S. HRG. 114–31 

‘‘THE STATE OF TECHNOLOGICAL INNOVATION 

RELATED TO THE ELECTRIC GRID’’ 

HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON 

‘‘THE STATE OF TECHNOLOGICAL INNOVATION 

RELATED TO THE ELECTRIC GRID’’ 

MARCH 17, 2015 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 


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‘‘THE STATE OF TECHNOLOGICAL INNOVATION RELATED TO THE ELECTRIC GRID’’ 


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U.S. GOVERNMENT PUBLISHING OFFICE

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94–050 2015

S. HRG. 114–31 

‘‘THE STATE OF TECHNOLOGICAL INNOVATION 

RELATED TO THE ELECTRIC GRID’’ 

HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON 

‘‘THE STATE OF TECHNOLOGICAL INNOVATION 

RELATED TO THE ELECTRIC GRID’’ 

MARCH 17, 2015 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 


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(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, Jr., Maine 

ELIZABETH WARREN, Massachusetts 

KAREN K. BILLUPS, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

KELLIE DONNELLY, Deputy Chief Counsel 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SPENCER GRAY, Democratic Professional Staff Member 


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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska .................. 1 

Cantwell, Hon. Maria. Ranking Member, and a U.S. Senator from Washington .................................................................................................................... 3 

WITNESSES 

Howard, Dr. Michael, President and CEO, Electric Power Research Institute 4 

Littlewood, Dr. Peter, Director, Argonne National Laboratory ........................... 58 

Taft, Dr. Jeffrey, Chief Architect for Electric Grid Transformation, Pacific 

Northwest National Laboratory .......................................................................... 69 

Barton, Lisa, Executive Vice President, Transmission, American Electric 

Power ..................................................................................................................... 82 

Edgar, Hon. Lisa, President, National Association of Regulatory Utility Commissioners and Commissioner, Florida Public Service Commission ................ 92 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Barton, Lisa 

Opening Statement ........................................................................................... 82 

Written Testimony ............................................................................................ 84 

Responses to Questions for the Record ........................................................... 334 

Cantwell, Hon. Maria 

Opening Statement ........................................................................................... 3 

Edgar, Hon. Lisa 

Opening Statement ........................................................................................... 92 

Written Testimony ............................................................................................ 94 

Responses to Questions for the Record ........................................................... 352 

Howard, Dr. Michael 

Opening Statement ........................................................................................... 4 

Written Testimony ............................................................................................ 7 

2011 Technical Report by EPRI entitled ‘‘Estimating the Costs and Benefits of the Smart Grid’’ .................................................................................. 114 

Responses to Questions for the Record ........................................................... 371 

Littlewood, Dr. Peter 

Opening Statement ........................................................................................... 58 

Written Testimony ............................................................................................ 60 

Responses to Questions for the Record ........................................................... 390 

Murkowski, Hon. Lisa 

Opening Statement ........................................................................................... 1 

Taft, Dr. Jeffrey 

Opening Statement ........................................................................................... 69 

Written Testimony ............................................................................................ 71 

For the Record: Pacific Northwest Smart Grid Demonstration Project 

entitled ‘‘A Compilation of Success Stories’’ ............................................... 271 

Responses to Questions for the Record ........................................................... 412 


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‘‘THE STATE OF TECHNOLOGICAL INNOVATION RELATED TO THE ELECTRIC GRID’’ 

TUESDAY, MARCH 17, 2015 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The Committee met, pursuant to notice, at 10:07 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. 

SENATOR FROM ALASKA 

The CHAIRMAN. Good morning. 

We’re calling to order the Energy Committee. We are here for a 

Grid 2.0 hearing, and it should excite us all. 

This is a good subject. It is an opportunity for us this morning 

to hear testimony from a panel of experts to evaluate what’s actually happening with technological innovation for the electric grid. 

No other electricity network on Earth provides as much power to 

as many people as reliably and affordably as our American grid. It 

really is a modern marvel, and I think we should be proud of what 

we have accomplished. 

Keeping the lights on, as all segments of the industry have for 

the past 100 years, is not just about flicking the switch or changing 

a bulb. It is a highly complex and technical undertaking that requires scores of talented individuals. 

We have also reached a very good point in time to be looking at 

this subject this morning. The grid was built incrementally, but the 

rate at which it changes, or is compelled to change, appears to be 

accelerating. A combination of market forces, technological innovation, and policy directives at both the federal and the state levels 

could well result in an unprecedented transformation of the electricity sector. 

Today’s developments have tremendous potential, but they also 

present a number of challenges, like smoothing out the 

intermittency of variable, weather dependent generation. With the 

rise of distributed generation and smart grid technologies, Americans are gaining more control over how they use and consume electricity, but the grid must be even more closely integrated as a result. 

Innovation and new technologies, such as commercially viable 

storage, are clearly necessary to assist in this transformation. We 

are talking a lot in my state about microgrids. Many people don’t 

think of Alaska as being a pioneer in some of these areas, but what 


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we are doing with microgrids—which used to be called ‘‘isolated 

islanded grids’’—is really making a difference in a state where 

sometimes it is tough to keep warm or keep the lights on. 

It is always best when public policy responds to proven technology advancements. Today, however, we must hope technology 

can deliver solutions to meet political mandates while satisfying 

our expectations for reliability and affordability. Two major questions that I have, and I will be proposing these to the panelists this 

morning, are over what time period can solutions be developed, and 

at what cost? Credible estimates hold that new grid technologies 

alone will require a cumulative investment of between $300 and 

$500 billion over the next 20 years. 

This Administration has rightly classified the electric grid as 

uniquely critical infrastructure because so many things—communications, roadways, hospitals—depend upon a functioning grid. 

The reliability of our nation’s grid is therefore paramount, and the 

impact of policy directives must be seriously considered—not dismissed as somehow anti-environment or anti-future. 

I focused our Committee on drafting broad energy legislation and 

expect that electric issues will be a key part of it. We have an impressive group of panelists with us this morning whose testimony 

will assist us in this effort. 

We have Dr. Michael Howard, who is President and CEO of the 

Electric Power Research Institute. He is going to start us off with 

an overview of the changing integrated grid. He had hoped to use 

a computer for his presentation, but we are still using 19th century 

technology here in the Senate, so we are stuck with posters, but 

thank you for that. 

We have also Dr. Peter Littlewood, who is the Director of Argonne National Laboratory. He is joining us because research is 

really the foundation of the federal role, and his lab is a key part 

of our efforts on grid modernization and energy storage. 

We also have Dr. Jeff Taft, who is the Chief Architect for Electric 

Grid Transformations at the Pacific Northwest National Lab. He’s 

here to tell us more about PNNL’s work with smart grid technologies and grid modernization. 

We have Lisa Barton, who is the Executive Vice President for 

Transmission for American Electric Power. She is here to share the 

perspective of a major utility that operates the nation’s largest electricity transmission system with 40,000 miles of transmission lines 

to deliver electricity in 11 states. 

To round out the panel this morning we have The Honorable 

Lisa Edgar, a Commissioner at the Florida Public Service Commission and President of NARUC, the National Association of Regulatory Utility Commissioners. She will present the state’s perspective which, of course, is invaluable because so much of this transition is happening at the retail level. 

So I welcome all of our panelists, and I look forward to your presentations. 

We do have a couple of votes coming up a little after 11 o’clock 

this morning, so we may be a little bit disjointed here, but we certainly intend to spend the full time this morning getting the most 

that we can from our panelists. 


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With that, I would like to turn to my Ranking Member, Senator 

Cantwell. 

STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM 

WASHINGTON 

Senator CANTWELL. Thank you, Madam Chairman and thank you 

for holding this important hearing today. I also join you in thanking the witnesses for being here to discuss these issues. 

As our economy has evolved and information technology has 

evolved, we have seen it has disrupted many industries and business models, everything from the telecom industry to the music industry. So I think today we’ll have a little bit of discussion about 

what that disruption is also going to mean for the electricity industry and how the advanced electrical grid is part of efficiency that 

will drive savings to consumers and businesses. 

The grid of tomorrow should offer new opportunities for consumers, savings on their electricity bills, and lower costs for businesses through new technology. These aren’t obscure academic or 

regulatory debates. These things are hitting the streets today. 

States as diverse as Idaho, Georgia, New Jersey, and California 

have sped ahead with distributed generation, smart meters, and 

net metering. Some places around the world, like South Africa and 

Uganda, have skipped the capital-intensive steps of developing centralized grids and just used pre-pay options so consumers can benefit from cheap electricity using American technology. Cities in the 

United States like Spokane, Monterey, Salt Lake, and McAllen, 

Texas, have installed or are considering electric bus designs that 

include wireless charging stations embedded in roadways. 

My point is that we can’t predict where the technology will take 

us, but we can invest in efficient electricity grids that make these 

innovations possible and give consumers more options. 

Our hearing today is about the savings, no matter what the 

source of generation, and putting that to use in a smarter way. It 

doesn’t matter if your state relies on hydro power, like my State 

of Washington, or nuclear or fossil fuels. The cost of wind and solar 

has come down, and the cost of natural gas has come down along 

with the integration of smart appliances. The grid is being used in 

new ways to drive double digit savings. 

The challenges and opportunities we face in upgrading our electricity grid and thinking about the global markets is what the debate of this panel is today. 

According to a 2011 Electric Power Research Institute report, investments in the grid will require $300 to $500 billion of new investment over the next 20 years. 

Bloomberg New Energy Finance calculated that global smart grid 

investments alone reached $15 billion in 2013, and Pike Research 

estimates that global spending on this will reach $34 billion by 

2020. 

I say those numbers because there’s an opportunity here for the 

United States to continue to perfect technology that will then become a global platform. 

The first job of utilities, power producers, and technology vendors 

in each of our states is to sell and deliver reliable electricity. The 

federal government is uniquely situated to take the broadest and 


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longest view of that electrical grid as a platform for economic development and diversification. This broad view enables smart people 

like the national labs, that are here today, and a program like 

ARPA–E, to explore solutions that are creative and promising, but 

offer no short term return and will challenge us on how to implement these over the long run. 

The grid’s efficiency, enhancing its resiliency, security, and new 

technologies are all part of the decisions that we’re going to hear 

from actual regulators today and how they’re implementing those. 

Obviously some of these solutions are already being pushed in the 

marketplace and can deliver new efficiencies. 

As Chairman Murkowski and I discuss with our colleagues our 

broader energy policy for this Congress, I hope we can find some 

common ground on continuing the federal investment in grid technologies. It does pay off for consumers and our economy. 

The Bonneville Power Administration helped lead the way 15 

years ago towards a responsive grid by installing the first network 

of sensors to take wide-area measurements of transmission systems. 

We’ll hear from Dr. Taft today from the Pacific Northwest National Lab, headquartered in Richland, Washington. The lab has a 

long history of working hand-in-hand with industry on pioneering 

new methods of controlling our rapidly changing electrical grid, 

with all sorts of new energy storage, new tools for predicting, and 

integrating the output of variable generation such as wind and 

solar. It was also an integral part of the largest smart grid demonstration project in the country. 

Grid technology companies like Itron, Schweitzer, and Alstom all 

have roots in Washington State and employ thousands of people. 

And as our economy grows, it continues to find new sources of distributed generation. 

So I want to applaud Secretary Moniz and the Department of 

Energy for convening the Grid Modernization Laboratory Consortium. This will help spread the wealth of the creativity of our national labs through our state, private, and academic partners. 

As I’ve said, I will continue to work with the Chair as we think 

about energy policy on how to support the investments in a smarter grid. Thank you. 

The CHAIRMAN. Thank you, Senator Cantwell. With that, we will 

begin with our panel. We’ll start with you, Dr. Howard and just go 

straight on down the line. 

I ask that you to keep your comments to five minutes. Your full 

testimony will be included as part of the record. 

Welcome and good morning. 

STATEMENT OF DR. MICHAEL HOWARD, PRESIDENT AND CEO, 

ELECTRIC POWER RESEARCH INSTITUTE 

Dr. HOWARD. Thank you very much, Chairman Murkowski, 

Ranking Member Cantwell, and members of the Committee. I’m 

Mike Howard, President and CEO of the Electric Power Research 

Institute. 

This is EPRI’s 43rd year. We were started by the electric utility 

industry to focus on advancing the science and technologies needed 

to ensure that society continues to have reliable, affordable, and 


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environmentally responsible electricity. That’s been our focus for 43 

years. 

We are a global organization. We work with utilities across the 

country and in 30 different countries globally, so we have a global 

perspective of some of the challenges that we’re facing. 

Our research at EPRI focuses on the generation of electricity to 

the delivery of electricity to the end use of electricity including energy efficiency. Last year we published a report. The report is entitled, ‘‘The Integrated Grid, Realizing the Full Value of Central and 

Distributed Energy Resources,’’ and my remarks today are going to 

focus on that report and some of the key insights from that report. 

I’m going to use this chart, and you should have a handout as 

well. It’s a simplified version of the electric utility industry, but I’m 

going to refer to that. 

Today’s power system is extremely complex. It’s an interconnected machine that includes everything from generation on the 

left-hand side, to delivery in the middle, to consumers on the righthand side. Traditionally, the system was designed to flow electricity from the left-hand side all the way to the right-hand side. 

The system has to make sure that at every given second there 

is enough generation to supply consumer’s demand for electricity, 

and that is a paramount criteria for the safe operation of the electrical power system. But the entire power system is changing, and 

it’s changing at a very, very fast pace. Faster than I’ve seen in my 

35 year career in this industry, and that’s an exciting time to observe and be part of the technologies that are evolving. 

As an example of these changes, let’s look at the customer side 

generation, which is on the right-hand side. It’s causing power, in 

some cases, to flow from the right to the left, and this is introducing a two way power flow. It’s just one example of some of the 

changes that are occurring. 

Most of these changes occurring in the power system are occurring on the right-hand side of this chart, which is at the edge of 

the distribution system, and they’re related to technologies referred 

to as distributed energy resources. These important technologies include energy storage, demand response, and smart thermostats, 

which is another example of some of the technologies that are occurring. 

Our research suggests that the successful integration of these 

distributed energy resources must begin with the existing power 

system. However, the existing power system, specifically the distribution system, was not designed to accommodate this high penetration of distributed energy resources. To fully realize the value of 

these distributed energy resources and to serve all customers at the 

established standards of quality and reliability, we must integrate 

these technologies into the planning and operations of the entire 

power system. 

Most grid connected distributed energy resources benefit from 

the electrical support and the flexibility and reliability of the entire 

power system but are not integrated into the power system. For example, customers with distributed generation may not consume 

any net energy from the grid, yet they need the power at times 

when their own generation, such as rooftop PV, does not provide 

enough immediate electricity. So consumers need the ability or caVerDate Sep 11 2014 23:48 Jul 02, 2015 Jkt 094050 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HR\OC\A050.XXX A050

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pacity to tap into the grid and even use grid power, though at different times of the day they may return actual energy to the grid. 

So with increased distributed energy resources capacity related 

costs will become an increased portion of the overall cost of electricity. 

One of the key points that I want to emphasize today is the importance of understanding capacity and energy and the impact that 

it has on the system. 

In my written testimony I’ve outlined in more detail the important items policy makers should consider to enable the integrated 

grid. I appreciate the opportunity to be here this morning, and I 

look forward to your questions. Thank you. 

[The prepared statement of Dr. Howard follows:] 


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The CHAIRMAN. Thank you, Dr. Howard. We will be sure to have 

some. Thank you for the model here of your integrated grid. 

Let’s go to Dr. Littlewood. Welcome. 

STATEMENT OF DR. PETER LITTLEWOOD, DIRECTOR, 

ARGONNE NATIONAL LABORATORY 

Dr. LITTLEWOOD. Good morning, Chairman Murkowski, Ranking 

Member Cantwell and members of the Committee. Thank you for 

the opportunity to appear before you. 

A reliable, efficient, and secure electrical grid is, of course, essential to the United States’ prosperity, competitiveness, and innovation. As we’ve just heard, our existing grid struggles to accommodate the new economy that is emerging as the nation and the world 

shift to clean energy and to digital technology. 

Much of the grid was designed and built using technologies and 

organizational principles developed decades ago to serve vertically 

integrated markets with large scale generation sources located dozens of miles from consumers. They were designed to use centralized 

control schemes that deliver a one-way flow of power to customers. 

The emerging national economy needs a flexible modern grid that 

accommodates two-way flow of electricity and information, provides 

strong protection against physical and cyber risks and the impacts 

of natural disasters, and integrates widely varying, widely distributed energy sources such as solar and wind that produce electricity 

intermittently depending on the weather. 

Argonne National Laboratory is a DOE Office of Science lab with 

a long and distinguished history in power R & D. We recently 

joined 13 other DOE laboratories in the Grid Modernization Laboratory Consortium. I’ll refer to this as the GMLC, a new initiative 

started last November by Energy Secretary Ernest Moniz. 

The GMLC is developing a vision and a plan for moving forward 

and has already identified three specific goals that can be achieved 

through a coordinated national effort to modernize the grid and to 

have in operation by 2025 which would yield a 10 percent reduction 

in the societal cost of power outages, a 33 percent reduction in the 

cost of utility’s reserve margins, and a 50 percent reduction in the 

cost of integrating energy distribution within the grid. 

The GMLC estimates conservatively that achieving these three 

goals would save the nation’s economy $7 billion a year. In addition, a coordinated national grid modernization effort would help 

ensure that the future grid is a flexible platform for innovation by 

entrepreneurs and others who can develop tools and services that 

empower consumers and businesses helping them make informed 

energy decisions. 

The GMLC has identified significant opportunities and needs in 

six broad technical areas that are critical to the establishment of 

the future grid. Sensing and measurement to report real time data 

from across the grid. 

Devices and integrated systems that can talk to each other over 

the Internet allow customers to make decisions about their energy 

use and implement those decisions remotely. For example, Argonne 

is helping to make hybrid and electric vehicles future grid friendly 

by working with the automotive and electrical supply industries to 

develop and test systems and technologies that let electric vehicles 


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communicate with grid operators and to enable ‘‘smart’’ charging 

and discharging, depending on the condition of the grid. 

Advanced energy storage systems are critical to integrating intermediate, intermittent electricity sources within the grid. The Secretary of Energy recently stressed the need for us to consider grid 

and storage as an integrated activity. An excellent example of this 

integration is DOE’s Joint Center for Energy Storage Research 

which leverages and expands current investments in energy storage research and is a vital component of the overarching grid strategy. 

We need to work on system operations and power flow, because 

today’s grid relies primarily on control rooms and centralized operations. 

The future grid must also be secure and resilient in the face of 

disruptive threats that range from natural disasters to terrorist attacks. 

Today’s grid is largely reactive, responding to failures after they 

happen. Although advanced control systems have improved automatic outage responses, they can expose the grid to new cyber risks 

as digital components proliferate and create new points of entry. 

As I mentioned earlier, advances in energy storage are critical to 

integrating clean, renewable energy sources such as wind and solar 

into our electricity supply and also to supporting fluctuating demand on microgrids. Breakthroughs in battery technology are 

needed to reduce our dependence on petroleum through a broader 

use of electric vehicles. 

Grid modernization will provide the nation with a reliable and 

secure system that delivers increasingly clean energy to business 

and residences in ways that optimize customers’ ability to control 

how, when, and where they consume energy. Grid modernization 

also assures a system that remains resilient to a range of threats 

and vulnerabilities. Success will not only save the nation billions 

of dollars annually, it would also create new suites of advanced 

technology. 

Thank you for your time and attention to this critically important topic. 

I’d be pleased to respond to any questions you may have. 

[The prepared statement of Dr. Littlewood follows:] 


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The CHAIRMAN. Thank you, Dr. Littlewood. 

Next let’s go to Dr. Taft, please. Good morning. 

STATEMENT OF DR. JEFFREY TAFT, CHIEF ARCHITECT FOR 

ELECTRIC GRID TRANSFORMATION, PACIFIC NORTHWEST 

NATIONAL LABORATORY 

Dr. TAFT. Thank you, Senator Murkowski and Ranking Member 

Cantwell and the Committee, for inviting me here today. 

I’d like to offer three main points in my discussion. First, we’re 

re-engineering the grid with advanced technologies, some of which 

you’ve heard about, to support many new capabilities. Second, 

these changes are actually challenging our existing grid structure 

and the methods that we use to operate it. Third, there are certain 

key technologies that can help resolve the widening gap in our ability to manage the grid reliably as we go forward. 

In the U.S. our modernization efforts with advanced technology 

support many new goals and emerging trends that were not envisioned for the 20th Century grid. It was thought of as a one-way 

electricity delivery channel with large centralized generation to 

passive users who had little or no choice in their energy sources, 

and it had surprisingly little in the way of sensing and measurement to guide operation of that grid. 

Our present modernization efforts are driving new technologies 

at an unprecedented pace, and some of these new goals that we 

have include expanding the diversity in consumer choice in electricity sources including distributed and clean generation sources. 

The emergence of what we call prosumers. That’s a combination 

of a customer who has both the ability to produce and consume energy and so thereby put energy back into the grid at times. 

The ability of non-utility assets such as ordinary buildings to 

provide services to the grid and cooperate in managing grid operations. The convergence of fuel networks, transportation networks, 

and even social networks with the grid itself. 

And then, of course, a desire for greatly improved reliability, resilience, and security for the grid. 

These changes, some of which are actually occurring virally rather than being planned, are modifying the characteristics, the behavior, and in some cases the very structure of our grid and vastly 

increasing its complexity of a system that’s already extremely complex. 

The forgoing are causing this widening gap in the ability of us 

to manage this grid as it evolves. As that gap widens, the ability 

of utilities to manage the grid reliably is increasingly challenged. 

The uneven penetration of new technologies mixed with legacy systems only increases that challenge. We need new methods and new 

tools for operating the grid in addition to having these new technologies, and we need some new kinds of components to help with 

the grid as well. 

Among all of the very valuable technologies that are being applied to the grid, a few stand out in particular as being key to resolving this widening gap between the grid as it is changing and 

our ability to operate it. These technologies are crucial to the future of the grid regardless of how modernization proceeds. 


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In particular they are sensing and data analysis—the electronic 

measurement and then the processing of the information that results from those measurements to extract useful information on 

very large scales requires new kinds of analysis tools for the utilities. 

High voltage power electronics, adjustable electronics allow us to 

control grid power flows in ways that are more sophisticated than 

our present on/off, electric-mechanical switches. 

Fast and flexible bulk electric storage which can act as the buffer 

that evens out variations in power fluctuations caused by various 

diverse energy sources. 

And finally, advanced planning and control methods. We need 

new methods that will require the next generation of high performance computing coupled with new control mathematics. 

The last three of those have so much potential for positive impact 

that we view the combination of storage, power electronics, and advanced control to be a new general purpose grid component as fundamental as a power transformer or a circuit breaker. 

The Grid Modernization effort that you’ve already heard about, 

launched by Secretary Moniz, is an important effort to systematically address all of these emerging challenges. It’s designed to leverage the broad assets of the national laboratory system and to 

deliver an integrated plan that connects all of the grid efforts in 

the Department of Energy. It also recognizes the importance of 

partnering with industry, the states and regional stakeholders in 

addressing these challenges going forward. 

Thank you, and I’d be happy to answer any questions. 

[The prepared statement of Dr. Taft follows:] 


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The CHAIRMAN. Thank you, Dr. Taft. 

Ms. Barton, welcome. 

STATEMENT OF LISA BARTON, EXECUTIVE VICE PRESIDENT, 

TRANSMISSION, AMERICAN ELECTRIC POWER 

Ms. BARTON. Good morning, Chairman Murkowski, Ranking Senator Cantwell, members of the Committee and fellow panelists. I 

appreciate the opportunity to speak with you here today. 

My name is Lisa Barton. I’m the Executive Vice President of 

Transmission for American Electric Power. I also serve on the 

Board of Directors of Reliability First Corporation. 

There are three key points that I’d like to leave you with today 

for your consideration. 

The first is that the grid is a natural enabler of new technologies. 

When I think about the grid and what it does for new technologies, 

I make the analogy between its and our robust data network. 

Today we have the ability with smart devices at any time, nearly 

anywhere, to pull out that device and be able to do tasks that ten 

years ago we never would have dreamed possible. The high voltage 

electric grid is similar and plays a similar role in society. It provides the backbone that supports diverse generation and distributed energy technologies. 

The AEP grid is designed to accommodate two way power flows, 

so it is different from the distribution system, and it’s a point 

worth noting. 

It is also designed to withstand component failures, designed to 

withstand the loss of a large generator and the loss of one or more 

large transmission lines, so it is an extraordinarily robust system. 

The grid ensures that electricity is delivered in a cost effective, efficient, and reliable manner whether it’s produced at a large power 

plant or on the roof of a house. 

The second point that I’d like to convey is the importance of ensuring a reliable and resilient grid for our economy and for our national security. 

The grid has evolved over time from a fragmented group of 

small, inter-dispersed systems to one that is a networked, a very 

strong networked system. It has been touted as the largest 

synchronist machine on the Earth. We own the system that many 

nations aspire to own. Therefore it is vital that we do not casually 

discount the power of the grid, the existing fleet of generation, and 

the tens of thousands of utility workers, particularly line workers, 

who stand ready to address system needs during times of system 

emergencies. 

The grid serves as the foundation of our economy, prosperity, and 

national security. As policy makers examine and evaluate the purpose of the grid and the potential for new technology such as wind, 

solar, distributed generation, battery technologies, and microgrids 

it’s important to recognize that the benefits to consumers will be 

maximized by combining the strengths of these resources. It’s imperative that we view these resources as complementing each other 

as opposed to competing with each other. 

Finally, it’s imperative that we support diversified technological 

solutions. To maximize the benefits to the grid, we really need to 


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avoid picking winners and losers and instead allow the market to 

identify the best solution for the particular circumstance. 

With respect to AEP’s territory, one of the unique things that we 

have is a unique perspective given the vastness of the territory. We 

have 11 states where we have transmission facilities, and we’re 

also constructing new projects in two additional states. Our service 

territory touches Mexico and goes as far north as Michigan. 

As noted in my testimony there are different solutions that are 

in place to fix the problem at hand. We do not have the same system in West Virginia as we do in Texas and therefore the technologies that we employ in the system itself are very different in 

each of those areas. There is no one size fits all solution with respect to the grid. 

Imagine a world where say, three years ago, we chose one application or one technology over another. We would have missed out 

on a much more advanced and better solutions, so it’s important 

that we don’t make those same mistakes with respect to the grid. 

By supporting a diverse set of generation resources continuing to 

invest in the backbone of the grid, we will ensure that energy is 

available, affordable, and reliable while enabling customers to optimize cutting edge technologies for their benefits. 

I thank you for the opportunity to speak with you here today, 

and I welcome any questions. 

[The prepared statement of Ms. Barton follows:] 


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The CHAIRMAN. Thank you, Ms. Barton. And finally, let’s go to 

Ms. Edgar. Welcome. 

STATEMENT OF HON. LISA EDGAR, PRESIDENT, NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS AND 

COMMISSIONER, FLORIDA PUBLIC SERVICE COMMISSION 

Ms. EDGAR. Thank you. Good morning, Chairman Murkowski, 

Ranking Member Cantwell, Committee Members. My name is Lisa 

Edgar, and I have the honor of serving as President of the National 

Association of Regulatory Utility Commissioners, also known as 

NARUC. I’m also a member of the Florida Public Service Commission, and my comments today reflect both responsibilities. 

Thank you for the opportunity to testify on issues regarding technological innovation and the electric grid. I applaud the Committee 

for holding this hearing and for recognizing the role and advances 

the states have made to improve electric service. For state utility 

regulators ensuring the safe, reliable, and affordable delivery of essential utility service is our most pressing duty. 

Today’s hearing is very timely. Coast to coast change is happening all around the electricity industry from smart grid deployments to energy efficiency and distributed generation projects, 

state public utility commissions are on the front lines and pursuing 

new and innovative programs across the country. As you’ve heard 

today DG can offer economic, reliability, and environmental benefits to consumers who are able to access and use them. When combined with smart meters and other resources DG can significantly 

change how some consumers use and consume electricity. 

These resources may also transform our current utility construct 

in ways we haven’t even imagined. Yet it is important to remember 

that while consumers come in all shapes and sizes from residential 

to large industrial, the expectation and the need for affordable, reliable service is the same no matter who is producing or delivering 

their electricity. 

To be sure, states are leading the way in implementing DG programs. At last count over 43 states and the District of Columbia 

had adopted net metering policies. In addition numerous states 

have deployed smart and distributed resources. 

For example, in Florida, my state, one of our utilities recently installed a smart grid system called Energy Smart Florida. This program installed over four and a half million smart meters. Now, of 

course, this did not come for free or without controversy, but it is 

a concrete step to keep Florida on the path for a smarter, nimbler 

and more reliable grid. 

But while DG can have multiple benefits it also brings idiosyncrasies and challenges that cannot be ignored. Solar and wind resources are not dispatchable. So if they are needed at a time that 

the sun or the wind isn’t producing those contributions are limited. 

Solar and wind also need support to operate under many different 

scenarios and configurations. 

Likewise small, backup fossil units can have worse air emission 

profiles than utility scale units. Grid operators generally don’t control these resources, and it is hard to predict when they will come 

into the system, where and for what time period. These advantages 


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and tradeoffs must be better understood and balanced while making policy and cost allocation decisions. 

In our view experience has demonstrated that states pursuing 

these initiatives at their own pace is good policy. We understand 

the value these technologies bring, but we also recognize the challenges associated with integrating them into the grid. Utilities are 

required to provide electricity 24 hours a day, seven days a week. 

We need to ensure that the core responsibilities of reliability and 

affordability are maintained while taking into account our local 

and regional differences. 

At NARUC our members have passed resolutions recognizing the 

many collaborative efforts between regulators, consumer advocates, 

utilities and other key stakeholders to address the potential for DG 

and other technologies. These efforts continue to be important as 

we work to better evaluate the benefits and the costs as these technologies grow throughout the country. 

In addition hearings like this help ensure that necessary consumer protections are maintained. 

It remains our responsibility to facilitate the continued provision 

of safe, reliable, resilient, secure, cost effective, and environmentally sound, energy services at fair and affordable rates. As 

regulators part of our job is to bring certainty into this fast changing and uncertain dynamic to ensure safety, reliability, customer 

affordability, customer satisfaction, environmental sustainability, 

and financial viability. Our unique reality is that we must regulate 

in the public interest for consumers and communities while these 

systems are in transformation. 

Given our statutory responsibility many of these decisions are 

best addressed at the state level. 

Thank you for the opportunity to continue a dialogue and so that 

we all better understand the opportunities and the challenges. 

Thank you. 

[The prepared statement of Ms. Edgar follows:] 


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The CHAIRMAN. Thank you, Ms. Edgar. 

Thank you to all of the panelists this morning for your comments 

and for beginning what, I think, is going to be a very, very interesting discussion. 

Ms. Edgar, you summed it up there when you were talking about 

your responsibility as a state regulator to ensure the safety, reliability, customer affordability, environmental sustainability, and financial viability and do this all at the same time where every day 

you have to do the basic function of making sure that it happens. 

You have to be able to perform while at the same time you’re pushing out and you’re really leading. 

Ms. Barton, you mentioned that we are the envy of the world 

with our grid and what we have, yet we are certainly not sitting 

still here every day. 

We are seeing advances that lead us to be able to do more, 

quicker, faster, and smarter. But this, I think, is our real challenge 

here, and I would like to propose to anybody that wants to jump 

in here. 

You have got, almost, a do no harm type of philosophy that you 

have to get up every morning with, while you’re pushing out at Argonne with new technologies. Those that are implementing and integrating need to make sure that you’re able to do so without being 

so out of the way that things don’t function anymore. 

The question I have is whether or not we can keep going at the 

rate that we are with the innovation and still keep the commitment 

to reliability, affordability, the financial security, and the environmental security. Is this sustainable? And I hope you say, yes. 

[Laughter]. Let’s start with you, Dr. Howard. 

Dr. HOWARD. Okay. The answer is absolutely yes. The hallmark 

of this industry has been innovation and implement that while at 

the same time you absolutely maintain affordability and reliability, 

and that is the keystone of this industry. 

The CHAIRMAN. What do you think is the biggest impediment to 

doing all of this? What is your anchor here? 

Dr. HOWARD. Well—— 

The CHAIRMAN. Your rock? 

Dr. HOWARD. We’re advancing technologies and that’s coming 

along. We need to continue to make investments in research so 

that we can continue to advance these technologies and many of 

which we talked about here today, power electronics, energy storage and reconductoring with advanced cables and so on. So there’s 

a variety of different technologies and we need to make sure we 

continue to lead in innovation, that we can implement these innovations at the regional level because what happens in one part of 

the country is going to be different in another part of the country. 

So there’s a lot of regionality issues. And we need to make sure 

that we continue to focus on not just an interconnected system 

which the system is now but an integrated system from end to end. 

These are very tough challenges, but I think it comes down to 

research, development and innovation that we’re so good at in this 

industry. 

The CHAIRMAN. So just in terms of keeping up as these new technologies are being developed, being incorporated, you have your integrated grid here. It’s being used in ways for which it was not iniVerDate Sep 11 2014 23:48 Jul 02, 2015 Jkt 094050 PO 00000 Frm 00106 Fmt 6633 Sfmt 6602 E:\HR\OC\A050.XXX A050

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tially designed. We have now recognized that you’ve got this flow 

both ways. 

Ms. Edgar, this is probably best directed to you so how do pricing 

mechanisms then need to be adjusted so the value that’s generated 

from both the grid and the distributed generation is captured? Because if you’ve got a system that was in place and this is your base 

and you’ve got all these changes, is that keeping up with the technology? 

Ms. EDGAR. Thank you, Madam Chair, for the question. As you’re 

well aware, customers all across the country have invested a great 

deal of money, money from their utility bills, money from their 

monthly family bills, into the system that we have. A concern that 

I believe needs to be part of the discussion is that those customers 

continue to get value from those investments as we are integrating 

new technologies and new systems into the larger system. 

The CHAIRMAN. Are we getting that yet? 

Ms. EDGAR. In some areas, yes and perhaps in some areas, less 

so. One of the discussions here today has been about how to maximize efficiencies by using new technologies, and that’s an important balance in all of these discussions. As is how do we use traditional rate making, innovative rate making, how do we attract investment while giving good value to customers and continuing to 

have that reliable, resilient system? 

The CHAIRMAN. Senator Cantwell. 

Senator CANTWELL. Thank you, Madam Chair. 

I think I am going to try to get three things in, since I don’t 

know what is going to happen with votes. 

Dr. Taft, could you tell us what you think the three federal priorities should be to accelerate the transition that’s already happening? 

Dr. Littlewood, how far do you think we are from game changing 

storage? 

Ms. Edgar, isn’t the grid investment really part of our security? 

Ms. Barton mentioned it as well. 

When you talk about grid security or any security, it is always 

about hardening the targets and redundancy. And basically continuing the development of smart grid gives us an incredible 

amount of redundancy, juxtaposed to some of the other ideas that 

are being talked about in other committees. Investing in smart grid 

will help us with our security. 

Dr. TAFT. I’ll start. We need to be able to take advantage of the 

start we already have in adding instrumentation and measurement 

capability to the grid. A lot of work has already been done at the 

transmission level with the deployment of phasor measurement 

units. More work like that is being done at the distribution level. 

It produces enormous amounts of data. 

Going forward one of the things we need to do is be able to process that data to extract the useful information and connect that to 

decision and control. 

So it’s really a three step process: measure, analyze and then 

control. We need more advanced capabilities for that control including distributed control as well as centralized control, and for certain key technologies like storage we need to continue driving the 

cost down so those become very practical. 


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Lastly, I’ll say because of the complexity and the growth in complexity we need better ways to look at and manage and understand 

that. 

We need architectural tools that help people. All kinds of stakeholders appreciate that you have this large tapestry and if you pull 

on the thread on one end something happens on the far edge. We 

see that in the New York REV process, for example, where they’re 

working with and struggling with all the complexities. So we need 

tools to help them visualize and understand the consequences of 

changes too. 

Senator CANTWELL. Dr. Littlewood, how far away are we from 

game changing storage? 

Dr. LITTLEWOOD. Because game changing storage is really a research activity, it’s rather difficult to predict that. Let me first say 

that conventional storage technologies are improving slowly, a few 

percent a year, and have been doing so for a long time. Of course, 

if you project forward the time scale where they will have impact 

in this business it’s probably another 20 years at that rate. So it 

isn’t good enough. So that’s why, of course, there are some major 

research efforts sponsored by Department of Energy and other 

agencies of the government to try and break out of that. 

What I will say is that the space, intellectually, for being able 

to do that is very large. And I am confident that on some time 

scale, which unfortunately I can’t give you, we’ll make the discoveries needed to get forward and do that. 

I would also say that there’s a point where you’re already beginning to see incorporation of storage within microgrids. I think the 

experiments that we’ll be doing in the United States where 

microgrids are gradually being introduced in various areas and we 

learn how to integrate storage, wind, solar, small scale energy generation in rural areas will propel this much faster than it has been 

at the moment. 

Senator CANTWELL. Thank you. 

Dr. LITTLEWOOD. I’m actually very bullish on this. I think there 

are great opportunities that will make a big difference. 

Senator CANTWELL. Great. Thank you. Ms. Edgar, under 30. 

Ms. EDGAR. Thank you, Senator Cantwell. Coming from Florida, 

clearly you can recognize that resiliency and redundancy are issues 

that are very important to us. When I first came to the Public 

Service Commission the issues that we were dealing with on a day 

to day basis were because over the course of two years Florida had 

eight hurricanes and two named storms hit our coastline and even 

into the central areas. We had areas of the state that had large 

outages, three, four, five times over the course of two years. 

That resiliency and redundancy is near and dear to the issues 

that we deal with. Changes with technology and incorporating new 

technology certainly will help us withstand cyber security risks, 

physical security risks, weather risks, but it also, as we make these 

changes, brings in new technology issues that need to be addressed. 

And one of the things, as a state regulator, that we want to do is 

make sure that no customer group is left behind and that there is 

transparency as we have the discussions about investment and cost 

allocation. 

Senator CANTWELL. Thank you. 


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Ms. EDGAR. Thank you. 

The CHAIRMAN. Senator Barrasso. 

Senator BARRASSO. Thank you very much, Madam Chairman. 

Dr. Littlewood, in your testimony you state that our electric grid 

must be secure and resilient in the face of disruptive threats that 

range from natural disasters to terrorists attacks. You explain resiliency research is a particular strength at the Argonne National 

Laboratory, and go on to say that Argonne and other labs have developed the beginnings of a foundational key to secure the grid, the 

national power grid, simulator. The simulator would run virtual experiments to test potential vulnerabilities and to develop responses 

to various types of attacks. 

In January the Department of Energy’s Inspector General released a report examining how FERC, the Federal Energy Regulatory Commission, conducted a similar process. In 2013 former 

FERC Chairman, Jon Wellinghoff, directed FERC staff to identify 

critical electric substations by location. Chairman Wellinghoff also 

directed FERC staff to create failure scenarios to simulate the impact of the loss of these substations. The Chairman then decided 

to share this information with individuals and entities outside of 

the federal government. The Inspector General actually found that 

Chairman Wellinghoff made the decision to share the information 

without determining whether the information was classified and 

did so even though FERC staff expressed concern that the information, ‘‘could provide terrorists and other adversaries with data they 

might use to disable portions of the grid.’’ 

Now personally I find these actions deeply troubling, but I’m 

even more troubled that emails between the Chairman and FERC 

staff on this issue were missing from the Chairman’s email account. 

I understand that Argonne National Laboratory handles sensitive information on a regular basis. What steps do you, as the Director of Argonne, take to safeguard this information? 

Dr. LITTLEWOOD. Sir, Argonne has a prominent role, actually, in 

cyber security in a large number of areas, so we actually work very 

hard to make sure that all transactions like this are appropriately 

vetted and are not shared inappropriately. 

I share your concern, Senator, about the risks of potentially advertising the vulnerabilities of our network. 

I also think that we need to work, in fact, to develop cyber security protocols for how the future grid will operate. And this is a 

very important part, a kind of hidden part, of making sure that any 

developments that we move forward with on the future grid are, 

in fact, robust against terrorist acts and terrorist intrusions and 

other such things. 

Senator BARRASSO. One other thing. I noticed in your testimony 

you compare the electric grid with the interstate highway system. 

Dr. LITTLEWOOD. Right. 

Senator BARRASSO. The comparison might suggest that Washington should assume virtually all of the responsibility for funding 

the electric grid, but today the vast majority of investment for the 

electric grid actually comes from entities other than the federal 

government. Are you suggesting that the federal government be the 


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principle source of funding the electric grid or how do you view that 

whole thing? 

Dr. LITTLEWOOD. I certainly didn’t intend to suggest that, and 

it’s none of my business, actually, to decide what the federal government should be doing in that area. I was simply pointing out 

the physical scale of the infrastructure. 

As I think I said earlier with regard to microgrids, one of the advantages the United States has over much more centrally planned 

economies is the ability to do experiments and actually to develop 

infrastructure in a way that’s responsive to the market and enables 

us to take great advantage of the intellectual and scientific and engineering strengths that we have. 

So one of the challenges, I think, for the industry and we discuss 

this a great deal, is developing business models which are appropriate to be able to deal with that. Notwithstanding as we’ve already heard from EPRI something like $300 to $500 billion of investment are expected to be required over the next 20 years. 

Senator BARRASSO. Thank you. Thank you, Madam Chairman. 

The CHAIRMAN. Senator Warren. 

Senator WARREN. Thank you, Madam Chair. 

Last month Energy Secretary Moniz came before this Committee 

to discuss the Department’s budget request, and during that hearing we had a chance to talk about the power grid and specifically 

how to make sure that the grid can reliably distribute electricity 

throughout the country. 

Well, our power grid has been reliable for so long that, for the 

most part, no one even thinks about it. The grid is aging. Much of 

the technology was developed by Thomas Edison and much of the 

structure was built shortly after World War II, and now this aging 

grid faces new challenges, particularly with the rise of extreme 

weather events that threaten to shut down parts of the grid during 

weather emergencies. 

During our earlier hearing, Secretary Moniz said that, ‘‘Distributed generation and microgrids are themselves a resiliency tool,’’ 

meaning that in addition to the environmental benefits a power 

grid with more wind and more solar spread across multiple locations can actually help protect against extreme weather. 

Dr. Littlewood, your testimony discusses how resiliency research 

is a specialty at Argonne National Laboratory which you run. Can 

you explain to us in more detail how it is that distributed generation itself can produce system wide resiliency? 

Dr. LITTLEWOOD. Thank you very much, Senator. That’s a very 

prescient and precise question. 

The grid is a very complicated object, so even now when it’s 

being driven in a one-way mode it interacts in very complicated 

and very subtle ways. And actually we do not understand it. 

If you look at it as a basic principle of resilience, you look for individual units that can continue to fight the war after the command or control has somehow been taken out. So that’s one very 

basic principle about how you build a resilient network. It cannot 

be a single connected object. It has to be a web in the same way 

that the Internet is a web. So by having microgrids that can operate independently but still communicate, you have the opportunity 

in the case of a natural disaster to be able to reroute energy 


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around affected areas to be able to make sure that the other infrastructure, which may be affected in the area of a natural disaster, 

is also not impacted. 

One of the dangers in major disasters, of course, is that you lose 

first the grid, then the Internet, then water, then the ability to distribute many, many different kinds of things. And the very basic 

principles of resilience tell you that one monolithic big thing is a 

dangerous thing to be working with. 

So the other side of that, the need that actually my colleagues 

have commented on for the ability to model, understand and work 

the operation of the grid in real time. And so that’s the high level 

infrastructure which is necessary to monitor it, the sensors, the 

data, the integration, the high performance computing. 

Senator WARREN. Thank you very much. 

The Energy Secretary and the technical experts at the Department are not the only folks who made this connection. A recent 

analysis from the World Bank showed that when there’s more diversity of energy sources, including more renewable energy that’s 

connected to the grid, the grid becomes more resilient. Similarly a 

Massachusetts Climate Change Adaptation report from 2011 also 

recommended diversifying energy supplies as a strategy to make 

our system less prone to failures. 

Extreme weather events are on the rise. Every year these events 

stress the capacity of our power grid. If our technical experts are 

telling us that plugging more renewable energy into the system can 

help protect the grid in the face of these extreme weather threats, 

then we should make it a priority. Whatever you think about climate change, we all have an interest in keeping the lights on. 

Thank you. 

The CHAIRMAN. Senator Risch. 

Senator RISCH. Thank you, Madam Chair. 

Ms. Barton and Ms. Edgar, this question is for you. On the Intelligence Committee, we spend hours and hours and hours listening 

to and wringing our hands about the cyber threats. There’s a lot 

of us who are convinced that that’s going to be the next big one 

that hits the country. 

Can each of you please explain how this plays out in the real 

world? What challenges do you face in the real world dealing with 

this? Ms. Barton, why don’t you start with you? 

Ms. BARTON. Certainly. The cyber threats are something that the 

utility industry takes extremely seriously. We have a number of 

people who basically sit behind a desk, 24/7, and monitor all of the 

threats that are going on, the attacks that are happening, whether 

it be through fishing attacks and so forth or direct attacks with respect to the system itself. 

The ability of this industry to work with the federal government 

and other service providers has been outstanding in terms of being 

able to mitigate any threats. We have a number of people on our 

staff who have a secret clearance so they can get access to all kinds 

of different information. 

We have also paid a lot of attention with respect to physical security and our control houses and making sure that they are much 

more resilient than they have been in the past. In the end system 

redundancy is diversity and redundancy are really at the heart of 


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reliability. So from a physical standpoint one of the things that we 

are doing is working with the RTOs who are responsible now for 

planning and determining what new transmission needs to be 

built, we are really encouraging them to take an accelerated view 

with respect to transmission investments so that the system itself 

can be more reliable by diversifying. 

Senator RISCH. Thank you. I appreciate that, and it is interesting 

to hear you talk about your relationship with the federal government. As you know, we’re struggling with that when you have the 

issues of privacy versus the issues of what’s got to be done in order 

to stop this, so I appreciate your input on that. 

Ms. Edgar. 

Ms. EDGAR. Thank you, Senator, and I’ll approach the question 

from perhaps a slightly different angle. 

First off, I will say that, again, the issues of cyber security are 

truly something that, as regulators, do keep us up at night. None 

of us wants to get that call from the governor that says, the system 

is down. Somebody has hacked it. What are you doing to fix it? 

However, I can tell you I recently attended a meeting that’s an 

ongoing collaborative effort between the Department of Energy, the 

Department of Homeland Security and EEI. I found it to be a very 

progressive and very forward thinking collaborative effort between 

the private industry, state regulators and the federal agencies, so 

I can tell you that a lot is going on that should give us all reassurance. 

However, as a state regulator one of the things that we struggle 

with, again, is the cost. Because much of this information is and 

necessarily so, confidential, it is difficult when utilities come to us, 

as a state regulator and economic regulator, and we are asked to 

approve these investments and put them into the rate base, into 

the monthly bills of consumers. Yet, because of the security issues, 

we cannot really closely evaluate where that money is going and 

what for. That is something, at the state regulatory level, that is 

still a puzzle that we are needing to work through. 

Senator RISCH. That’s interesting. I think most consumers really 

aren’t fully aware of the challenges the utilities face. We all take 

for granted when we flip the switch, the light goes on. And when 

that doesn’t happen, the reasons for it are complicated and could 

be a real danger to the security of the United States. So, thanks, 

thanks for all of that. 

My time is almost up. 

Dr. Taft, I’m aware of the Pacific Northwest smart grid demonstration project that you’re working on, and I have a couple of 

questions regarding that. Since my time is up and with respect to 

the other people, would it be alright if I submit those in writing 

and you could respond? 

Dr. TAFT. Absolutely. We will be very happy to respond. 

Senator RISCH. Thank you very much, Dr. Taft. I appreciate it. 

Senator BARRASSO [presiding]. Thank you, Senator Risch. To 

members of the panel, we’re in the middle of roll call voting on the 

Floor of the Senate. You’ll see some of the Committee members 

leave and then come back. 

And with that, Senator Franken, you’re next. 


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Senator FRANKEN. Thank you. I’m sorry. I’m going back and 

forth to the HELP Committee, health hearings. 

Dr. Howard, I like distributed energy, and I like distributed generation. It makes our grid more resilient, allows critical infrastructure, like hospitals and military bases and others, to stay online 

during an outage which is very important. That’s why I’ve always 

supported the increased deployment of things like combined heat 

and power and district energy, which we have in St. Paul, burns 

clippings and tree limbs and stuff like that then provides electricity 

for downtown St. Paul and heats and cools the buildings. So I like 

distributed energy. 

So I want to ask the panelists about another aspect of distributed 

energy and that’s grid scale storage. I apologize if this has been 

discussed already, but I think this is a real game changer because 

it will allow us to deploy renewables, more renewables, wind and 

solar, when needed. It will help stabilize the grid, and it will improve our resiliency by making sure that we have electricity available on demand and in case of an outage. 

Can the panelists in the national labs please describe some of the 

recent advances in grid scale storage and what your visions are for 

deploying this technology in the future? 

Dr. TAFT. So let me start, Senator Franken. One of the things 

that we have been doing is looking at storage both in terms of the 

core technology, the fundamentals of how the storage devices work, 

but also how they can be used as system components. And you 

mentioned grid scale storage in particular. The ability to use storage in multiple modes is one of the things that makes it most interesting. There are a variety of functions that it can supply that are 

useful to the grid, and unlike most components, storage can be 

used in multiple ways simultaneously. 

So one of the things that we have been working on is how you 

actually use that in a multi mode fashion because that helps 

spread the cost over more capabilities and make it more cost effective. 

The reason that we think of storage, power electronics and advance control as a new grid component is because of those new capabilities and so many of them as opposed to other components 

that have one function. That’s why we think that will become a 

general purpose tool for buildings and grids of the future, and so 

we focus a lot on how to apply it as a system component. I’ll stop 

there and let my colleague take over. 

Dr. LITTLEWOOD. Thank you. I agree with those comments. Let 

me focus a little bit on the technology side of that. 

Since the need for grid scale storage has only recently emerged, 

it turns out that there’s a substantial vacuum in technology and 

science which is needed to support that. Unlike mobile storage 

which has been driven by the consumer electronics industry for the 

last few years, this is a recently emerging driver. And that’s one 

of the reasons that the DOE has been heavily investing in fundamental research on the basic science to be able to do this with the 

main goal of taking prototypes that we already know and understand and have opportunities to work with and drive the cost down 

so that they are appropriate for the grid. 


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I actually think that on grid scale storage, at least electrical storage, we will make some very substantial advances within the next 

few years of driving costs down because this is an area which has 

been underexploited for quite some time. 

Senator FRANKEN. I agree, and I’m glad you’re doing this. 

Let me ask about like electric vehicle storage. I mean, there you 

have like at night, wind blows, wind. Electric vehicles can store at 

night. Drive, less gas. Then during the day the sun is shining so 

we get solar, and what are the benefits of this approach in terms 

of reducing our carbon emissions? 

Dr. LITTLEWOOD. I think they’re actually very substantial over 

the long term. 

In the short term, it actually involves getting, you know, the 

electric vehicles to a stage where they are widely adopted. And 

that’s largely, again, a matter of cost in it, cost to do this. 

Senator FRANKEN. Right. 

Dr. LITTLEWOOD. It also involves, I think, doing experiments 

with microgrids because this is the first opportunity to do so. 

I think there are big opportunities in rural areas and there are 

big opportunities in certain subdivisions to design microgrids that 

are able to take solar, wind and electrical storage and use them effectively. I think a number of utilities are actually exploring models 

by which they can introduce those and that involves developing 

new business models which go along with the technologies as 

they’re being invented. 

Senator FRANKEN. I know I’m out of time, but this is exploding. 

I mean, this is happening faster than anyone could have conceived. 

If you look at the explosion in cell phones and think about that 

technology and think about what we’re going to be doing with all 

of this stuff. This is a revolution, right? And it’s good, right? Except 

for Ms. Barton, right? It’s good for you too? 

Ms. BARTON. Diversity in the generation portfolio is always a 

good thing. 

Senator FRANKEN. Okay, good. I’m sorry I went over my time. 

Senator BARRASSO. Thank you, Senator Franken. Senator 

Daines. 

Senator DAINES. Thank you, and thanks for holding this hearing 

today. 

I represent the State of Montana. Certainly innovation and reliability in the electric grid is an important topic for our consumers 

back home. And thank you for what the witnesses have relayed 

today regarding the challenges that the modern electric grid faces. 

But too often the change in generation sources is brought by misguided federal policies. And somebody from a state like Montana 

we have truly an all of the above energy portfolio. The sun shines 

a lot. The wind blows a lot. We have an abundance of coal, oil, natural gas and hydro, but Montana consumers rely on over half of 

their electrical supply from coal. Montanans are severely concerned 

about the impacts of the EPA’s regulation on their energy prices, 

transmission capacity, grid reliability and the very jobs that depend on coal production in Montana. 

The Crow Tribe, for example, their unemployment rate today is 

50 percent. If we lost the coal mining jobs on the Crow Reservation, 

their unemployment rate goes to somewhere north of 80 percent. 


SSpencer on DSK4SPTVN1PROD with HEARING
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The tax revenue of coal production in Montana is $118 million 

a year. That is how we fund our infrastructure, our teachers and 

our schools. These proposed EPA clean power plant rules could 

threaten operations at Colstrip. 

In fact it threatens coal-fired plants in other states like Michigan. In fact it’s coal for Montana that powers those plants in Michigan, that supplies electricity for the auto manufacturing industry 

there in Detroit. 

My questions surround the impact of clean power plan on electricity reliability. 

Ms. Barton, Nick Akins, the CEO of American Electric Power, 

has been outspoken on grid reliability. About a year ago he stated 

in testimony before this very Committee that the country, ‘‘dodged 

a cannonball during the polar vortex.’’ He also reiterated a point 

he made a month earlier that AEP used 89 percent of generation 

that will retire in 2015 to meet electricity demand during the polar 

vortex. 

My question is this. Will the EPA 111D rule on existing power 

plants impact conventional sources of electricity like coal? And if 

so, how will that impact grid reliability? 

Ms. BARTON. Thank you. Will the EPA 111D impact conventional 

generating units? Yes, it will. 

One of the things that we have been doing is we have been 

studying the grid, in particular, studying the PJM system, to really 

understand and appreciate the impact of what some of these retirements are. I think it’s important to note that when you talk about 

the grid, the grid is the combination of the generation, transmission and distribution system that is there in a given area. The 

grid in New York City is very different from the grid in Montana, 

the grid in Texas and so forth. And so it’s very important that we 

appreciate the inner workings of the grid in those regional areas. 

PJM, for example, has actually recently done a study and it has 

gotten some news attention. And that is an economic study. An economic study really is just looking to determine is there a sufficient 

amount of generation on the system. Their next stage is to look at 

a load flow analysis. The load flow analysis really looks at can you 

get power from that generation to your load centers. In that recent 

analysis there are basically five load pockets that did not have 

enough import capability in a post 111D world, to be able to function reliably. 

So when you look at the impacts of really any government initiative, whether it be 111D or what have you, it’s important to take 

a step back and really take a look at the reliability of the grid. We 

have incredible modeling technology. We have folks who basically 

are station operators who are looking at the system and appreciating what needs to happen to keep the system reliable at any 

given moment. 

We then have a number of regional transmission planners who 

are looking at that system ten years into the future, five years into 

the future. What you end up having in some of these situations is 

a chicken and egg situation. You need to first identify well, what 

generation is retiring? Where is it retiring? What then changes are 

necessary with respect to the transmission grid to be able to maintain the reliable and stable system we have today? 


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Senator DAINES. Thanks for your insights into the supply chain. 

I appreciate that. 

Commissioner Edgar, similarly, do the federal regulations like 

111D help your Commission create certainty or do these regulations create uncertainty for consumers? 

Ms. EDGAR. Certainly. Thank you, Senator. 

Well at this point there is great uncertainty. As you’re well 

aware, we are in the stage of, still in the stage of rulemaking or 

EPA is still in the rulemaking stage. Many, many discussions have 

occurred about what the proposed rule really means, what it requires, what costs will come from the changes that it may or may 

not require? But of course, it’s still a proposed rule at this point 

in time. 

And consumers, regulators, states and industries are continuing 

to make investment decisions in order to meet the needs of customers, short term and long term, not knowing what the final rule 

is going to be or even once it comes out what the implementation 

processes will be. So yes, there is certainly uncertainty now as that 

process moves forward. 

Senator DAINES. Thank you. 

Ms. EDGAR. Thank you. 

The CHAIRMAN [presiding]. Thank you, Senator Daines. 

You will see that members have fled for the votes, but they are 

on their way back. So as members come in I will turn to them, but 

let me ask another series of questions here. 

I mentioned in my opening comments my interest in the potential that we have for microgrids and recognizing, as you pointed 

out, Ms. Barton, that there are great differences region to region 

and that’s why there can’t be a one size fits all application when 

it comes to our energy sources and how our grid functions here. 

Dr. Littlewood, what kind of coordination goes on with our national labs and what the states are doing or even more locally? For 

instance, in a very small village in the Southwestern part of Alaska, not connected by road, there’s a village by the name of 

Kongiganak, with their own little microgrid between three wind 

turbines, a battery storage unit and small heating units within 

homes which is perfect for them. They’ve really pioneered much of 

what they have provided for their community of several hundred. 

How much coordination goes on between the labs and then what 

we’re seeing within the states, whether through our universities or 

just from those that, by necessity, are pulling together these very 

small microgrids? 

Dr. LITTLEWOOD. So one of the things that the labs are doing is 

trying to develop test beds that can be used for communities to do 

virtual experiments within the lab system to be able to design systems that could be exported to be used in small communities. 

So I’ll mention a program at the NREL, National Renewable Energy Lab, which is ESIF which actually provides a kind of basic 

test bed. There’s similar work been going on at PNNL and at Argonne and at many of the labs. 

So, of course what we can’t do always is to connect with individual communities one by one, but we do work quite closely with 

a view, to get a view, both from regulators or from within individual states with those states running those kind of experiments. 


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I think the labs would say that they would, in fact, benefit from 

the attention coming from states who have particular problems and 

particular issues that they want to solve. For example, I think my 

colleagues would be interested to come and study while it’s actually 

going on on the ground. And we do, in many places, like can’t 

vouch for the fact that we’ve been to a particular village in Alaska, 

although I’m sure that there are some pretty creative ideas which 

are on the ground there already. 

The CHAIRMAN. I think it would be helpful for all of us to have 

a better understanding in terms of what is happening in some pretty unique situations, because of necessity in so many of these 

areas, and then integrating that with our brilliant minds that we 

have in our laboratories. 

Dr. Taft, you had mentioned four technologies that are key to 

modernizing the grid. And this is a sensing and data analysis, high 

voltage power electronics, fast and flexible bulk energy storage and 

then the advanced planning and control methods and tools. Which 

of these is most readily deployable? And as we are moving toward 

this modernization, of these four, where’s our biggest challenge? So 

what can we do to deploy quickly? And again, what’s our drag 

here? 

Dr. TAFT. The utilities have had an opportunity recently to expand their capability to make measurement, especially at the 

transmission level, some at the distribution level. More is coming. 

So we’re at the point of needing to be able to manage and analyze that data. And just to give you a sense of how much more data 

we’re talking about, an ordinary utility in the past might collect up 

enough data to fill up a book like a Tale of Two Cities, once every 

second. And what we’re looking at now in the future is being able 

to fill up a book like War and Peace, 846 times a second. 

So the need there is to be able to sift through all of that data 

and get the useful information and then act upon it. That’s an immediate need because the sensor capability is coming online. The 

tools to do that in other industries exist but the tools to do it in 

the utility industry are somewhat lagging. So we need that. We 

need it immediately. We also need advanced controls. 

And you talked about microgrids. You know, when we did the 

grid architecture work for DOE last year we looked at microgrids 

as a specific example, looked at NRCA work in that area because 

that more distributed architecture has lessons for us to learn. And 

so we started to gather that kind of information and make use of 

it and think about that in terms of how we would go forward. 

The control systems for all of that are an area where we need 

considerable work. And there’s a lag there because the industry 

doesn’t invest a lot in research. They can’t do a lot in research. So 

the vendors see a thin market and there’s a nice role for the federal 

government to do the key development and demonstration of that 

capability so that it moves forward. 

The storage technologies are moving forward commercially, but 

there’s a great deal to be done to drive the costs down to make 

them more effective and to make them flexible. 

So all four of those technologies are, kind of, in the same place 

in a sense of there’s not one that’s way ahead of the other as we, 

kind of, need all four. But that’s why I talked about them as a 


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group. That we need to advance all of those together and when you 

put together the power of electronic storage and control, in particular, you get this remarkably flexible tool that can be applied at 

the microgrid level, at the bulk system level, even at the individual 

building level, for example, if you think of a building as acting like 

a microgrid on its own. 

It’s imperative that we move those forward because they have so 

much flexibility to help us deal with all of these variations, fluctuations and complexity that we’re faced with going forward. 

The CHAIRMAN. Thank you. 

Dr. Howard, you have said that a consumer with distributed energy resources is not necessarily a self-sufficient energy consumer. 

Talk a little bit about that because I think you have folks that 

think, well, wait a minute, I’ve got solar. I’ve got panels on my 

home, and I’m seeing those benefits. I am a self-sufficient energy 

consumer. 

You say that they are not necessarily so. Speak to that and what 

would it take for an energy consumer to really become completely 

self-sufficient? 

Dr. HOWARD. Okay. The answer to that question really gets to 

the issue of capacity and energy. A consumer that has, for example, 

solar PV, may at certain times have excess energy that is being 

produced. But when they don’t have that excess energy they need 

to tap into the grid. And at that point they hope that the capacity 

is available to get access to that energy that they need. 

And so it’s really a two way street. And that’s why it’s important 

going forward that we really understand that a lot of these different technologies may be rich in energy, but you need to also tap 

into the power system to get access to that capacity that’s needed 

so that when the sun doesn’t shine, they have electricity now. 

The CHAIRMAN. But hope doesn’t necessarily—— 

Dr. HOWARD. That’s right. 

The CHAIRMAN [continuing]. Get you to the reliability—— 

Dr. HOWARD. That’s right. 

The CHAIRMAN [continuing]. Piece of it, so—— 

Dr. HOWARD. That’s right. So you need devices that we referred 

to here like smart inverters or power electronics. You need sensors. 

Also energy storage can play a very important role in helping to 

certainly end those times when the sun isn’t shining then you can 

either use energy storage or the biggest energy storage device is 

the grid itself and tap back into the grid to get the electricity that 

you need. 

So it all has to work together. But as we look forward I think 

there’s a whole new approach that we need to think about, not just 

energy, but also making sure that we have the capacity available 

at every single minute to provide the energy that’s needed. 

The CHAIRMAN. Well, let’s talk about the capacity here. And you 

used the term capacity related costs because in my opening statement I, kind of, teased and said I wanted to know what’s our time 

line for development here and what are those costs. 

I’m pretty sure that Senator Cantwell used the same number 

that I did that we’re looking at a cumulative investment of between 

$300 and $500 billion over the next 20 years to really modernize 

our grid here. 


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When we’re talking about this capacity related cost is this the 

number that we’re talking about here? 

Dr. HOWARD. Yeah, yeah, that’s right. We, EPRI, did a report in 

2011, and it’s called ‘‘Estimating the Costs and Benefits of the Future Grid.’’ I will make sure that that report is available for this 

Committee. 

The CHAIRMAN. Okay. 

[The information referred to follows:] 


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268 

Dr. HOWARD. It outlines that the costs over a period of 20 years 

is at the top end of about $500 billion. 

Now capacity, a lot of times we mistake capacity as being generation capacity. But we also have to think about it in terms of capacity on transmission and distribution as well. And so, you know, is 

the capacity available in the distribution system to provide the energy? 

The study that we did in 2011 looks at all of those costs and we 

estimate that, at that point, about $500 billion is the top end. 

The CHAIRMAN. Is there agreement on the panel that this is the 

number that we’re looking at as effectively, $500 billion, top end? 

Ms. BARTON. I think generally speaking, yes. One of the key 

things I think that’s important to remember is that if you have 

market-based solutions you can make sure that these technologies, 

using your words, Senator Murkowski, pass the do no harm test, 

but I would add, at a reasonable cost to consumers. And what that 

cost to consumers is with respect to these integrated technologies 

really varies in terms of what is that technology is thought to be 

integrated in order the system needs. If it’s a market-based solution then consumers will really choose what’s important to them. 

We have used, for example, in Presidio, Texas, which is on the 

border of Mexico. And it would have cost a lot of money for a new 

transmission line to be put in place there. We basically have two, 

2.4 megawatt NaS batteries in place to basically serve to enhance 

the transmission grid there. So that’s just an example of how technology can be used to meet a specific need. And I think it’s very 

important that it be solution-based. 

The CHAIRMAN. Senator Cantwell, I have been asking a series of 

questions and have gone well over my allotted five minutes. But if 

you’re ready to proceed? 

Senator CANTWELL. Yes. 

The CHAIRMAN. I will turn to you. Thank you. 

Senator CANTWELL. Thank you. Thank you, Madam Chair. 

I don’t know all the questions you asked, but we were discussing 

earlier about, obviously, how do we make investment and get recovery on these issues. Ms. Barton, your company operates in 13 

states and I understand that in Ohio the federal government funded about half of your 150 million smart grid demonstration 

projects. 

Ms. Edgar, your association represents regulators in every state. 

In your own state, Florida Power and Light’s smart meter installation program was funded in part through $200 million in the Recovery Act. 

What examples can each of you give of investments and the cost 

of recovery mechanism? 

Ms. BARTON. Sure, I’ll start. As you mentioned, we have transmission facilities in 13 states. We have regulated utility operations 

in 11 states and by virtue of that territory it gives us a unique perspective and information from which to draw from. 

So in Indiana, for example, we have launched a solar project, a 

pilot program, where we’re looking to basically have about 16 

megawatts worth of solar capacity integrated into the system. 

That’s been very successful. 


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I just recently talked about a project in Presidio, Texas, and we 

also had one in West Virginia which uses NAS batteries which is 

Sodium Sulfur batteries. 

These technologies, while they are expensive, in unique grid situations can really amount to be the best solution. We’ve had tremendous success in a number of our states with bolt bar technology. 

And what bolt bar technology is is basically controlling through a 

series of complex communication the voltage on the system through 

regulators and capacitors. What that does is basically reduce the 

level of voltage that folks receive in their home and it results in 

significant energy savings. 

So in the jurisdictions that our states have been supportive of 

that technology, we have gone forward with that technology. We 

try to stay very close with our states and our regulators to make 

sure that we’re implementing the types of technologies that meet 

the state’s needs. 

Ms. EDGAR. Thank you, Senator, for the question. Much of what 

we’ve been discussing today is the recognition that the grid is a 

technology integration network and that distributed generation, although offering many advantages, is often intermittent and that it 

does require investment in both new transmission and distribution 

and in modernizing the system, both transmission and distribution 

that is already there. 

So the role of the federal government in supporting research and 

in bringing that research in new technologies to scale, cost effectively, so that states and communities and consumers can take advantage of those resources is key, I believe, in helping us move forward. 

Senator CANTWELL [presiding]. So how well established do you 

think we are in those kinds of recovery ideas? 

Ms. EDGAR. You mean cost recovery? 

Senator CANTWELL. Yes. 

Ms. EDGAR. The rate making process at the state level is tried 

and true. The cost causer pays looking at actual cost before putting 

them into the rate base and then looking at projected cost. The 

challenge now moving forward is how to continue to attract capital 

investment so that consumers are getting a good value from the investment that they are making and also trying to look at alternative rate making mechanisms to take advantage of the cost efficiencies that are out there in the future that may not be here right 

now. And that is something that we are grappling with. 

Senator CANTWELL. I remember probably 20 years ago when 

some of the first ideas were being surfaced on metering and things 

of that nature and they were turned down by UTC. But now, how 

many states have policies around this? 

Ms. EDGAR. Probably most. I don’t have an exact number, but I 

would say more than half and probably beyond that. 

You mentioned a project that I mentioned in my testimony, and 

yes, that project was partially paid by federal dollars. I do believe 

it’s an important investment in my state to helping us move the 

grid forward. 

But of course, we’re still learning how to take advantage of that 

technology so that consumers really benefit and then all of the 


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270 

other issues with data collection, data management, privacy and 

security. 

Senator CANTWELL. Dr. Taft, could you talk about the Recovery Act funds that were part of the $4.5 billion of money that was 

spent and what lessons we’ve learned? 

Dr. TAFT. I can talk about some of that. I don’t have all the details with me, but a lot of those projects were to improve the basic 

ability to measure on the grid. So we saw a lot of investment in 

phasor measurement units. We saw a lot of investment in AMI. We 

also saw large scale projects such as the one in the Pacific Northwest to take a look at how to integrate large numbers of resources 

and coordinate them in such a way that they would operate collectively even though many of them were not part of the actual utilities. 

And the lessons coming out of those are going to be available 

shortly. There’s going to be a, actually, a report and seminar about 

that project in particular. 

So these projects move things forward because they brought a lot 

of money off the sidelines and helped establish things that the utilities needed to understand. When it comes to things like storage 

there are quite a few projects that are now finishing up this year 

that will have lessons learned, and there are a number of states 

working on determining the cost justifications based on those lessons. So, very valuable in helping people understand how the technology can work, but also how the economics of those technologies 

will work out going forward. 

And moving forward, fundamentally, the basic measurement in 

observability/capabilities of the grid so that we begin to get the 

data that we’ll need for the next stages also has been a crucial aspect of that very valuable for the utilities. 

Senator CANTWELL. Well I know we, in the region, talk so much 

about some of the things we were able to do out on the Olympic 

Peninsula, but maybe it’s worth reminding people of some of the 

efficiencies that were delivered through those analysis and how we 

now take that data and try to scale it. 

Dr. TAFT. So I haven’t brought all the numbers with me. I’d be 

happy to supply them. 

[The information referred to follows:] 


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Dr. TAFT. But what has been demonstrated there is that you can 

coordinate very large numbers of consumers and their appliances 

and equipment in such a way that they reduce the peak demands 

on the utility significantly. They operate in a more efficient mode 

overall, and they do a better job of coordinating with variable energy resources. 

So the impacts have been significant. The final details are coming out shortly, and we’d be happy to supply them for this hearing. 

Senator CANTWELL. My understanding is that you were able to 

demonstrate you might be able to get as much as double digit savings out of current supply. 

Dr. TAFT. The indications from those experiments—— 

Senator CANTWELL. I mean I’m not talking like 20 or 30, but, you 

know, 10, 11, 12? 

Dr. TAFT. Yeah. The indications are, in fact, that such results are 

practically achievable. The results from that program showed that 

on scales that were larger than any that have been tried anywhere 

else. So that’s a solid justification for saying that some level of double digit improvements are, in fact, achievable using these methods. 

Some of the methods involve new forms of control and new forms 

of coordination necessary in order to make all those pieces work together, but when you can do that there’s an enormous synergy 

from all those pieces and that’s why you can get the double digit 

savings. 

Senator CANTWELL. I know the people that will discuss what 

does that mean to the consumer and as you said in this case, they 

buy in. I’m waiting for the smart appliance that says turn my dish 

washer on at the lowest megawatt rate today. And obviously some 

intelligence for these, you know, big energy users in the household. 

Dr. TAFT. Well and that’s a crucial issue is how in fact can you 

make that work and make it work in an unobtrusive manner? People are not interested, probably, in spending a lot of time trying to 

micromanage the thing, so it needs to be automatic. And a lot of 

the work done on these programs is to show how to automate that. 

Senator CANTWELL. Thank you. 

Senator King. 

Senator KING. Thank you. Following up on that discussion. 

If you have ever toured a sawmill most modern sawmills now 

have a device called an optimizer which takes a computerized picture of the log as it comes in, calculates the most effective way to 

cut it and checks with the market at that moment to see whether 

the market will value two by fours rather than two by sixes. It 

seems to me that is exactly what we are talking about here. We 

are talking about dishwashers and clothes dryers and heaters that 

will check the grid, understand what the needs are, what the price 

is and will automatically optimize, if you will, I mean, that’s sort 

of what we were talking about. 

That leads me into a, sort of, general observation here. We are 

talking about a disruptive technology. We are talking about a fundamental change in an early 20th Century model for how electricity is generated and delivered. If you look back, I can remember 

the phone company. I am old enough to remember the phone comVerDate Sep 11 2014 23:48 Jul 02, 2015 Jkt 094050 PO 00000 Frm 00331 Fmt 6633 Sfmt 6602 E:\HR\OC\A050.XXX A050

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pany saying it’s impossible. It will be disruptive. It will ruin the 

system if people can choose their own phones. 

Then, of course, it was cellular phones. You’ve got to have a 

phone in your home. That’s gone by. 

Cable TV, you know, you can only get your news through cable 

TV. All of a sudden people are getting—streaming. 

I believe that distributive generation a, is going to happen, b, it’s 

a disruptive technology. The only question is how do we manage it? 

I think the real question is who will supply the battery? Who will 

supply the battery for distributed generation on your roof? Will it 

be the grid as the backup or will it be batteries in your basement? 

The grid, speaking largely as a large institution, has a choice to 

make. They can price themselves out of that market and thereby 

make batteries more economic which is what people will then 

choose or they can choose to adapt to this disruptive technology 

and figure out ways to make it work. 

I think one of the great questions is how do we price store it? 

How do we price backup? How do we price the backup charge? 

I think it is reasonable that utilities should, if they have to be 

there and maintain the wires and backup capacity, how do we price 

that both in terms of benefits and costs? It seems to me that is the 

really fundamental question here, and the price should be reasonable and not so high as to be punitive in order to ward off this 

change which is going to come anyway. 

Mr. Taft, what are your thoughts about how you price? How do 

you price backup? 

Dr. TAFT. So, pricing is not a specialty of mine, but I do have a 

couple of comments that are related. 

You’re probably familiar with the effort in the State of California 

where they determined that they’ll have 1.3 gigawatts of storage on 

their system. And the California ISO has produced a road map for 

achieving that. 

One of the things that’s going on though now is exactly that 

question of how to determine the pricing for the services that can 

be supplied by storage, in particular. There’s not a settled answer 

to that yet, so they’re working hard with vendors and others in the 

State of California to see if they can develop a model for that. 

Separately, but in a sense related, is the activities going on in 

the State of New York with the New York rev process where 

they’re looking at restructuring the rules and responsibilities of distribution companies, and a lot of it has to do with the penetration 

of distributed energy resources and storage. And so they’re looking 

at changing the very structure of the industry in their state so that 

they can facilitate that but are faced with the same question ultimately, and they’re asking themselves how are these going to be 

valued? The answer is not known. 

Several states are working on trying to determine value propositions for storage, in particular, that includes the State of Washington, for example, Oregon, Hawaii and so on. So we don’t have 

a settled answer for that yet. 

And, you know, most people think that a way to get at that is 

to make it a market function and let a market determine those values. 


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Senator KING. Well, you are talking about a classic non-market 

situation. You are talking about monopolies who deliver the power 

whether they’re monopolies and generations. So saying to let the 

market do it and then allow the utility to impose a $100 a month 

backup charge—that’s not the market. I am all for markets, but 

only if they are real markets. 

Dr. TAFT. Well and I think that’s what some of the states are trying to sort out now is how they can actually accomplish that. And 

I reference California ISO trying to understand how they can allow 

third parties to offer services based on storage and figure out what 

those values would be. So there is a complex question there. I don’t 

think it’s settled. 

Senator KING. One market related point, and I will end with 

this. This is not a central part of the discussion, but it seems to 

me that time of day pricing is one thing that would make some 

sense in order for the market to drive more efficient utilization of 

the grid. There’s a lot of excess capacity both in terms of generation 

and transmission at night, and if you had time of day pricing and 

people just routinely saying oh, I’m not going to turn the dryer on 

until after nine. 

I can remember making those decisions about long distance 

phone calls, you know, looking at my watch and saying I am going 

to make my call at 9:05. If people started making those decisions 

about utilization of the grid that would be much more efficient, but 

it won’t happen unless people get the price signals. It seems to me 

time of day pricing is something that we ought to be thinking about 

because of the fact that there is so much excess capacity. 

Madam Chair, I am very pleased that you are having this hearing. I think this is a fascinating topic, but the bottom line for me 

is we are talking about a disruptive technology. We have got to figure out how to adapt to it, not fight it and strangle it in its crib 

because that isn’t going to happen anyway. I think this is a very 

important subject. Thank you. 

The CHAIRMAN [presiding]. Well it is, Senator King. I certainly 

agree with you. 

When you mentioned the point about making telephone calls 

based on the time of day, I think we’re both dating ourselves there. 

But that was absolutely—— 

Senator KING. I do that all the time, but I have given up on worrying about it. 

The CHAIRMAN. Yeah, yeah, I suppose. [Laughter]. 

Let’s go to Senator Heinrich. 

Senator HEINRICH. Thank you, Madam Chair. 

I am not going to try and date myself that hard, but I will say 

my father was a utility linemen, and I appreciate some of the comments about the work that they do. One of the things that I had 

when I was a kid was a t-shirt that said, I turn on after seven, and 

I don’t think I got the joke. 

The underlying message from the utility he worked for was about 

peak load management and about trying to shift loads to later in 

the evening just in the way that the long distance pricing regime 

shifted people to using their long distance later in the day. 

I think that Senator King is right. Anything we can do to, sort 

of, actively make the market work in our favor in terms of both 


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loads and then hopefully storage and utilization of storage over 

time. 

So I want to start out with a quick question for Dr. Littlewood. 

I am a big fan of the work that is being done at DOE’s joint center 

for energy storage research. And while I think most of us here 

agree that the pricing regimes and the market to the extent that 

we can have an efficient and transparent market will settle out the 

winners and losers with regard to energy storage over time. 

I am wondering if you can talk a little bit about the state different technologies for utility scale storage and the challenges inherent in scaling that. What are you excited about? What do you 

see rising to the top of that very exciting, emerging technology sector? 

Dr. LITTLEWOOD. Thank you very much, Senator. I’m glad you 

like the program because we do too. 

What else? I mean, I think our view of storage is that it is not 

going to be a single solution. 

There are solutions which may come through improved storage 

which is actually mobile. We were discussing earlier that if we 

could actually make electric vehicles more effective they are affected. You also have storage medium on the grid. That will be one 

class of storage. There will be classes of grid storage which will involve very different technologies that can be very large and cumbersome, not mobile, but have to be made extremely cheap. 

One should also remember that there are storage on the grid 

which is distributed across the grid in a way that you can’t see it. 

To be a little bit philosophical and look very far ahead, I will say 

that our goal, actually, is to turn electrons into a medium of exchange. 

The thing that will happen in the very long term, eventually, is 

that indeed this will be distributed where you do not know how. 

But that you will be able to go there in the same way that there’s 

a bank. That means that I would also expect that we would have 

a system which looks like the banking system. There will be big 

banks. There will be small banks. There will be local communities 

with local community banks. And all of those will be based around 

different technologies and different ways of doing it. 

I think that we are doing very well in developing new technologies which push the price down in the area of large scale grid 

storage, and that’s partly because this is an area which has not 

been explored very much. 

I think that there are vast opportunities, more broadly, for moving forward even with conventional technologies based around lithium ion, and the reason is that the community which has been 

pushing that technology forward, which was your cell phone, is now 

beginning to understand that there’s a business opportunity which 

involves something different. 

So it’s a very exciting time to be in there. I think it’s really important to be engaging in all of this. You know, one shouldn’t make 

predictions about the future, but I’m very positive about it. 

But just a quick philosophical comment on phones. I used to 

work for Bell Labs, and I worked for Bell Labs at the time when 

I was part of the long distance network and we were inventing the 

cell phone. While my colleagues were doing that we were kind of 


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aware that we were putting our company out of business, but it 

turned out that we were all so confident that that was going to 

happen anyway we might as well be the ones that did that invention. 

Senator HEINRICH. It’s interesting that you bring that up because 

it’s always interesting to look back at what was said about the 

adoption of cell phones early on and the penetration and numbers 

of that adoption and how dramatically we all underestimated that 

technology early on. 

It’s not unlike when, you know, 20 years ago in terms of people 

looking at a technology that hasn’t changed much in terms of 

photovoltaics and what the eventual generation from that would 

be. Looking last year at the gigawatts that were installed in this 

country alone, I think, we are realizing now that we are on the 

edge of a very changed landscape. We have a lot of work to do to 

manage the grid and to manage the transition in all of this into 

some very new territory. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Heinrich. 

You used the terminology, Ms. Barton, that the grid can be a 

natural enabler of new technology. I think that this is what we see 

play out all the time. 

Let me ask just one last question for you and then I’ll ask if others have a desire for more. I know that we have some panelists 

that need to leave at noon. 

How can we do a better job in so far as the utilities identifying 

or quantifying the costs of the ancillary services that are provided 

by the grid and ensuring then that these costs are perhaps born 

proportionately by all the customers that are utilizing the grid? 

How do we do a better job here? I’d ask Ms. Barton and then Ms. 

Edgar, if you’d like to comment as well. 

Ms. BARTON. I think that’s an excellent question. We’ve talked a 

lot about distributed generation, and we’ve talked about it as being 

a disruptor. I really think it is more of a complementary technology 

to the grid. 

And if you really think about the origins of the grid where it 

started off as, quite frankly, a series of small microgrids, is what 

you really could have called them back in the day. They got stronger by being networked together. 

There is an incredible value associated with having that grid as 

a backup, and I’ll just use the example of super storm Sandy. 

While there are a number of customers who were out of power for 

a few weeks, that’s nothing compared to if their only option was 

a roof top solar facility to provide them with generating capacity. 

So the grid has an incredibly inherent value, and a lot of it has 

to do with the line workers and the tree crews who, quite frankly, 

can travel across the country and get to any place where they need 

to be through our mutual aid agreements. There is value to that 

as well. 

I think that that becomes part of the philosophical debate as to 

what is the value of the grid, and I would say the value of the grid 

is not defined as backup power. The value of the grid is that it is 

an enabler and therefore you have to support the costs and the infrastructure of that grid and so that those costs are not 


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disproportionally spread to other consumers. Unfortunately that’s 

some of the things that we’re seeing happening. If you advocate the 

view that I can just have my solar roof top, solar generating facility 

and unplug from the grid, you know, that’s different than wanting 

it there as a resource. And the vast majority of Americans have become very relying upon a very reliable grid and an affordable grid. 

It’s that balancing act that we need to pay attention to, but 

there’s a lot of fantastic technologies out there. Right now a lot of 

them come at a fairly significant cost and that affordability feature 

is key. 

The CHAIRMAN. Let me ask you for your comments, Ms. Edgar. 

Ms. EDGAR. Thank you, Madam Chair. 

So many issues here and this kind of brings it all home, the 

value of the grid. 

Something that a number of states are looking at is trying to 

put, for example, a value on solar as different states work their 

way through their different processes, and the other states can 

learn as they’re moving through is part of what makes all of this 

so exciting. 

Many cost tools that are out there, capacity charge, service 

charge, fee based, cost causer, time of use, all of this, I think, needs 

to come into play as we recognize, again, yes, the value of the grid, 

but also the very essential nature for public health, for public safety, for community interaction. 

We haven’t talked much today about economic development, but 

the key for the grid and new technologies for job creation, for work 

force. And then, I think, to bring it all back is, as we have these 

discussions, what our members would ask of Congress and governors and state legislators and other policy makers, is that we 

have transparency as we are talking about those cost allocation 

issues and cost burdens recognizing that how that falls, for instance, on a very large industrial customer is going to be different 

than how it falls on, for instance, a retiree on a fixed income and 

how we try to make sure that everybody is aware and is served 

well. 

The CHAIRMAN. Very important considerations. 

Senator King. 

Senator KING. Ms. Barton, I wanted to follow up. You made one 

statement that I thought was very important. You said diversity 

and redundancy are at the heart of reliability, and it seems to me 

that that’s part of what we’re talking about here, the ultimate in 

diversity and redundancy is distributed generation. It’s people having their electricity on their roof as part of the system. 

So it just seems to me that we are really on the edge of a very 

important discussion to get back to what I mentioned before. How 

do you value the plusses of distributed generation in your own 

words, diversity and redundancy, versus the costs which is the 

maintenance of the grid and the backup generation in order to 

have customers ultimately make rational, economic decisions, 

based upon the true costs of whatever it is that they’re using? 

I just think that this is a development that’s going to happen 

anyway, and the real question is how is it adapted to and how does 

the grid facilitate rather than block what I think, in the long run, 

will be very salutary developments on behalf of all of our citizens? 


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Ms. BARTON. I think the key is that there’s value on both sides 

of the transmission system is maybe one way of looking at it. 

Senator KING. Absolutely. 

Ms. BARTON. In terms of distributed generation can be certainly 

valuable in terms if you aggregate. The grid is really an 

aggregator. It’s an aggregator in days of old, of large generating 

plants and taking that power through substations to consumers, 

and today it’s basically an aggregator in both directions. So it’s aggregating those distribution resources and distributive technologies 

as well as the larger scale generating facilities. 

When you look at the utility infrastructure, the math is maybe 

a little bit easier in the sense that it’s a cost-based model. And for, 

you know, a reasonable level of return the investors in the utility 

industry that we go to to borrow the capital really require that 

level of transparency to say I know I’m going to give you this dollar 

and you are going to give me a return on this dollar, plus this dollar back in a reasonable period of time. And so, I think, making 

sure that that is in place helps to take care of the utility side of 

the equation. 

With respect to the distributed energy side of the equation, I 

think that there’s a lot of different ways of valuing that. Part of 

it can be from what does it do for the benefit of that consumer? For 

example, the pharmaceutical industry often needs to have a heightened level of reliability that, quite frankly, they’re willing to pay 

for that heightened level of reliability. And so it’s very valuable to 

them. 

There’s also benefits with respect to the ancillary services market 

in various market driven ways of estimating the value of those resources. And, you know, that can be done through the RTOs and 

how they have established their energy markets and how they’re 

valuing those resources. So I think it’s really a balance of that. 

Ultimately the states play an incredibly important role in determining what level of energy efficiency, what level of distributed 

generation that they want to advocate and how it’s paid for. 

Senator KING. Of course, there are two pieces to this which is 

generation as backup and transmission and distribution to deliver 

the generation. So there are two pieces of analysis that have to be 

done. And part of the analysis of how much backup capacity, generating capacity, do you need, is a question of a complicated analysis 

of what are the resources on the grid. 

Insurance companies don’t have all the money in the bank for 

people’s accidents or health insurance or particularly, life insurance. They invest it. They have actuarial studies, engineering studies, if you will, as to when the draw will be. And so you don’t have 

to have every bit of capacity there to backup if every solar insulation goes out at the same moment. 

And of course, as you distribute these kinds of facilities, solar 

and wind, across the landscape you mitigate somewhat, it’s not 

going to be cloudy everywhere, for example. So I just hope that we 

can develop policies that will be fair to all rate payers, fair to investors, but also not inadvertently obstruct what could be and can 

be and will be, I believe, very positive developments both for rate 

payers, for individuals and we haven’t mentioned the environment 


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much, for the environment in terms of moving away from fossil fuel 

generation. 

Thank you very much, Madam Chair. 

The CHAIRMAN. Thank you, Senator King. 

Senator Cantwell, any final questions, comments? 

Senator CANTWELL. Well I would just, again, thank all the witnesses and Ms. Edgar said we really didn’t talk about the whole 

plethora of economic issues, but I do think it’s something we should 

work with our colleagues on. I went recently to the 110th anniversary of the IEEE in Seattle. And the fact that that organization 

has been around that long, of electrical engineers and all the things 

that they have done and then the next generation of things that 

they’re creating I think is important for us to remember that the 

workforce here within the United States on these issues is a great 

potential for us. 

So, thank you and thanks for holding this hearing. 

The CHAIRMAN. Well, thank you, and thank you to all of our panelists. This has been very helpful and informative as we are building out some of the discussions that have gone on with some listening sessions and figuring how we move forward with a broader energy vision, an updated vision. Clearly in the electricity space what 

we have been talking about here this morning is so key. 

Again, a reminder that while there is so much happening out 

there in terms of the technologies and the advancements and the 

modernization, we can remain excited about it, but we also need 

to make sure that the boring work of turning on the lights around 

the country, every day, stays in place. So it’s pushing out on the 

technology side, but it’s performance as well and performance at a 

time that we are focusing on security, absolutely the cyber piece, 

on reliability, on customer affordability, on environmental sustainability and financial viability as we have been reminded by Ms. 

Edgar. 

It’s a big challenge, but thank you for what you do within your 

respective spheres to make it happen. We appreciate it, and we appreciate the time that you have given us. 

I know that members will likely have questions so we will submit 

them to you and we look forward to those replies as well. So thank 

you for being here before the Energy Committee. 

And with that, we stand adjourned. 

[Whereupon, at 12:01 p.m. the hearing was adjourned.] 


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SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 468 here 94050A.365
399 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 469 here 94050A.366
400 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 470 here 94050A.367
401 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 471 here 94050A.368
402 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 472 here 94050A.369
403 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 473 here 94050A.370
404 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 474 here 94050A.371
405 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 475 here 94050A.372
406 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 476 here 94050A.373
407 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 477 here 94050A.374
408 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 478 here 94050A.375
409 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 479 here 94050A.376
410 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 480 here 94050A.377
411 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 481 here 94050A.378
412 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 482 here 94050A.379
413 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 483 here 94050A.380
414 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 484 here 94050A.381
415 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 485 here 94050A.382
416 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 486 here 94050A.383
417 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 487 here 94050A.384
418 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 488 here 94050A.385
419 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 489 here 94050A.386
420 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 490 here 94050A.387
421 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 491 here 94050A.388
422 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 492 here 94050A.389
423 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 493 here 94050A.390
424 


SSpencer on DSK4SPTVN1PROD with HEARINGInsert offset folio 494/600 here 94050A.391