusetts we are—and we want to find the best way to meet 

them. 

We see offshore wind as being an enormous renewable potential 

for the coastlines of our country, a potential that is very close to 

load centers and can interconnect in multiple locations on the 

lower-voltage-type networks that Commissioner Azar mentioned in 

a way that will strengthen the reliability of the grid; and that it 

represents—there is also a huge amount of onshore renewable potential up and down the East Coast. 

The concern that we have is that by—if you take, for example, 

what is included in the Joint Coordinated System Plan, it would essentially dump—— 

Mr. MARKEY. Could you expand on what that is? 


rfrederick on DSK5VPTVN1PROD with HEARING
103 

Mr. HIBBARD. Sure it is a multiregional plan that was done—I 

think, coordinated by MISO. 

Mr. MARKEY. Can you explain what MISO is? 

As you all continue your testimony, we have C–SPAN watching 

this, and I think it would be a very interesting subject if it was actually communicated in English to the watching audience. So we 

are going to be on acronym alert for the rest of this hearing, and 

I am going to stop every time you use an acronym and every time 

you make an assumption that everyone in the room knows what 

you are talking about. 

This is a very important issue that has very profound impact on 

families, so please explain what you are talking about. 

Mr. HIBBARD. Thank you, Mr. Chairman. I will try not to use a 

lot of acronyms. I hope my Boston accent is OK. 

Mr. MARKEY. You sound very eloquent. All of the other people in 

the room have such funny accents, don’t they? 

Mr. HIBBARD. I agree. 

Mr. MARKEY. How about those Red Sox and Yankees last night? 

Mr. HIBBARD. I was going to, on a personal note, commend you 

for your astute observation about the link between our national 

economy and baseball because we are seeing signs that our economy is improving, and it occurred to me that at the same time, as 

you watch the Red Sox once again sweep the Yankees over the past 

few days, Ortiz is hitting home runs again. 

Mr. MARKEY. I will give you 1 extra minute, so everyone—again, 

people won’t know what you are talking about. 

I gave a speech in Boston on Monday, and I said that—I said in 

Boston that the economy was in a David-Ortiz-like slump, but that 

I had faith that our economy and David Ortiz would be hitting 

home runs again. Now, unfortunately, the Boston Globe ran a little 

editorial the next day questioning my judgment in linking David 

Ortiz’s recovery to the American recovery. That night David Ortiz 

hit a home run. Last night David Ortiz hit a home run. 

Today and yesterday we received all this new, positive commentary about the American economy. I am not saying it is directly 

related to my speech on Monday. However, I do believe that, and 

I thank you for pointing this out, that my comments were accurate. 

So please continue, and we will add back the time onto your 

statement. 

Mr. HIBBARD. I will see if I can remember the original question. 

There was what I think has gone hand in hand with the efforts 

to push for expanded Federal oversight over transmission, there 

have been a couple of major studies done recently by DOE and also 

done by a group of regional planning entities across the country to 

look at this idea about how do we actually expand the development 

of renewable generation in the parts of the country where it exists 

and move that across the multiple regions and deliver it into subregions. 

So the Joint Coordinated System Plan was a very large technical 

analysis of how to go about doing that, what the transmission network would look like, a super-high-voltage transmission network 

would look like, to accomplish that result. 

As part of that plan, when you look at it, one of the things it does 

is, it would dump on extra-high-voltage lines on the order of 


rfrederick on DSK5VPTVN1PROD with HEARING
104 

severalthousand megawatts of power into New England at a very 

high voltage. 

Now, in addition to that—issues that Commissioner Azar has 

mentioned—that would require a lot of building out of the transmission network within New England. 

The concern I have is that we have a competitive market framework in New England that is absolutely essential to keep commodity prices low for our consumers. We have a need in the region 

over the next couple of decades only on the order of several hundred to 1,500 megawatts for new power. If we were to administratively put in a large high-voltage transmission line that put that 

quantity of power into our region, it would eliminate the market 

signals that our local renewable resources require in order to move 

forward with financing and development. That is the threat. 

Our position is, we absolutely have to meet the carbon goals that 

the country is now warming up to and that we need to meet in the 

coming years. But the way to do that is to do it through ensuring 

that the resources that are brought on line are those that make the 

most sense to the customers from the standpoint of the delivered 

price of electricity; and we think we can do that without this level 

of Federal oversight. 

Mr. MARKEY. So—if I may, so one of your concerns and New England’s concerns generally, those six States, would be that as you 

put together regional plans to generate renewable electricity within 

the region, offshore or onshore—there is a huge project up in 

Aroostook County in Maine that could be, ultimately, in the thousands of megawatts if it is built out completely; but there will be 

an issue there of getting that electricity down into the population 

areas. But nonetheless it is contained within New England that 

has had historic relationships and worked through all of the reliability, cost allocation and siting issues over the years. 

But you would be concerned that if there was some superimposed 

decision made to build transmission lines in from other parts of the 

country, that that would then change the economics of developing 

the renewables that are indigenous to Massachusetts and New 

England whether it be in Aroostook County, Maine, or off the 

coastline of New England. 

I think—and I will add this as well—one of the things that is not 

well understood about the East Coast of the United States is that 

when you go out 10 miles, 20 miles, 30 miles, 40 miles, you are still 

only in 200 feet of water. When you go out that far on the West 

Coast, you are out—you are miles deep in the ocean. And so in 

terms of the siting issues along the East Coast, for wind especially, 

you can go out miles and miles and still be just hundreds of feet 

from having to site these wind facilities; and then with superconducting technologies, just bring them in to the shore and hook 

them into the preexisting grid that already is there in New England—with the States having to work out, of course, what the cost 

allocation is, but knowing that all of New England, for example— 

and New York, for that matter, and New Jersey and Maryland are 

all committed to resolving and cooperating in the production of 

new, renewable energy resources. 

So just opening up this whole question of the remote areas of 

Maine, for example, most people don’t know that 95 percent of 


rfrederick on DSK5VPTVN1PROD with HEARING
105 

Maine is forest. It is woods. It is rural. So there is a lot of opportunity there as well, and it is a huge State as well. So I just raise 

that issue because we have to strike a balance here, because we do 

want each region’s indigenous resources to be developed as well. 

Let me just stop there and recognize the gentleman from California, Mr. McNerney, for his questions. 

Mr. MCNERNEY. Thank you. I was expecting you to recognize Mr. 

Inslee first. 

Mr. MARKEY. He has already been recognized for his first run. 

So I think it is appropriate for you to be recognized. 

Mr. MCNERNEY. Thank you. 

First of all, I want to thank Chairman Wellinghoff for his hospitality this week. And I think your testimony was rational. I noticed 

one thing though. You were seeming to advocate that the Fed has 

a significant, large role and the State regulators were all saying, 

Well, the States should have a larger role and the Fed should have 

a littler role. So I guess that is not too surprising. 

I wanted to ask you, though, do you think that the U.S. faces significant technical hurdles, or do you think it is mostly political hurdles to improving our national grid? 

Mr. WELLINGHOFF. Thank you, Congressman McNerney. 

First, on the issue of the Federal role, I really believe that we 

should primarily defer to the States. I think what we need is to 

have Federal pressure to ensure that the States can move forward 

with interconnection-wide regional planning, siting, cost allocation. 

But I largely agree with Commissioner Azar and her testimony. 

I think really it needs to be primarily informed by the States. 

We certainly, though, have to have some entity who would overlook that State activity to ensure that the national goals are also 

incorporated into what the States—— 

Mr. MCNERNEY. And I like Ms. Azar’s suggestion that we lock all 

the State people in one room until some decisions are made. But 

I don’t think that that is really going to happen. 

Mr. WELLINGHOFF. But on your second question with respect to 

whether it is technical or political, it is a good mix of both. And 

on the technical side, I think it is important to understand—and 

I know that New England and the eastern seaboard States are very 

interested in offshore wind, and I support offshore wind; that is a 

great resource. 

What we have to understand is, they are not an island either; 

they are interconnected to the entire eastern interconnect. So, for 

example, if we had offshore wind from Rhode Island, New Jersey, 

New York all the way up through New England put in place, developed, say, 10 gigawatts, 10,000 megawatts of wind put into the 

East Coast, we could not simply, as I understand it from my reliability engineers, simply interconnect that into the existing grid. 

We—in fact, if we had that happen, and we had as little as perhaps 

2,500 or 3,000 megawatts of that go off line, we could black out 

Florida. 

So we ultimately need to look at how to strengthen the entire 

interconnect so that all the regions, in fact, can meet the renewable 

goals and can do it with their local renewable resources and with 

distance-renewable resources, if necessary. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 


rfrederick on DSK5VPTVN1PROD with HEARING
106 

Mr. Halvey, I certainly appreciate your work toward the Western 

region. I understand your desire to streamline the permitting process. Do you have any specific recommendations along those lines? 

Mr. HALVEY. Yes, I think a couple of recommendations, one because of the work that we are doing with regard to the Western 

Renewable Energy Zones project. We think it will became clear 

very quickly which areas represent the most desirable, the richest 

and the most developable renewable resource zones. Given that 

identification, we think there is the opportunity to prioritize those 

areas. Where they exist in concert with federal lands, we believe 

there should be a priority given to the permitting on those areas. 

Same thing with the transmission lines that would be necessary 

to move that power from those renewable energy zones to the market centers where it is needed. 

One of the other aspects of the project is that we will identify, 

conceptually at least, where the transmission lines need to be in 

order to use that power. 

Mr. MCNERNEY. So you are really addressing the prioritization, 

not the actual process of permitting? 

Mr. HALVEY. We think it is both. One recommendation is the 

prioritization. The second is to look at the requirements and certainly limit the number of requirements that agencies have to go 

through that have no value added in terms of that permitting process, that there is a way to protect wildlife, that there is a way to 

address environmental values, that there is a way to go through 

these processes and not take the kind of time that we are seeing 

with many of these applications. 

Mr. MCNERNEY. I agree. And I just want to remark on Mr. 

Hibbard’s optimism that offshore wind can be as significant as it 

can. And the fact that it is proximate to load centers, that is an 

important consideration as opposed to putting in a lot of transmission. So I appreciate that. 

And also the observation about just putting in large transmission 

capacity can have a negative impact on renewables. So those are 

appreciated, those comments are appreciated. 

And with that, I will yield back. 

Mr. MARKEY. Gentleman’s time has expired. 

The Chair recognizes the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. Thank you. I wanted to read just a little portion of 

Commissioner Azar’s testimony and ask a couple of questions to 

the three of you about it. Commissioner Azar said Congress can 

and should play an important role in bolstering and catalyzing 

State efforts by setting clear mandates and guidelines as well as 

strict deadlines for State and regional transmission planning efforts. If these planning efforts fail to meet these mandates or deadlines, Congress can set up additional backstop authority for Federal 

agencies to take action and ensure that projects identified in the 

regional planning efforts move forward. I am paraphrasing now. 

Examples of the type of leadership that would be helpful include 

the following, and the commissioner lists four things. But the fifth 

thing is clear and powerful backstop authority for Federal action 

to plan for, approve and site transmission lines that are identified 

as vital in the State-led transmission planning process. 


rfrederick on DSK5VPTVN1PROD with HEARING
107 

I agree essentially with that statement. And I think a bill I have 

introduced heads in that direction. The question I would like to ask 

Mr. Hibbard, Commissioner Azar and Chairman Wellinghoff is, Mr. 

Hibbard has identified this issue that he doesn’t want to see offshore wind intruded upon by, say, coal coming in from Ohio or 

somewhere else. And I believe if we do have this backstop authority, we can and should build something in that would make sure 

that we preserve our goal of enhancing low carbon-based fuels as 

part of what you might think of as bonus backstop Federal authority. 

Is there a way to do that? And if you could give us your thoughts 

on the best way to do that. I will just start with Mr. Hibbard. If 

we were going to adopt this backstop Federal authority, what 

would you encourage us to do to prevent the scenario that you fear? 

Mr. HIBBARD. Well, let me start by saying I think that the legislation as it stands contains that backstop authority. By setting a 

cap on carbon and by setting a floor on renewable resource development, you are providing competitive markets the market signal 

they need to spur the development. 

The question you are posing is what if that is not enough? What 

if at some point we look and we see that, for whatever reason, we 

are not getting the level of development of renewable and low-carbon resources to meet our clear caps and our clear floors? 

What I would urge all of you to consider is to try to come up with 

a framework that does so while maintaining the importance of competitive market solutions. 

Again, under FERC’s leadership, our wholesale competitive markets in New England are critical to keeping prices low to consumers, and not violating that is extremely important. Now, are 

there ways to do that? The one example I can give you is that in 

Massachusetts we recently enacted legislation that requires our 

distribution utilities to enter into long-term delivered-price contracts with renewable power sources so that the utilities themselves would issue solicitations and would select the lowest-cost option for meeting that goal of the Massachusetts State Legislature. 

You could consider something along the same lines where at 

some point you could evaluate whether or not the country is heading towards meeting its carbon cap and its renewable power floor, 

and if there is a deficiency identified, have FERC step in in essentially a backstop planning mode and require that regions, RTOs, 

utilities or interconnecting transmission owners issue solicitations 

for long-term contracts for renewables on a delivered-price basis. 

Mr. INSLEE. I want to make sure, if you could kind of wrap up, 

I want to make sure we get to the other two witnesses. 

Ms. AZAR. Thank you, Congressman. I am optimistic that if Congress sets the goals and sets the process and has a strong backstop 

authority, that we will be able to get this done. If we don’t get it 

done, again, I think that is when the role of FERC steps in. So if 

FERC for instance—if the States came up with a specific plan and 

the plan did not meet the objectives of Congress that Congress set, 

I think there needs to be essentially an overseer. And I personally 

would be fine with that being the Federal Government saying, yes, 

this plan actually meets those objectives. But the plan itself has to 

be designed by the States. 


rfrederick on DSK5VPTVN1PROD with HEARING
108 

Mr. INSLEE. Mr. Chairman. 

Mr. WELLINGHOFF. Thank you, Congressman Inslee. Just to respond to Mr. Hibbard, I want to make very clear that FERC is very 

committed to competitive market solutions. We wouldn’t choose to 

do anything that would be counter to that. But I think when we 

look at transmission, there are some nonmarket barriers, and those 

include the issues of siting and cost allocation. And, again, agreeing 

with Commissioner Azar, I think it is necessary to allow the States 

to move forward in those areas to see if they in fact can do some 

interconnect-wide planning collectively, that they are moving forward to do that both in the eastern and western interconnects, and 

then see from that if the siting and cost allocation can be agreed 

upon. But if not, we have to I think have that pressure, that Federal pressure behind it to inform that process, to make sure that 

it moves forward to ensure that we meet our national goals. 

Mr. INSLEE. Thank you. 

Mr. MARKEY. The gentleman’s time has expired. The Chair recognizes the gentlelady from Wisconsin. 

Ms. BALDWIN. Thank you, Mr. Chairman. When I hear the discussions about connecting Dakota wind generation through transmission to load centers on the east coast, I sort of feel like Wisconsin could become a State that has an extension cord just running through it. Maybe I should use the swimming pool analogy instead. But that is the image that it conjures up for me. And I worry 

that it disincentivizes distributed generation. 

And as I pondered in my opening statement earlier this morning, 

how we propose to pay for the transmission upgrades that are coming down the pike is a critical question. Will those who do not receive the extensive benefits of this transmission have to pay for the 

cost of traversing lines across the country? 

The ratepayers that I represent, as you have already heard, have 

supported their share of more than $2 billion of new investments 

in the Wisconsin transmission system. Clearly there are transmission technology decisions that need to be made, and there are 

cost allocation decisions that need to be made. But I guess I would 

ask the whole panel and anyone who wants to comment, how we 

best protect those ratepayers, how we set up the system in a way 

to best protect those ratepayers who will not be receiving the huge 

benefits of this transmission buildup. 

Mr. HIBBARD. If I may jump in, Congressman. I think the model 

that I have been discussing here this morning of requiring that the 

cost of transmission associated with moving generation from the 

generation source to market be included in the price that is offered 

to consumers that will be purchasing it is our first line defense on 

that. So that if transmission were coming from the Dakotas and 

being put into New England, the price of that would include not 

just the cost of developing the generation but also the cost of the 

transmission. We can then compare that price to other generation 

prices available to us within the New England market for local renewables, for demand resources, or for more traditional generation, 

and that ultimately the projects that will go forward will be the 

ones that benefit ratepayers. 

Ms. AZAR. As far as cost allocation I don’t think we can actually 

speak to what would be the best cost allocation at this point in 


rfrederick on DSK5VPTVN1PROD with HEARING
109 

time. It should be tailor-made to the grid that is essentially 

planned. As I mentioned in my initial comments, if you pick a specific cost allocation right now, it is likely to steer the plan in a specific direction. And I would rather have the physics drive—the 

physics and the economics drive the plan, and then we can figure 

out how to pay for it after the plan is designed. So that is my recommendation. 

Mr. COEN. As a Vermont commissioner I would concur with my 

colleague from Massachusetts. For the naval perspective, we would 

be looking to take a position case by case as it comes forward. 

Mr. WELLINGHOFF. And, again, I would agree with Commissioner 

Azar. We should not dictate a particular method, number one. But 

number two, my preference would be to have the States try to work 

it out ultimately. And if those States that were involved in the line, 

the line went across the State, but that State could make a case 

if there wasn’t real benefits to that State. So hopefully that solution could be worked out and ultimately resolved in a collaborative 

way. 

But ultimately, at the end of the day, if the decision had to be 

made and it couldn’t be made by the States and the region collectively, I think it would be appropriate for FERC to determine that 

allocation; and the allocation, in fact, may decide that a particular 

State like Wisconsin did not benefit, depending upon the definition 

and breadth of the term ‘‘benefit’’ from a particular line, and, as 

such, may not be allocated costs. 

But, again, you have to provide the flexibility for that kind of a 

decision to be made. You can’t restrict specifically or dictate in a 

rule how that has to be done. It has to be in a very broad, in a 

broad way that allows FERC to meet its mandate to ensure that 

rates are just and reasonable. 

Mr. MARKEY. OK. Let me now turn and recognize once again the 

gentleman from California for another round of questions. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

I had a question for Commissioner Azar. You had some recommendations for congressional action to facilitate projects, transmission projects. Do you feel that those recommendations are widely shared across the country by State commissioners. 

Ms. AZAR. I have not had the opportunity to float that idea by 

my colleagues, so I can’t speak to that. 

Mr. MCNERNEY. Well, that is my only question and I yield back. 

Mr. MARKEY. I thank the gentleman. 

The Chair will recognize himself just to pursue a few questions 

here. Mr. Hibbard, perhaps you could deal. Mr. Wellinghoff said 

that if there was 3,000, 5,000 megawatts of wind brought in from 

offshore up in New England, that it could cause reliability problems down in Florida. But the converse could also be true with 

what Florida Power and Light and, hopefully someday, the Southern Company is doing in Florida to generate renewable electricity 

could cause reliability problems up in New England. How do we resolve that issue? 

Mr. HIBBARD. Thank you, Mr. Chairman. The issue, the engineering issue that the Chairman refers to is really one of the size 

of the transmission and the associated capacity being put onto the 


rfrederick on DSK5VPTVN1PROD with HEARING
110 

transmission network in the region. So for example, if as Commissioner Azar was referring to you have a 765 kv line and it is—— 

Mr. MARKEY. You know, can you imagine the audience right 

now? OK, what is that? What is that? 

Mr. HIBBARD. If you have a really extra high-voltage line—— 

Mr. MARKEY. What does that mean? What does that mean? 

‘‘Dropping,’’ what does that mean? 

Mr. HIBBARD. Think of it this way. 

Mr. MARKEY. OK. Try again. 

Mr. HIBBARD. When a transmission line interconnects or it hooks 

up with the transmission system in New England, it looks like a 

generating facility. So if you have a really high-voltage line it looks 

like a really big power plant. 

Mr. MARKEY. So when people are riding down the street or out 

on the highway, and they look off and they see something, explain 

it in those terms just so they can understand why people’s sensibilities might be affected by what it is that is constructed, so that 

you can put it in those terms, because 765 kilovolts doesn’t really 

mean anything to people. 

Mr. HIBBARD. What they would actually see is a really big tower. 

But from the standpoint of how it affects the grid it just puts a lot 

of electricity onto the grid in a single location. And if that were 

suddenly to disappear, then there could be problems if the transmission system can’t withstand it, and cause the type of widespread outage that he was referring to. 

The value I see in offshore wind technology along the eastern 

seaboard is it completely overcomes that problem, because it can be 

built out incrementally at lower voltages that hook on individual 

lines into the major load centers along the east coast so that we 

can build it out without the need for increasing the reliability, the 

potential reliability risk on the underlying transmission system. 

So that, while I think if we were to take the path of interconnecting 3,000 megawatts in a single point—that would be the 

problem that the Chairman is referring to— but that offshore wind 

has the potential to be dispersed on a much more widespread geographic basis and actually enhance the reliability of the grid. 

Mr. MARKEY. Mr. Wellinghoff, would that solve your Florida 

problem, or, from our perspective, our New England problem? 

Mr. WELLINGHOFF. I am not sure that it would, Mr. Chairman. 

Mr. MARKEY. Can you explain why? 

Mr. WELLINGHOFF. I am not sure that it would, Mr. Chairman. 

Ultimately, even though you may disperse the 3,000 megawatts 

over a number of locations, the issue is going to be the variability 

of that wind and the effect of that variability on reliability across 

the interconnect with respect to frequency. And I have actually directed our reliability division to commence a study that will look 

at this issue and determine how that incursions infrequency can affect reliability across both the eastern and/or western interconnects. 

Mr. MARKEY. Mr. Hibbard, you are back at a FERC hearing right 

now; what are you going to say to Mr. Wellinghoff when they raise 

that issue? 

Mr. HIBBARD. First I will commend the Chair and FERC for looking into reliability. 


rfrederick on DSK5VPTVN1PROD with HEARING
111 

Mr. MARKEY. Good. 

Mr. HIBBARD. And I would encourage them to consider in that 

study the difference between variability of 3,000 or 4,000 or 5,000 

megawatts being connected at a single point to the variability, and 

the impact of it being spread over a very wide geographic region. 

And whatever the outcome is I am certain it will be the right answer. 

Mr. MARKEY. And would you agree that there could be a distinction made between a concentrated renewable source and something 

that is dispersed over hundreds or thousands of miles? 

Mr. WELLINGHOFF. Mr. Chairman I try to not practice electrical 

engineering without a license, but I would agree there may be a 

difference between the two. 

Mr. MARKEY. Thank you. And by the way, would those same 

issues exist in a Western State, for example, that might want to 

produce 3,000 or 4,000 or 10,000 megawatts of renewable in their 

State and try to move that, for example, into a metropolitan area 

in another State or several other States? Would it create the very 

same issue? 

Mr. WELLINGHOFF. Yes, it could be applicable in either interconnect. 

Mr. MARKEY. So it is an issue that we ultimately have to resolve 

here. I think that going back to this 765 kilovolt issue is an important thing to understand. Because in my experience, at least on 

this committee for 33 years, there are corporate entities that really 

think big; the bigger the facility, the bigger the plan, the better it 

is. And then there are others that think, well, maybe we can disperse the way in which we generate electricity. Maybe we can do 

this in a way—and here it is going to be increasingly important— 

to generate solar and wind and other renewables from more dispersed sources. And that is to a certain extent where the smart 

grid comes in so that we are doing it. We not only need a smart 

grid, but we need smart people planning a smart grid so we don’t 

overbuild it and put those burdens back on to the consumer. 

And we saw all of that happen back in the 1970s and early 1980s 

where all of these nuclear power plants that were guaranteed to be 

needed by the year—if we didn’t build 500 new nuclear power 

plants, they told us, by the year 2000, we would have blackouts all 

over America. 

So we need to think big and put all these costs on the shoulders 

of ratepayers all across America. In the New England region we 

really suffered from the overenthusiasm, I will say, of these big 

central planners. And so we have to be careful here that those 

types of—we will call it planners—don’t control this process, because it is just the opposite era that we hope we are entering in 

terms of the development. 

And I can just feel the hoofbeats of the large central planners 

moving towards this whole concept. And after 33 years, I am kind 

of aware of what can happen. There is an old saying that a smart 

man learns from his own mistakes and a wise person learns from 

other people’s mistakes. But at my age and service in Congress, I 

am an expert in both areas of mistakes, and so I just don’t want 

to see that happen again. And that overbuilding issue is really 

something that is quite important to me. 


rfrederick on DSK5VPTVN1PROD with HEARING
112 

So if you could, Ms. Azar, could you go to the question of AC/DC. 

And first of all, explain to our viewing audience what that is and 

why different results occur depending upon the decision which is 

made. 

Ms. AZAR. Yes. The alternating current system is the primary 

transmission grid we have right now, and it is completely interconnected. So when you put an electron on that AC grid it is going 

to go to the path of least resistance. With models, you can predict 

where it is going to go but you can’t direct it. The electron goes 

where it wants to go. On a DC line it is actually very directed. It 

has one direction. 

Mr. MARKEY. So DC means direct current. 

Ms. AZAR. Direct current, thank you. The direct current line. You 

have a lot of control over it. The electron goes in one direction. You 

know, for instance, when you drop an electron on one end of a DC 

line, you know where it is going to end up. It is going to end up 

on the other side of the DC line. Whereas in an AC grid, if you 

drop an electron at the same point, you are not sure what path it 

is going to take. The only thing you know is you are pulling power 

off at certain locations. So there are two very different models. 

Mr. MARKEY. And for the purposes of our discussion today, how 

does that instruct this discussion in terms of the goals that we are 

seeking to achieve. 

Ms. AZAR. I can give two answers to that. One is we need to 

know what the goals are from Congress. And then we are going to 

be able to decide which of those, or the combination of the both of 

them, will solve the problems that you are going to put forth to us. 

I can tell you from a personal perspective that the DC lines, if 

your problem is trying to get power from a fairly localized location, 

let’s just say in the Dakotas, and you are trying to get it far east, 

as long as you are over 400 miles long, DC lines will likely be a 

very good solution to that problem. 

Mr. MARKEY. Are they more or less expensive? 

Ms. AZAR. That is a good question. As a general rule I would say 

they are less expensive, but it depends on what kind you are building. 

Mr. MARKEY. And that should be a decision, in your opinion, 

made by the regions. 

Ms. AZAR. That is correct. 

Mr. MARKEY. And that could actually turn on how much burden 

is placed upon consumers in terms of their electricity bill each 

month. 

Ms. AZAR. That is correct. 

Mr. MARKEY. Mr. Wellinghoff, if I may, you heard Mr. Hibbard 

and others talk about what the impact would be of the WaxmanMarkey bill on the marketplace. The signal will be sent to move 

away from carbon-producing electrical generation; there will be a 

national renewable electricity standard now as a result encompassing an additional 20 States. And he largely believes that that 

is going to now force States on a regional basis, because of these 

national goals, to reach a combination on these new lines, and that 

the Federal Government is actually going to be less needed in the 

future, perhaps with the exception of the Federal lands issue, to resolve these issues. 


rfrederick on DSK5VPTVN1PROD with HEARING
113 

What is your response to that in terms of—because we are trying 

to create a market-based response. And I will just give you an analogy and perhaps you could—or an analogous situation and perhaps 

you could reflect upon it. 

After we passed the 1996 Telecommunications Act, all of a sudden there was an explosion of broadband deployment across the 

country. Telephone companies, cable companies, others who had 

been telling the local PUCs, oh, it is not in fact cost-effective to be 

deploying fiber optic or broadband technology. We are now in a 

mad race to do so because there is now a new Federal law which 

is placing a premium upon it, and by the time we reached 2000 we 

actually had a dot-com bubble because of the vast and very rapid 

deployment of broadband across our Nation. 

Now, we created thousands of new companies. Some survived, 

some didn’t. But it was great for our country in the long run. Is 

there any reason to believe that the legislation, as it is now drafted, won’t unleash a similar and very, very significant deployment 

of renewables across the country and kind of press regions and individual utilities to finally resolve their longstanding, call it—no, I 

won’t call it opposition, I will call it skepticism. Because I saw it 

in the telephone sector, I saw it in the cable sector. They moved 

overnight to challenging their perspective. 

Do you think the legislation will do that, and, as a result, perhaps this Federal role isn’t going to be as needed, with the exception of the Federal lands issue? 

Mr. WELLINGHOFF. Well, certainly as you are aware, Chairman 

Markey, there are approximately 29 States now that have renewable portfolio standards. In fact, my State of Nevada is one of 

those. We have a standard that is 20 percent by 2015, so it is far 

ahead of most State standards. And those standards have in fact 

created markets, created markets for renewable energy, and moved 

renewable energy into those markets very effectively. So I think 

that is happening already on the one hand. 

But on the other hand, I have people coming into my office who 

tell me that wind is being curtailed in the Midwest because we 

don’t have adequate transmission. So that tells me we have a problem. It is not simply the markets are creating these new markets 

for renewables, it is the need to somehow ensure that this transmission gets built to make a deliverable. We need to make a deliverable. 

Mr. MARKEY. You are saying that the States are not cooperating 

in the Midwest in the transmission of wind. 

Mr. WELLINGHOFF. No, I am not saying necessarily the States or 

the Federal Government. I think it is a combination of the fact that 

we have certain barriers, which include issues of planning, siting, 

and cost allocation that need to be relooked at in ways that we can 

facilitate more transmission for renewables. 

Mr. MARKEY. You are basically saying the Federal Government 

needs more authority because the States aren’t doing the job in 

moving that wind around in the Midwest. 

Mr. WELLINGHOFF. I am saying that ultimately what we need to 

do is ensure that the States understand—— 

Mr. MARKEY. And I appreciate that. 


rfrederick on DSK5VPTVN1PROD with HEARING
114 

Mr. WELLINGHOFF [continuing]. Those priorities, and that in 

fact—— 

Mr. MARKEY. But you are saying they will need that,—in addition to the new law which we are passing, which will create all 

those incentives for utilities to move and for states to move, you 

are saying that that is not going to be sufficient; that you believe 

that the States themselves have some built-in inertia, and some of 

those utilities do as well, and that because they don’t move, even 

though we passed this new law and created these high goals that 

have to be met by national mandate, that we will still need the 

Federal Government to come in as a club. Is that what you are saying? 

Mr. WELLINGHOFF. I am saying that I am not blaming the States, 

nor am I saying the Federal Government is the panacea. I am ultimately saying—— 

Mr. MARKEY. Right. But here is the problem. In terms of—and 

I appreciate what you are saying, and you are engaging in a bit of 

terminological inexactitude which is necessary for to you maintain 

good relationships with the States, and I appreciate the position 

that I am putting you in. But at the same time, we are going to 

create a brand new law here that is going to affect all these States. 

Mr. WELLINGHOFF. That is correct. 

Mr. MARKEY. So we need some evidentiary basis for preempting 

the States that is based upon a Federal perception of the problem 

that exists in these States. So while we won’t use the word 

‘‘blame,’’ we need to find some way in which we pinpoint what it 

is that is occurring that is the problem, and then we can tailor a 

solution to it. But we can’t deal with it in kind of broad generalities. We need to have the specifics, and then even in the report 

language of the legislation we can ensure that we are explaining 

the problem as it exists, let’s say, in a particular region. And here 

we are talking about the Midwest and the fact that wind is not 

moving around, even though it is readily available. So pinpointing 

what that problem is helps us then to tailor the language to reflect 

that problem. 

So maybe you can elaborate a little bit on that Midwestern problem where the bottlenecks are, what causes it; and then we can 

kind of contemplate, cogitate, on what might be necessary. 

Mr. WELLINGHOFF. And I am suggesting part of the bottlenecks 

are the fact that, number one, FERC really doesn’t have the authority to allocate across boundaries. So between Misol and PGM, 

for example, we don’t have the ability to allocate costs of transmission across these boundaries, and, as such, we are not really 

getting the types of transmission built. 

And I think you are going to hear from Mr. Welch from ITC in 

the next panel, and he has a very interesting transmission project 

that I would commend you to explore this with him further, because he is in the Midwest trying to get large amounts of wind out 

of the Dakotas into the Chicago area. And I think one of his issues 

he is talking about is cost allocation across two regions. 

So what I am suggesting ultimately is that Congress needs to 

look at an entire structure of planning, siting and cost allocation 

that is initially deferred to the States, and I would say that the 

States should in fact ultimately solve that problem. But if they 


rfrederick on DSK5VPTVN1PROD with HEARING
115 

can’t, then the pressure should be there to allow the Federal Government to step in if necessary. 

Mr. MARKEY. Thank you. Mr. Wellinghoff. I was the author in 

1992 of the wholesale transmission access provisions in the Energy 

Policy Act that, for the very first time, gave the FERC the ability 

to force utilities to stop blocking requests for open and nondiscriminatory access to wholesale transmission lines so that there could 

be more competition in that area. 

The FERC then built upon that new law that I created and 

issued a generic order 888 on transmission access, which is an historic order, and that is based upon my 1992 law. 

So I am very sensitive to this issue, but, again, I don’t think we 

should tailor something that goes beyond what is needed. And I say 

this to you, Chairman Wellinghoff, that part of the problem we 

have up in Massachusetts, and New England as well, is the—and 

it is not you, it is your predecessor of FERC that has just left office—but preempting our State and local governments from granting FERC siting authority on wholesale electric transmission lines, 

that issue is illuminated by the fact that the FERC has seemed to 

be completely unresponsive to our local concerns when it comes to 

the siting of the liquefied natural gas facility in Fall River, Massachusetts. I have an LNG facility in my district in Everett, Massachusetts. 

Massachusetts, working with the Federal Government, has licensed two LNG facilities about ten miles off of our coastline to 

bring LNG into our market and into the New England market. It 

is upwards now of 30 percent of the natural gas that we use in 

New England, and we support LNG and we have licensed two facilities. 

But notwithstanding Massachusetts saying to the FERC, we 

don’t need another one on land, we are doing it offshore and we 

have licensed them, the FERC—not your FERC—but the FERC up 

until this point has been saying, no, you are going to have another 

one in Massachusetts. And even that decision itself could affect the 

amount of renewables that we need. Notwithstanding the fact that 

natural gas may be half of the carbon in its use as coal, it is not 

nearly as good as renewables will be, but it is going to affect our 

marketplace by having that be forced upon us. 

And the FERC has been pressing that now for the last 4 or 5 

years. So that kind of calls into question kind of this Federal onesize-fits-all process, where, even when the State is saying back off, 

the FERC continues to come in and say, no, this is what you are 

going to have for New England. So how do we reconcile that, Mr. 

Wellinghoff? 

Mr. WELLINGHOFF. Well, Mr. Chairman, I am not suggesting a 

one-size-fits-all process. Again I am suggesting, unlike the LNG 

process, where FERC has the primary and initial responsibility 

with respect to siting and permitting, that in fact States be given 

the initial opportunity in this regard. And that opportunity I think 

should be given all the tools necessary for it to succeed. 

Mr. MARKEY. Thank you, Mr. Wellinghoff. 

Are there other members who wish to ask questions of this 

panel? Let me recognize the gentlelady from Wisconsin. 


rfrederick on DSK5VPTVN1PROD with HEARING
116 

Ms. BALDWIN. Thank you. Just one more rather big question. But 

I appreciate the Chairman for asking our witnesses to make this 

understandable for a viewing audience. 

We had a discussion recently of follow the electrons. And I actually would like to pose a question about following the money. I ask 

anyone who wants to give just a very brief primer on the economics 

of transmission, is there a guaranteed rate of return; how is that 

determined; who decides; and, if so, what is that guaranteed rate 

of return for transmission? 

Mr. WELLINGHOFF. Congresswoman Baldwin, I will attempt that. 

I like to believe in rate-based regulation and transmission is not— 

first of all, you have to understand transmission is not a market 

item, it is an item that we have a limited number of entities who 

are putting in transmission, and it is under a rate-based cost service scheme. 

So they are authorized a return on their investment and they 

have an opportunity to earn a return. But to earn that return they 

have to manage their expenses and they have to manage their operations in an efficient way to ensure that their expenses match 

what their projections are, so that their return comes out to the 

level that they hope to achieve. The regulators, whether it be a 

State regulator or a Federal regulator, would authorize a level of 

return on equity that would be authorized. But, again, that is only 

an opportunity to earn that level of return. 

Ms. BALDWIN. Do you have any averages of what that rate of return might look like? 

Mr. WELLINGHOFF. I am sorry; what it might look like? 

Ms. BALDWIN. What is the average rate of return? I know there 

are variables. A ballpark. 

Mr. WELLINGHOFF. I can submit that to you in writing but I don’t 

have an average today for you. 

Ms. BALDWIN. OK. Thank you. 

Mr. MARKEY. I thank the gentlelady. And I thank all of our witnesses. You have been absolutely fantastic. 

And you, Mr. Wellinghoff, I want to tell you how much we appreciate your willingness to take on this job. This is one of the toughest jobs we are going to have in America. You have an outstanding 

record. And I have already had an extensive conversation with you 

privately, and I really am very very glad you have this job. I think 

you are going to do a tremendous, tremendous service to our country there in that position. It is very sensitive. It is going to require 

people like you who are willing to spend the time to get this right 

so we have a long-term solution. And as we are going forward, especially over the next week or so, we are going to need some specifics to help us to think through this issue in terms of where the 

problems have been, what has caused the problems, and what 

would be needed in order to correct those problems. 

We will need some examples and some specifics with regard to 

what has been used as a blocking mechanism to the resolution of 

these regional issues, because we want to get at that issue. We 

want to have real competition out there in the marketplace. So for 

you especially, Mr. Chairman, we hope that we can work with you 

in the next week. You have an outstanding staff and you are an 

outstanding individual and I think we can accomplish that. 


rfrederick on DSK5VPTVN1PROD with HEARING
117 

Mr. WELLINGHOFF. We would be happy to do that Mr. Chairman, 

and thank you very much for your kind words. 

Mr. MARKEY. I thank you. What I am going to do now is to work 

now in reverse and I am going to give each one of you 1 minute 

to tell us what you want us to remember as we consider this issue 

over the next week. 

And we will begin down on this end with you, Mr. Halvey. You 

each have 1 minute apiece. 

Mr. HALVEY. Thank you, Mr. Chairman. I think the two things 

that we would emphasize are the issue of supersizing, which relates directly to the cost allocation issue that we spoke about. It 

doesn’t make a lot of sense for us to use up whatever goodwill we 

might have trying to locate a line—or, excuse me, locate a line that 

is undersized. 

The second thing is I think the Federal lands issue, the permitting issue, I have elaborated some on that. But this we see as a 

very large impediment. Those would be the two things that I think 

we would like you to bear in mind. 

Mr. MARKEY. Thank you, sir. Mr. Hibbard. 

Mr. HIBBARD. Thank you, Mr. Chairman. I would just say that 

certainly from our perspective in the Commonwealth, we completely agree with the goals of the ACES legislation. We absolutely 

have to address the carbon issue and we have to address it now. 

What I would urge you to consider from the standpoint of transmission is to try to retain the competitive market structure that delivers benefits to our ratepayers in the designs that you implement 

going forward. the carbon cap that provides a value or cost, additional marginal costs associated with allowance purchase for fossil 

generating resources, and a renewable portfolio floor that provides 

additional revenues to renewable resources should provide the financial incentives needed to get the renewables and the associated 

transmission built. And that we want to maintain the distinction 

between who is responsible for paying for transmission if it is a 

generating facility, and who is responsible if it is needed for reliability. 

Mr. MARKEY. Thank you. Commissioner Azar. 

Ms. AZAR. Thank you. Number one, define the goals that we need 

to be with the transmission grid. 

Number two, define a State-led process by which we can meet 

those goals. One of the primary aspects of that needs to be that the 

decision maker must be beholden only to the public interest. 

Number three, ensure there is Federal backstop authority so that 

we get our job done, 

Umber four, don’t do harm. And with regard to that don’t define 

a specific technology and please don’t define a cost allocation process. 

Mr. MARKEY. Thank you. Mr. Coen. 

Mr. COEN. Thank you, Mr. Chairman. Very, very briefly, I just 

want to reiterate that the States are here to help. We would like 

to work closely with your committee in developing some transmission planning, and that Federal preemption of transmission 

siting should only be used as a last resort. 

Mr. MARKEY. Thank you. And, Mr. Wellinghoff. 


rfrederick on DSK5VPTVN1PROD with HEARING
118 

Mr. WELLINGHOFF. Mr. Chairman, thank you. I would suggest 

that hopefully you come away with this, number one, that we are 

not as far apart as we initially seemed to be, I think, when we 

started out in our testimony. But we all have the same goals: to 

reduce carbon and to ultimately develop as much renewables as 

possible to do that. 

But I think we need to remember that there are nonmarket barriers that we need to look at how to get that development done. 

And as part of those nonmarket barriers I think we need to do, put 

a construct together that would allow the States to initiate the 

processes of planning, siting and cost allocation, to have the transmission developed to deliver renewables. We also have to have that 

back pressure of the Federal Government standing there, being 

able to step in if necessary to make it happen and get it done. 

Mr. MARKEY. Thank you, Mr. Wellinghoff, very much. 

And in the spirit of what Mr. Wellinghoff said, we may not be 

as far apart as the initial statements indicated. Let’s work towards 

that goal. Time is of the essence, so all of these conversations now 

continued outside of this hearing room over the next week or so 

would be very helpful to us. With the thanks of the committee, this 

panel is dismissed, and we will ask the next panel to come up to 

the table. 

Mr. MARKEY. We thank you all for being here and we apologize 

for the delay. This is obviously a very important issue. We may be 

writing the transmission rules for the next generation of electricity 

generation in our country. Over the next couple of weeks we will 

see if that can be accomplished, perhaps it can, perhaps we can’t. 

But your testimony is going to be central to accomplishing that 

goal. We could not do it without your participation. 

We apologize to you for the delay in your panel being recognized 

and for it being Friday afternoon, getting later as the minutes transpire. 

STATEMENTS OF RALPH IZZO, CHAIRMAN AND CEO, PUBLIC 

SERVICE ENTERPRISE GROUP; JAMES NIPPER, SENIOR VICE 

PRESIDENT, AMERICAN PUBLIC POWER ASSOCIATION; 

GLENN ENGLISH, CEO, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION; REID DETCHON, EXECUTIVE DIRECTOR, ENERGY FUTURE COALITION; JOSEPH WELCH, PRESIDENT AND CEO, ITC HOLDINGS CORPORATION; CHRIS MILLER, PRESIDENT, PIEDMONT ENVIRONMENTAL COUNCIL; 

AND DAVID JOOS, CEO, CMS ENERGY CORPORATION 

Mr. MARKEY. We will begin with Ralph Izzo. He is Chairman, 

President and Chief Executive Officer of the Public Service Enterprise Group, Incorporated. He is a leader within the utility industry in the public policy area. We thank you once again for being 

here. Mr. Izzo, whenever you are ready please begin. 

STATEMENT OF RALPH IZZO 

Mr. IZZO. Mr. Chairman, members of the subcommittee, thank 

you for this opportunity to appear before you today to testify. PSEG 

distributes electricity and natural gas to more than 2 million customers in New Jersey, and owns and operates electric generating 


rfrederick on DSK5VPTVN1PROD with HEARING
119 

capacity in the Northeast, Mid-Atlantic and Texas. PSEG has long 

supported policies to promote renewable generation. 

We are planning major investments in solar, offshore wind generation, and in energy storage technology that will make renewable 

energy more competitive. 

The question today is not whether we should vigorously promote 

renewable generation, but how. Specifically, how should we use 

transmission policy to promote renewable generation at the lowest 

possible cost? This would include not just Federal siting authority, 

but decisions about transmission planning and cost allocation that 

are fundamental to determining how much transmission is built 

and where. 

There are two competing views on this. One view which I strongly favor is that government should establish prices for externalities 

such as the cost of emitting greenhouse gases, and let market 

forces determine which technologies and which locations are most 

promising for investment. This is the approach taken in the landmark ACES legislation. It establishes a price for carbon through a 

cap-and-trade program and a market-based subsidy for renewable 

generation through the Renewable Electricity Standard. With these 

price signals developers can compare the cost of renewable generation in different locations, including the associated transmission 

cost. 

The alternative view is that some central entity should plan and 

site transmission that will connect the areas with strong renewable 

resources to areas of high electric demand via some grand superhighway, paid for by a broad group of taxpayers. Under this model 

government would essentially pick winning renewable technologies 

and locations, and build transmission to facilitate them. 

I have several concerns about this approach. First, it could lead 

to unnecessarily expensive outcomes. All business owners know 

that if they establish their factory at a distant location to keep production costs down, they have to weigh that against shipping costs. 

But if we socialize shipping costs of renewable generation, we skew 

decisions away from locally based options that may have a lower 

total cost. 

That is why a bipartisan coalition of ten Northeastern Governors 

wrote to Congress warning that this policy would undermine their 

efforts to grow renewable industries. Moreover, building thousands 

of miles of transmission lines in anticipation of the arrival of renewable generation may lead to an expensive excess of transmission capacity. 

Transmission planning is a delivered process meant to respond 

to long-term reliability and economic concerns. It is not intended to 

predict and facilitate dynamic markets. 

Second, as has been said so many times already, there is no such 

thing as a green transmission line. Transmission lines carry all 

electrons without regard to the carbon footprint of the generator. 

In fact, the dispatchability of renewable resources would suggest 

you would have a significant underutilization of the transmission 

line unless you filled it with other forms of generation. So a green 

transmission line will give market advantage to any power plant 

fortunate enough to be close to the new line. 


rfrederick on DSK5VPTVN1PROD with HEARING
120 

Third, creating a new planning process across regions is unnecessary. We already have regional planning processes that are effective and sensitive to local concerns. Cross-regional issues should be 

addressed through improved coordination between regional planning bodies, which is exactly the approach taken in the committeepassed bill. 

Finally, existing tools can help renewable projects connect to the 

grid without distorting locational price signals and without potentially burdening consumers with an excess of expensive transmission. 

For example, if the costs of connecting to the grid and getting 

power to market are too much for one developer to bear, multiple 

developers can share costs among their projects. Or FERC can require that ratepayers initially bear these costs, provided they are 

reimbursed by developers after the projects become operational. 

In closing I believe we will meet our long-term carbon reduction 

goals. But sitting here today, I cannot tell you what renewable 

technologies, and, more importantly, in what locations, it will take 

to get us there to serve our customers at the lowest possible cost, 

and neither can government. 

That is why I strongly support policies such as an RES and carbon pricing that send price signals to the market and unleash the 

creativity and entrepreneurial spirit of the American people. Thank 

you. 

Mr. MARKEY. Thank you, Mr. Izzo, very much. 

[The prepared statement of Mr. Izzo follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
121 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 129 here 73745A.069
122 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 130 here 73745A.070
123 

Mr. MARKEY. Our next witness is Joe Nipper who is the Senior 

Vice President for Governmental Affairs of the American Public 

Power Association, representing the Nation’s more than 2,000 community-owned electric utilities. We thank you for being here. 

Whenever you are ready, please begin. 

STATEMENT OF JAMES NIPPER 

Mr. NIPPER. Thank you, Mr. Chairman, and members of the subcommittee. I appreciate the opportunity to be here today. 

APPA, as you mentioned, represents the interests of 2,000 publicly owned State and locally owned utilities across the country, collectively serving 45 million Americans; 110 public power utilities 

collectively own about 8 percent of the Nation’s transmission lines 

of 138 kilovolts or greater. 

However, the great majority of APPA’s members are transmission-dependent; that is, dependent on facilities owned by others, 

in order to acquire the electricity they need for redistribution of 

their retail customers. 

Our members report that more transmission is needed in almost 

every area of the country to serve a variety of purposes, including 

increased use of renewable energy, reliability and to enhance competition. 

In our view, the single most significant impediment to getting a 

new transmission built continues to be siting, and we urge Congress to clarify and continue to support the Federal backstop siting 

authority included in EPAct05. EPAct05 siting authorities were a 

major step forward but have been called into question by the recent 

court decision in the Fourth Circuit Court of Appeals. 

As an intervener the side of FERC in this case, APPA believes 

that legislation should clarify the original congressional intent in 

EPAct05 by expressly providing FERC with the authority to consider backstop transmission siting applications when a State denies 

an application. 

It is important to note for us that as units of local and State government, public power utilities are not typically supportive of Federal policy that diminishes State authority, and we certainly have 

had concerns about Congress’ and FERC’s attempt to expand authority in other areas. However, e importance of siting new interstate transmission lines cannot be understated, and thus our continued support of the compromise crafted in EPAct05. 

There is some misconception, though, that higher voltage lines 

are always better. In actuality, the interconnected nature of the 

grid is such that a lower voltage line, located strategically, could 

have a greater ability to relieve congestion and to enhance reliability than a higher voltage line, d could experience less local resistance to the siting and cost less than a higher voltage line. 

Of course there are situations where higher voltage lines is preferable and necessary, but we want to make it clear that bigger is 

not always better when it comes to the grid. This is one reason why 

regional planning is so important. 

The impact of proposed new higher voltage facilities on an existing transmission network needs to be fully considered so that the 

optimal mix of facilities can be determined. Encouraging proportional joint ownership of transmission facilities by load-serving enVerDate Mar 15 2010 05:20 Jun 30, 2012 Jkt 073745 PO 00000 Frm 00129 Fmt 6633 Sfmt 6633 E:\HR\OC\A745.XXX A745

rfrederick on DSK5VPTVN1PROD with HEARING
124 

tities, including public power utilities in a given region, another 

way to get more transmission built. 

If the responsibility for building and owning the transmission 

grid is spread more broadly among the entity serving customers in 

a region, en joint transmission planning will be facilitated simply 

because there are more participants at the planning table supporting the immediate projects. 

If network customers of a dominant regional transmission provider are encouraged to own their load ratio share of the transmission system, transmission usage and ownership will be more 

closely aligned, d the friction between transmission-dependent utilities and transmission owners can be reduced. There are many examples, Mr. Chairman, where that is the case. 

With respect to planning, APPA supports the transmission planning provisions, including the committee-passed version of the 

American Clean Energy and Security Act, as we believe they will 

bolster rather than duplicate or further complicate the existing and 

extensive transmission planning process under FERC Order 890 occurring at the regional and subregional levels across the country. 

The manner in which transmission facilities’ costs are allocated 

among generators, transmission owners, transmission-dependent 

utilities and other stakeholders is one of the most controversial topics related to transmission. 

APPA strongly supported the language included in EPAct that 

underscores FERC’s flexibility in determining the appropriate 

transmission pricing methodology. We don’t always agree with the 

decisions made by FERC on cost allocation. We continue to believe 

that Congress had it right in leaving these decisions with appropriate stakeholder input and administrative due process to FERC 

to determine under sections 205 and 206 of the Federal Power Act. 

The issue of who pays for transmission facilities to provide regional benefits is a difficult one. Such facilities can provide Presidents future system benefits that extend well beyond the specific 

entities wherein the facilities are constructed. Therefore APPA 

urges FERC to provide greater guidance on cost allocation for new 

major transmission facilities that afford regional benefits. 

APPA does not support the allocation of costs of facilities to regions, subregions or entities that will receive little or no benefit 

from the facilities, and therefore opposes a Federal statutory requirement to allocate such costs on an interconnection-wide basis. 

And lastly, Mr. Chairman, APPA has concerns with respect to 

FERC’s application of its incentive rate authority provided under 

EPAct05, for it seems to regard section 219 as a statutory requirement to offer a variety of different transmission incentives to applicants. It appears that these entities have been helping themselves 

to those incentives and that the Commission has not taken a sufficiently disciplined approach to awarding rate incentives. 

We appreciate your long-held concern in this area and your recent letter to FERC asking for an explanation of their use of their 

incentives, and we look forward to their response and to working 

with the Chairman on that issue. Thank you very much. 

Mr. MARKEY. Thank you, Mr. Nipper, very much. And I appreciate the very diplomatic way in which you used the word ‘‘entity’’ 

in your testimony. 


rfrederick on DSK5VPTVN1PROD with HEARING
125 

[The prepared statement of Mr. Nipper follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
126 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 134 here 73745A.071
127 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 135 here 73745A.072
128 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 136 here 73745A.073
129 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 137 here 73745A.074
130 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 138 here 73745A.075
131 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 139 here 73745A.076
132 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 140 here 73745A.077
133 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 141 here 73745A.078
134 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 142 here 73745A.079
135 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 143 here 73745A.080
136 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 144 here 73745A.081
137 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 145 here 73745A.082
138 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 146 here 73745A.083
139 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 147 here 73745A.084
140 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 148 here 73745A.085
141 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 149 here 73745A.086
142 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 150 here 73745A.087
143 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 151 here 73745A.088
144 

Mr. MARKEY. Our next witness is Glenn English. He is the Chief 

Executive Officer of the National Rural Electric Cooperative Association. But more significantly, he served in the United States Congress for ten terms as one of our most distinguished members. And 

it is our honor to have you back before the subcommittee. Glenn, 

whenever you are ready please begin. 

STATEMENT OF GLENN ENGLISH 

Mr. ENGLISH. Thank you very much, Mr. Chairman. I appreciate 

that. I am not sure my board of directors would agree with the 

‘‘more significantly,’’ but I appreciate that and understand where 

you are coming from on that. 

Mr. MARKEY. I think the one thing that the board and I can 

share in comment is that we will each reserve to ourselves which 

of us believes that you had a more important job. 

Mr. ENGLISH. Well, I appreciate both of you thinking I have an 

important job. 

Mr. MARKEY. The fact that you are so important to both of us. 

Mr. ENGLISH. You are very kind Mr. Chairman. I appreciate 

that. 

As I think the members of the committee know, electrical cooperatives are consumer-owned. We are in 47 States across the 

country and we serve, however, 7 percent of the population through 

about three-quarters of the land mass of the United States. So 

when we talk about transmission and when we talk about the fact 

that you are talking about generating renewable energy in this 

country, it is most likely going to come from areas that are served 

by electric cooperatives. So we have a big stake in that. We plan 

to have a big part of the future as we move forward in that general 

direction. 

Mr. MARKEY. Can you just repeat that number again; 7 percent 

of the customers, but—— 

Mr. ENGLISH. We have got three-quarters of the land mass. 

Mr. MARKEY. OK. Thank you. 

Mr. ENGLISH. And it is all owned by those individual consumers 

throughout those 47 States, Mr. Chairman. 

Also I think we can all agree that the signing of the American 

Clean Energy and Security Act of 2009 is going to bring about a 

profound change in the way that not only energy is generated in 

this country, but the way that we use energy in this country. It is 

going to change our lives. 

And with that understanding, I hope that we can also recognize 

that we have got to be prepared for that kind of a dramatic change. 

The transmission system as it he exists today was certainly not designed for this kind of change. In fact, it wasn’t designed for the 

1992 Energy Act with the deregulation on the wholesale level, so 

we are still trying to adjust to that. 

What we would suggest, Mr. Chairman, is that we need a sense 

of urgency here. And certainly we need transmission as a part of 

this act. It needs to be addressed in this act. And as a result of 

that, we think there are some very basic principles that need to be 

incorporated as you move forward with any kind of legislative language as it applies to this new transmission system, new transmission policy, that the country is going to be following. 


rfrederick on DSK5VPTVN1PROD with HEARING
145 

As I think you know, Mr. Chairman, we have established now a 

National Renewable Cooperative so each cooperative in every one 

of those 47 States can participate in any renewable project in any 

part of that three-quarters of land mass of the United States. So 

a wind project in South Dakota,for instance, may be invested by 

people from Wisconsin, co-ops from Wisconsin, or they may be from 

Alabama or Georgia or wherever. They can own a piece of that. 

And what we are looking for is a way in which we can generate 

that power through renewables in the most efficient way possible, 

no matter where it is located. We should be looking for the most 

cost-effective way in which we can do that. And just as we know 

that certain wind corridors exist that will provide us with a great 

amount of production of wind energy throughout the Great Plains, 

not every farm is the same, not every State is the same, that we 

also then have got to make sure that when we locate that kind of 

generation in those areas that we can move that power out of those 

regions. So we need an efficient and effective transmission system 

to do it. 

But we also, I think, have to be very aware of the fact that—and 

it has been our experience that bottom-up planning works the best. 

So you need local regional planning, you need local folks putting 

this plan together to determine what is the best way to move forward on this. And so that is a principle I think we need to adhere 

to, a bottom-up rather than top-down as far as planning the transmission system of this country. 

I would also suggest that under these conditions, and given the 

fact that we are going to have to move in a more efficient transmission system, we are going to have to move that transmission 

across State lines, that we may run into difficulties and encumbrances, we may run into delays that, quite frankly, the national 

best interest is not being served. 

So I think we have got to, while we are having that local planning, we have got to also make sure that we don’t have impediments put in the way that are going to prevent that local planning 

from being implement. We have got to make sure that the overall 

national policy of moving across State lines is dealt with. And for 

that reason we do think that there is going to have to be some authority on the Federal level as far as siting is concerned. But, 

again, it should be focused on certain qualifiers as we look at that 

siting authority. 

First of all, it should be facilities that are only identified on regional planning. It should be facilities that are interstate projects. 

In fact, the owners of those facilities should not be eligible for enhanced rates or any other financial incentives as far as where they 

are building that transmission. And the cost of facilities should be 

fairly and broadly allocated, along with the use of the facilities, 

should not be limited to just one kind of power. 

It should not just be renewables only. And that is mainly because 

of the fact that the law of physics, as we have heard expressed here 

today, doesn’t distinguish between electrons. They are all the same 

once they get into that transmission system. 

And we would also suggest that the law which we are proposing 

this become a part of, would in fact itself dictate the direction that 


rfrederick on DSK5VPTVN1PROD with HEARING
146 

we would be manufacturing or generating those particular electrons. 

Also we would suggest there needs to be broad fair-cost allocation. We think that is a very important point. Obviously those of 

us who are electric cooperatives are very sensitive about that. We 

would have a few people. And all the costs being dumped on those 

few people would be unbearable, so it should be allocated on the 

basis of who is getting the benefit, who are the folks that are receiving the benefits of that energy that is being generated and produced. 

Also, we would suggest, Mr. Chairman, that we move forward 

and recognize the fact that there are more benefits to building such 

a transmission system across this country in different areas of this 

country than just the movement of that power. The right-of-ways 

for any kind of transmission like that would become extremely valuable. And it would also be a way in which it would in fact. Become 

a new technologies right-of-way; ways in which you could move new 

technologies. And I know you are particularly interested in the 

smart grid. And obviously there are many uses that could be incorporated into any new transmission system along those lines. Fiber 

between the towers is obviously another way in which we can make 

good use of that transmission system. 

So, Mr. Chairman, I would suggest to you that we need a new 

transmission system to go along with the legislation that is being 

proposed. 

Mr. MARKEY. Thank you, Glenn, very much. 

[The prepared statement of Mr. English follows.] 


rfrederick on DSK5VPTVN1PROD with HEARING
147 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 155 here 73745A.089
148 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 156 here 73745A.090
149 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 157 here 73745A.091
150 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 158 here 73745A.092
151 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 159 here 73745A.093
152 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 160 here 73745A.094
153 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 161 here 73745A.095
154 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 162 here 73745A.096
155 

Mr. MARKEY. Our next witness is Reid Detchon. He is Executive 

Director of the Energy Future Coalition, a nonprofit organization 

that seeks to reform U.S. energy policy. We welcome you, sir. 

Whenever you are ready, please begin. 

STATEMENT OF REID DETCHON 

Mr. DETCHON. Mr. Chairman, thank you for inviting me to testify today on this important and timely topic. I find a great deal 

of agreement across the table, and particularly with Congressman 

English. 

Last year, in partnership with the Center for American Progress 

and the Energy Foundation, the Energy Future Coalition undertook a series of listening sessions with a diverse group of stakeholders including Federal agencies, grid operators, transmission 

companies, utilities and environmental groups, and we found broad 

support for changes in Federal law to facilitate the transmission 

needed to bring stranded renewable resources to market. 

Wind in the great plains; solar in the desert Southwest; and yes, 

offshore wind in the East. 

Our vision statement for the national clean energy smart grid, 

which is attached to my full statement, was endorsed by some 55 

organizations, including the AFL–CIO, the Council on Competitiveness and the Digital Energy Solutions Campaign, along with many 

renewable energy advocates and environmental groups, including 

the Sierra Club, who are not usually prone to supporting new 

transmission capacity. 

What brought these environmental groups to the table and ultimately to agreement was the imperative of action to address with 

urgency the growing climate crisis. Time is running out for the 

world to avoid serious harm from climate change. 

Mr. Chairman, you understand this challenge very well, and we 

owe a great debt of gratitude to you and Chairman Waxman for 

your leadership and acumen in advancing H.R. 2454, the American 

Clean Energy and Security Act. You have set the appropriate longterm target for emissions reductions, more than 80 percent by 

2050. 

The changes in our energy system needed to reach this goal are 

profound. We need to begin planning today to reach those reductions by 2050. And one thing is clear, we cannot deliver that much 

low-carbon energy without changes to the grid. Low carbon electricity will be expected to power not only our homes and businesses 

but also an increasing portion of our vehicle fleet. 

The system we have today for planning, permitting and financing 

transmission lines was not designed to respond quickly to a challenge of this magnitude, moving many thousands of megawatts of 

renewable energy from remote areas to load centers. 

Our discussions with those who must deliver on this promise, renewable energy developers and transmission companies, quickly focused on the obstacles of planning, siting, and cost allocation that 

we have heard repeatedly today. Of these, planning turned out to 

be the linchpin, as our group concluded the better planning could 

reduce the difficulty of siting and financing new lines. 

We recommended enlarging the scale of the planning process to 

the two principal power grids in the United States, the Eastern 


rfrederick on DSK5VPTVN1PROD with HEARING
156 

and Western Interconnections, for two reasons. First, long-distance 

transmission is needed to support development of some major renewable energy resources and necessarily will cross State and regional boundaries. For example, almost 300,000 megawatts, an 

enormous amount of wind, 300,000 megawatts of proposed wind 

projects, which is more than enough to meet 20 percent of our electricity needs, are waiting to connect to the grid because there is inadequate transmission capacity to carry the electricity they would 

produce. 

Second, planning for transmission to support the renewable energy standards of State and Federal legislation must occur on a 

broad regional basis, just as the benefits of such investments will 

be shared on a broad regional basis. Your discussion of the impact 

of wind resources and ease is a good illustration of the need for 

planning across the entire interconnection. 

An enhanced regional planning process of this kind should build 

on, not replace, the current engagement of stakeholders, including 

States, grid operators, utilities, consumer and environmental interests and landowner groups. 

This will remain a State not a Federal process. Siting authority 

would rest with FERC, but the States collectively would have more 

power not less than they do now, because their plans would govern 

the exercise of that Federal authority. Only if planning process 

breaks down would FERC have the ability to resolve disputes and 

get transmission built to bring renewable energy to market. 

We have been gratified to see many of our recommendations reflected in H.R. 2211, introduced by Congressman Inslee, a system 

of interconnection wire transmission planning supported by 

broadbased cost allocation and underpinned by Federal siting authority. We would be pleased to work with the committee on further legislative language if you think that would be helpful. 

Mr. Chairman, you and your colleagues have taken an enormous 

step forward by reporting legislation that will begin the process of 

transforming our Nation’s energy system to deal with the threat of 

global climate change. Expanding and modernizing our transmission grid is essential to that transformation. By addressing 

transmission directly and comprehensively, you can help our common goal of a clean-energy future become a reality and not be left 

stranded by regulatory impediments. Our economy, environment 

and national security deserve no less. Thank you very much. 

[The prepared statement of Mr. Detchon follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
157 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 166 here 73745A.097
158 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 167 here 73745A.098
159 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 168 here 73745A.099
160 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 169 here 73745A.100
161 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 170 here 73745A.101
162 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 171 here 73745A.102
163 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 172 here 73745A.103
164 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 173 here 73745A.104
165 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 174 here 73745A.105
166 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 175 here 73745A.106
167 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 176 here 73745A.107
168 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 177 here 73745A.108
169 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 178 here 73745A.109
170 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 179 here 73745A.110
171 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 180 here 73745A.111
172 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 181 here 73745A.112
173 

Mr. MARKEY. Thank you so much for your testimony. 

Our next witness is Joseph Welch, chairman and president and 

chief executive officer of ITC Holdings. That is the Nation’s first 

independent transmission company. 

We welcome you sir, please begin. 

STATEMENT OF JOSEPH WELCH 

Mr. WELCH. Thank you and good afternoon. 

Mr. MARKEY. Could you move the microphone in a little closer 

and turn it on? 

Mr. WELCH. Thank you and good afternoon, Chairman Markey, 

and members of the subcommittee. 

As the Chairman said, my name is Joseph Welch. I am chairman, CEO and president of ITC holdings, the Nation’s first and 

only independent transmission company in the United States. 

Being independent means that we are not affiliated with any 

market participant. We have no ownership or have any dealings in 

energy transactions. Our job is to facilitate the market, to facilitate 

the interconnection of any sources of generation that are put before 

us, and to make sure that we connect the loads and reliably do so. 

We own and operate about 15,000 miles of high-voltage lines in 

Iowa, Minnesota, Illinois, Missouri, Michigan and our developing 

regional transmission projects in Kansas and Oklahoma. As we 

have worked through these various States, each time we come to 

the point where we need to build transmission, for whatever reason, we have come up against a set of obstacles, each one different 

in every State. 

Probably that is as it as should be, but when we get to the outcome of where we want to go in this country, this is going to become a major impediment for us to move forward as a country who 

dearly and necessarily needs to seek energy independence. 

I brought with me today a report from the Council on Competitiveness and Energy Sustainability which I believe is a good framework, and I will leave it with you all for you to read. I think it offers a lot of information which is very consistent with the very 

principles and items that you are considering here. 

But going to the fundamental principles that we need, and at the 

top of the list, and I want to go to right to the top of the list, we 

need a policy for energy in this country. We have talked about all 

the things underneath, and we debate about whether it is right or 

wrong, but the fundamental issue is that we need a policy and 

something to plan to. 

With that policy in place, the rest of the items become a lot clearer and a lot more succinct. And a lot of the debates that we hear 

from all of us who really are closer than further apart really start 

to come together. For instance, with a policy, then the planners, 

and when I say the planners, and we have talked about this in the 

item I support and my company supports, is that we need independent planning authority. We need to take the policy and get the 

policy implemented in a very clear and succinct way. 

Secondly, if you have the policy, then the cost allocation can be 

dictated by the policy itself, meaning that from that policy, we now 

know where we want to go. We now know who are the benefactors 


rfrederick on DSK5VPTVN1PROD with HEARING
174 

and what those benefactor issues are. And so that policy sits at the 

top and we need that. 

And last but not least, when we get down to the very bones, I 

always tell people being in the transmission business it is a great 

business until I do one of two things, and the first item is build 

new transmission lines. The minute we start to build them, it becomes a nightmare. And the process a hard, and it is long. And 

what we need is true Federal backstop siding authority. That is not 

meant to cut the States out of the process. The States should be 

involved in the process. They are the most knowledgeable about 

local issues. But at the end of the day, we have to get a regional 

transmission grid built. 

As you have heard here, there are literally thousands upon thousands of megawatts of renewable energy that this country needs to 

deploy, and we need to deploy it now. And if we start now, we are 

years and years away from our goal line. So please let’s have this 

conclusion and bring it to an end, and I thank you very much for 

my opportunity to speak here today. 

[The prepared statement of Mr. Welch follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
175 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 184 here 73745A.113
176 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 185 here 73745A.114
177 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 186 here 73745A.115
178 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 187 here 73745A.116
179 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 188 here 73745A.117
180 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 189 here 73745A.118
181 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 190 here 73745A.119
182 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 191 here 73745A.120
183 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 192 here 73745A.121
184 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 193 here 73745A.122
185 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 194 here 73745A.123
186 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 195 here 73745A.124
187 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 196 here 73745A.125
188 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 197 here 73745A.126
189 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 198 here 73745A.127
190 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 199 here 73745A.128
191 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 200 here 73745A.129
192 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 201 here 73745A.130
193 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 202 here 73745A.131
194 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 203 here 73745A.132
195 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 204 here 73745A.133
196 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 205 here 73745A.134
197 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 206 here 73745A.135
198 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 207 here 73745A.136
199 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 208 here 73745A.137
200 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 209 here 73745A.138
201 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 210 here 73745A.139
202 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 211 here 73745A.140
203 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 212 here 73745A.141
204 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 213 here 73745A.142
205 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 214 here 73745A.143
206 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 215 here 73745A.144
207 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 216 here 73745A.145
208 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 217 here 73745A.146
209 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 218 here 73745A.147
210 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 219 here 73745A.148
211 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 220 here 73745A.149
212 

Mr. MARKEY. Thank you, Mr. Welch. 

Our next witness is Christopher Miller. He is president of the 

Piedmont Environmental Council, an environmental organization 

focused on conservation issues in the Piedmont region of Virginia. 

We thank you for being here, sir. 

STATEMENT OF CHRIS MILLER 

Mr. MILLER. Thank you, Congressman Markey. Thank you for 

the opportunity to testify on behalf of the Piedmont Environmental 

Council, also for land trusts and land conservation organizations 

across the country. We are a very active member of the Land Trust 

Alliance and are working hard on this issue with them. And they 

have asked us to express some of their concerns. 

I have a couple of maps which I hope the staff can put up, because I think they will help instruct this conversation. 

We appreciate the time and attention that this committee is taking to consider the complex issues associated with the transmission. We appreciate the willingness of the committee to deal 

with transmission as part of a broader energy policy and not as an 

end in itself. 

From our perspective, transmission is only a tool for moving electricity from the source of generation to the end user, but much 

more important are the policies that will reduce demand for electricity, modify peak demand so that the need for generation and 

transmission infrastructure is minimized. And encourage clean 

generation close to load centers, which will reduce the losses of energy caused by long-distance transmission. 

For in the end, the high-voltage transmission lines with towers 

that can exceed 180 feet in height and wide rights of way are part 

of the energy system with the largest footprint and often the most 

dramatic impacts on communities that lie along them. The transmission system has the potential for substantial land-use impacts, 

including impacts that directly conflict with Federal, State and 

local policies to protect and enhance important natural and cultural 

resources. 

In the brief amount of time I have, I want to focus on a couple 

of issues that have not been raised yet. The first is the assertion 

that the only way to meet national and State goals to reduce greenhouse gas emissions and to increase the role of renewable sources 

of energy is to build a national transmission grid. One example of 

this grid is up here. This is the grid proposed AEP for the 765 KV 

system that would link resources. 

It was originally overlaid over wind resources, but in fact, the 

correspondence with coal resources is actually higher when you actually go see where those lines are laid out. That is one of the 

causes of concern that in fact what you would be doing by doing 

a transmission-loaded set of incentives is in fact encouraging greater transmission of coal-fired generation than in fact of renewables. 

The reason for that is that no where in the legislation do we recommend a change in the economic dispatch rules that govern which 

generation is brought on line first. All the renewable goals notwithstanding, we dispatch energy by price, and the auctions are by 

price. We have heard lots of calls for competitive pricing, but the 

potential that that will in fact increase the amount of transmission 


rfrederick on DSK5VPTVN1PROD with HEARING
213 

that is carrying coal-fired emissions, and in fact from the dirtiest 

and oldest plants, is very real. 

Unless this committee can also ensure that, before that transmission is made available, we are in fact putting in the carbon cuts 

through the carbon cap-and-trade and otherwise governing the 

emissions of grandfathered coal plants who have never reduced 

their emissions, there is a very real possibility in the Eastern 

Interconnect that the gains that have been made by RGGI, the 45 

million tons or so of carbon emissions reductions, could be offset. 

Second, an issue that has not been addressed so far is the issue 

of peak versus average demand. The transmission and generation 

system is being designed to meet peak loads, and the more we can 

do to reduce peak loading, the less we have to build across our 

landscape. And so it is very important that this committee address 

the fact that transmission planning that has been done to this 

point really hasn’t addressed the full incorporation of some of the 

policies that are in the ACES legislation. They did not take into account the amount of demand-side management that is recommended and in fact assumed a level of per capita electricity used 

that steadily increases over time rather than is reduced. 

The final thought is this, to the extent the transmission is necessary, and obviously connecting some renewables will require 

transmission, it is very important to respect the other public policy 

values that are out there, and particularly related to the lands that 

have to be crossed by transmission. We should be seeking to avoid 

wherever possible the natural resources, the historic resources, the 

cultural resources and, yes, even the landscapes that America values so much. 

Current legislation draws a distinction between publicly-owned 

lands and privately-owned lands. And that is something that I 

think this committee needs to look at hard. East of the Mississippi, 

most natural resource lands, most historic lands are privatelyowned but protected through public-private partnerships, whether 

it is the designation of historic districts or the donation of conservation and historic easements. Those easements are often approved by State government. 

In the case of Massachusetts, hundreds of thousands of acres are 

actually individually approved each time by the attorney general. 

The same is true in the State of Virginia. And they are due all of 

the respect that a national park or national wildlife refuge or State 

park would. So as you think forward on those transmission lines 

that have to be built, make sure we are avoiding the resources, the 

private resources as well as the public resources. And make sure 

we mitigate and compensate for the impacts on those resources. 

[The prepared statement of Mr. Miller follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
214 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 224 here 73745A.150
215 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 225 here 73745A.151
216 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 226 here 73745A.152
217 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 227 here 73745A.153
218 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 228 here 73745A.154
219 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 229 here 73745A.155
220 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 230 here 73745A.156
221 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 231 here 73745A.157
222 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 232 here 73745A.158
223 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 233 here 73745A.159
224 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 234 here 73745A.160
225 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 235 here 73745A.161
226 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 236 here 73745A.162
227 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 237 here 73745A.163
228 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 238 here 73745A.164
229 

Mr. MARKEY. Thank you, Mr. Miller, very much. 

And other final witness is David Joos. He is the president and 

chief executive officer of CMS Energy, and chief executive officer of 

its principal subsidiary, Consumers Energy. 

We welcome you, sir. 

STATEMENT OF DAVID JOOS 

Mr. JOOS. Thank you, Mr. Chairman. 

And thank you also for pronouncing my name properly. I appreciate that. 

I appreciate the opportunity to address the subcommittee this 

afternoon. Consumers Energy, our principal subsidiary, serves 1.8 

million electric customer; 1.7 natural gas customers in lower peninsula of Michigan. 

I would suggest that we have a bit of a unique opportunity. Having developed, owned, and operated transmission assets along with 

distribution and generation assets for a century, Consumers Energy now no longer owns transmission assets. We sold our transmission system in 2002, and it is now independently operated. 

We therefore appreciate the difficulty in siting new transmission 

and support Federal backstop authority for new interstate lines as 

a last resort. We also see a need for new transmission in Michigan 

to interconnect new wind resources that are being developed in the 

Thumb in particular and along the Lake Michigan shoreline as 

part of the renewable portfolio standard compliance effort in the 

State of Michigan. 

We believe new transmission development should meet three key 

commonsense principles. Number one, benefits of proposed projects 

should exceed the cost by a reasonable margin. Number two, proposed projects should be similar or should be superior to other alternatives, which would include other transmission solutions, distribution solutions, perhaps lower-voltage transmission solutions 

and generation solutions. And finally, costs ought to be fairly allocated to the beneficiaries of the project as determined through the 

planning process. 

I would concede that these principals are complex to apply and 

therefore need an independent planning authority of some sort to 

apply them, a regional transmission organization or a group of 

RTOs, for example, to conduct the evaluation. 

They cannot be objectively performed by market participants, including independent transmission owners that have a vested interest in new transmission. In our view, overly generous FERC incentive policies have created a rush to invest in transmission, often 

not justified on a cost-benefit basis. I provide some specific Michigan examples within my written testimony and won’t go over those 

now. 

Fortunately for new intrastate projects in Michigan, we have a 

certificate-of-need process that fully vets these projects before allowing condemnation. I suggest that might be a model that is appropriate at the Federal level as a Federal backstop. 

Now there are proposals to build massive new high-voltage infrastructure over the entire Eastern Interconnect, the so-called overlays. Part of that, a $3.2 billion 765 KV project largely in Michigan 

has already been evaluated by the Midwest Independent System 


rfrederick on DSK5VPTVN1PROD with HEARING
230 

Operator and determined not to meet a cost-benefit test for the 

State of Michigan. 

A number of independent system operators and planning authorities in the Eastern Interconnect recently studied a joint coordinated system plan that was referred to earlier involving $56 billion 

high voltage overlay. Some have referred to it as the equivalent of 

constructing an interstate highway system. That study concluded 

that Michigan would receive virtually no benefit at fairly large cost. 

Looking just at consumers customers, if cost were spread a ‘‘postage stamp basis’’ to all our customers, we would pay about $159 

million a year of increased cost for roughly a $2 million annual 

benefit. I would submit that Michigan simply can’t afford that. Another $10 billion to $12 billion project that has been proposed 

to bring wind power from the Dakotas to as far east as Chicago, 

of course, does not reach Michigan, but further, when the cost of 

that transmission is included in the equation, Michigan-based generation is less expensive to develop. On that score, we agree with 

the 10 Northeast and Mid-Atlantic Governors with regard to the 

potential implications on developing renewable resources locally. 

Let me be clear, we don’t object to such projects if the benefits 

exceed the cost by a reasonable margin; reasonable alternatives 

have been considered; and the costs are spread appropriately to the 

beneficiaries. That might be, for example, Dakota wind developers 

or purchasers of that power who need it meet their own standards. 

Finally, Michigan transmission rates today are four times what 

they were in 2002 when we sold the system. Even without these 

overlay projects, we are forecasting they will increase by another 

50 percent from today’s rates over the next 6 years. Transmission 

investment is occurring in the State of Michigan. 

We don’t feel that FERC rate making oversight currently is sufficient in States where transmission is independently owned and 

therefore not subject to State regulatory oversight. That situation, 

along with overly rich incentives, are causing in our view transmission development that is sometimes not in the best interest of 

our customers. 

In summary, we think targeted transmission investment is needed both in Michigan and nationally. We believe that planning and 

evaluation by our RTOs or groups of RTOs that are independent 

from market participants is an appropriate way to pursue that. 

And we think three key principals need to be followed: One, benefits exceed cost by reasonable margin; two, reasonable alternatives 

have been considered; and three, the costs are appropriately allocated to the beneficiaries. 

Thank you again. 

[The prepared statement of Mr. Joos follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
231 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 242 here 73745A.165
232 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 243 here 73745A.166
233 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 244 here 73745A.167
234 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 245 here 73745A.168
235 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 246 here 73745A.169
236 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 247 here 73745A.170
237 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 248 here 73745A.171
238 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 249 here 73745A.172
239 

Mr. MARKEY. Thank you, and we thank our entire panel. 

I turn and recognize the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. Thank you. 

First, I would like to put on the record a white paper which is 

quite instructive. It is entitled ‘‘Green Power Super Highways,’’ 

provided by the American Wind Energy Association and the Solar 

Energy Industries Association. 

Mr. Chair, if I may. 

Mr. MARKEY. Without objection. 

[The information was unavailable at the time of printing.] 

Mr. INSLEE. I appreciate that, Mr. Chair. 

This does confirm what the witnesses talked about, which is that 

we have got 300,000 megawatts of wind projects waiting in line essentially to connect to the grid. And they point out that the lack 

of transmission capacity is also hindering States’ ability to meet 

multiple renewable energy goals, and it just confirms what several 

the witnesses have testified today. 

I want to ask Mr. Detchon about the greenhouse gas interconnection standard that your proposal has incorporated that basically 

would essentially allow Federal backstop authority. It would encourage it in relationship to those sources that are low and zero 

greenhouse-gas-emitting generators. Can you tell us how you envision that working? 

And by the way, would it help in at least some sense some of the 

concern of the Northeast States who don’t want to see their offshore wind projects intruded upon by, say, if we can call it dirty 

sources from far away intruding on their corridor. 

Mr. DETCHON. Thank you for the question. 

I think there is confusion how a greenhouse gas interconnection 

standard would work. In the first place, it is an interconnection 

standard. It doesn’t govern what electrons are on the line because, 

as everybody has pointed out, you can’t distinguish between green 

and brown electrons. 

But if we are going to provide some additional authority to site 

and pay for special new transmission lines to benefit renewable energy, let’s make sure that the generation that is hooked up to it 

is not conventional coal. And so what we have suggested is that, 

since you are going to need probably gas to balance renewable energy on these lines, that up to a single-cycle gas turbine, emission 

level would be acceptable to connect to these lines, but above that 

would not. And that seems like a fairly straightforward way to approach that. 

With regard to the question of competition with local resources, 

I think what should be important and I think inevitably would 

happened if the States are driving this planning process even on 

an interconnection-wide basis is that they take into consideration 

State policies considering local resources and use delivered prices, 

as was mentioned in the last panel, as the basis for comparing different resources. I think that is a very straightforward way to 

make sure that the competition is fair. 

Mr. INSLEE. I will ask you what I hope is a rhetorical question, 

but in the bill that I have introduced, we have tried to preserve the 

bottom-up planning, so that the States and regions really do the 


rfrederick on DSK5VPTVN1PROD with HEARING
240 

planning rather than a cramdown from the Federal Government. 

Do you think that is a fair characterization of the proposals that 

we have made? 

Mr. DETCHON. No, absolutely. And I think that there has been 

a lot of talk about top-down or Federal intervention here, but I 

think the legislation that you have proposed, Congressman, establishes mechanisms for States to work collaboratively addressing 

these regional issues. And those decisions will be executed with the 

assistance of FERC, but FERC would only be able to step in if the 

States are unable to reach a plan. 

Mr. INSLEE. And could you suggest any other solutions to the 

concern that the gentleman from Massachusetts expressed about 

this offshore wind being crowded out, if you will? I perceive that 

greenhouse gas interconnection standard would help solve that 

problem, because it would essentially allow the use of the Federal 

backstop authority for clean source, green sources of energy. I 

think that would help solve that problem. Do you agree with that, 

and is there anything else you could suggest that would help solve 

that concern? 

Mr. DETCHON. Well, I think a stronger step which Mr. Miller 

suggested, which would be to have Federal intervention on the 

loading orders for the use of different kinds of resources, I doubt 

that that would be politically saleable right now. So I think, within 

the context of what is doable, I think the approach you outlined is 

about as strong as it could be. 

I might add the greenhouse gas standard to a certain extent over 

time gets overtaken by the requirements of the cap-and-trade legislation, assuming that that is enacted, but I think your legislation 

reflects that as well as. 

Mr. INSLEE. Thank you. 

Thank you, Mr. Chair, for your cooperation. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair will recognize himself for a round of questions. 

Let’s go down the line and each of you could answer yes or no. 

Do you support giving FERC the authority to modify any transmission plans that are established through bottom-up regional 

planning processes? 

Mr. Izzo. 

Mr. IZZO. I would not. 

Mr. MARKEY. Mr. Joos. 

Mr. JOOS. Nor would I. 

Mr. MARKEY. Mr. Nipper. 

Mr. NIPPER. No. 

Mr. ENGLISH. No. 

Mr. DETCHON. I think that if the plans are developed by a broad 

array of States in the way we are describing, I would agree no. 

Mr. MARKEY. No. 

Mr. Welch. 

Mr. WELCH. Bottoms-up is each State brings it up, or how do you 

envision that? 

Mr. MARKEY. Regional planning that is agreed to by the State. 

Should the FERC be able to modify a regionally agreed-upon plan? 

Mr. WELCH. If the planning process is independent, no. If the 

planning process is not independent, yes. 


rfrederick on DSK5VPTVN1PROD with HEARING
241 

Mr. MARKEY. ‘‘Not independent’’ meaning? 

Mr. WELCH. That it is influenced by market participants and 

other political entities. The planning process to me—— 

Mr. MARKEY. Even if the State governments agree to it? 

Mr. WELCH. I believe that all the transmission within the State 

that is not regional in nature should—the State should have as 

much authority over it as they want when we develop regional 

transmission, which is for the good of the region or the good of the 

country. 

Mr. MARKEY. Should the FERC be able to override that original 

plan agreed-upon by those States? 

Mr. WELCH. I stand by what I said. If it is done by an independent planning authority, yes. I am saying no. And if it is not, 

yes. 

Mr. MARKEY. Mr. Miller. 

Mr. MILLER. I think one of the concerns we would have if FERC 

were involved, that the right of appeal ought to be not only limited 

to the transmission proposers but also those with other perspectives. Right now—— 

Mr. MARKEY. Under those circumstances, you would give FERC 

the authority to modify a transmission plan? 

Mr. MILLER. Well, there are legitimate Federal issues with anything involving interstate transmissions, but if you are going to 

create that, it ought to be equally available to both the proponents 

and those that have concerns. 

Mr. MARKEY. OK. Let me go down the line again, how many of 

you would support a greenhouse gas interconnection standard of 

the type proposed by Mr. Inslee? 

Can we go down and ask how many of you would support that? 

Mr. IZZO. I would not for the simple reason that a greenhouse 

gas interconnection standard does not speak to existing carbon-intensive generation being able to piggyback. 

Mr. MARKEY. Thank you. 

Mr. Joos. 

Mr. JOOS. I will have to qualify my answer, I am not 100 percent 

sure the specifics of the standard. I haven’t read them. 

I would say we have, of course, standards for interconnecting all 

kinds of renewable capacity already. I would not be supportive of 

something that limited the use of the transmission line to certain 

types of technology simply because I agree with what has been said 

earlier, that you can’t label the electrons. 

Mr. MARKEY. Thank you. 

Mr. Nipper. 

Mr. NIPPER. No, sir, we would not. 

Mr. MARKEY. You would not. 

Mr. English. 

Mr. ENGLISH. I believe that the bill in itself, since this is going 

to be part of the legislation, the bill in itself takes care of that 

issue, so no. 

Mr. MARKEY. No. 

Mr. Welch, I know you do support it. Mr. Welch. 

Mr. WELCH. With my company, we are an independent transmission company. You make the policy, we are going to support the 

policy. 


rfrederick on DSK5VPTVN1PROD with HEARING
242 

Mr. MARKEY. Mr. Miller. 

Mr. MILLER. I think it is an interesting concept would apply to 

lines that feed into the grid, but unfortunately, the authorities that 

are being discussed would apply to transmission that is not simply 

for bringing new generation on to the grid but for expansion of the 

grid as a whole. So I would have to say no. 

Mr. MARKEY. And I will let you answer for the record, Mr. 

Detchon. 

Mr. DETCHON. Just to touch on these two points, we are talking 

about specially authorized renewable energy transmission lines 

that would be feeding into the larger grid, not to the larger grid. 

And I agree with Glenn that if this is attached to H.R. 2454 and 

enacted, then some of the reason for it goes away. But there is always the possible that this will become disconnected from that bill, 

and as a free-standing measure on transmission, we think that a 

greenhouse gas standard would be important. 

Mr. MARKEY. How many of you would limit Federal authority to 

only lines that affect renewable electricity that is generated? How 

many would limit Federal authority just to that? 

Mr. IZZO. I would do quite the opposite, Mr. Chairman. I would 

limit Federal siting authority to lines that affect reliability. 

Mr. MARKEY. Reliability, ok, thank you. 

Mr. Joos? 

Mr. JOOS. I would limit Federal authority as only a backstop provision and rely on local and regional planning as the primary 

mechanism. 

Mr. MARKEY. Mr. Nipper. 

Mr. NIPPER. Assuming the backstop authority, no, we wouldn’t 

limit that. 

Mr. MARKEY. You would not limit. 

Mr. English, would you limit? 

Mr. ENGLISH. And again, backstop. 

Mr. MARKEY. MR. DETCHON, WOULD YOU LIMIT IT JUST TO RENEWABLES?

Mr. DETCHON. What I would say is that, if we are going to create 

special new authorities, they ought to be targeted at the problem, 

which is renewables. 

Mr. MARKEY. Mr. Welch. 

Mr. WELCH. I would not limit the Federal backstop siting authority. 

Mr. MARKEY. Mr. Miller. 

Mr. MILLER. I think we would support limiting it and also respecting the Fourth Circuit opinion that we were involved in. 

Mr. MARKEY. Mr. Izzo, do you support Federal back-up siting authority for lines for any reason other than reliability? 

Mr. IZZO. No, I would not. 

Could you talk a little bit about that first map which Mr. Miller 

put up that showed very rich wind resources along the East Coast 

of the United States. With the exception of some portions of the 

Great Lakes and out on the West Coast, it looks like it has the 

greatest potential for renewable electricity generation in our country. 

Mr. IZZO. You are absolutely right, Mr. Chairman. 


rfrederick on DSK5VPTVN1PROD with HEARING
243 

And as I may have mentioned, we pursuing 150 megawatt wind 

farm. And as you mentioned, we can do that 20 miles out and still 

be within 140 feet of water. That is not to underestimate the challenges of construction and operations and maintenance cost. We expect to fully bear the cost of the short-haul transmission and would 

be opposed to having a nationwide support for a long-haul transmission and be unfairly disadvantaged. 

Mr. MARKEY. Well, what could happen if we take Mr. Miller’s 

charts—I guess they are not Mr. Miller’s charts. They are AEP’s 

maps that have been put together. Is that right, Mr. Miller? 

Mr. MILLER. The transmission map is AEP’s. We overlaid it on 

wind and then the coal resource maps. 

Mr. MARKEY. If that transmission plan was implemented, it 

would bring a transmission line in from the Midwest very close to 

the East Coast. What impact might that have on your planning for 

renewable electricity off of the coastline or other parts of New Jersey? 

Mr. IZZO. We would stop planning for that. 

Mr. MARKEY. Why would you stop? 

Mr. IZZO. Well, because we would not be able to be competitive 

with the cost of the wind if it is not burdened by the cost of transmission. So the wind from the Midwest if it does not face the transmission charge would be cheaper in that case. 

Mr. MARKEY. Now you are up in the Great Lakes, Mr. Joos. 

Could you talk about that as well in terms of the potential renewables coming in off the Great Lakes and what impact that 

could have for Michigan and what could happen if, instead, power 

is wheeled in from other parts the country through Federal preemption and Federal eminent domain takings? 

Mr. JOOS. It is a bit similar but maybe two aspects to what Mr. 

Izzo said. 

First of all, it is clearly windier in the Dakotas for example that 

it is Michigan. Michigan has wind resource even on land, but it is 

not as windy in the Dakotas. So instead of 42 percent roughly capacity factors, you might see in the range of 30 percent capacity 

factor. 

However, once the cost of transmission to get the power from the 

Dakotas to Michigan is taken into account, it is cheaper to develop 

it in Michigan. 

Now you mentioned offshore, Michigan does have a very strong 

offshore wind resource. Unfortunately, offshore is still about twice 

as expensive to develop than onshore resources. So when that calculus is taken into account, we think it makes more senses to develop the onshore resources in Michigan first. 

Mr. MARKEY. Now you heard the earlier testimony about the 

problem getting renewable energy resources from Dakotas over to 

Minnesota and the blame being laid at the feet of the Federal Government. In that region, do you believe that is one of the main 

problems that otherwise the regions have been able to harmonize 

their electricity transmission policies in a way that is viewed as 

fair to all States? 

Mr. JOOS. I am not familiar with specific Federal Government 

problems that may have come up in Minnesota. My observation is 


rfrederick on DSK5VPTVN1PROD with HEARING
244 

that the regional planning process has been effective and is a good 

solution to the problem. 

I think as many of us are pointing out, you warp the economics 

when you start putting effectively free transmission or postagestamp transmission across broad regions, and then you change the 

economics dramatically rather than having them compete on a 

stand-alone basis. 

Mr. MARKEY. Now for our audience, when we say ‘‘postage 

stamp,’’ what are you referring to? Why is the phrase ‘‘postage 

stamp’’ used? 

Mr. JOOS. Effectively what a postage-stamp rate is, and it is used 

an analogy to the Federal postal system, where you put a stamp 

on a letter, and you can send it anywhere for the same price. 

Mr. MARKEY. You could send it from the Dakotas to New Jersey 

for the same price. 

Mr. JOOS. The reality, of course, is the costs are not the same. 

And when we look at the cost of transmission to move power from 

West to East, there is a significant cost involved. However, if that 

cost is ignored and everybody pays the same price regardless of 

how far it moves, it changes the economics, and yes, Dakota wind 

would then be more economic on that basis, once the cost of transmission is ignored, than Michigan or the East Coast. We don’t 

think that is the right way to look at it. 

Mr. MARKEY. And one of the things that we are really trying to 

accomplish obviously in the Waxman-Markey bill is to generate renewable electricity and renewable energy jobs generally in all 50 

States. 

So Mr. Izzo here has a plan to, along with many other people in 

New Jersey, to generate new renewable energy jobs that help with 

the employment in his company, but in the State of New Jersey as 

well. And we don’t want to invoke the law of unintended consequences here and have a great revolution, have a standard imposed upon New Jersey and not have the jobs created in New Jersey, especially if they have the richest renewable energy resource 

right off their shore. 

Mr. English. 

Mr. ENGLISH. Mr. Chairman, I think you make a good point, but 

I also suggest one other thing, that it might make more sense, in 

light of the objective of the legislation and in light of the fact that 

we are entering into a little different world than we have in the 

past, that really what we are trying to do here is maximize the 

amount of renewable energy that we get produced all over this 

country. 

Now the fact of whether it is produced in one State versus another State, as long as it is the most cost-effective way in which 

we produce it and we can in fact make use of it all across this Nation, I would think would be the ultimate objective. 

Now I can understand why some folks may want to look at this 

very localized, and it may be a very parochial thing, but this is a 

national piece of legislation. And we are trying to achieve a national objective, and the thing that is limiting us to being efficient 

is this transmission system. 

Mr. MARKEY. Absolutely, and by the way, we couldn’t agree more 

on this. 


rfrederick on DSK5VPTVN1PROD with HEARING
245 

Mr. ENGLISH. So if you are looking at this map and the fact that 

we are talking about along the coast, and they may have more 

wind there, then obviously we ought to be looking, that is where 

we ought to produce it, and we should use that most cost-effectively. And that should be the driver in where we go. If we can’t 

do that and have to do it out in the Dakotas, then fine, do it in 

the Dakotas. 

But it shouldn’t matter whether it is off the coast of Massachusetts or in the Dakotas, as long as we are meeting the Nation’s 

needs, and we are going to have a huge amount of power that is 

going to be necessary to come from renewable energy if we are 

going to meet the objectives as outlined in the legislation. 

One quick point, I know, I have a home down in South Carolina. 

It is up on a mountain top. We have a huge amount of wind up 

there, but I can assure you, if you try to build a wind generator 

on that mountain, you are going to have a lot of people that are 

going to be objecting to it, unlike what you will find in the Dakotas. 

Mr. MARKEY. Absolutely. 

I think the point that Mr. Izzo is making and Mr. Joos as well is that, using this postage stamp analogy, it doesn’t cost $0.47 to 

really move a letter from New Jersey to New York City. It probably 

costs less, but the average is $0.47, so that someone from South 

Dakota can mail a letter to New York City, and we have communications across the country. That is great, and we accept that. It 

is the way it should be. 

But what Mr. Izzo is saying is that if you do the same thing for 

electricity and you make it the same price to transmit electricity 

in from the middle of America to New Jersey as it would be to 

bring it in off the coastline of New Jersey, then that is going to undermine the economics of all the projects along the East Coast because it hasn’t factored in how much it costs to transmit that electricity 1,500 miles all the way into the East Coast market. And so 

the question then becomes, how many new jobs will be created 

along the East Coast of the United States if there is no incentive 

any longer for Mr. Izzo because he is almost bound by his obligation to his shareholders to take all of this very inexpensive but subsidized electricity coming in from the Midwest? 

So how do we square this circle, Glenn, so that Mr. Izzo and Mr. 

Joos and others are not disincentivized to produce renewable electricity within their own service area? 

Mr. ENGLISH. Broadbased fair rates, that is basically what you 

are talking about. The people that are receiving the power, that are 

using the power, are paying the cost. That is what it really comes 

down to. If you are not talking about mailing that letter from the 

Dakotas to some other region of the country, and you are talking 

about, instead, what it costs to actually mail that letter to that location, that is the real issue that you are coming down to. 

Mr. MARKEY. Mr. Izzo, what would you respond to that? 

Mr. IZZO. So I would say that, if I looked at just this last year 

alone, the price difference associated with transmitting power from 

the plains States to New Jersey, depending upon how busy the 

transmission lines were, range from $20 to $80 a kilowatt hour. 

Typically, it was $30 to $40 a kilowatt hour. That means it would 

be cheaper for a customer in New Jersey to use a wind farm operVerDate Mar 15 2010 03:30 Jul 01, 2012 Jkt 073745 PO 00000 Frm 00251 Fmt 6633 Sfmt 6633 E:\HR\OC\A745.XXX A745

rfrederick on DSK5VPTVN1PROD with HEARING
246 

ating 25 percent of the time than to use a wind farm operating in 

the plains 40 percent of the time, because it is the total cost that 

matters. 

If you eliminate transmission, then suddenly the 40 percent time 

of the Dakota farm looks cheaper, but you have put a burden on 

the American taxpayer, and you have ended our economic development in that region. 

Mr. MARKEY. Well, we want to be fair here, though, right? I 

mean, that is our goal of the bill. We want to incentivize renewable—this green energy revolution should be everywhere, not just 

in certain parts of the country. So we need to find a way then to 

make sure that we don’t invoke this kind of consequence that undermines economic development in States that have incredible resources indigenous to them, and that is a real difficult problem 

here and something we that we have to work through. 

I apologize to everyone. I really could spend a whole afternoon 

with you, and next week I might spend an afternoon with each one 

of you in working out this issue, because we have to be fair. We 

have to be fair. We have a big vision, but everyone, every State can 

actually play a role here. There is actually a role for everyone, and 

we have to make sure that we render to the East Coast the things 

that are theirs; the things to the South that are theirs; and the 

Midwest that are theirs; and the West that is theirs. The prairie, 

the desert. 

And, Glenn, even as you were saying you represent 75 percent 

of the land mass of the United States, there is an ocean mass, too, 

that is also out there. And we have to—— 

Mr. ENGLISH. We do have coastal co-ops, Mr. Chairman. 

Mr. MARKEY. That is what I am saying to you, and so I want to 

make sure those coastal co-ops are able to go out into the ocean 

and have the incentive—— 

Mr. ENGLISH. I am with you. 

Mr. MARKEY. So we have to work out a fair formula. 

So I thank each of you. And we are going to have to stick close 

together over the next couple of weeks so we can have this conversation and reflect what our national goals are, but with each 

State, each region, and the history of each State and region; States 

that are not even States, commonwealths, whether it be Virginia 

or Massachusetts, have their own traditions in terms of what lands 

are sacred that might not follow the traditional Federal Lands Act 

but have just the same impact in terms of the relationship with the 

history our States. 

So I thank each of you, and I am going to turn over the remainder of the hearing to Congresswoman Baldwin who will bring it to 

a conclusion. Thank you so much. 

Ms. BALDWIN [presiding]. I don’t get to sit in this chair very 

often, but I won’t make you stay long just because I am enjoying 

it. 

First, a quick comment, and I am construing or interpreting from 

some of Mr. Welch’s testimony that there is a frustration with 

some of the planning that is occurring at the State-level process. 

And one of the things that I would just point out, and certainly we 

have heard some testimony in the first panel about very successful 

State-level planning, but if you look at Order 890 and this process, 


rfrederick on DSK5VPTVN1PROD with HEARING
247 

it is really relatively new and I think I would argue hasn’t yet been 

given the chance to play out. 

If you look at the area that I am most familiar with, the first 

time MISO Order 890 planning processes were approved by FERC 

and then subject to additional compliance requirements was on 

May 15th, 2008. And thereafter, they had to do a filing in August 

of 2008, where it was just approved on May 20th, 2009. So you 

could make an argument that really just 3 weeks ago this is getting underway, and it is a process to be given 12 to 24 months to 

occur. 

So it certainly concerns me to have a characterization of this 

State and regional planning processes as not being—as being broken or not working when really much of the new focus that is subject to Order 890 is just underway. 

I have one question for the panel with regard to, it goes without 

saying that construction of a transmission super highway will be 

a money maker for certain parties involved, and we heard the 

chairman of FERC testify about the economics of transmission 

siting, and construction as well as the guaranteed rate of return. 

And so I guess I would like to ask you all what role, if any, 

should these entities with profit interest play in the transmission 

siting and decision-making process? How should we appropriately 

limit or not the role that they play? 

And why don’t we go from left to right this time and start with 

Mr. Miller. 

Mr. MILLER. I appreciate that question, that has been one of the 

most troubling aspects of the planning process in the PJM region. 

The PJM is essentially, from our perspective, a trade association of 

utilities who are proposing projects and then ratifying the proposal 

amongst themselves. They do not, until very recently, have a process that complies with the FERC Order 890. They were looking 

only at transmission solutions and not at alternatives. And they do 

not do the kind of balancing of impacts, you know, other issues of 

the public interest that State utility commissions more clearly have 

authority to do. 

So the current way we do regional transmission planning is very 

disturbing. The owners of the transmission lines propose projects. 

There is a reactive approval process, and there is no balancing of 

other considerations, even within the alternative energy solutions 

like energy efficiency DSM. They are starting to incorporate those 

things, but the process is very conservative and very oriented towards producing transmission solutions. 

Ms. BALDWIN. Mr. Welch. 

Mr. WELCH. Well, to go to your question, first, the frustration 

that I feel with the planning process is that I would agree with you 

that Order 890 went a long way, but the one thing that we don’t 

have in MISO or any of the other RTOs, we don’t have full participation from all of the affected people. As a result of that, when you 

are trying to do regional planning, you are not going to get to the 

solution set that you need, number one. 

Number two, like when we had problems in 2003 with the largest blackout that affected this country, we finally came to the conclusion that NERC was funded improperly and wasn’t independent 

in their decision-making for setting reliability standards. As a reVerDate Mar 15 2010 03:30 Jul 01, 2012 Jkt 073745 PO 00000 Frm 00253 Fmt 6633 Sfmt 6633 E:\HR\OC\A745.XXX A745

rfrederick on DSK5VPTVN1PROD with HEARING
248 

sult of that, we changed the way NERC was funded. It reports to 

FERC. It is funded through an assessment through all the utilities, 

and that assessment is paid to FERC, who then pays NERC, and 

we have taken the financial incentives of the market participants 

out of the RTO or, in this case, the reliability council. 

So when we talk about independent planning, it is not about 

some kind of closed-door deal here. It is about getting the financial 

impacts off the back of the RTO so that they can do the job that 

they are supposed to do. 

Then when we get to that point, you have the question that says, 

who should participate and which of the rates of return that these 

companies should earn? I think that the fair thing to say, when you 

start to build regional projects, that everyone is affected by it; they 

should be all participating in as financial investors. This shouldn’t 

be just a one-stop, one-person place, but those people should be 

part of that investment proposition because they are all there to 

make the grid work and work in a concert way. 

When you build a regional grid, you have to have yourself in a 

position where you can also maintain it. No one company could 

ever go across thousands of miles, have linemen and line crews, 

warehouse facilities and everything that we need. So it is going to 

take the participation of all of those people on the route, but without everyone being there at the table, this gets tough to do. So 

when you get to that point, whatever the FERC says is just and 

reasonable; that is what it will be.Ms. BALDWIN. Mr. Detchon? 

Mr. DETCHON. I thank you for the question, let me suggest a way 

to think about cost allocation and rate of return together. Under 

the current system, private companies enter into agreements to 

provide transmission, and they go out, and they raise the capital 

on the markets to do that. So as our regulators consider that, they 

have to provide the cost of that at the high cost of raising that capital and then a rate of return on top of that. 

If the costs are more broadly shared, first of all, you have a guaranteed revenue flow which will reduce the cost of capital to raise 

the money in the first place. And in the second, and therefore a reduced rate of return to the companies would be justified. So there 

would be two ways by sharing the cost that you would reduce the 

cost of building out this transmission, sharing it across a broader 

range of customers. 

Ms. BALDWIN. Mr. English. 

Mr. ENGLISH. We have had many complaints about the fact that 

it is difficult for electric cooperatives to participate in this process 

both because of the size and the complexity and the type of expertise that is required to participate independently, but also I think 

a lot of it does come down to the situation that the big entities of 

the region, quite frankly, are the ones that seem to have the control and the influence or at least feel that they should. 

And many of those—so that basically does not have an all-inclusive broad participation locally in designing many of the systems 

that come forward. 

Mr. ENGLISH. So, I think there is much work that needs to be 

done in the improvements in that, and hopefully we are going to 

see that in the future, but we need a broad-based planning system 

in place. 


rfrederick on DSK5VPTVN1PROD with HEARING
249 

Ms. BALDWIN. Mr. Nipper. 

Mr. NIPPER. Yes, ma’am. We would agree with the comments 

that have been made that it really requires a participation by everyone involved, all the stakeholders, it is varied in our members’ 

views among regions, some a bit better than others, but it really 

is necessary that everyone be at the table and be participating and 

their input be counted. 

I will say that, following up the comment on the RTO and ISO 

regions—and they vary a bit, as well, among them; but the opportunities to participate, equally participate in the stakeholder process with some of the other stakeholders, for our members leaves a 

lot to be desired. I will say that. 

And then I will lastly mention the benefits that I mentioned in 

my testimony about joint ownership, and if there are opportunities, 

equal opportunities for folks, and yet American transmission company is a good example of this, where an opportunity for broad and 

joint ownership by multiple entities provides planning and other 

benefits as well. 

Ms. BALDWIN. Mr. Joos. 

Mr. JOOS. Well, I might just pick up on something Mr. Miller 

said. 

I think that FERC’s incentive policies have created a situation 

where not only independent transmission companies but integrated 

utilities that hold distribution, transmission and generation favor 

investment and transmission for solutions to the problems, even if 

they are not the most optimum solution. Because frankly the rates 

of return are higher and the levels of risk are significantly lower 

than other kinds of investments that might be under State regulatory policy vis-a-vis, for example, what the FERC has put in 

place. So our concern is you see a rush to invest in transmission. 

Now, I want to clarify again there are transmission projects that 

make sense, and if they make good economic sense, they ought to 

be supported. I think we have to be careful not to incent investment because of the low-risk, high-return environment vis-a-vis 

public interest; and therefore, I do think broad public planning of 

some nature is necessary with broad participation. 

Ms. BALDWIN. And Mr. Izzo. 

Mr. IZZO. We operate both a regulated transmission and distribution business and an unregulated generation business. And the regulated transmission business provides reliability 99.99 percent of 

the times through a regional planning process. It works and it 

works well. And that is regulated and rates are based upon our 

cost of service. 

Our unregulated generation business always has to consider the 

cost of connecting to the grid as part of its investment strategy and 

fully bears that cost. 

We need to dispel the notion that renewables are not being built 

because of the transmission system. Renewables are not being built 

because we are not sending clear price signals. This committee deserves congratulations on doing that through cap-and-trade and 

through setting an RES. 

And now, at the risk of being a little slip, the next thing I expect 

to hear from people is that if only we had refrigerated freight 

trains running free of charge from the North Pole, our local superVerDate Mar 15 2010 03:30 Jul 01, 2012 Jkt 073745 PO 00000 Frm 00255 Fmt 6633 Sfmt 6633 E:\HR\OC\A745.XXX A745

rfrederick on DSK5VPTVN1PROD with HEARING
250 

market would get its ice cubes through there. It just doesn’t make 

sense to ignore the transportation charges. 

Ms. BALDWIN. I want to thank all of you gentlemen again for 

your time and expertise and your patience. 

Before I adjourn, I need to ask unanimous consent that two letters from FERC to Chairman Markey are put in the record. Without objection so ordered. 

[The information appears at the conclusion of the hearing.] 

Ms. BALDWIN. And with that, our hearing is adjourned. 

[Whereupon, at 2:40 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


rfrederick on DSK5VPTVN1PROD with HEARING
251 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 262 here 73745A.173
252 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 263 here 73745A.174
253 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 264 here 73745A.175
254 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 265 here 73745A.176
255 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 266 here 73745A.177
256 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 267 here 73745A.178
257 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 268 here 73745A.179
258 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 269 here 73745A.180
259 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 270 here 73745A.181
260 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 271 here 73745A.182
261 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 272 here 73745A.183
262 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 273 here 73745A.184
263 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 274 here 73745A.185
264 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 275 here 73745A.186
265 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 276 here 73745A.187
266 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 277 here 73745A.188
267 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 278 here 73745A.189
268 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 279 here 73745A.190
269 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 280 here 73745A.191
270 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 281 here 73745A.192
271 


rfrederick on DSK5VPTVN1PROD with HEARINGInsert offset folio 282 here 73745A.193