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62–185 2010

GET SMART ON THE SMART GRID: HOW TECHNOLOGY CAN REVOLUTIONIZE EFFICIENCY AND 

RENEWABLE SOLUTIONS 

HEARING 

BEFORE THE

SELECT COMMITTEE ON 

ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

FEBRUARY 25, 2009 

Serial No. 111–3 

( 

Printed for the use of the Select Committee on 

Energy Independence and Global Warming 

globalwarming.house.gov 


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(II) 

SELECT COMMITTEE ON ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

EDWARD J. MARKEY, Massachusetts, Chairman 

EARL BLUMENAUER, Oregon 

JAY INSLEE, Washington 

JOHN B. LARSON, Connecticut 

HILDA L. SOLIS, California 

STEPHANIE HERSETH SANDLIN, 

South Dakota 

EMANUEL CLEAVER, Missouri 

JOHN J. HALL, New York 

JERRY MCNERNEY, California 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

Ranking Member 

JOHN B. SHADEGG, Arizona 

GREG WALDEN, Oregon 

CANDICE S. MILLER, Michigan 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

GERARD J. WALDRON, Staff Director 

ALIYA BRODSKY, Chief Clerk 

THOMAS WEIMER, Minority Staff Director 


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C O N T E N T S 

Page 

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

Prepared statement .......................................................................................... 3 

Hon. F. James Sensenbrenner, Jr., a Representative in Congress from the 

State of Wisconsin, opening statement .............................................................. 6 

Hon. Earl Blumenauer, a Representative in Congress from the State of Oregon, opening statement ...................................................................................... 7 

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

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

Hon. John Hall, a Representative in Congress from the State of New York, 

opening statement ................................................................................................ 8 

Hon. Ben Ray Luja ́n, a Representative in Congress from the State of New 

Mexico, opening statement .................................................................................. 9 

Hon. Ron Klein, a Representative in Congress from the State of Florida, 

introduction of witness Shirley Coates Brostmeyer .......................................... 71 

WITNESSES

Tom Casey, CEO, CURRENT Group, LLC ............................................................ 11 

Prepared Statement ......................................................................................... 15 

Answers to submitted questions ...................................................................... 137 

Robert Gilligan, Vice President, General Electric ................................................. 28 

Prepared Statement ......................................................................................... 30 

Allan Schurr, Vice President, IBM ......................................................................... 44 

Prepared Statement ......................................................................................... 46 

Charles Zimmerman, Vice President, Wal-Mart ................................................... 62 

Prepared Statement ......................................................................................... 64 

Answers to submitted questions ...................................................................... 159 

Shirley Coates Brostmeyer, CEO, Florida Turbine Technologies, Inc ................ 71 

Prepared Statement and PowerPoint attachments ....................................... 74 

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

Mr. James Hoecker, Hoecker Energy Law & Policy ............................................. 95 

Prepared Statement ......................................................................................... 97 


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(1) 

HEARING ON GET SMART ON THE SMART 

GRID: HOW TECHNOLOGY CAN REVOLUTIONIZE EFFICIENCY AND RENEWABLE SOLUTIONS 

WEDNESDAY, FEBRUARY 25, 2009 

HOUSE OF REPRESENTATIVES, 

SELECT COMMITTEE ON ENERGY INDEPENDENCE

AND GLOBAL WARMING, 

Washington, DC. 

The Committee met, pursuant to call, at 9:30 a.m., in room 2247 

Rayburn House Office Building, Hon. Edward Markey (chairman of 

the Committee) presiding. 

Present: Representatives Markey, Blumenauer, Inslee, Hall, Sensenbrenner, Sullivan and Capito. 

Staff present: Jonathan Phillips. 

The CHAIRMAN. Over the past two years this Committee has explored key elements of our low-carbon energy future: renewable energy sources and improving efficiency. Today we focus on the next 

critical component: how the Internet and information technologies 

unleashed by the 1996 Telecommunications Act can enable us to 

take full advantage of renewable energy sources and efficiency. I 

think of this as the energy internet. 

Today we will explore how the Internet can revolutionize the energy sector, just as it has transformed so many other parts of our 

economy. We all recognize that the energy backbone infrastructure 

needed to integrate wind and solar resources is an issue that needs 

to be addressed as we move away from carbon-producing fossil 

fuels towards new, clean, cost-effective renewable resources. 

But the backbone infrastructure needed for renewables requires 

more than tall towers and wide rights-of-way. To do it right, it also 

requires smart grid internet protocol communications networks, 

open protocol smart meters, backbone sensors connected to radio 

spectrum, and sophisticated interactive control technologies. 

The U.S. electric grid has been called the most significant engineering achievement of the Twentieth Century. It is the largest, 

most complex machine on the planet, with over a million 

megawatts of generating capacity and 300,000 miles of transmission lines ready for just-in-time delivery of energy to heat our 

homes and light our world almost wherever it is needed. However, 

this grid was designed for a different era. 

Historically, environmentally unfriendly coal, natural gas, and 

nuclear generators have delivered electricity to passive consumers. 

These customers, both large industrial users and average conVerDate Mar 15 2010 08:36 Dec 14, 2010 Jkt 062185 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A185.XXX A185

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sumers, lacked the information and incentives to change their consumption. Utilities also had limited information on grid conditions 

and limited ability to control and monitor demand-side resources or 

respond to changing grid conditions. 

In the era when we have gone from black rotary phones to BlackBerries, from three TV stations on the large appliance in your living room to YouTube on the tiny device in your pocket, we need 

to do better. 

The technology is available in 2009 to develop an energy internet 

and a smart grid. And today we will explore some of the potential 

technologies to accomplish that goal. 

Smart grid technologies can alter the way we use electricity, 

allow distributed generation to be sold to the grid, help utilities to 

integrate intermittent renewable resources, allow us to reduce carbon emissions, and allow self-healing of the grid when the system 

goes awry. This is not just the right thing to do. Smart grid technologies also can save consumers money. 

In discussing climate change legislation, we focus on the importance of putting a price on carbon to send price signals to businesses and consumers. On the electricity side, we need to ensure 

consumers, large and small, have good information to make wise 

decisions. 

Home-level smart grid technologies allow consumers to reduce 

demand and see their carbon footprint through the use of advanced 

meters. Smart meters, such as those placed on thermostats, washer/dryers, and refrigerators, allow consumers to respond dynamically to prices by turning down appliances and thereby reducing 

consumption. 

These end-user smart grid devices also can be adopted by utilities to control numerous electricity usages from street lighting to 

industrial customers willing to reduce consumption. 

I am pleased that we have a panel of experts to explain the benefits and challenges facing us in the development of smart grid technologies and promoting an energy internet. I thank you all for 

being here. 

That completes the opening statement of the Chair. We now turn 

to recognize the Ranking Member of the Committee, the gentleman 

from Wisconsin, Mr. Sensenbrenner. 

[The prepared statement of Mr. Markey follows:] 


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Mr. SENSENBRENNER. Thank you very much. Thank you. Thank 

you very much. Thank you very much. [Laughter.] 

Okay. Reset the clock, please. Thank you very much, Mr. Chairman. 

The CHAIRMAN. We have no clock. So we will be putting pieces 

of paper in front of people when there are 30 seconds. 

Mr. SENSENBRENNER. Okay. Well, thank you very much, Mr. 

Chairman. I look forward to hearing about the advantage of smart 

grid technology and the need to update our national transmission 

system. 

Technology and costs are not the only hurdles that we have to 

clear. Last week the Fourth Circuit ruled that the Federal Energy 

Regulatory Commission, FERC for short, lacked authority to locate 

high-voltage transmission lines. If we can’t streamline the regulatory issues for siting new transmission lines, we will be doomed 

to legal battles and the same outdated grid. 

In his written testimony, James Hoecker, counsel to the Working 

Group on Investment in Reliable and Economic Electric Systems, 

says that much of the infrastructure needed to increase our electrical transmission network will stretch over state lines. 

Indeed, much of the nation’s wind, solar, and geothermal resources are located in the interior of the country while many people 

who need that electricity live near the coasts. This will require new 

transmission lines, not just upgrades to the existing grid. 

The states and the federal government must develop a streamlined system of approving rights-of-way for new electrical transmission lines. Since many of these lines will cross several states, 

the federal government must lead. 

With regional electricity transmission networks serving numerous states, states will surely argue over the costs of these vital upgrades. Smart grid technology will encounter the same cost allocation and recovery problems that the transmission network now 

faces. 

I am interested in hearing today about new electrical transmission technology that can make the network more efficient, but 

I am also interested in hearing about what new transmission is required and how we can improve the regulatory system that oversees this expanded network. 

The states, the federal government, shareholders, consumers, 

and other stakeholders will all play a role in upgrading our energy 

infrastructure. These stakeholders must work together to ensure 

that this network can be built in a timely manner without unnecessary regulatory hold-ups. 

Now, let me say that earlier this week energy/environment czar, 

poobah, or whatever she is in the White House, Carol Browner, 

talked about the need to upgrade the regulatory process in siting 

and building transmission lines. 

I think that this is one issue where Republicans and the White 

House can agree. And I am looking forward to working to get together a piece of legislation that will update at least that part of 

the FERC law that gives FERC some power to deal with this issue. 

I noticed in reading the newspaper last August that a utility in 

Indiana wished to build a 240-mile transmission line solely within 

that state and not crossing any state lines. They said in order to 


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surmount the regulatory and litigation hurdles, they would not be 

able to begin construction until the year 2014. 

Now, obviously that is unacceptable. And we in Congress are 

going to have to look at the FERC laws very closely to see what 

can be done to streamline the approval process for siting and construction of new transmission lines as well as upgrading the capacity of the grid. This is going to be a challenge with many conflicting 

stakeholders involved, but it is something that in my opinion has 

to be done. 

So we can’t let disputes between regulators and other stakeholders block better transmission and improve technologies that 

help address the energy challenges that we face. This hearing will 

deal with about half the issues. We had better be dealing with the 

other half to make sure that the package is complete. 

Thank you. 

The CHAIRMAN. The gentleman’s time has expired. The Chair 

recognizes the gentleman from Oregon, Mr. Blumenauer. 

Mr. BLUMENAUER. Thank you. Thank you for sharing your microphone, Mr. Chairman. 

I find myself in substantial agreement with both statements from 

the ranking member and the chair. So I would like to forego an 

opening statement and add it to my question period if that is all 

right. 

The CHAIRMAN. Excellent. The Chair—— 

Mr. BLUMENAUER. My apologies to the witness. Actually, Mr. 

Markey’s influence is being felt in my Ways and Means Committee. 

We are having a hearing on global warming. I am just going to 

check in, tell them I am alive, and come right back. 

The CHAIRMAN. Excellent. Thank you. 

The Chair recognizes the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. I just want to make three quick points. First, you 

know, we have had a start on the smart grid, which was last Tuesday, when President Obama signed the economic recovery plan, 

which made very substantial investments in smart grid technology. 

This is not an abstract exercise. We started last week creating 

green collar jobs associated with the smart grid with the signing 

of the economic recovery package. 

I may note, too, that that package included what you might think 

of as the old-fashioned grid improvements as well. In my neck of 

the woods, the Northwest, it included $3.5 billion for laying wire 

with the Bonneville Power Administration. So the old backbone 

counts, too. 

So, number one, we have made the first step down this road. 

Number two, we know that this works. One of the first experiments on consumer acceptance of smart grid technology with demand management so we can manage the amount of demand to 

level out peaks to reduce some of the stresses on the grid system 

was in Olympic Peninsula out in western Washington. 

What the Pacific Northwest labs found is very high consumer acceptance on some strategies to reduce the demand in peak load periods, where consumers had the ability to determine when to do 

their drying and when to do their washing and when to do some 

of their thermostat and heating of their hot water systems, very, 


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very high consumer acceptance to find a way to do that demand 

management. We know this works. 

And, third, we do know that we have to improve our siting, planning, and financing of grid improvements in general. I will be introducing in the next couple of weeks a bill that will make substantial improvements that will engage the offices of the federal government for siting, planning, and financing the very, very large improvements we need to the grid system, both as to timing, permitting, and a way to finance this plan. 

I think the conditions are right for progress on this. I just note 

that the utility commissioners as recently as last week were moving forward to accept some more national effort in this regard. This 

is a very, very positive sign that the states are recognizing the necessity for a national movement in this regard. That is not always 

easy to do. And I think we should feel comforted that the states 

want to be partners with us in this effort. We even have the chamber on the other side of the U.S. Senate moving on these issues. 

So it is time for action. And thanks for this hearing, Mr. Chair. 

The CHAIRMAN. The gentleman’s time has expired. The Chair 

recognizes the gentle lady from West Virginia, Mrs. Capito. 

Mrs. CAPITO. Thank you, Mr. Chairman. I have no opening statement. I just want to say I am pleased. This is my first hearing as 

a new member of this Committee. And I am very honored. 

I represent West Virginia, which obviously has a great interest 

in the direction that we are going to go as a nation. We have two. 

The TrAIL and the PATH are grids that are going right through 

our state right now and are trying to be sited. So I again appreciate the courtesy. And I will defer to the witnesses. 

The CHAIRMAN. Great. The Chair recognizes the gentleman from 

New York State, Mr. Hall, for an opening statement. 

Mr. HALL. Thank you, Mr. Chairman, for holding today’s hearing. And thank you also to the distinguished panel of witnesses, 

whose testimony I look forward to. 

I have long believed that modernizing our electric grid is critical, 

not only to achieving energy independence but also to coping with 

the looming climate crisis. So it is altogether appropriate for this 

Committee to be holding this hearing today. 

As the testimony you have submitted indicates, due to the structure of the current grid, there are significant barriers to widespread use of renewable power, something that I think many of us 

here, if not most of us, would acknowledge as a worthwhile policy 

goal. 

We need to have a grid that is flexible to accept power from a 

variety of intermittent sources, a grid that can handle power flowing in two directions, a grid that anticipates the widespread use of 

plug-in hybrid electric vehicles and electric cars, a grid that may 

be made of materials that are not 100-year-old technology but more 

modern technology that does not lose so much power in transmission due to the resistance, modern network that can carry the 

voltage without unduly marring our landscapes and harming local 

ecosystems. 

Without those pieces in place, the investments we are making in 

renewable power, advanced battery technology, and electric cars 

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ly the resources provided by this Congress, then not only will we 

modernize our grid, but we will create good-paying jobs here at 

home. 

There is a new growth industry in smart grid technology that is 

just beginning to develop. Before us today are some of the first of 

what I hope will be many smart grid technology companies, who 

not only find a market but also a workforce. 

I have said before the only thing more foolish than continuing to 

import more oil from the Saudis would be to import more solar 

panels from the Chinese. Well, the same could be said for smart 

grid technology. 

We cannot let the opportunity pass us by to harness the American and, indeed, the global market for this technology and create 

the industries and the jobs right here at home. 

Now more than ever this is critical. Thanks to the economic recovery package signed by the President last week, the resources to 

begin work on the smart grid are available today. It is up to us 

here in this Congress and on this Committee to make sure that the 

resources are used wisely to create jobs and solve our energy and 

climate crises. 

Again, thank you, Mr. Chairman, for holding the hearing. And I 

look forward to the testimony of our witnesses. 

The CHAIRMAN. Great. I thank the gentleman. The gentleman’s 

time has expired. 

The Chair now with the permission of the other members will 

recognize the gentleman from New Mexico, Mr. Luja ́n. He is a new 

member from the State of New Mexico and is an expert, actually, 

on these issues. And, without objection, I will recognize him to 

make an opening statement if he would like to do so. 

Welcome. 

Mr. LUJA ́ N. Thank you, Mr. Chairman. Thank you, Mr. Chairman and members of the Committee. I am honored to be part of 

this very important discussion today. 

As our country moves forward toward creating a green economy 

and reducing our dependence on foreign oil, it is imperative that 

we not only prepare students for the jobs of the future. And in a 

growing renewable energy industry, we must build transmission 

that includes smart grid technology that will be critical for our future. 

New Mexico has always been the leader in energy. And in my 

state, like many around the country, we have an enormous potential to grow renewable generation, like solar and wind. 

While traveling to my district last week, I had the opportunity 

to visit the North American Wind Research and Training Center 

and Mesalands Community College in Tucumcari, New Mexico. 

There we also have the Northern New Mexico Solar Energy Research Park and Academy, which is growing every day. Students 

at the center train for the jobs of tomorrow, learn the mechanics 

of the wind turbines, the importance of solar generation, and have 

planned their skills on full-size generation built right on the campus. 

As we train and prepare our young people for the jobs of the future and make investments of renewable energy, we are faced with 


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the challenge that trends to minimize the gains we have made preparing our workforce for a clean energy economy. 

We all know our current electric grid design does not accommodate new renewable energy resources. We are charged with the 

task of building new transmission while incorporating new technologies that will improve efficiency. 

We must continue with fundamental research and development. 

And areas such as energy storage and solar generation have already taken place across the country in facilities like Los Alamos 

National Laboratories. We must develop technologies that have the 

ability to store millions of watts of electric energy that can be released back into our electric grid so we can take full advantage of 

the abundant renewable potential United States. 

Smart grid is a complex system. And we need to accelerate the 

use of computer simulation and modeling to build an ideal electric 

grid, a grid that will support energy efficiency, reduce our use of 

fossil fuels, lower consumer energy costs, and support our growing 

renewable energy industry as it creates jobs for the future. 

At Los Alamos National Laboratories, scientists are exploring the 

next generation of technologies needed to implement smart grid. 

Los Alamos has adapted the tools we use today for national security to analyze and develop solutions, as an example, resulting from 

renewable generation, from large-scale renewable facilities, and 

from distributed generation in homes or businesses. 

To get these solutions into the workplace, we need to grow new 

partnerships between research and development organizations, like 

our national laboratories, our utilities, and industry aimed at accelerating the pace of discovery and commercialization. 

As a former public utility commissioner with the New Mexico 

Public Regulation Commission, I understand the importance and 

the urgency and the need to improve our existing infrastructure 

and build a new, more efficient smart grid that will allow for the 

deliverability of new renewable generation and improve the reliability and security of our nation’s power. 

Deployment of smart grid technologies will create new jobs, facilitate a green economy, and change the way we generate and deliver power across America and around the world. 

Investments in the modernization of our electric grid is the next 

critical step towards a clean energy future. And I look forward to 

working with my fellow members to develop and implement the 

smart grid systems of today and tomorrow. 

Thank you, Mr. Chairman, the Committee, for allowing me the 

time to be able to be here today. 

The CHAIRMAN. Thank you, Mr. Luja ́n. Thank you for being here. 

Now we are going to turn to our witnesses. Our first witness is 

a very distinguished one, Mr. Tom Casey. He is the CEO of CURRENT Group. He previously worked on telecommunications and 

global communications with Merrill Lynch and Skadden Arps. He 

was also the chief counsel of the Federal Communications Commission back in the 1970s, long ago and far away for both of us, Tom. 

We welcome you. And whenever you are ready, please begin. 

Mr. CASEY. Thank you, Mr. Chairman, Representative Sensenbrenner, members of the Committee. 


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STATEMENT OF TOM CASEY, CEO, CURRENT GROUP, LLC; 

ALLAN SCHURR, VICE PRESIDENT, IBM; ROBERT GILLIGAN, 

VICE PRESIDENT, GENERAL ELECTRIC; CHARLES ZIMMERMAN, VICE PRESIDENT, WAL-MART; SHIRLEY COATES 

BROSTMEYER, CEO, FLORIDA TURBINE AND TECHNOLOGIES, INC.; AND JAMES HOECKER, HOECKER ENERGY 

LAW & POLICY 

STATEMENT OF TOM CASEY 

Mr. CASEY. I am here, obviously, to talk about smart grid and 

to talk to explain the impact of a smart grid can do for energy efficiency, for energy independence, and for emission reduction. 

As the Chairman mentioned, we can think about a smart grid as 

though it was an electric internet or the internet of the electricity. 

I completely agree with that analogy because it is a network that 

must be organized, monitored, managed for the distribution of electrons, as opposed to bits. 

But the challenges and the operational considerations that go 

into running the grid are very similar to the considerations that go 

into running the internet or telecommunications networks generally. 

And, in fact, much of the value of the internet, as with much of 

the value of the smart grid, will come from not only the performance and the efficiencies it creates itself but the fact that it enables 

other devices to attach to it and then to perform services on it; for 

example, computers on the internet, telephones on the telephone 

network. 

We don’t know what the iPod or Google of the electric sector will 

be, but if we have a true smart grid, we can have a great deal of 

confidence that there will be an iPod of electricity, there will be a 

Google of electricity, that consumers will be taking electricity as a 

service. And these changes are very, very significant. 

If I could—and I know the Committee is well-aware of this, but, 

just for the record, I would put out some statistics on the stakes 

of what we are talking about today. The Department of Energy has 

estimated that 40 percent of all of the greenhouse gases emitted in 

the country are emitted from the electric sector, from the power 

sector. 

EPRI, in turn, has forecast that if a smart grid were deployed, 

25 percent of those emissions could be avoided or 10 percent of 

total greenhouse gas emissions globally could be avoided. 

The Climate Group, a well-populated group filled with international companies, conducted a study by McKinsey. And they concluded that 2 gigatons a year of carbon dioxide or its equivalents 

could be avoided by the deployment of a smart grid. McKinsey said 

that the deployment of a smart grid is the largest single global 

technology contribution possible to reducing climate change. 

So the stakes are very high. And the smart grid is an essential 

element to accomplishing those benefits. So let’s talk about, then, 

what a smart grid is. 

There has been a lot of discussion about smart grid. It is something of a generic term encompassing very large amounts of different technologies, different functions, different services. I would 

like to be a little bit more precise. 


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I believe that a smart grid is an electric grid; that is, the set of 

wires that distributes electricity that has had applied to it technology to do several specific things: first, to sense information on 

the performance and the operation of the grid. That is, is the electricity running on these wires? Is it at the proper voltage? Is it at 

the proper current? Is it in balance, all those sorts of operational 

things? 

Once that information is discovered, it must be communicated 

somewhere for somebody to do something with it. So there needs 

to be a communications channel created. That communications 

channel delivers the information to some analysis capability, so a 

software system. 

The software looks at the data that it has received and decides 

what is going on. Is this a problem? Is it normal? Do I have to do 

something? Do I have to change? Do I have to turn the power on 

or off, up or down? And then it concludes that an action should be 

taken. 

It sends an instruction to take that action, either to a person or 

in sort of the next generation of smart grid to a device that is on 

the grid itself. And that device controls the various pieces of equipment that are on the grid to turn off or up or down or go on another path or whatever. 

This sounds complicated, but this is what happens every minute 

of every day in the telecom world. Every network is managed in 

this way. The internet is managed in this way. The equipment exists to do it. The software exists to do it. And as consumers of telephony and as internet consumers, we don’t even know that this 

is happening. 

But the network itself is very dynamic. Messages are moving in 

various ways along various paths. And the network itself is organizing that. We believe that that is what a smart grid is. 

I would say also that smart grid consists of many elements, as 

I said. It will have thermostats in it. Eventually appliances will 

have chips in them. And the appliance itself may be communicated 

with directly. The meter is going to be a part of the smart grid, as 

will the substation as will the renewable generation, as will the 

solar panel on our roofs or the windmill on our chimney. 

All of these devices are elements of a smart grid, but they are 

not the smart grid itself, just like telephones and computers are 

elements of telecommunications or of the internet, but they are not 

the internet. The internet is the network of networks. And a smart 

grid is the underlying network that enables all these other devices 

to perform to their optimal potential. 

I would say also smart grids are available today. CURRENT is 

a small company. We are headquartered in Germantown, Maryland, just outside of Washington. But we have smart grids operating in Dallas, Texas with Encore Electric and in Boulder, Colorado with Xcel Energy. These are fully equipped, operating commercially, functioning smart grid networks that work. 

So this is not a concept. This is not a vision necessarily. It is a 

vision in the sense that the rest of the country and the rest of the 

world, in fact, needs to adopt a smart grid technology, needs to deploy it, which is a complex and an expensive undertaking that will 


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be helped, we hoped, by the stimulus package that the member just 

referred to. 

I would say the important point here is that smart grid exists 

today. It is commercial operation. And the effects that we have 

seen from smart grid operation we can categorize into four general 

categories. 

System optimization. Electricity grid is a system. It starts at the 

generation. There are long distance lines, which are called transmission lines. Then there are local distribution lines, which are 

called distribution grid. Then there is the consumer. 

All right. All of this network can be optimized. And by ‘‘optimized,’’ we mean that the electricity that is traveling over it is the 

least that is necessary to perform the functions of the users at the 

end of the grid. 

Your appliances in your home and in factories and in offices have 

certain requirements to have electricity of certain parameters: 120 

volts. If the electricity is moving above or below 120 volts by too 

much or too little, it can have an effect. 

An optimized network will make sure that the electricity flows 

exactly where it is needed or at least as close to where it is needed 

as possible, which will save generation because if we are not buying or generating energy that we are not using at the end of the 

day, then we are not emitting carbon equivalents. We are not 

spending money on generating plants. We are not siting them. We 

are not having any of those consequences. 

The second and equally important contribution of a smart grid is 

it enables renewables and distributed generation. Renewables have 

certain characteristics. They are basically clean, which is why we 

as a nation are committed to trying to increase the deployment and 

the use of renewable energy, but they are also intermittent. 

They have variability to their production of electricity. And that 

poses certain challenges for the grid because the grid right now is 

operated on the premise that there will be constancy of the electrons. 

Electrons are produced at the coal plant or the natural gas plant 

or the nuclear plant, and they flow in one direction until they end 

up in your refrigerator or in your television. And that is it. There 

is no complexity to that. 

Renewable, the sun doesn’t always shine. The wind doesn’t always blow. Clouds can come over. They are inherently variable. 

They are inherently intermittent. And, therefore, they are inconsistent with the way that the grid is designed to be operated now. 

That inconsistency or that intermittency has to be dealt with. 

And it can be dealt with. One of the ways to deal with it is by making the grid smart so the grid can manage the ebbs and flows of 

the source by managing the ebbs and flows of demand, either on 

the grid itself or through end user equipment. 

Another attribute of renewables, particularly on the distributed 

generation side, is if I have a solar panel on my rooftop or if I have 

a windmill or if I have some other form of distributed generation, 

the electric company doesn’t know that I have that, I am producing 

that electricity. 

And so several consequences occur from that. One, if they think 

the electricity is off on my line because a transformer has blown 


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up and I am, in fact, generating electricity from my solar panel and 

they send a technician out to check, that technician thinks there 

is no electricity there. But there is because I am generating it. So 

that is obviously a safety issue. 

If the substation has been designed or if all the equipment along 

the grid has been designed to receive certain amounts of energy 

coming from the generator and the utility knows how much energy 

that is but I am adding energy to it and the utility doesn’t know 

that, then all their calculations are about balance and about loading and about all of the technical parameters of moving the electricity are wrong. And, therefore, that will affect performance. 

These are problems that can be resolved, but they need to be resolved by having the technology that allows the utility to know 

what is going on on their grid and to manage it more accurately. 

The CHAIRMAN. Mr. Casey, if I could? Because I think this is a 

great primer for all of the members, and I think they are all enjoying it a lot. But you have exceeded the five minutes. And if you 

could just make a kind of more cursory reference to points three 

and four, we will go to the other witnesses. Then we will come back 

to you during the question period if possible. 

Mr. CASEY. Yes, Mr. Chairman. I am sorry about that. 

The CHAIRMAN. Everyone is really benefitting from this overview. 

Mr. CASEY. I would say, one, I made the point, just to close out, 

that the smart grid consists of multiple networks, some of which 

are in the home and some of which are on the grid. 

There have been studies. The Climate Group in this McKinsey 

study I referred to estimated that 85 percent of the carbon emission reductions from a smart grid come from the network, the part 

I was talking about. And 15 percent of the carbon reduction, carbon 

emission reductions, can come from in-home energy management 

systems. 

So we believe it is important when we talk about smart grid to 

actually have a set of priorities that allow change to be taken 

where it might have the most impact. 

Thank you, Mr. Chairman. 

[The prepared statement of Tom Casey follows:] 


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The CHAIRMAN. Thank you, Mr. Casey, very much. 

Our next witness, Mr. Robert Gilligan, is the Vice President and 

corporate officer for GE Energy transmission and distribution business. We welcome you, sir. Whenever you are ready, please begin. 

Mr. GILLIGAN. Thank you very much. 

STATEMENT OF ROBERT GILLIGAN 

Mr. GILLIGAN. Good morning, Mr. Chairman and members of the 

Committee. Thank you for the invitation to testify on the smart 

grid and the tremendous opportunities it presents for our nation. 

Smart grid is essentially the marriage of information technology 

and process automation technology with our existing electrical infrastructure. It is the energy internet, as the Chairman referenced, 

delivering real-time energy information and knowledge to grid operators and to consumers, enabling smarter energy choices. 

As you know, the energy challenges that we face are significant. 

Transmission and distribution have been under-invested in comparison with new generation in this country for more than 25 

years, resulting in an aging and stressed infrastructure. By 2030, 

it is estimated that U.S. electrical consumption will increase at 

least 30 percent, putting more stress on this aged infrastructure. 

Power outage and power disturbances in the grid are estimated 

to cost the U.S. economy over $100 billion a year. And the reliability of the grid is deteriorating. 

America spends more than $200,000 per minute importing foreign oil, putting our energy security in jeopardy. And, as was referenced by Mr. Casey, climate change has become a major concern 

in this country and around the world. And 40 percent of the U.S. 

carbon footprint is related to power generation. 

Considering these factors, we must find a way to support greener 

sources of energy, improved efficiency, and enable conservation. 

These are the three primary objectives of a smarter grid: first, to 

enable the integration and optimization of more renewable sources 

of energy and eventually plug in hybrid electric vehicles; second, to 

drive significant increases in the efficiency and reliability of our 

network; and, third, to empower consumers to manage their energy 

usage and save money without compromising their lifestyles. These 

key benefits are clearly deliverable today and are shovel-ready to 

help foster energy independence and lower carbon emissions. 

We need to drive delivery optimization, increasing grid efficiency 

through network intelligence and more sophisticated controls of our 

transmission and distribution system. 

We need to drive demand optimization, empowering consumers 

with information to manage their usage and save up to 10 percent 

on their power bills by cutting their peak usage by 15 percent and 

their total usage by up to 8 percent. This has been demonstrated 

in studies conducted by the Department of Energy. 

Renewable integration, reducing our nation’s dependence on foreign oil by enabling seamless integration of greener, cleaner energy 

technology into our network, being able to deal with the complexity 

of intermittent power-generating sources, and enabling plug-in hybrid electric vehicles to be of benefit to the grid, as opposed to an 

additional burden on the grid. 


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In addition to giving consumers power and choice, perhaps one 

of the most critical deliverables of the smart grid is the optimization and integration of renewable energy. GE is actively engaged 

with Maui Electric Power Company and the Department of Energy 

to solve the challenge of integrating very high penetrations of renewable energy, particularly variable sources of energy, like wind 

and solar. 

A smarter grid provides utilities with levers they can pull to address changes in renewable energy production. For example, if the 

wind suddenly drops, utilities can quickly compensate for this variability by shedding load or finding other sources of energy that 

they can bring on the grid in time to maintain that support. 

Stimulus funding dedicated to smart grid gives us the opportunity to transform today’s grid into a smarter automated system 

so we can start realizing many benefits that we have talked about. 

This technology is available now. 

We believe it is in the long-term national interest to take a 

broad, all-encompassing view of the smart grid. To realize full benefits, funding must be focused on demonstrating solutions, not just 

spent on infrastructure. The inclusion of software solutions alongside infrastructure will be critical to delivering the ultimate promise of a smarter grid. 

A logical approach might be funding full-scale, city-scale smart 

grid solutions, including back office solutions, where advanced metering infrastructure deployments have been independently funded 

and approved. 

In addition to the efficiency, environmental, and productivity 

benefits delivered by smarter grid, large-scale investment will also 

result in jobs. In a study done by KEMA, an energy consulting 

company, for the Department of Energy, the stimulus is believed 

to create over 150,000 new jobs within the first year and over 

250,000 jobs over the next several years alone. These jobs will span 

factories to utilities to construction to engineering firms. 

By using the funding to demonstrate real benefits, we can ensure 

that the investment will continue after the stimulus money is 

spent. This will ensure that these jobs continue into the future. 

The CHAIRMAN. If you could summarize, sir? 

Mr. GILLIGAN. Another great benefit of the stimulus is that it 

creates the opportunity for the U.S. to lead and to create a market 

for these sophisticated and advanced solutions globally. We have 

the opportunity to be a leader in smart grid technology, just as we 

did for the internet. 

Thank you. 

[The prepared statement of Robert Gilligan follows:] 


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The CHAIRMAN. Thank you, Mr. Gilligan. 

Our next witness is Mr. Allan Schurr. He is the Vice President 

of Strategy and Development for IBM Global Energy and Utilities 

Industry. We welcome you, sir. 

STATEMENT OF ALLAN SCHURR 

Mr. SCHURR. Mr. Chairman and members of the Committee, 

thank you for this opportunity to testify before you today about 

how a smart grid can enable a sustainable energy system with 

greater energy efficiency, improved reliability, and enhanced energy security. 

I am Allan Schurr, and I am Vice President of Strategy and Development, as the Chairman mentioned. And IBM is proud of its 

global leadership role in smart grids as it reflects IBM’s commitment to a smarter planet that is more instrumented, interconnected, and intelligent in diverse areas such as transportation 

systems; water supplies; health care; and, of course, energy. 

We believe that the application of advanced information technology and communications technology to an already digitizing 

equipment domain in the energy field will revolutionize the way 

electricity is generated, delivered, and consumed across all sectors 

of the economy. 

There are four key benefit areas for smart grids: more efficient 

use of energy by consumers, lower cost application of renewable energy supplies, operational and asset efficiency by utilities, and improved reliability and quality of electrical service. As requested by 

the Committee, I am going to focus on the first two mostly: consumer energy efficiency and renewables. 

As I mentioned, smart grids encompass a mix of instrumentation, 

interconnectedness, and intelligence and are key to ensuring we 

meet our environmental and energy security goals and do so costeffectively. Let me describe some examples where smart grids help 

achieve energy efficiency and incorporate renewables at the lowest 

possible cost. 

Energy efficiency is widely viewed as the lowest impact and most 

cost-effective resource. Many large enterprises, like IBM, have 

made substantial progress in reducing energy consumed per unit of 

output over the past 30 years. 

These enterprises had the scale to support detailed engineering 

analysis needed to identify waste in their operations and equipment, and they made investments accordingly to improve efficiency. 

But consumers and small businesses have not had the same opportunity. Smart grid technologies will allow improvements for all 

customer classes. Smart grid technologies can help track, analyze, 

and control energy consumption at the whole premise level and on 

specific appliances, such as connected thermostats for a home air 

conditioner. Think of this as an intelligent home automation system but utilizing internet technology and in some cases utilityscale economies to dramatically reduce the cost and effectiveness. 

Next, renewable energy technology is a growing part of a generating portfolio that can reduce environmental impacts. Whether in 

a utility-scale configuration or in wholly distributed installations, 

the integration of renewables with traditional grid operations reVerDate Mar 15 2010 08:36 Dec 14, 2010 Jkt 062185 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 E:\HR\OC\A185.XXX A185

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quires special consideration. And smart grids can reduce this cost 

of assimilation. 

For example, smart grid technologies can simplify the interconnection process of distributed renewables through business process automation, communication standards, and system discovery 

and monitoring, just like the way the internet itself manages devices that are constantly connected and disconnected. 

The variability of renewable energy output is often cited as a significant objection to growing the portion of renewable energy 

sources. And smart grid can address this supply/demand imbalance 

by connecting the current and forecasted renewable output to 

dispatchable load. 

Just today IBM announced that we are undertaking related efforts to integrate wind generation to the smart charging of plugin vehicles so that on-board battery storage can absorb excess wind 

energy during controlled charge cycles. 

All of this is possible with the smart grid, even without new inventions. We do require new thinking, new business models, new 

regulatory approaches, and new applications. For us to get there, 

we firstly need scale deployments. They depend on both solid program management and on technology blueprints that leverage 

standards and interoperability for the lowest total cost. 

Interoperability is a necessary foundation for smart grid. And 

good progress is being made there. Within the electric system, 

interoperability means the seamless end-to-end connectivity of 

hardware and software from customers’ appliance domain all the 

way up through the transmission distribution system to the power 

supply domain, enhancing the coordination of energy flows with 

real-time flows of information and analysis. 

The markets driving toward interoperability in many states accurately see this issue as a means to ensure lower-risk technology investments, but there are challenges that need to be addressed, including current business model challenges in the utility industry, 

a lack of a coherent national smart grid strategy, and the lack of 

smart rate-making, all of which result in the fact that while there 

have been many pre-deployment pilots, there have been few fullscale projects. 

The CHAIRMAN. Could you please summarize, Mr. Schurr? 

Mr. SCHURR. Smart grid has become a topic of keen interest to 

parties across the technology, energy, and regulatory spectrum. 

And its benefits to energy efficiency and renewables are well-documented alongside reliability and operating efficiencies. But the hurdles really are the institutional inertia of the existing regulatory 

models and utility businesses. Necessary technologies and solutions 

are available, awaiting only the orders for scale deployments to 

drive costs out and benefits up. 

Thank you very much. I look forward to answering your questions. 

[The prepared statement of Allan Schurr follows:] 


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The CHAIRMAN. Thank you, Mr. Schurr, very much. 

Our next witness is Mr. Charles Zimmerman. He is the Vice 

President of Design and Construction for the International Division 

of Wal-Mart. Welcome, sir. 

Mr. ZIMMERMAN. Thank you. 

STATEMENT OF CHARLES ZIMMERMAN 

Mr. ZIMMERMAN. Chairman Markey, Ranking Member Sensenbrenner, and distinguished members of the Committee, my name 

is Charles Zimmerman. I am the Vice President of International 

Design and Construction for Wal-Mart Stores, Incorporated. In my 

current role, I am responsible for coordinating the architectural 

and engineering system design for all of our international retail facilities. 

Prior to joining Wal-Mart’s International Division earlier this 

month, I was the U.S. Vice President of New Prototype Development and the captain of the sustainable buildings network. Here 

I oversaw our company’s efforts to make our buildings more energy 

and water-efficient and lower their overall environmental impact. 

On behalf of Wal-Mart and our 2.2 million associates around the 

world, I would like to thank the Committee for its work on this important issue and for holding this hearing today and for inviting us 

to appear. While I will focus primarily on our energy efficiency efforts, I will also explain the role smart grid plays in those efforts. 

Our company holds the unique position in the world of energy. 

While there are no firm statistics, it is widely understood that WalMart is one of the largest private purchasers of electricity in the 

world. In fact, the only entity thought to purchase more energy in 

the U.S. is the U.S. government. 

Since energy is also Wal-Mart’s second largest operating expense, 

it should be no surprise that we have been focused on energy efficiency and control technologies practically since the day we were 

founded. We have always recognized what many others have not, 

and that is that energy truly is a controllable expense. 

Because nearly one-third of Wal-Mart’s energy consumption is in 

the form of lighting, we have developed one of the most efficient 

lighting systems in the world. In fact, the installed lighting load in 

one of our newer stores is nearly 50 percent less than the baseline 

requirements established in the Energy Policy Act of 2005. 

This truly innovative system results in the fact that during daylight hours, our sales floor lighting is either off or significantly 

dimmed. This is possible thanks to a sophisticated daylight harvesting system comprised of hundreds of skylights per store that 

are connected to sensors and state-of-the-art control technologies. 

This allows our sales floor lighting system to continually modulate 

the amount of energy needed based on the natural light available. 

This system is so dynamic that it even gradually ramps the light 

levels up and down as clouds pass over the store. 

In our non-sales floor areas, such as offices, break rooms, and 

restrooms, lighting is controlled by occupancy sensors that turn off 

lights when no one is in the space. Even our freezer case lighting 

has now evolved to display an advanced digital technology as it is 

now comprised of LEDs, or light-emitting diodes. 


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The result is a building where most of the lighting is dynamic 

and only on to the degree conditions warrant. And this is just lighting. Similar efforts are underway with HVAC and refrigeration. 

Recently, at the request of Wal-Mart, Lennox International has 

developed a new rooftop heating and air conditioning unit that it 

has marketed as being—and I quote—‘‘the most efficient unit of its 

kind.’’ Lennox also states that this equipment is up to 66 percent 

more efficient than U.S. Department of Energy regulations. 

Today every rooftop unit purchased in the U.S. and Canada for 

all of our new stores and retrofits is this Lennox super high efficiency unit. This has been one of our many investments in green 

jobs. 

Of course, as efficient as all of this equipment is, without proper 

control technology, it will never meet expectations. That is why 

every Wal-Mart store in the U.S. includes a sophisticated energy 

management system that allows us to monitor and control the 

lighting, temperature, humidity, and refrigeration in each and 

every one of our stores from our home office in Bentonville, Arkansas. Mr. Chairman, this is our version of a smart grid, simply 

awaiting arrival of a true smart grid described by Mr. Casey and 

others today. 

If an associate in Sacramento leaves the door to a walk-in Coke 

cooler open, we know it in Arkansas. If a store manager in Chicago 

overrides their daylight harvesting system, we know it in Arkansas. And if a freezer in Miami is icing up and needs to be defrosted, 

we know it in Arkansas. And, in fact, we can correct the situation 

from Arkansas. 

In 2001, when Governor Davis asked for all businesses to curtail 

lighting energy use during the 2001 brownouts, we were able to do 

that from Bentonville, Arkansas. 

As efficient—— 

The CHAIRMAN. Do you think you could summarize, please? 

Mr. ZIMMERMAN. As proud as we are of these accomplishments 

and innovations, we are even more proud to share what we are 

learning with everyone, including our competitors. 

We at Wal-Mart applaud Congress in its efforts to communicate 

the necessity and the benefits of energy efficiency. Thank you for 

your time in allowing me to speak on behalf of Wal-Mart on this 

very important topic. We look forward to working with you to effectively and constructively address these issues. Thank you. 

[The prepared statement of Charles Zimmerman follows:] 


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The CHAIRMAN. Thank you, Mr. Zimmerman, very much. 

You sound like my mother used to say, ‘‘If you ride your bicycle 

outside your zone, your mother will know.’’ [Laughter.] 

I remember that lecture, but now it is coming from Wal-Mart. 

We have another special guest today, Congressman Ron Klein 

from the State of Florida, who is also not a member of this Committee. This is a very special morning here for us in the Committee. We have so many members not on the Committee who are 

interested in the subject. 

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

Mr. KLEIN. Thank you, Mr. Chairman. And thank you, all of you 

on this Committee, for holding this and for the participants today. 

This is something that many of us have been interested in for a 

very, very long time. It isn’t just about energy alternatives. It is 

also about conservation and so many other things. So I appreciate 

your leadership. 

Mr. Chairman, I have the opportunity today to introduce Shirley 

Brostmeyer. Shirley is CEO of Florida Turbine Technologies. She 

is a constituent. 

In these difficult economic times, she is a great example of leadership in our business community in understanding the importance 

of how energy conservation can lead to great-paying jobs. 

She employs over 185 well-paid employees at her company that 

work on the development, manufacturing, and testing of turbo machinery components and systems for aircraft engines, space propulsion, and industrial gas turbines. It sounds like a big, complicated 

thing, but, actually, it is an incredibly important part of our whole 

energy conservation that we are having. 

When we think of energy independence, we always think about 

those alternative energies, which I know Mr. Hall and many others 

have been leading the fight on. But it is equally important to focus 

on energy conservation, something Ms. Brostmeyer and her company have been working on for many years. 

I think you will be very impressed with the specifics that she is 

going to give us this morning. And don’t let her be bashful because 

over the last ten years, her company is very proud of the fact that 

their improvements to aircraft, industrial turbines have led to 

25,000 gigawatts of green energy, which is equivalent to all of the 

wind turbine farms in the United States. 

Thank you for being here, Shirley. We appreciate your leadership 

in the community and nationally in your bringing this important 

advancement to the Committee. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Welcome, Ms. Brostmeyer. Whenever you are ready, please 

begin. 

Ms. BROSTMEYER. Thank you. 

STATEMENT OF SHIRLEY BROSTMEYER 

Ms. BROSTMEYER. Mr. Chairman and members of the Committee, 

thank you for this opportunity to address you today. As you heard, 

I am Shirley Brostmeyer, CEO of Florida Turbine Technologies, a 

185-person small business in Jupiter, Florida. 


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We develop next-generation turbine technologies for the Air 

Force, the Department of Energy, and aircraft and industrial engine manufacturers. We are fortunate enough to employ many of 

the world’s foremost experts in turbine technology. 

While my topic is not specific to transmission today, turbine efficiency technologies should be an integral part of the discussion regarding how technology can revolutionize efficiency. 

In the ten years that FTT has been in business, we have already 

had a huge beneficial impact on the environment, eliminating the 

equivalent of emissions from 8 coal-fired plants, or 30 million tons, 

of carbon dioxide annually. Such a huge environmental impact was 

possible because turbines provide 97 percent of the electric power 

generated in our country. 

We hear lots of talk today about improving the efficiency on the 

consumption side of electricity, such as our dishwashers, our 

clothes dryers, but just as important are changes that can be made 

on the production side of electricity or improving the efficiency of 

turbines. 

I am here to tell you that turbine efficiency technology is the 

most cost-effective and near-term means to increase our energy 

independence and reduce CO2 emissions. 

I have a figure here on the wall if you can see that that shows 

the sources and uses of electric power in our country. I think it is 

probably difficult to see, but you should have it in your packet as 

well. 

On the left, you can see that fossil fuels make up a large portion 

of our electric power generation. Renewable energy, which is small 

down there—this is a few years old—it will increase. It is increasing. But since demand is also increasing, fossil fuels will, by necessarily, remain a significant part of our energy picture for many 

years to come. 

Why are high-efficiency turbines important? High-efficiency is 

important because more power can be generated with the same existing equipment because less fuel is needed to generate the same 

amount of power and because fewer carbon dioxide emissions result 

because less fuel has been burned. 

I should start by saying that we have focused our efficiency advancements on natural gas-fired combined cycle plants since they 

are the most efficient way to make power with fossil fuels. Their 

efficiency is close to 60 percent. And they produce approximately 

one-third of the carbon dioxide for the same amount of power relative to a coal plant. And also because they are available 24/7, they 

make an excellent complement to most renewable sources. 

My company has developed an exciting new technology called 

Spar-Shell Blade for combined cycle power plants. This next figure 

shows a schematic of how such a blade would be constructed. 

Most turbine blades have to spray cooling air out from the inside 

of them to keep them from melting in their hot environment. That 

cooling air creates efficiency losses. 

Spar-shell technology allows one to reduce that cooling flow by 

75 percent. That savings in cooling air leads to a three and a half 

percent efficiency improvement for the plant. 

Some other promising technologies to improve combined cycle efficiency are reducing the clearances between the rotating and the 


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non-rotating parts or reducing the cooling leakage air. And these 

can be combined with Spar-Shell technology to make an upgrade 

kit that can be retrofit into today’s turbines. This retrofitting would 

eliminate 60 tons of carbon dioxide every year. 

Okay. We can go to the next. The final chart shows the effect of 

incorporating this Spar-Shell upgrade kit into half of today’s combined cycle plants, or about 60 gigawatts worth of power, in the 

United States. 

With the addition of these upgrade kits, we would end up with 

nine gigawatts of additional power. Three of those would be completely fuel-free and carbon dioxide-free. 

With worldwide application, this additional power could reach 36 

gigawatts and remove the equivalent emissions of 16 coal-fired 

plants. And my assumption is that we would only put these upgrade kits in about half of our existing power today. The Spar-Shell kit would cost approximately $400 a kilowatt, 

which is half the price of putting in new combined cycle plants and 

one-quarter of the price of any other alternative. 

The CHAIRMAN. If you could try to summarize, Ms. Brostmeyer, 

please? 

Ms. BROSTMEYER. Okay. One additional point is that because it 

allows higher temperatures, Spar-Shell technology is an enabler for 

efficient, clean coal cycles. And the clean coal initiative at the Department of Energy is currently funding this. 

So I would like to thank you, Mr. Chairman and members of the 

Committee, for taking time to hear about turbine efficiency technologies. And I encourage you to include power plant efficiency improvements as part of your energy independence plan. 

The CHAIRMAN. Thank you. 

Ms. BROSTMEYER. Thanks. 

[The prepared statement of Shirley Brostmeyer follows:] 


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The CHAIRMAN. Thank you, Ms. Brostmeyer. Thank you for your 

very important contribution to this whole discussion here this 

morning. 

Our final witness is Mr. Jim Hoecker. Mr. Hoecker is the founder 

and the principal of Hoecker Energy Law Policy, but most importantly for the purposes of our hearing here today, Mr. Hoecker and 

I go back a long, long time. Mr. Hoecker was the Chairman of the 

Federal Energy Regulatory Commission, to name just a few of his 

achievements. 

So it is good to see you again. We welcome you back. And we are 

sorry the table is just a little bit smaller than we had anticipated 

today. We have saved you for last because of your—we started off 

with the Federal Communications Commission over here, and we 

end with the Federal Energy Regulatory Commission. I think there 

is a good reason why we should start and end with these two subjects. So whenever you are ready, please begin. 

Mr. HOECKER. Thank you very, very much, Mr. Chairman. I appreciate your welcome. 

STATEMENT OF JAMES HOECKER 

Mr. HOECKER. Good morning, Mr. Chairman, Congressman Sensenbrenner, and members of the Committee. It is a pleasure to be 

here. I come here today as the representative of WIRES, as their 

outside counsel. 

WIRES, for your information, is a nonprofit trade group made up 

of transmission providers, operators, customers, technology companies. And we advocate for transmission investment. 

Last night our President made it clear that we must pursue a 

transformational energy agenda in pursuit of alternative energy, 

energy independence, curbs on emissions that contribute to global 

warming. 

Today’s panel is about a key piece of that agenda. As a recovering regulator, I stand in awe of the technologists at this table 

and what they are seeking to achieve. And I want to associate myself with their testimony with respect to the importance of digital 

technologies in making our electricity system cleaner, more efficient, and responsive to consumer demand. 

I also want to acknowledge Mr. Hall’s remarks about the technology that applies, perhaps not digital but composite technologies, 

that improve the transmission system itself, including superconductivity and such new innovations. 

The Wall Street Journal recently wrote about the popularity of 

small smart roads, smart bridges, smart grids. Today I want to impress upon the Committee that we need roads before we can have 

smart roads. We need bridges before we can have smart bridges. 

And we need an adequate transmission infrastructure as we apply 

the new technologies to help deliver reliable energy to market. 

The North American electricity grid is the largest machine on the 

planet. It is also, unfortunately, a hodgepodge of individual and regional systems, much of it edging and congested, plan by an array 

of entities with different agendas, using different criteria, regulated 

by scores of agencies that use long lead times and unable to connect to places where renewable power supplies are plentiful. 


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The industry has, nevertheless, made huge advances in coordinating large transmission systems. And there are now scores of 

proposals on the table that, if developed, would bring clean energy 

supplies to market. 

Whether public policy favors renewables, nuclear power, advanced coal, natural gas, all of the above, a transmission system 

that integrates and interconnects these new resources is essential. 

A stronger transmission system is not the answer to all our energy challenges, but the solutions that we and the President are 

talking about cannot be implemented without it. Smart grid doesn’t 

obviate the need for transmission, but it certainly complements it. 

Policymakers and private companies can debate what shape this 

new grid should take and whether specific facilities should be built 

at all. But we need some basic reforms to get there, more effective 

and consequential planning and understanding about who will pay 

for these investments, predictable cost recovery, and efficient siting 

procedures. 

We at WIRES propose to tackle some of these subjects in the 

Cannon House Office Building on Friday morning for those of you 

who are interested. 

Mr. Chairman, I come here today in full support of what has 

been said and would like to add the interest of the transmission 

infrastructure to that chorus. Thank you for the invitation. 

[The prepared statement of James Hoecker follows:] 


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The CHAIRMAN. Thank you, Mr. Hoecker, very much. 

So that completes the time for opening statements. We will now 

turn to questions from the Select Committee. The Chair will recognize himself for a round of questions. 

Mr. Casey, let me come to you. You were pointing out 80 percent 

of the benefits come from one side of the equation and 20 percent 

come from the other. Can you expand upon that, explain to us exactly what it takes? Let’s just go to the 80 percent. What does it 

take to gain 80 percent of the benefits? 

Mr. CASEY. Yes, Mr. Chairman. The 80 percent in this study 

comes from approximately half from system optimization, which is 

the various functions that make the electricity flow more efficiently 

across the grid. 

So that is energy efficiency or grid efficiency, making sure that 

the voltage is proper, making sure the current is proper, making 

sure the balance between the channels is all appropriate, making 

sure that when there is a transformer that is degrading, it is recognized and either fixed or electricity is routed around it in the case 

of an outage and so on. So that is system optimization. That is 

about half of that 80 to 85 percent. 

The other half of the 80 to 85 percent is that the renewables cannot really reach their full potential without having more intelligence in the grid to allow them to be managed and dispatched, 

as we talked about before. 

So half of it is from the grid wires itself, and half of it is from 

what a smart grid will do for renewables. 

The CHAIRMAN. And how much of that, Mr. Casey, do you think 

is going to be as a result of public monies having to be spent or 

just a different regulatory framework in which the marketplace is 

responding, as it did in the telecommunications field after the 

changes that were made that made it possible for MCI and 

Sprint—that is when you and I were working together in the 

1970s—to be able now to gain better access to the network? How 

would you divide that question? And how much money do you ultimately think comes out of the public sector and how much out of 

the private sector? 

Mr. CASEY. I think that the money in the stimulus package will 

determine the answer to that question. I believe that the approximately $11 billion that is set aside in the stimulus package for 

smart grid or energy efficiency measures is now sitting at the DOE. 

And the DOE is going to have to decide how to allocate that. 

If they allocate it in ways that allow, as Mr. Gilligan said, solutions to be adopted at scale that can actually show the benefits of 

these various technologies that we are talking about, then I think 

the market itself will take off. And you won’t need any more public 

money. 

It will have to be, as several people on the panel have mentioned, 

there have to be regulatory changes because, as you remember 

from those days, Mr. Chairman, regulated rate-based monopolists 

don’t have a lot of incentive to be efficient. 

The CHAIRMAN. I think I remember that. 

Mr. CASEY. And in telecom, what happened was technology developed. And new entrants came in. The new entrants were MCI, 

Sprint, and all of these people. 


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There is no competing long distance set of carriers. There is no 

cable television industry that can offer VOIP channels to consumers to give them a choice. There is no wireless alternative to 

give them a choice. So the economic structure of the electricity industry I think is different. 

But if the regulatory regime allows them to make money by investing capital in technology that will produce efficiencies, then I 

think they will do it. And consumers will save money. And the society will be better off because we will be much greener. 

The CHAIRMAN. All right. And then expand upon that. Talk a little bit about, then, the ability if we get this right to use renewable 

energy electric generation as part of the electric vehicle revolution. 

Mr. CASEY. I think there will be an electric vehicle revolution, in 

fact. And I think it will happen faster than other people think it 

will happen. I think solar and wind and distributed generation at 

homes and in backyards, I think that is going to happen. 

All of that needs a couple of things. The economics of the electric 

industry right now is very, very simple. They invest money. They 

get a return on it. They make the return by charging number of 

kilowatt hours sold times pennies per kilowatt hour. 

So if we conserve as consumers or if government wants a conservation policy, what that means to an electric company is they 

get less revenue, but they don’t have a corresponding amount of 

costs. As an investor-owned utility, they can’t possibly do that. It 

is not right. 

So the energy, the way they make money has to be altered. And 

that is complicated because their regulation is basically on the 

state level, which was another problem in telecom. And it was resolved in that sector. 

The CHAIRMAN. My time has expired. I will just make this point 

that in the 1970s, there was just this confluence where I was a 

graduate of Boston College, Mr. Casey was a graduate of Boston 

College, three of the FCC commissioners were graduates of Boston 

College. And we all agreed. 

Mr. BLUMENAUER. It was a conspiracy. 

The CHAIRMAN. And, by the way, there was no course at Boston 

College on this subject. But we all agreed that it wasn’t a good idea 

for our mothers to have to rent a phone for three bucks a month 

and to have everyone every time there is a long distance call to 

yell, ‘‘Grandma is on the phone long distance. Run to the phone.’’ 

Why is that the case? Because one company, one utility had 1.2 

million employees, AT&T, and these little companies, MCI and 

Sprint, wanted to get into the business. So we changed the rules. 

And that was the rules. We changed the dynamic for the deployment of this telecommunications network, Mr. Casey. 

Mr. CASEY. And we were all very concerned that our mothers 

would know that we were allowing that to continue, too. 

The CHAIRMAN. It is exactly right. It was all driven by the same 

kind of guilt that Mr. Zimmerman is now inducing in people at 

Wal-Mart. Okay? [Laughter.] 

And that is always the most powerful admonition that grips your 

brain. 

Let me turn now and recognize the gentleman from Oregon, Mr. 

Blumenauer. 


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Mr. BLUMENAUER. Thank you, Mr. Chairman. I would like to just 

pick up where you left off because for me, that is the single most 

important element that is woven through the testimony here today. 

I have no doubt that there are tremendous potential efficiencies 

to be wrung out of the existing system, whether it is design of turbines or just figuring out for people who don’t have the benefit of 

scale of a Wal-Mart, say, and don’t have the focus as well to be able 

to take advantage of it. 

The colloquy between you, Mr. Chairman, and Mr. Casey, about 

what we do with the regulatory system because ultimately we need 

to incent the billions of decisions that are made every day by American consumers and the businesses that serve them and, dare I say, 

government itself, to be able to respond to the potential benefits, 

I was struck by what we have heard from GE and have been impressed with people from your organization. The IBM story I think 

is stunning in terms of your 45 percent reduction, Wal-Mart, the 

benefits of scale and focus. One of the things that is an unsung success story, you have done it in transportation, what you have done 

in energy consumption. 

I wonder if our panelists, particularly those from these three 

major institutions, could follow up on the conversation, Mr. Chairman, between you and Mr. Casey to talk about the regulatory incentives that you could envision that would help change those billions of individual decisions. 

Can you see a large organization like a GE or a Wal-Mart being 

empowered to negotiate an energy conservation tariff to be able to 

get even deeper greener? Can you foresee a differential rate of return for a private utility and their customers for investments that 

will save energy over time so maybe we incent that, so they invest 

capital in time and energy and the customers are motivated, not 

bey altruism, not by rules and regulations, although we think that 

people will be motivated by what is good for the planet and there 

is a role for appropriate rules and regulations? But can you talk 

about regulatory carrots that would make a difference to your three 

institutions? 

Mr. GILLIGAN. I will start if that is okay. I think that there are 

demonstrated models in the utility sector today that do encourage 

investment in efficiency. 

If you look at the State of California, where there is decoupling, 

there is encouragement for investment in efficiency. And because 

of that, we have seen the rate of growth in per capita electric use 

at about 50 percent. California is running at about 50 percent the 

rate of growth of the rest of the nation. So the decoupling process 

has been effective. 

In some way, we need to encourage driving efficiency and incent 

utilities to invest in efficiency as if they were investing in new generation. Decoupling is one mechanism. I think there is a second 

challenge, though. 

My experience around this industry is it is a conservative industry. And regulators are very conservative about spending people’s 

money on new technology. So we need to think about, how do you 

encourage a given utility to be one of the first to adopt new technology? 


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Mr. BLUMENAUER. And I am mindful. I want to be short because 

I think my other colleagues want to speak. And so I won’t flog this, 

even though I had a couple of extra minutes in my questioning. So 

what I would like to do is just follow up with each of you in terms 

of having something in writing. 

But, Mr. Gilligan, what I am interested in—I want to be clear, 

and my friend Mr. Inslee has been a leader in his committee pushing decoupling. We have done this with legislation that I have been 

working on. But, rather than thinking of it as new generation, I am 

wondering if we can think of it as new lines of business for the 

4,000 power, gas, sewer, and water utilities across the country, 

that they can think about the partnership with you incented by appropriate regulation as actually a new line of business that could 

be developed. 

I will yield back, Mr. Chairman, but I would be keenly interested 

in following up with each of our three witnesses for them to respond with the smart people they work with on how we deal with 

this interesting avenue that you and Mr. Casey opened up. 

Thank you, sir. 

The CHAIRMAN. Thank the gentleman. And if you would respond 

in writing, then we will make sure that each of the members receives those responses. 

The Chair recognizes the gentleman from Washington, Mr. Inslee. 

Mr. INSLEE. Thank you. Thank you. 

Mr. Hoecker, I wanted to ask about the need for additional federal action and/or state action on siting, planning, and financing 

grid improvements. I just would like you to address the urgency of 

that, which is kind of a rhetorical question, but I would like you 

to talk to us about why quick action is appropriate if you believe 

it is; and, two, how you would fashion the federal-state relationship 

in that regard. 

Mr. HOECKER. Well, thank you, Congressman. I appreciate that 

softball. And we could talk quite a while about this. It is widely 

acknowledged that the existing transmission system is aging in 

many respects, that it doesn’t reach areas where renewable energy 

is plentiful, that it is under a good deal of stress, and that we are 

looking at an increase in electricity demand of up to 30 percent 

over the next 20 years or so. 

Now, a lot of the technologies we have been talking about will 

be able to help manage that load and perhaps reduce it, make it 

more efficient. But the electric transmission system is an enabler, 

not only of these technologies but our access to renewable energy 

and service reliability that will enable our economy to recover. 

I think we are looking at a pivotal moment in the history of the 

grid. We are moving to new technologies, where we are putting 

more demands on this network infrastructure. And we need to 

think about it holistically. 

The history of this industry is rooted in the early part of the last 

century in very discrete systems, where generators were built close 

to load and the only transmission was to interconnect it to over relatively short distances. 

Now we have an emerging, highly integrated bulk power system. 

And it is being asked to do things that it wasn’t designed to do. 


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So in order to expand that system, make it smarter, employ new 

technologies, we need a larger regional planning either institutions 

or procedures. We need to take a hard look at the siting of transmission, which happens on a state-by-state basis right now. And 

WIRES is not advocating that states be excluded from that. 

But when we look at whether particular transmission facilities, 

especially extra high voltage facilities that are 345, 500 kV and 

above, that have regional impacts and perhaps even cross state 

lines, it makes no rational sense for the developer of those facilities 

to have to engage in procedure after procedure after procedure in 

multiple states in order to get authorization or recognition that the 

facility is needed. 

So we need to step back and take a look at this large machine 

and plan it on a regional basis, site it in a more efficient fashion, 

and allocate the costs in recognition of the fact that the high voltage transmission system has regional beneficiaries, not just local 

beneficiaries. 

Mr. INSLEE. So we are going to have a draft of a bill I would appreciate your input on here in the next few days. I hope that you 

will help us take a look at that. 

Mr. HOECKER. I would be delighted. 

Mr. INSLEE. Thank you. 

Can the panel address this issue of electrifying our transportation system? I think we are moving substantially in that direction. I saw, I think it was, Battelle Research that showed we could 

essentially power our transportation fleet or 85 or 90 percent of it 

without additional generating capacity. You could essentially use 

existing generating capacity at night, if you will, to charge our 

autos. 

Is that accurate? And what does the electrification of the auto industry portend what we need to do in the grid in general? 

Mr. SCHURR. If I could take a stab at that? We have done quite 

a bit of looking at the electric transportation impacts on the electric 

grid. EPRI’s studies support what you described and that there is 

substantial off-peak capacity that would support large-scale conversion of passenger vehicles to electric transportation, whether they 

be plug-in hybrids or battery electric vehicles. 

One of the challenges is that there is not enough garage capacity 

for everybody to park at night. Only about one in five cars parks 

in a residential garage that they own overnight. And so we think 

that there is also a challenge of public charging, which will not always be between the hours of—you pick it—10:00 p.m.–6:00 a.m., 

when there is a lot of both generation capacity and transmission 

and distribution capacity. 

So ultimately electric transportation is going to require smart 

grid intervention in order to manage charging in public situations 

and particularly during the daytime, where it is not just a matter 

of the bulk system having enough capacity but even lots of clustering of vehicles which might occur at a transit station or a place 

of employment. It will be critical that smart charging is part of and 

pricing signals are part of the ultimate scale-up of electric transportation. 


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I mentioned today that we are working on a project where we are 

integrating wind with that smart charging to really create the ultimate in clean recharging. 

Mr. INSLEE. Thank you. 

The CHAIRMAN. The gentleman’s time has expired. 

Here is where we are. We have three roll calls on the floor. We 

have approximately seven and a half minutes left to go, which will 

allow me to recognize Mr. Hall for all of his questions. We will then 

recess the hearing and then reconvene in approximately 20 minutes and then have approximately a 20-minute conclusion to the 

hearing—okay?—so everyone knows that there will be an opportunity for more questions and for Congresswoman Speier to also 

ask her questions. 

Congressman Hall. 

Mr. HALL. Thank you, Mr. Chairman. I will just ask one question 

of Mr. Hoecker, if I may. And thank you all for your testimony. It 

was very interesting. 

Mr. Schurr, your company is the largest employer in my district. 

Although you are not based there, I am happy to say that IBM is 

a strong presence in New York’s 19th District. 

Mr. Hoecker, if superconductor technology is viable, is it viable? 

And if so, why would we consider building new transmission lines 

out of anything else, particularly copper line technology that is 50 

to 100 years old, as some of you said? 

Put another way, why go to the trouble of building a new Twenty-First Century smart grid with essentially a Nineteenth Century 

backbone? 

Mr. HOECKER. Thank you, Mr. Hall. 

I guess I would characterize superconductive research, such as 

that done by American Superconductor, as in the demonstration 

stage. This is very leading-edge technology. There aren’t many facilities to produce it. And its response if installed in large quantities is not entirely clear yet. 

They are about this big. You can bury them in the ground. It is 

super-cooled with liquid nitrogen. It is impressive. It has got enormous potential because you can deliver massive amounts of power 

in a relatively short space. That at least is the concept. 

I think we will find in the coming years ways to prove this technology and to begin to install it, but this is a process. 

And right now undergrounding any transmission in these kinds 

of facilities, in particular, is very expensive. And so I think we are 

looking at some long-term goals for installing some very, very beneficial technology, but I think we are at the beginning of that process, not at the end of it. 

Mr. HALL. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Well, Congresswoman Speier, we could recognize you for three 

minutes right now if you would like. 

Ms. SPEIER. Thank you, Mr. Chairman. 

I had just visited, just last week, a new company in my district 

called Green Box. They are actually creating the software to allow 

the homeowner, the consumer to assess all of their electrical equipment in their homes and make determinations on whether or not 

they should be taking it, unplugging them or not. 


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So my question is it sounds like we already have the technology. 

We have the smart grid technology. We have the technology to be 

put in our homes in the form of software to really change behavior 

in a dramatic way. So what is preventing us from getting there? 

Mr. ZIMMERMAN. Speaking from someone who has to pay for everything that we do, it is first cost. I mean, it is a hard struggle 

for consumers, for other businesses to look at all the life-cycle costs 

and savings associated with these investments and in today’s environment, making that significant first cost is just extremely difficult for people. 

Ms. SPEIER. But if the smart meters indeed over 20 years pay for 

themselves by virtue of just the manpower you don’t have coming 

out to read the meters, if the software is readily available and is 

going to save people money from day one literally, to me, it—— 

Mr. ZIMMERMAN. Right. It is positive cash flow from day one. All 

of the initiatives that we have employed the last few years, we are 

typically seeing two to three-year paybacks. So it is not a hard decision if you look at those costs. 

I can’t speak for other companies, but it must just simply be the 

availability of that capital right now in these times of the incentives. 

The CHAIRMAN. I apologize, but there are now only two minutes 

left to go to walk about a quarter of a mile, which would be a good 

task. But if the gentle lady would like to return, we will have more 

questions in approximately 20 minutes. 

And, by the way, this is Congresswoman Speier’s first hearing. 

She is the newest member of the Select Committee on Global 

Warming and Energy Independence. And she has an outstanding 

record on these issues in California. And we are looking forward to 

her participation on this incredible adventure we are on this term. 

So we stand in recess for approximately 20 minutes. 

[Brief recess.] 

The CHAIRMAN. We welcome you all back to the Select Committee on Global Warming and Energy Independence. We just had 

a brief interlude while the members could cast their votes on three 

different issues out on the House floor. We have got a brief period 

of time here where we can continue the question and answer period. 

I would like to ask Ms. Brostmeyer, if you could, to relate what 

you are saying to what Mr. Casey is saying about the network and 

how what you are testifying about is related to this larger revolution. 

Ms. BROSTMEYER. Okay. 

The CHAIRMAN. If you could, please turn on the microphone. 

Ms. BROSTMEYER. I would be glad to do that. Thank you. 

Yes. The chart that I showed—and I did take the liberty to put 

that up there—shows that 65 percent of the energy is lost in inefficiencies. This is actually in the power plant itself. There is also a 

value here for transmission and distribution losses on the same 

chart. So you can see that that is also a loss. 

So we are both talking about losses, inefficiency, which can be 

helped. If those losses are reduced, then we will be able to deliver 

more power with our existing infrastructure. 


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So I think we are the same in that regard. And we also are the 

same in that we feel there is some technology that needs to be accomplished here. In our case, we feel that technology to create 

retrofitable kits is a very relevant part of our energy solution or 

must be. And in that case also I believe that are some technologies. 

And I don’t know a lot about the subject, but it sounds like an investment is really required to optimize the grid. 

The CHAIRMAN. Okay. Thank you. 

Back to you, Mr. Casey. You were talking in terms—I think Mr. 

Gilligan as well made reference to the stimulus package and how 

the use of that money might demonstrate how this would work, although you made earlier reference to the fact that in Boulder, Colorado and other locations, it is already happening. 

What can we learn from what is already occurring in these communities? And what more could we learn from investments made 

by the stimulus package? 

Mr. CASEY. The two deployments that are in commercial operation in the United States, one in Dallas and one in the smart grid 

city in Boulder, are relatively small. 

The CHAIRMAN. When you say, ‘‘relatively small,’’ what do you 

mean? 

Mr. CASEY. Dallas, the network covers 125,000 homes. In Boulder, we are in the middle of building it. We are at probably 25,000 

now and heading to 50,000 just within the City of Boulder itself. 

Those two networks are showing us that the conservation benefits that we talked about and the efficiency benefits that we talked 

about are real, that they are achievable. 

What the stimulus funding will do is it will overcome for other 

utilities the regulatory impediments to them making the same decision to start deploying in their territory. 

The CHAIRMAN. May I ask you, what level of satisfaction do Dallas and Boulder have in their experiment thus far? 

Mr. CASEY. Obviously I don’t want to put words in their mouth, 

but the CEO of the Dallas utility wrote a letter to the chairman 

of the Texas Public Service Commission when we gave him our 

early reports, saying, ‘‘We have just experienced a Neil Armstrong 

moment in electricity.’’ 

The CHAIRMAN. And this is in Dallas? 

Mr. CASEY. In Dallas. 

The CHAIRMAN. Talking about something that happened in Houston? That’s a big moment. 

Mr. CASEY. In Dallas, yes. 

The CHAIRMAN. That is what I am saying. 

Mr. CASEY. Right. 

The CHAIRMAN. That is a big moment. That is a huge—— 

Mr. CASEY. That is right, exactly. 

The CHAIRMAN [continuing]. Analogy concession, yes. Are they 

expanding upon that? In other words, is the success in Dallas and 

Boulder being built upon in Dallas? 

Mr. CASEY. In Dallas, while we were building the 100,000, the 

Texas Public Service Commission issued an order requiring that all 

of the utilities within the State of Texas enable all homes within 

their service territory with smart meters that had direct connect/ 


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disconnect capability. And that was going to cost some hundreds of 

dollars per home times some millions of homes. And so—— 

The CHAIRMAN. And that would be made, then, part of the rate 

base? 

Mr. CASEY. Yes, that would be made part of the rate base. In 

fact, they were allowed to charge a premium, a surcharge, to recover that investment. And so Encore basically stopped the 125,000 

homes and said, ‘‘Look, we have to go do this now. And so then we 

will come back.’’ 

In Boulder, they are working on it. And they have the same issue 

that they have committed to do 50,000 homes in Boulder. But then 

they intend to stop to assess whether the benefits were what they 

had hoped they would be. And so far they have been. But then they 

have to go to their regulators and ask for rate recovery for the investment because they can’t risk so much capital without some regulatory approval. 

The CHAIRMAN. So as you and I remember, back in the 1970s, 

U.S.Tel—a lot of these companies came out of Dallas—— 

Mr. CASEY. Right. 

The CHAIRMAN [continuing]. The competitive telecommunications 

companies that were stymied. Is that a phenomenon that we are 

seeing in Texas right now, that this experiment in Dallas is now 

being embraced by the state PUC and is now something that we 

can expect other states to look at? 

In other words, what are we learning from Texas in terms of that 

being the laboratory? We are passing a federal stimulus for these 

kinds of experiments, but it seems as though Texas had already 

been moving, notwithstanding the stimulus package. 

Mr. CASEY. They did, but the business structure in Texas was 

very different from any other business structure. In Texas, we built 

the network ourselves. We paid for the manufacturing of the equipment. We paid to have it installed. And we were going to offer 

broadband internet access to consumers, plus sell smart grid services to the electric utility. 

So it cost them nothing to do it. And we were going to make our 

money back by selling broadband. DirecTV was actually our partner in Dallas marketing broadband internet access to consumers. 

The CHAIRMAN. I see. 

Mr. CASEY. So as long as they had no risk and no financial, you 

know, they could take a chance. But even at that time, they 

stopped when the commission told them to install meters. They 

stopped this market deployment because they had to go to install 

the meters. 

In Boulder, Xcel Energy is funding part of it, but their willingness to risk funding is limited. And so when they hit that limit, 

they will stop until they get regulatory approval. 

The CHAIRMAN. So the stimulus is needed, then? 

Mr. CASEY. I believe until these are established, it absolutely is 

essential to get these other utilities to start the process where they 

become familiar with the benefits themselves. They can then take 

the data from those experiments and show it to the regulators. And 

then the regulators can move forward with the structure. 

The CHAIRMAN. So you think that once the individual utilities 

and individual PUC members become familiar with these concepts, 


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then they embrace it and begin to implement it as a state strategy 

as well? 

Mr. CASEY. I think they will when they see the benefits, yes. I 

think the relative benefits of meter-only installations—and I will 

take two examples from the State of California. San Diego Gas and 

Electric received authority to invest $650 million in meters and 

proposed a $692 million benefit. The net value difference between 

the cost and the benefits was $40 million. 

I think SoCal Edison in California has regulatory approval to in- vest almost $2 billion in meters. And the value, the net value of 

that investment, is $9 million. 

We have a study that Booz Allen and KEMA and other utility 

executives have done with us where the benefits of a smart grid 

are $3 billion. The net present benefits of a smart grid are $800 

million. 

When regulators see that and see the benefits that are that significant, I think they will be willing to create structures to make 

it happen. But right now it is an argument. And they need to see 

it. 

The CHAIRMAN. Just an argument. Well, we do have kind of an 

eastern United States grid and a western United States grid and 

a Texas grid. 

Mr. CASEY. Right. 

The CHAIRMAN. And Texas likes it that way. They see themselves 

as the lone star grid. So we are getting some of the benefits here 

of this experimentation which is going on there. 

Mr. Gilligan, could you comment here on what Mr. Casey is saying in terms of how you view this? Are you familiar with this Dallas experiment and Boulder? 

Mr. GILLIGAN. We are familiar with both. We are not participating in either one of those today. We are working with other utilities in other areas. 

What we see is very similar. The return on investment for meter 

reading alone is insufficient to justify the investment. You need to 

get the benefits—— 

The CHAIRMAN. Can you say that again? That is a very important sentence for everyone to hear. 

Mr. GILLIGAN. Yes. The infrastructure investment to put in place 

advanced meter infrastructure, the benefits for meter reading alone 

is insufficient to justify that investment. 

The CHAIRMAN. What would make it sufficient, Mr. Gilligan? 

Mr. GILLIGAN. You have to use that infrastructure to do demand 

response, so be able to send pricing signals to the consumer that 

allows the consumer to shed power, shed load, and get rewarded 

for doing that, for using the devices in off-peak power times. We 

also need to use that communication — 

The CHAIRMAN. Shed load in off-peak power time. Now, can you 

try again to put that into English so that your mother would understand what you are working on every day? 

Mr. GILLIGAN. Okay. 

The CHAIRMAN. Can you do it for her? 

Mr. GILLIGAN. Yes. 

The CHAIRMAN. Okay. 

Mr. GILLIGAN. So how do we levelize the use of power across—— 


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The CHAIRMAN. You would use that word with your mother? 

Really? [Laughter.] 

Mr. GILLIGAN. Sure. Sure. 

The CHAIRMAN. Come on. No. Try again. Try again. You are talking to your mother. ‘‘What are you doing? What do you doing 

today?’’ 

Mr. GILLIGAN. We are working to get a more efficient system. 

The CHAIRMAN. Okay. 

Mr. GILLIGAN. Okay? 

The CHAIRMAN. ‘‘How does that help me?’’ 

Mr. GILLIGAN. By allowing you to share in the benefits of that 

efficiency. So use power when it is cheaper. 

The CHAIRMAN. Where are you from? 

Mr. GILLIGAN. From Atlanta. 

The CHAIRMAN. How does it help me in Atlanta? 

Mr. GILLIGAN. If I can use power when it is cheaper in Atlanta, 

I will do that. But I need the utility to be able to tell me when the 

power is expensive and when it is cheap so that I can act appropriately. So the demand response is part of that opportunity. 

The CHAIRMAN. I know. But your mother is saying, ‘‘Bobby, 

Bobby.’’ [Laughter.] 

Mr. GILLIGAN. She hasn’t called me that in a long time. 

The CHAIRMAN. I know she hasn’t. She is watching right now on 

C–SPAN. They are broadcasting this. And she can have a copy of 

it. So what exactly are you asking for this utility? What utility is 

she using right now? 

Mr. GILLIGAN. I have no idea. 

The CHAIRMAN. Oh, she doesn’t live in Atlanta. 

Mr. GILLIGAN. No, she doesn’t. 

The CHAIRMAN. That is right. There are not many Gilligans down 

there. No. 

Mr. GILLIGAN. No. They are up in the Northeast. 

The CHAIRMAN. Where are the Gilligans living? 

Mr. GILLIGAN. They are in Massachusetts. 

The CHAIRMAN. There you go. [Laughter.] 

I don’t know why I thought that might be the case. We have the 

Caseys and the Gilligans and the Markeys all having a conversation here. 

So explain it in Massachusetts terms to her. What community 

are you from in Massachusetts? 

Mr. GILLIGAN. They are from outside of Boston. 

The CHAIRMAN. Which is? 

Mr. GILLIGAN. Cape Cod. 

The CHAIRMAN. Cape Cod? 

Mr. GILLIGAN. Yes. 

The CHAIRMAN. What high school did you go to? 

Mr. GILLIGAN. No. I didn’t go to school there. 

The CHAIRMAN. Oh, you did not? 

Mr. GILLIGAN. No, I didn’t. 

The CHAIRMAN. So they moved there for the weather? [Laughter.] 

Mr. GILLIGAN. Oh, yes. It is beautiful there. 

The CHAIRMAN. Okay. So I will go to Mr. Casey. Then I am going 

to come back to you. Mr. Casey, can you try to take a whack at 

that question? 


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Mr. CASEY. The benefits of what we do are that you will pay less 

for electricity, and you will breathe. And your children will breathe, 

and your grandchildren will breathe. 

The CHAIRMAN. Right. 

Mr. CASEY. That is what I do when I tell my mother. 

The CHAIRMAN. When you tell your mother. 

Mr. CASEY. She thinks I am great. [Laughter.] 

The CHAIRMAN. Yes. So, Mr. Schurr, would you like to take a 

whack at that question? 

Mr. SCHURR. I would love to take a shot at that. My mother lives 

in Sacramento. It gets very hot in the summer. So here is how it 

works. 

The CHAIRMAN. Okay. 

Mr. SCHURR. On a hot summer day, when there are fewer resources available to generate power during those peak afternoons, 

if you are willing to exchange utilities’ control of your thermostats 

for short periods of time,—— 

The CHAIRMAN. So for your mother—— 

Mr. SCHURR [continuing]. They will pay you money. 

The CHAIRMAN. For your mother in the course of the day—— 

Mr. SCHURR. ‘‘You are not even there, Mom.’’ 

The CHAIRMAN. But you said ‘‘peak.’’ 

Mr. SCHURR. During the peak periods. 

The CHAIRMAN. How would you explain it but not using that 

word? 

Mr. SCHURR. So during the hot afternoon when power is in short 

supply, that is the peak. 

The CHAIRMAN. Why is it in short supply in the middle of the 

afternoon? 

Mr. SCHURR. Hot weather. Everybody runs their air conditioner 

at the same time. Office buildings are lighting at the same time. 

The CHAIRMAN. Oh, good. Now you have got it. Okay. Now, her 

air conditioning, everyone else’s air conditioning is running. Go 

ahead. 

Mr. SCHURR. So if you are willing to exchange control of your air 

conditioner on behalf of the good of the community—— 

The CHAIRMAN. What do you mean ‘‘exchange control’’? 

Mr. SCHURR. Let the utility control—— 

The CHAIRMAN. Who will I exchange control with? 

Mr. SCHURR. The utility. 

The CHAIRMAN. With the utility? 

Mr. SCHURR. Instead of—— 

The CHAIRMAN. You would give the utility control over her air 

conditioner? 

Mr. SCHURR. For a short period of time. 

The CHAIRMAN. Okay. 

Mr. SCHURR. She will receive a payment from the utility—— 

The CHAIRMAN. A payment from whom? 

Mr. SCHURR [continuing]. To reduce her bill. 

The CHAIRMAN. From whom? 

Mr. SCHURR. From SMUD in this case. 

The CHAIRMAN. From whom? 

Mr. SCHURR. Sacramento Municipal Utility District, the local 

utility. 


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The CHAIRMAN. And they will pay her to do what? 

Mr. SCHURR. Just give them the right to do that. It is like an 

emergency supply. 

The CHAIRMAN. And then they are going to turn down her air 

conditioner? 

Mr. SCHURR. Well, in this case turn up the thermostat for just 

a few degrees over maybe an hour or two. And that peak load reduction is one of the other benefits. 

The CHAIRMAN. That what? 

Mr. SCHURR. Peak load. You don’t like that word. 

The CHAIRMAN. Try again. [Laughter.] 

That what? 

Mr. SCHURR. That hot afternoon. 

The CHAIRMAN. Okay. 

Mr. SCHURR. Load reduction—— 

The CHAIRMAN. Okay. 

Mr. SCHURR [continuing]. Is one of the benefits that advanced 

metering gives to the utility, in addition to meter-reading reductions. 

The CHAIRMAN. Just remember, all of you, that in order for us 

to pass legislation, we have to convince your mothers. 

Mr. SCHURR. Understand. 

The CHAIRMAN. Okay? Not whoever you do your PowerPoint 

presentations to. You know what I am saying? So that is the whole 

key to this story and how the testimony has to be. 

Mr. Zimmerman, you talk to your mother. You are always thinking about your mother at Wal-Mart. 

Mr. ZIMMERMAN. Actually, my mother passed away several years 

ago. 

The CHAIRMAN. Oh, I am sorry. 

Mr. ZIMMERMAN. But we do exactly already what was described 

here with several utility companies, all the way from giving them 

actual control through our system to make those adjustments to 

still the old-fashioned way. They call us and say, ‘‘Hey, between 

3:30 and 5:00 tomorrow, can you shed 10 percent of your load from 

your stores?’’ And we can do that. 

What the smart grid allows us to do is we are making those decisions maybe a day or two ahead of time. And then we get to that 

time. Maybe you didn’t need to do it for an hour and a half. Maybe 

you needed to do it for two hours. But since we have manually programmed this, we are going to do it for that set time, for that set 

hour and a half versus with the smart grid that has been described, it will only occur during the time that it really makes 

sense and for the duration that really makes sense so it will always 

keep the system running at peak efficiency. 

The CHAIRMAN. Okay. So, you know, my mother, she always said 

to me, ‘‘Eddie, you have got to learn how to work smarter, not 

harder.’’ And nothing ticked her off more than these utility bills, 

nothing, or the auto insurance rate for my father, by the way, who 

never had an accident. But because we lived in Malden, he had a 

higher rate than a kid who had three accidents who lived in Winchester. It always used to drive her crazy. 

So they are all experts on these things, but they don’t talk about 

it in the terms that you are, their utility bills. So the deal that you 


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are going to offer to them is a deal politically as well that we will 

change policies in order to benefit them. Right? And that is what 

we have to sell here politically and to put it into terms that they 

understand as they are talking to other people in their age group 

about these issues. 

And they will go, ‘‘Why don’t we do that? I have never liked the 

utility. I have always felt they were overcharging me. If this gives 

me an opportunity to save some money, then that is a great thing.’’ 

Okay? And that is the pitch that we have to make as public officials to change the rules. And then IBM and GE and Wal-Mart all 

become beneficiaries of it, obviously, but we have to put it in those 

terms to win this argument. 

So let’s do this. There is a roll call again that has been called 

on the House floor. I am going to give everybody one minute to 

summarize for the record what you would like us all to remember 

from your testimony so that we can move forward. 

Our intent is to obviously pass legislation this year in this Congress on these issues to add on to what was in the stimulus package and to look at it from a regulatory perspective, from a tax perspective. And anything you can do to summarize in terms of how 

you view the issue and what you think needs to happen would be 

very helpful to us. 

So let’s go in reverse order of the opening testimony. We will 

begin with you, Mr. Hoecker. 

Mr. HOECKER. Thank you, Mr. Chairman. 

My closing comment about electric transmission and the need to 

strengthen and upgrade the transmission grid is simply that it provides options, and it provides choices. If you have got a good, solid 

grid, you can use a preferred energy mix. You can access renewable 

energy. You can access the cheapest or the greenest power available. You can access emergency power. Your utility can integrate 

those variable resources we have been talking about. And you can 

serve new customers. 

The electric transmission grid, as I said, doesn’t solve all the 

problems, but everything we have talked about in terms of efficiency and clean energy can’t happen without transmission and a 

stronger transmission system. 

The CHAIRMAN. Thank you, Mr. Hoecker. 

Ms. Brostmeyer. 

Ms. BROSTMEYER. Thank you, Mr. Chairman. 

Yes. The incorporation of turbine efficiency technologies is so important in today’s discussion on clean energy. And I would like to 

really have that in everybody’s mind when they think about green 

energy and how we should be moving to get more power as our 

power needs in the world increase. 

Spar-Shell is one great example that our company has developed 

that would improve the amount of power available and also provide 

green energy because some of the new power generated would actually require no fuel to generate. 

So my hope is that, going forward, when people think about 

green energy, they say, ‘‘Wow. The first thing we ought to do is fix 

those plants that are on the ground already, some of them 30 to 

50 years old, and let Florida Turbine and other companies put 

some new technologies in them to make them cleaner, to make 


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them create more power, up to 15 percent more power, without 

putting too much money into infrastructure.’’ 

The CHAIRMAN. Thank you, Ms. Brostmeyer. 

Mr. Zimmerman. 

Mr. ZIMMERMAN. Mr. Chairman, Wal-Mart because of our scale 

represents one of the largest footprints in the world, about 750 million square feet. We have about 150 million customers walking 

through our doors in our U.S. stores every year. 

The things we have done with energy efficiency and existing control technologies, we have the data that proves the results of those 

efforts and the paybacks. I think part of our role is to share that. 

We already have relationships with NREL, Oak Ridge, DOE, and 

others, but we are the biggest laboratory that you could hope to 

find. We want to be partners in this discussion and share all of 

that. 

And, in closing, I have just got to add one of the things we can’t 

lose sight of is energy efficiency. It is still the lowest-hanging fruit. 

And, as I walked into this room, I looked up at the lighting. It is 

T12 fluorescents. We haven’t installed a T12 fluorescent lamp in a 

Wal-Mart store in over a decade. We need to keep moving forward 

with energy-efficient measures. 

The CHAIRMAN. Did you know that the Bush administration actually missed all 35 deadlines for improving appliances and lighting 

from 2001 to 2007? 

Mr. ZIMMERMAN. Well, now is our chance. 

The CHAIRMAN. Well, now is our chance, yes. They missed their 

chance. [Laughter.] 

So, believe me, it is going to happen. That is a classic working 

smarter, not harder issue. You solve the problems with technology. 

Mr. Schurr. 

Mr. SCHURR. Thank you for the opportunity today to testify. I 

think my mother will also appreciate your exchange, and I will 

make sure she gets a chance to see it. 

The CHAIRMAN. Thank you. 

Mr. SCHURR. I think it is evident that the smart grid is needed 

for energy efficiency and renewables. All the testimony today came 

to that conclusion. Yet, there is a substantial amount of inertia in 

the market. We don’t think that inertia is from consumers or voters. 

We just finished a 5,000-consumer survey. They all want to be 

more involved. In fact, 90 percent of them said they want a smart 

meter, if you believe that. So we are sure that consumers are ready 

for this. 

And I think you are right in describing that it is important that 

they understand what the benefits are and so forth, but this inertia 

is real. And I think the stimulus money will be excellent seed funding. It will get some areas started that otherwise wouldn’t start. 

And we need to monitor that closely. And I think there could be 

an opportunity for additional funding to support what works. 

And, finally, I think the DOE focus on standards would be a very 

helpful place to focus where standard acceleration, already it is 

working but it is working too slowly, would also be a place where 

we could make inroads. 


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The CHAIRMAN. And, Mr. Schurr, just in terms of talking about 

mothers, when Bill McGowan, who was the founder of MCI, came 

into my office in 1977 and started talking about another phone 

company, I was thinking, ‘‘Now, how is he going to do that? Will 

he build like three-foot-high phone poles all across America? How 

can you have another phone company? How can you have lower 

phone bills?’’ 

So it took me about two months just to internalize this shift, but 

you have to explain it to people in ways that they then embrace 

that change and try to break the connection with the old way of 

doing business. So we thank you for your testimony. 

Mr. Gilligan. 

Mr. GILLIGAN. Thank you. 

The smart grid is about enabling high penetration of renewables, 

both wind and solar. It is about more efficiency, less losses and 

waste in a delivery system. And, for my mother and consumers, it 

is about getting them information so they can make more informed 

choices about how and when they want to use their power to save 

money. 

To accelerate this and to get the most beneficial use out of the 

stimulus money, we are recommending that we focus on really 

demonstrating these benefits so that the cost-benefit equation is 

clear to utilities and to regulators and that this investment continues to transform the grid well after the stimulus money is gone. 

We believe that the technology is ready today and that the benefits are real, but it needs to be demonstrated. 

The CHAIRMAN. Thank you, Mr. Gilligan. 

Mr. Casey. 

Mr. CASEY. Thank you, Mr. Chairman. 

The smart grid, as we all have acknowledged, has the potential 

to reduce emissions by an enormous relative amount. One expert 

has estimated it to be the equivalent of taking 140 million cars off 

the road, a big impact. 

It has been called the single most productive application of an information technology solution to climate change. Eighty-five percent of the carbon emission reduction benefits come from the grid 

and the operation of the grid. 

So what is needed to make that happen? Part of it is a cost problem. We talked about that. Some of that can be solved simply by 

getting manufacturing volume. Some of that will be solved as technology innovates with deployment. But we need the stimulus package, the money that is now at the DOE. It has been given to them 

with somewhat flexible assignment. They have to disburse money 

to the programs that Mr. Gilligan talked about where we can prove 

this. 

Regulatory changes in the states need to be made so that the 

utilities, who are the ones who are going to deploy this equipment, 

actually can make money at it, instead of lose money. And I think 

standards as well are an important element. 

The CHAIRMAN. Great. Well, we thank each of you for your testimony today. This is a very important hearing going forward. The 

revolution that is now under way is something that we have to 

speed up. We have to make it happen faster. 


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It will create more jobs. It will help with our environment if we 

can electrify the cars that we drive, back out the oil that we import 

from OPEC, and make our whole system of producing goods in our 

society more efficient while reducing the price of electricity for people at home. 

So this is win-win-win-win-win-win. But we have to really try to 

work hard now to get this done. And while my mother passed away 

ten years ago, her admonitions still grip my brain. And she gave 

me an agenda, as each of our mothers do, for what we should be 

doing every day. And so my intention this year is to make this revolution become something that is national and not just localized. 

We thank each of you for your testimony today. Thank you. This 

hearing is adjourned. 

[Whereupon, at 12:06 p.m., the Commmittee was adjourned.] 


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jdjones on DSK8KYBLC1PROD with HEARINGInsert offset folio 230 here 62185A.127
167 


jdjones on DSK8KYBLC1PROD with HEARINGInsert offset folio 231 here 62185A.128
168 


jdjones on DSK8KYBLC1PROD with HEARINGInsert offset folio 232/300 here 62185A.129