tv [untitled] CSPAN June 16, 2009 6:30am-7:00am EDT
to allowing regions, states and our nation to meet these goals. the commission has taken@@@@@@rj regulatory framework is the principle obstacle developing a transmission system that can support the goals you have outlined. if we are to overcome that obstacle, we need a national policy commitment to develop
such a transmission system and in developing that policy, congress should consider three closely-related issues, planning, siding and cost allocation. first, the scope of regional planning initiatives needs to be expanded. we must create a structure that includes coordination on an international regional basis. it will transport power from areas rich in renewable energy resources as well as the deployment of redistributed resources and key smart grade equipment and systems. second, states should ton have the opportunity to cite transmission facilities and developers should have resource as a federal siding authority under appropriate circumstances. it would be helpful even if limited only to transmission facilities needed to reliably meet renewable energy goals.
third, if congress determines there are broad public interest benefits in the transmission system necessary to meet the goals discussed and then congress should consider clarifying the commission's authority to allocate costs of such infrastructure to the load serving entities or part of an interconnection where it is appropriate to do so. of course, the commission would need to ensure as it does today that these costs are allocated fairly to the appropriate entities and that due deference is accorded regions that work together for mechanisms that garner cost support. it's important to recognize the issue is not how to choose between nearby renewable resources. both should be part of the mix of energy resources to achieve our national goals. and appropriately allocating the cost of transmission facilities needed to connect remote resources should not disrupt the implementation of state policies or disadvantaged local,
renewable resources. rather, full-planning analysis that reveals respective costs of scenarios and a fair cost allocation of necessary transmission reliable to deliver the resources to lows will eliminate the barrier to clean resources and thus, will facilitate competition. such a measured approach should inform consumers that the sustainable resource options to meet state, environmental, and security objectives and enacting a regulatory structure that enables such an approach to be implemented assuring the energy goals to be achieved. thank you for the opportunity to appear before you. i'd be happy to answer any questions you may have. >> thank you very much. our next witness is david cohen. he is the first vice president of the national association of regulatory utility commissioners. mr. cohen has also served as a member of the vermont public
service board since 1995 and has continued. he has served in a variety of regional and national leadership positions including the chair of the consumer affairs committee of the new england conference of public utility commissioners. we welcome you, sir. whenever you're ready, please begin. >> good morning, mr. upton, and ranking subcommittee. i also served as the first vice president of the regulatory commissioners also known as neru. i offer a state view on transmission. i'd like to thank representative wells for his kind introduction and his service to our state. he is certainly my favorite congressman from vermont. at the state level, we deal with transmission planning and siding
requests regularly and the issues and concerns are not policy or procedural, and do not lend themselves to a one size fits all solution. state commissioners are obligated to act deliberately to ensure that any new projects would benefit the public. this means regulators must determine whether demand respon response, energy efficiency or local energy source is more appropriate than putting transmission towers in the ground. a major impediment is a great difficult no getting public acceptance. as a country, we want our electricity to be affordable, reliable and increasingly clean, but we also want to ensure the transmission infrastructure does not impact our quality of life. public hearings on transmission lines are always packed with concerned rate payers and land owners with nearly all of them in opposition to the project. i can assure you no level of federal involvement will make this go away. still, the state and local level provides an important venue for all parties to be heard.
state regulators know the geography and citizenry better than any federal agency can. our processes are transparent and give all parties a voice. what some may consider roadblocks and impediments we consider process. let me tell you more of what we're doing in vermont. it has a planning process that analyzes potential transmission constraints over a 20-year horizon and considers various alternatives including targeted energy efficiency programs that would address any identified, reliable issues. the process ensures that solutions to transmission constraints 11 the long-term needs of consumers at the lowest cost. after decades, without major investment, the public service board has approved three major transmission projects from 2005 to 2008 with total projected capital over half a billion dollars. at the regional level, these
without any transmission investme investment, more than 4 million has been placed in service and new england since 2002. despite the activity on the say the and regional level, they will provide broader transmission authority even though we're four years removed from the enactment of the policy act in 2005. epac gave backstop citing authority designated by the department of energy. not enough time has passed to determine whether this law needs to be revisited, but the congress addressing this issue is nevertheless, neru reese notally updated our transmission policy in anticipation of federal action. we believe that a bottom up state and regional driven approach is the most appropriate model going forward. while we are not convinced that the case has been made for federal authority. we recommend the following principles. anything granted to ferc by the
legislation allow for primary siding jurisdiction by the states and provide a ferc's backstop siding authority be as limited as possible. in no event should ferc be granted any additional authority over the siding and construction of new interstate transmission line. in no event should ferc be granted any additional authority to approve a new interstate transmission line that is not consistent with the regional transmission plan developed in coordination with affected state commissioned or other citing authorities or regional planning groups. in no, vent should ferc be granted authority to approve a new interstate transmission line unless there is already in place either a cost allocation agreement among all of the states through which a proposed project will pass governing how the project will be financed and paid for. or if the cost allocation rule that covers the entire route to the proposed project. in no event should any legislation allow ferc to
preempt state authority over retail rate making. the mitigation of impact under state authority. the distribution facility, the citing of generation or the participation by affected stake holders in state and/or regional processes. in no event should any legislation preempt existing state authority to eliminate bundled transmission services. in conclusion, the electric transmission system must have the capacity to meet the growing energy needs of the nation regardless of the generation source, the solutions to the challenges will not come quickly or easily and will require the cooperation of all stakeholders including state and federal governments. thank you, and i look forward to your question. >> we thank you very much. i am now going to turn to congresswoman baldwin to introduce our next witness. >> thank you, mr. chairman. >> i am pleased to welcome a constituent to our hearing today. in 2007 governor jim doyle
appointed laura naz ar to the service commission. she has played a leading role in confronting the challenges associated with transmission development. the wisconsin psc cited a significant transmission line. lauren serves as president of the organization of miso states where she's leading a regional planning and cost allocation effort for developing electrical transmission over the midwest iso region which includes 13 states and one canadian province. prior to her appointment to the wisconsin psc, commissioner naz ar worked as an attorney and practiced extensively in the areas of electric and water utilities representing rate payers and utilities. she helped to create the first stand alone transmission company, otherwise known as atc and helped to cite a 210 mile extra high voltage line in wisconsin and minnesota. in addition to all of these
credentials, i can also tell you what she eats for breakfast and grow in her vegetable garden because as you all know she is also my partner. i welcome her to our subcommittee. >> thank you, congresswoman. >> we welcome you and whenever you're ready, please begin. >> thank you, ranking member upton, and the members of the subcommittee, thanks for inviting me to appear at this hearing on the future of the grid, and my primary messages for today are number one, before a transmission grid can be cost effectively planned, congress must define the goals for that grid. number two, states with technical assistance from the regional and utility transmission engineers should plan the grid and cite transmission lines. three, congress should define the framework through which the states will design and cite the grid. if the states fail then it's appropriate for the federal
government to step in and, four, congress should agree to do no harm by not selecting a specific grid designer technology and by not selecting a specific cost allocation. >> as to point number one, congress should define the goals. the renewable energy standards will define the generation portfolio that our nation will need to develop. with clear identification of ref and the carbon mandate, the states can be combin designing the transmission grid necessary for the generation portfolio. point number two, states should develop the plan and cite the lines. there are a variety of reason yes a state-led process will lead to better results than a process. these reasons include state provisions for retail electric rates. second, planning must accommodate state choices for generation and demand side programs for distribution decisions they've made.
third, planning must incorporate the designs for the economisting state transmission and distribution systems anda lastly, state decision making allows more complete public information, participation and acceptance. point number three, congress should define the process. congress could define the parameters for state-led process. such parameters could include the following essentially requiring the states to participate in regional planning initiatives to design the grid that will meet the congressional mandates. set strict and reasonable deadlines for the planning product and the citing of lines in the plan. ensure that they'll profit from the grid buildout and do not make the decisions for the buildout. lastly, if states do not complete the plan and the siding of the lines for the plan then the federal government should intervene. point number four, congress should do no harm. i ask you to take a hippocratic oath today and such an oath would require you to not do two
things. number one, do not pick technologies and plans, while the moniker super highway, end quote, sounds good. depending on the goals of congress, it may not be what we need. i suspect the one size fits all solution such as the 765 grid overlay will not be cost effective, will likely be oversized and will harm some areas. as an aside, the parties advocating for an overlay are the parties that will make money off of that plan. and the second point about not doing harm is do not select a specific cost allocation for the grid because cost allocation should be tailored for the plan developed. congress should not preselect such an option. if congress mandates a specific cost allocation, it would be indirectly endorsing a specific type of design. for instance, endorsing a so-called postage stamp which allocates the cost evenly over a large area is more appropriate
which is the organization of miso states and that's the midwest independent operator, the states within the 13-state region and one canadian province are currently developing a regional plan and cost allocation process and we expect to have that done by the end of the year. more, i think, importantly to this committee's work, in the aria congress decided they wanted interconnection wide plans and on may 15th, leaders from the eight different regions within the eastern interconnection met to begin the process of planning on the interconnection wide basis. at the end of this month, we expect to have all 40 states present at a meeting in which we will begin to discuss just how we expect to go forward in the process and what the state's role should be in the process. thank you very much. >> we thank you very much for being here today and for your
testimony. our next witness is paul hibberd, chairman of the mci department of public utilities, chairman hibberd previously worked for the massachusetts department of environmental protection. we welcome you, sir. whenever you're ready, please begin. >> i want to thank members of the committee for inviting me here today to discuss the topic. i want to thank you all for your leadership in addressing our energy challenges and global climate change and for your wisdom in addressing both at the same time in the legislation. we support your efforts and encourage congress to have the legislation expeditiously. on transmission, we think that ace has got the transmission planning and citing question exactly right. in its current form, it presents a measured and sensitive approach that supports the continued and vital primary role in state and regional resource plan and efforts and it expands
the role of ferc to regional planning across a broader geographical footprint and most importantly t does so without jeopardizing the critically important role in competition in the wholesale energy markets. in contrast, i have serious concerns with the more aggressive proposals that have been put forward to expand federal authority in transmission planning and seaeding. at their core, these proposals prepare to put ferc in three roles. they have the short period of time in interconnection wide plans. ostensibly to access renewable resources. second, it puts ferc in the world of deeming transmission included in such plans as needed for the public convenience and welfare triggering the citing override and third t puts ferc in the role of improving the allocation across all load. under these proposals. ferc's -- under these proposals,
ferc's traditional authority is expanded to where it becomes a defact on central planning authority to select the resources across the nation. the abundant level of demand reduction in renewable resources at the local level in the regions. developing renewable resources is a top priority for the commonwealth as i'm sure it is for states across the country. we believe that renewable resources in our state and along the eastern seaboard both onshore and offshore represent one of the nation's most promising and yet underdeveloped renewable sources of energy. while they currently exceed those offon shore installations, they're much closer to the load centers and in research and development efforts focused on reducing costs and improving reliability, promise to make offshore competive and distant and on shore wind farms on a delivered cost of basis.
as regional on shore projects move forward and it moves into commercialization in the united states, they all must have the opportunity to compete on an even playing field with the on shore and more remote sources of renewable power and not be disadvantaged by up-front transmission subsidies. the threat that renewables would be unable to compete, in fact, has been taken very seriously in our region and beyond. a bipartisan group representing every coastal state from maine to virginia as well as vermont, recently joined together to raise these concerns in a letter to the committee chairman. central planning process is in stark complex are supposed to ensure fair competition all generating resources, renewable or otherwise and are responsible for all development cost. including the cost of environmental compliance at a cost of reducing their cost reliable toe load. it's the lowest cost provider
based upon the price at retail that prevails, ensuring that society's electric reliability and environmental goals are met at the lowest possible cost. notably, this is the design principle on to aces where the prices offered by fossil fuel resources will be higher and less competitive due to the additional marginal cost with carbon allowances. it will be lower and more competitive due to the additional marginal revenues associated with the renewable energy credit and other incentives. in this framework there is no need for central planning development to pick the winning resources, because by definition, the value of renewable energy credits will rise to levels needed to support resources that must come online in order for the nation to meet the carbon cap and our renewable resource floor. this is the way it's supposed to work and indeed has worked in the mission markets over the last couple of decades by suggesting the ferc needs to
engage in resource planning to pre-selected renewable resources is to concede at the outset that the free market structure for mission control contained in aces will fail. in my view, the more aggressive proposals for transmission legislation thus are about much more than citing. they force the role into a resource planning, a role they believe in the long run will damage the operation of competitive markets, suppress the technological innovation and creativity that come from the competition and ultimately will result in our meeting our climate objectives that prices of retail consumers of electricity than higher than they otherwise would need to be. i want to thank the members of the committee for this opportunity, and i look forward to questions. >> we have one final, very important witness representing the western states governors who i think we should all hear from before we cast a vote on the floor on the last vote of the
day and then we'll reassemble after that roll call. i think since we're all here right now we'll hear from the energy program director for the western governor's association and representing those western governors before the subcommittee today. we welcome you, sir, whenever you're ready, please begin. >> members of the committee thank you for the invitation to testify here today. >> could you move the microphone in a little closer? thank you. >> over the last five years the western governor's association has had a strong leadership role in regional cooperation. in 2002 a protocol governing cooperation among state and federal agencies in the siding and permeating transmission lines in the western united states was developed and signed by the wga, the departments of energy, interior and agriculture and -- >> suspend for one second, sir. okay. recommence. >> thank you.
and the council on environmental quality. in june, that published a report to explain that renewable resources throughout the west. many reside in remote areas without ready or cost-effective access. lack of transmission access was the latest impediment to renewable scale. in april 2008 the western governors partnered with the united states departments of energy and interior agriculture and the federal energy regulatory commission to create the energy zone's project. this project will identify those areas with the highest potential for large scale, cost effective renewable energy development across the western region and the high voltage transmission that would ensure it would demand centers. this coming monday the western government association will have the phase one report, qualifying the potential of the resource areas.
wga will continue to work on the project over the next two years. we're partnering with utilities and the western electricity coordinating counsel to evaluate transmission needs to move power from preferred renewable energy zones. we'll be working to improve the integration of wild life and environmental values on the decision of transmission associated with these renewable energy zones. ultimately, we will propose conceptual transmission plans to move electricity from the most desirable zones to markets. we'll work with load-serving entities for the renewable energy zones and to state cooperation for the transmission. the western governors support the government of interconnected transmission plans. however if the commission has given the authority to approve such plans, congress needs to set explicit criteria by which ferc has the plans. at a minimum, it should require that the state approve them to be studied and to approve the
plans corresponding to the scenarios. even with the success of the past efforts the western governors recognize we need help from the congress. i'll mention four positions the governors have consistently emphasized as necessary elements of cost allocation and regional cooperation where legislation will be critical. first, the federal government should be responsible for ensuring that near-term projects proposed to serve large, geographically constrained low-carbon resource areas are sized to meet long-term needs. when we know the demand will materialize and access to correctly size lines will help projects capture economies of scale and building transmission and avoid environmental impacts with the multiple lines from the same area. we propose it will build higher capacity lines to these areas. second, congress should redirect the implementation of sections 1221 and 368 of the act of 2005 to preserve corridors and ensure
the timely siding to move geographically constrained, low carbon generation. specifically, associated conceptual transmission has been identified, congress should direct federal land management agencies to use the results when evaluating and designating corridors. third, the western governments have permitting processes. the major hurdle for transition in the west has been securing permits from federal agencies. the implementation of federal law has resulted in lengthy permitting processes, enabling ferc to preempt state siding processes will not fix the underlying problem. i'd like to mention the limited instances in which the governors can agree with the authority. it must be demonstrated that the transmission line is needed to meet national carbon and renewable generation requirements and reports with an interconnection transmission plan is right sized to meet the long-term needs for the low
carbon generation and is the lowest cost option to meet long-term needs and where the state has failed to make a decision within a regionally set statutory period. finally, the western governors believe the current system for cost allocation in the west has worked well and we believe it will continue to be adequate for the future. the exception would be the cost allocation as it applies to the kind of right sizing we described. we're attaching two letters to the testimony and we ask that they be included, two letters that the western governors have sent to the congress in 2009 regarding transmission issues. thank you for the opportunity to talk with me today. >> thank you very much. >> think this is about as important a hearing as we're going to have this year. we appreciate the opening statements from the witnesses. there are five minutes left on the house floor for us to cast our vote and so what i will recommend is that we reconvene this hearing in 15 minutes and then we will begin with questioning of the witnesses by the subcommittee members.