Transcripts For CSPAN2 Senate Hearing On Electric Grid Relia

[inaudible conversations] twenty as we need today for business meeting and a hearing and we will begin by considering nominations of david turk to be secondary deputy. mr. barrasso will have his and then one more and ready to go. i was highly impressed by mr. turk at her hearing last week and he clearly does have a firm grasp on the wide range of issues facing the apartment of energy and will bring a wealth of practical experience to the job as deputy secretary and started his career working with the senate for our former colleague kent conrad who speaks very highly of him and he then worked on the senate judiciary committee for senator biden. he had a series of national security and foreign affairs jobs in the house and state department and at the national security council. he spent two years as deputy assistant secretary in the apartment of energy and has spent four years in senior positions at the international energy agency, including the last 14 months as the deputy. quite simply, mr. turk has spent the last 20 years serving in important jobs and giving in the technical knowledge and practical experience and energ, national security and management that he will need to help secretary granholm lead the department of energy. i believe his performance are hearing last week demonstrated that he has the knowledge and ability to serve in this important position in an unbiased way. he is supremely well-qualified for the job and i do heartily support support his nomination. let me reckon eyes him senator brosseau to make a statement at this time. >> thank you very much, mr. cha. i agree, today our committee will vote on the nomination of david turk to serve as deputy secretary of energy and it confirmed he will play a critical role in our nation's energy agenda and in leaving the department. his experience and energy policy, i believe, is extensive and served in leadership positions at the international energy agency, the apartment of state and the national security council. during his nomination hearing he said he was dedicated to all types of american energy in the name to keep america energy dominant. he stated he wanted too work wih our committee to support the development and expansion of american carbon capture technologies nuclear power and critical minerals. especially appreciated his commitment to carbon capture utilization and sequestration technologies as well as the need to construct co2 pipelines to move that captured carbon. during his ear and he said quote, there are huge opportunities on cc u.s.s if we can work together and really go to scale. i agree. republican democrats were together left congress to pass the use it act bipartisan legislation to support carbon capture technologies, including air capture and the construction ofgi co2 pipelines. the integrated test center outside wyoming with ground breaking research is already taking place in carbon capture technologies. these are the types of efforts the biden administration should be embracing and fully support. mr. turk, he was also responsive to committees written questions for the record and this is not been the case with every one of president biden's nominees so far. if confirmed mr. turk must prioritize policies that take advantage of the german's economic and national security benefits generated by an abundant of oil, natural gas an coal resources that we have. so far the biden demonstration who declared war on american energy and of limited policies that have their own energy workers out of work, coal, oil and natural gas are not going away. we will continue to rely on these abundant and affordable resources for decades to come and that is a fact. we need to promote every kind of american energy and the jobs they support. the biden administration has told oil, natural gas and coal workers that they can get new jobs as solar panel technicians. if these jobs even exist the biden administration would be asking these workers to take in a norm is cut in pay. according to the houston chronicle the president of texas afl-cio states the largest labor union has said quote, someone working in refinery leaving to go install solar panels will take a 75% pay cut. that's unacceptable. if confirmed as deputy secretary of energy mr. turk must prioritize policies that are america's maintaining energy dominance and this includes u.s. production of oil, natural gas and coal. the biden demonstration policies have taken a sledgehammer to western state economies and i've already or it's really already having real impacts on the lives and livelihoods of the people on my home state of wyoming and many other states represented on this committee. america needs and all the above energy strategy that includes coal, oil, natural gas, nuclear power and renewables. mr. turk, to me, demonstrate and that he understood that reality during his nomination hearing and i will hold him in the biden demonstration accountable to the commitments he made to support and expand carbon capture and nuclear power. mr. chairman, i will support his nomination. >> thank you, senator brasa.n we have any other members that would like to make a statement or be i heard and i would encourage you if you do, do so because we are waiting on one more member to come before werr vote? any members wishing to -- i can't believe it. with that, we will go into opening statements, shall we vote? >> we don't have a quorum. >> i'm encouraging all her senators who usually have something to say to say something. [laughter] going one's spirit mr. chairman. >> there we go. i knew we would have a taker. >> thank you, mr. chairman paid obviously we appreciate you and having ang member hearing to fill these important posts. while we have made progress at the hanford law sitee this current slate of the deputy and other directors at doe will still have a very big role in moving us forward on cleanup at the hanford reservation so i encourage any of my colleagues who want to delve more into that or visit i am inviting you and the ranking member to come specifically to the tri-cities. we've invited the secretary and the nominee before us. this is such a big response billeting for the united states really, you know, and the 2 billion a year range. i know it's hard for people to imagine but we called on this part of the country to do their job during world war ii. >> you ought to explain because you have a history on this for our newer members and what role he played. >> obviously my colleague from new mexico could also talk about the role they played and other colleagues could talk about our former colleague senator alexander could discuss it but the point is now we are also left with the cleanup response bullies and why that exists within the state of washington and it's not the state of washington's response bullies but a federal response bully in the state of washington does a good job in the tri- party agreement trying to hold us all accountable on meeting certain milestones that we canf get it cleaned up. i also appreciate the secretary yesterday made further announcements at the p and l lab on battery and storage capacity research that the national labs are doing so they are playing their part. we got to get cleanup done and move on to the other challenges that we face. i very much appreciate this nominee commitment during the q&a about his commitment to making sure that they would live up to those milestones and, as i said, the very complex problem that oftentimes people think there's just got a better rate to do it or do it on the cheap. there just isn't. we made great progress on the facility and now we have to get it operational. i hope that anybody who wants to come and visit there i encourage you to do so and there is, i think, with my colleague from new mexico we did create a national historic park between our three locations of the united states to tell the story and i think we have more work to do on that as well and i think we have to do more work with doe and our national park system to make those sites more accessible to the public which obviously, is a challenge because it security area as well as something we want the public to have access to. mr. chairman, i am hoping that we t found another member or tht they are on their way. >> if not, we have a senator to help us through this right now. >> mr. chairman, always here to help you and it is rare that you need to plead with senators to t say something. i never thought i would see -- >> no, it's true. i want to let the committee know and let you know mr. chairman i plan to support mr. turk's nomination. i found the interactions i had with him refreshing, pragmatic and he definitely demonstrated the knowledge and willingness to work on both sides of the aisle. in effect, the hearing we will go into next, mr. chairman, will demonstrate why we need mr. turk's pragmatism as we look at senator brosseau said more than all of the above energy portfolio moving forward. i used to be an operations guy before i got involved in public service and understand what it means to have peak capacity and and oned requirementsop engineer once told me and said that if you think about a family of three and trying to develop a capacity plan for how many beds they needab some might say they only need one because on average you sleep eight hours a night butn the reality is it's all about the peak load, not about averages. we just saw what happened in the recent cold snap in a pond's pot like montana. happened every winter and with the wind stopped blowing and attempters plummet and if it a weren't for the fact that we had in all above energy portfolio we would've had rolling brownouts and blackouts in places like montana. we got close. we see the same thing happen in the summertime with high-pressure systems move in and demand goes way up in the wind stopped blowing and consequently you got to have the firstum diverse portfolio to mae meet peak demand. bottom line, i appreciate what he said about critical minerals and about carbon capture and how we can work together here to work on reducing emissions as well as ensuring we have reliable and affordable energy. i plan to support mr. turk and thank you for the time to speak, mr. chairman. >> senator heinrich. >> i'm sorry, i thought we had so much extra time here while we're waiting on our colleague. i just want to say i thank you for holding the steering today because i think it will be very constructive. one of the things that hasn't been particularly well covered is that during the freeze up in texas that natural gas production actually fell by 45%. it's a little more complicated than just i diverse portfolio. there's a lot of water andol natural gas in the basin. when you don't winterize things and it freezes up and so we saw and, you know, natural gas just could not, in texas, fill the gaps because of the freeze ups and so irrespective of what happened in the first few days with regard to electricity generation there are a lot of lessons to be learned about winterizing all of our infrastructure and about planning for the incredible extreme weather events that we are now experiencing on a regular basis and why having gone through this in 2011 we went to the same thing just weeks ago. i very much appreciate you calling this hearing and i'm looking forward to getting intoh some of those details a little more deeply than maybe sean hannitye or tucker carlson. >> we've got a great panel coming out. senator kelly. >> thank you mr. chairman. i listened closely to mr. turk and, you know, looked at his record, particularly about climate change and renewable energy. i come fromm a prior life where part of my job, we lived in a place on the international space station that is powered exclusively by renewable energy, solar power. i also have to come from state that has a rather large and growing solar power industry and it is critical to our economy and, you know, when i think about my first space flight and i flying over south america and looking down at the amazon and what you notice is this big long copper color river going through the jungle and fast-forward about ten years later and i'm on my fourth spaceflight if you look down over the same part of the planet what do you notice but it's not the river. you notice the deforestation and we put a lot of carbon up in their atmosphere and we continue to do that. i think we've gone from aboutno 250 or so parts per million of co2 you pre- industrial revolution to about 415 or so today i think those numbers are kind of close. what that means for our state if we continue on the business as usual plan in the yearki 2100 or so we will have twice as many days in phoenix over 100 degrees. it is a big, big change. it is obviously we have to do something about it and one of the solutions and it's not everything but is solar. we've got supply chain issues that we have to address to continue to grow and our solar uindustry in the state and acros the country, those supply chain issues often extend to issues with foreign governments. sometimes it's our adversaries. you got to i sort that out. there are rare earth minerals that we need access to to grow this industry and there's also trade issues and tariffs and so it's a common gated but we do know that it works and renewable energy and moving to more renewable and you know, less carbon based energy is how both but it is not the entire solution. we have seen this this pastt summer in arizona that we need a surge and we have that now but we also need to be able to reduce demand at times and our utilities have had some success with this and i have spoken to the ceos of our major utilities in arizonawi they have been able to dial down the demand with connected thermostats in one case i was told 30000 homes at one time where the utility could reduce the demand from 30000 basically turn off the airre conditioning at 30000 homes just temporarily so there are solutions in the supply chain issues are critical for the state of arizona in critical to expanding solar power across our state. cost is another issue. we got to dress that as well because i would say right now where we have tax credits and have extended these tax credits it is also often a challenging economic decision for a family to make if they will decide to put solar panels on their roof or even for small business owners and they've got to make this little more attractive, thank you, mr. chairman. >> thank you, senator. >> we will go ahead and move to our opening statements on our hearing with the senator's coming take a vote when they appear. >> turning out to a hearing me begin by saying i really think we can all agree that reliable, affordable energy is a hallmark of an advanced economy, critical wfor businesses and residential consumers alike to thrive. our north american luxury crediy is a marvel of engineering and the envy of the world. but ongoing and increasing changes in the generation mix and outside forces like cyber threats and weather events highlight the importance of a resilient grid. this topic squarely within theim jurisdiction of this committee and it's critical that we, state and local governments, and grid operators on the country be two steps ahead in planning for these changes and threats and how to ensure that we strike the right balance between resilience, reliability and affordability. at the top of everyone's mind is the recent winter storm that brought siberian weatheror too much of the country in west virginia was not spared. we hadou over 100,000 people who lost power and mostly due to downed distribution lines and poles because of the ice. of course, the impact on texas has gotten the most publicity with 4.4 million texans without power for days. this resulted in billions in damages and billions more in skyhigh energy bills and tragically dozens of deaths. i understand the texas legislator has helped several hearings and working to get to the bottom of why the texas grid was so unprepared to weather the storm. the texas grid operator has provided us with a written statement and i have the written statement here which i will ask unanimous consent to enter into the record and i encourage all of our members if you get a chance to read it. interesting. do i have any opposition? if not, so be entered. let me be clear, today's hearing is not a referendum and we have seen the impact of extreme weather events to our electric grid across the country and whether that be the 2014 polar vortex, extreme heat and california last summer or the extreme cold around the country last month. we need to incorporate all the lessons learned from those events into our future planning. particularly, as we can expect both energy mix and weather patterns to be different and in the next decade than they were in the last decade and is part of that future planning we need to take into account the need for a diverse fuel mix with a broad array of emissions, reducing technologies and including an honest assessment of where our weak spots are and where we need to invest to balance the cost of reliability and affordability. i have said time and time again that we need to address climate change and we have to do it through innovation, not elimination and that the starch proponent of the above energy policy i want to emphasize that we need to be thinking about all of our fuel sources. we got to use all these resources we have in the cleanest way possible but we need to be eyes wide open and none of them are 100% immune to weathern disruptions and whether that be freezing wind, turbines, freezing wind turbines, disruption store natural gas production and delivery systems or frozen all which we saw happen this month. that may take investment in weatherization and infrastructure which, course, comes with a price tag and leaves me back to affordability. reliable, resilient power does us no good if businesses and families can't afford it on a day-to-day basis and while we typically think about this in terms of the cost of the kilowatt hour we also cannot deny the incredible cost associated with nature disruptions. by that i mean not only the potential loss of life but also the price tag that comes with scarcity and rebuilding the repairing infrastructure both energy and otherwise although not labeled as such those costsh are passed to all of us whether through utility and service bills or through our taxes. we truly can't sacrifice reliability, resiliency or affordability when it comes to our electricity if we want to continue to thrive. it's incredibly important that we strike the right balance between all of these attributes as we look to the future. there isn't one answer to that heequation but you sure know whn you've gotten it wrong. i look for to hearing from a panel of witnesses about exactly what happened in recent grid and what lessons we should learn from them and what we should all be thinking about moving forward to strike thess right balance. i want to welcome our panel but right now we have a quorum so we will go to our vote and then we will go right to senator barrasso for his opening statement. i will introduce our panel in a few minutes. >> if there are no members wishing to be heard further the question is on reporting favorably the nomination of david m turk to be deputy secretary of energy with a recommendation that the nomination be confirmed. the clerk will call the roll. [roll call] [roll call] >> on this vote the eyes are 20 and the no's are zero. the nomination is favorably reported. we will now turn to our hearing this morning and let's finish up by welcoming our panel and then senator barrasso will give his opening statement. >> want to thank all of you for taking the time to be here in bringing your expertise to our panel.i we will have mr. the president and mr. mark gabriel administrative ceo of the power and administration and the honorable ceo of hunt network tyand former texas public utiliy commission founder and president of the environmental progress and president and ceo of the connection. oni want to thank you all for being with us today in person and i look forward to your expert analysis and the discussion today and now turn o senator barrasso. >> thank you very much, mr. cha. we all agreed that affordable, reliable and resilient electric services is essential for every american and electricity is needed for virtually all aspects of our lives and that is why i've beenit a strong advocate fr generating electricity from my diverse set of resources, including coal, uranium, natural gas, high-power, wind and solar. i've been especially supportive of energy and what is known as baseload capacity. it is why we need to be realistic about theci limitatios of energy resources such as wind and solar that can't generate electricity all the time. increasingly, the national discussion on electricity as centered around a single metric, how much greenhouse gas does a source of electricity produce. the discussion has failed to pay sufficient attention to the questions of reliability, resiliency and affordability. during last month cold snap that played a critical role inor maintaining power in oklahoma and other states. in addition nuclear power by one standard outperformed all other energy sources in texas and hydropower was essential about keeping the lights on in western estate spirit we must ensure that our grids can provide electricity at all times and i prices that american family and businesses can afford.nd the morning public deserves to know what policies and measures are necessary to ensure that that happens. public deserves to know what policies and measures make that objective much more difficult to achieve in today's hearing should help address these important issues. electric systems in this country are among the best in the world and they are always evolving. the men and women who build and operate them are tremendously capable and these professionals must work today with the grids we have today and not with the grids that we wish we had in 15 or 25 years. the blackouts that we witnessed in california in 2019 and in 2020 as well as the blackouts of crowns the central part of the country last month are unacceptable. what's also is unacceptable our proposals will make blackouts more likelyofth or more devastag fore the american people. for example, president biden has pledged to quote, achieve a carbon pollution free power sector by 2035. this is the goal most states, not even california has set for itself. president biden has also pledged to cut quote carbon but part of our national building stock in half by 2035. to quote, ensure 100% of new sales for lighto and medium duty vehicles will be zero emissions. in other words, president biden wants to settle our electric grids with the additional burdens of powering our transportation fleet and heating buildings currently served by natural gas or oil. as bloomberg new energy finance report stated last month, the transition to electric heatingbe and transport drives up electricity demand while tremendous growth to wind and solar strained the grids. president biden's proposals could concentrate our nation's vulnerability to bad weather events, terrorism or cyber attacks on the electric grid. rather than learn from the blackouts in california and the blackouts last month some in congress are doubling down. last week house democrats introduced a bill to require d that the country's power sector be 80% carbon free in less than ten years and 100% carbon free by 2035. like president biden's plan the legislation would also push additional burdens on america's electric grids through the electrification of buildings and vehicles that would otherwise rely on oil or natural gas. we should pursue ways to generate electricity that produces less greenhouse gas emissions andwe we must not do o at the expense of the reliability, resiliency or affordability of electric services. that means supporting the continuation and expansion of electricity generation from nuclear power, from hydropower, natural gas a and for coal. thank you, mr. chairman. >> thank you, senator. spirit mr. chairman, before we start i'm curious, i noticed there is no one from [inaudible] on our list of witnesses today and i'm just wondering why that is? >> it wasn't a lack for inviting them. we invited them and we spoke to everyone and i'm not sure anyone has left. >> so they chose not to be here spirit well, what they did, they needed to remain available to the direct regulators which is the texas legislator and they'v been in total statements with them in total confab with them but we a are working on that bui thank you will enjoy the panel with an experienced person who knows inside and out. let's get started now, if you don't mind, with our panel. we will start with mr. robb. with the electric reliable corporation. >> good morning. thank you for having me here at this timely hearing. the recent tragic loss of life and human suffering in texas in the middle of the south state starkly demonstrate the essentiality of a reliable electric system. as you know we began to work in an joint inquiry into the joint causes of this event and committed to quickly getting to the facts as to what actually happened, implement and appropriate measures within our authority in communicating to other implied actions to policy makers and industry. the three major trends which are fundamentally transforming the power system and challenging our historic paradigms. first, the system is decarbonization rapidly and this evolution is altering the operational characteristics of the grid and policies, economics and market designs are resulting in sniffing and retirements and new investments is increasingly focused on developing carbon free generation with variable profiles. industry resource mix natural gas fired generation is becoming ever more critical and both for bulk energy to serve load and balancing energy to support the integration of these bearable resources. grid is becoming more disturbed did in the improved economic of solar is a key example. the smaller scale resources have been deployed on both the bulk electric as well as distributional systems and in many cases, resides behind the meter. third, the system is becoming increasingly digitized through smart meters and digital control systems. these investments greatly enhance the operational awareness and efficiency of grid operators but at the same time it heightens our exposure to cybersecurity risks. extreme weather, as we recently experiencedty this past month, stresses this emerging electric system in different ways. our reliability assessments are one important way we evaluate the performance of the grid, identify reliable the trends, despite challenges and provide technical platform for important policy discussions. with growing reliance on variable and just-in-time resources we are developing more advanced ways to study energy supply risk. our assessments consistently have identified three regions of the country particularly exposed to these dynamics. california, texas and new england. last august massive heatwave across the west caused an energy supply shortage in californialan the early evening and solar energy was ripping down in the grid operated was unable to import power as planned due to high the west.th they were forced to cut power to proximally 800,000 customersan d among the lessons learned from this event are one of the critical need for reliable ramping resources to balance load and second the need for improved ways to estimate resource availability when the system is under stress. and new england cold-weather exacerbates its dependence on limited pipeline capacity and a handful of critical fuel assets. in early january lead to natural gas shortages and fuel oil was burned to reserve reliability. had that cold step not abated when i did the fuel oil infantry would've been exhausted and they almost certainly would have needed to shed load. insufficient and inadequate weatherization of generation in texas in the-m middle south stas have been a growing concern for us since 2012. after a cold-weather event because load shedding for 3 million customers in texas in 2011 we developed a winter preparation carling to focus industry best practices and started conducting syndicate outreach and wintered preparedness bread following additional extremes and unplanned load shedding in that region in 2018 we concluded they could no longer be treated as rare and that a mandatory approach was warranted. as a result begin the process of adding mandatory weatherizationn requirements into our reliability standards. in addition to these weatherization initiatives are like to leave the committee with four main points to consider. first, more investment in transmission and natural gas and the structure is required to improve the resilience of the electric grid. increased utility scale wind and solar will require new transmissionsed to get power to load centers. next, the regular tory structure and oversight of natural gas supply for the purposes of electrical generation needs to be thought. the natural gas system was not built and operated with electric liability first in mind. policy action and legislation will likely be needed to ensure reliable fuel supply for generations and is a critical balancing resource natural gas is the fuel to keep the lights on. third, electrical systems must be better prepared for extreme weather conditions which are frankly becoming more routine. regulatory and market structures need to support the planning and the necessary investment to ensurery reliability. finally, investment and energy storage or alternative energy need to be supported to have a viable alternative for balancing resources. the technology which can be deployed cost-effectively and at massive scale with adequate duration to deal with supply disruptions lasting for days rather than hours is required. thank you again for the opportunity to be here today. >> thank you, sir. now will we have mr. mark gabriel. >> i think we have him by video. >> federal power marketing administration responsible for selling and delivery wholesale power from 57 hydroelectric dams to about 700 utilities, military bases, native american tribes, national laboratories and 15 central and western states. they spend spans 17000 [inaudible] one of the largest in the united states. it's an integral part of the high-voltage power grid in the west the reserve assures reliable electricity from 40 million americans. early in my career electrons follow the laws of physics and electricity follows the laws ofr politics and really only one of these can be amended.ee experiences 99.99% uptime in america possesses the most reliable grade in the world thanks to our professional utility industry overseen by industry and government regulatory agencies and a common commitment to keeping the lights on all while competitive grid keeps costs as affordable as possible. we all operate resilience system whether destructions like storms, wildlifeas interactions, vehicle accidents, routine maintenance and emergency situations can safely return power to citizens. however, when the system is pushed beyond its limits due to extreme weather such as the august 2020 heatwave and not in california we experience the consequences of operating and maintaining a competitive grid focus mainly on low cost. on february 15 and 16 spp directed rolling blackouts across much of the territory to protect the grid in the communities that rely on it from damaging prolonged outages. twenty-one customers experienced outages for an average of 55 minutes and up to two hours. fortunately, the army corps of engineers sent 27000150 megabytes hours of additional hydropower between february 15 and 18, enough to power nearly 800,000 homes. in the august 2020 heatwave we did not lose power but between august 14 and 15 the bureau supplied 5400-megawatt hours of surplus, federal higher power to delimit the effects of the energy emergency without impacting our customers. in both cases and in the texas, and texas, the markets worked according to design and the grid did not collapse, load shedding and conservation helped in all available resources were generating in the crisis prices increased when the megawatts wereai scarce but however, this alter the system's weakness. first, every former generation can be disrupted by extreme temperatures. second, a competitive market can discourage long-term capital investment in the liability measures and finally, costs move in both directions in competitive markets and electricity will flow often at times at practical prices. wapaa prepares for price fluctuations as well as drought by maintaining a financial reserve at the treasury carefully coordinated with our customers and this is aimed at avoiding rate shock. increasingly severe weather disasters are straining the grid, including wapaa mid 2018 car fire. we arere responding to more destructive ice forms, snow storms, tornadoes, wildfirese d high wind events. we have deployed personnel committee commitment materials to restore power at the heart after volcanoes and typhoons. the anticipate investing $1.3 billion in our system over the next decade to ensure reliability. reliability being the confidence that the light will turn on when we need them and resilience is the ability to prevent and withstand and recover for disruptive threats and events. ideally, we would invest more in resilience emphasizing defense critical electric cart infrastructure, artificial intelligence, hardening facilities, redundant services, black star capabilities, replacing wood was steel and increasing the movement of energy between the eastern and western grades through the seven ties. integrating ai machine learning and advanced technology solutions into grid operations can improve real-time situation awareness including knowing what is losing power when electricity is proactively cut to protect the grid a shortfall today. today's market structure in some ways this incentivizes utilities from necessary resilience and modernizing advancements. in conclusion power power and gas markets are marvelously efficient and driving out inefficient generating units, increasing financial liquidity and expanding the sale of electricity however, the real question is whether electricity and to a lesser extent natural gas are logical commodities to participate in open markets and unlike pork bellies and orange juice, it has consequences far greater than the availability of bacon or a morning refreshment. in q mr. chairman. i would be pleased to answer any questions you are the committee r.may have. >> thank you mr. gabriel. we will now have the honorable pat would. >> thank you, chairman mansion. >> it's been a few years and seven here and i don't remember how to do it. senator heinrich, i'm the b team and i'm sorry arcot cannot be here. >> we are thrilled to have you, thank you. >> i was the state and federal regulators and since you also may last 16 years ago as i testified on the energy and policy act of 2005 in support of the formalization and former role that they would have over the u.s. i've been involved in a lot of things that i think what we compare to talk to today and i'm happy to share perspective tof the committee during any questions but i've been a wind developer and developed lng projects and chairman of a company that had coal and gas operations throughout the e country and founding board member of sun power and i remain on the board which is one of the top three solar companies in the united states and on the board of quantum services which is the largest utility construction firm buildingco telecom, natural gas and importantly power lines and we are a joint venture operator with the puerto rico grid that will happen this summer. i get to talk about resilience and the people in the system of puerto rico and a full hearing in case of their own. today i'm ceo of hunt energy network and building storage, batteries, small batteries at the distribution level around the state of texas and i think the role in energy storage indi the future will be one that will be just nowhere to go but up. as we bring on intermittent resources and understand the members concerns and live to them as well with intermittent resources from variable resourcesnc that we got to do something to firm those up and i did not have 15 or 20 years ago when we were talking through market issues across from california to new england but storage is just beginning and it's got to scale up but it's pretty interesting place to be. i don't speak to any of those but i'm informed by my experience with all of themem ad i do thinkf that the years thati haven't in particular these last three or four across the country through a drought and two hurricane hits in houston in this weather event in texas last week or last month and the presidents day freeze they went to all tournament to four counties of the state with a winter weather warning which we never ever had statewide and it tells me the world is changing and modeling that we have done and we cannot just look in the rearview mirror and avoid the next pothole we ran through but have to be much more creative and much more imaginative about the world that we see coming. it is the role of government even for people to help marshall and pull thees right people and visions together so we do think about infrastructure in a new way. one of those ways that certainly came up was the events of my home state last montha and i think at the end of the day or legislators deeply involved inat that as we speak and in fact they are testifying todayth andy successor as chairman of the public utility commission working through the financial issues but the operational issues which they will review under their mandate will probably include familiar ones as well as some new ones, the failure of power plants to perform which i think, and my figure three on my testimony, might be a good place to look but it really was across all energy resources. some did better than others but all were in fact impacted below what we had expected them to be. failures and the natural gas system which feeds about half our power in texas and failures on that system to perform in the interplay between the two which was pointed out in the 2011 report continues to be a large issue in commercial issues, market rule and limitation against scenario planning and the public medication issues were big issues for legislator last month and the lack of, we know more about when amber alerts go out about somebody that got kidnapped in the state of texas that we knew about what was coming that would affect foreign halfling people so that was a significant impact but finally, the one that was most customer was the management of the outages by our local utilities that was a significant shortfall that is being remedied as we speak because it could happen again as soon as this summer. we always have to be ready and we have to be vigilant but most of all we have to be creative. >> thank you. now we will have the founder and president of american progress. >> and q, good morning.nb i am grateful that the committee for inviting my testimony. in the 2017 report the national academies of science warned that our electricity grids were becoming increasingly complexex and vulnerable due to restructured energy markets and increased use of variable energy sources. while all energy sources field the performance and to anticipate and vibrate some perform better than others in the capacity factors for nuclear natural gas, coal and wind in texas and the four days of load shedding for 79% for 5%, 50% and 14% respectively. experts today agree that79 weatr dependent energy sources over the last decade have made the grid more sensitive to extreme weather in last august calhoun's grid operator attributed on a conference call the lack of energy supply for the states closure of nuclear and natural gas plants and its overestimation of what renewables could contribute. california's share of non- hydro renewables increased from 14-39% of electricity from 2011-2020 and the impacts on affordability or seriousti and our cost of electricity rose eight times more than the rest of the united states and today california pay 50% over 50% more than the national average. economist at the university of chicago found that electricity customers and 29 states had paid 125 billion more on electricity then they would have in the absence of renewable energy mandates. one makes b electricity reliabl, resilient and affordable is the generation by a few large efficient plans with a minimal necessary wires and storage. i think this is most important inclusion in the basic picture is that a simpler grid is a more reliable resilient and affordable affordable electricity. industrial solar and wind projects require between three and 400 more time than land than nuclear plants and the best available science calculated that the if thehe u.s. were tryg to generate all its energy with renewables we would need to increase the amount of land required for energy from .5%5% o 25 or even 50% or opposition to expanding transmission comes from conservations across the u.s. and for example, federal judge last year blocked the transmission line at the behest of plaintiff's proposed to be billed straight three whooping crane habitat in nebraska because transmission lines are the number one cause of mortality among whooping cranes. most of today's stores last for hours not seasons. we see this in germany. in february of this year germany's renewable increase two electricity they produce in january and february of last year despite a 4% increase in solar panels and wind turbine capacity. this is simply because of annual variability of wind and the sun. germany's only been able to manage the seasonal fluctuations from intervention renewables are maintaining diverse fleets of coal, natural gas and nuclear power plants and at a very high cost. france today spends half of much of kilowatt that produces one tenth of the carbon emissions of a germinal to city and that is because france's grid is prominently nuclear where's germany is facing out nuclear. the most influential proposal for 100% renewable energy in the united states relies upon a tenfold increasee in the power f existing hydroelectric dams in the united states but the real potential of hydroelectric storage is just 1% of that. california has a major network of dams but we have not converted them into batteries because you need just the right kind of dams and reservoirs and it's very extensive and expensive retrofit and we need the walk far water for our farms and cities. they had to curtail electricity coming from our solar farms and pay arizona to take excess electricity during sunny days. u.s. has reduced its greenhouse gas emissions between 2011 and 2020 and more than any other nation in history but now emissions, prices and resiliency risk rising if the u.s. closes the nuclear reactors in california, illinois, michigan, new york, pennsylvania that presents power outages over the last three years. although texas lost one of its four nuclear reactors after coldwater effected the sensor automatically shutting down a reactor returned to service within 36 hours helping to end the power cuts. meanwhile, nuclear reactors another cold snap states operated normally. the senate can play a constructive role by taking action now to prevent the closure of the nuclear plants which have proven essential to maintaining a diversity, reliability and affordability of supply as well as, i might add, sustainability of our energy mix. thank you very much. >> thank you. now we have the president and ceo. >> thank you, good morning chairman mansion, members of the committee. i am the ceo. it is a pleasure to be here with you today and participate in this hearing. it is right to share my perspectives on reliability, resilience, affordability about the power grid. we are a grid operator based in valley forge, pennsylvania in our organization was formed in 1927. we have grown over time to serve 65 million people who live in 13 in 13 states and the district of columbia and we serve one fifth of the nation's population. i want to start today by just saying the reliabilitya. of the bulk power system is our organizations thriving purpose. watching the human impact of the recent events in texas has been a sobering reminder of the importance of that purpose. i can tell you i personally feel the weight of the responsibility that we, as pg and m, keep the power flowing every day. i wanted to cover four points in my opening remarks today. the first point is that the pgm grid is strong and it has performed well. this includes during the recent storm we were able to keep the power flowing and export metrics to support our neighbors in their time and the second point i want to make today was that resilience is critical and it takes deliberate effort. we at pjm think about what could go wrong but there will be things that happen that we didn't anticipate. the covid been to make is a good example. pjm had a pandemic plan since 2006 get so much about this event has been unexpected. we've had to learn and adapt and we've taken significant steps to preserve our ability to control the grid and having teams of operators live on site for up to ten weeks in some cases just so we can have a backup plan to our backup plan. our pandemic response is one demonstration of how seriously we take resilience. third point i want to share with you today is not withstanding the first two points but there is more work to be done both on reliability and on resilience. we at pjm have studied and responded to extreme events in 2011 southwest blackouts as well as 2014 polar vortexpo that hit our system and while we don't have the facts yet about the recent there are at least three questions we believe that we and our stakeholders and the regulators must address in our own backyard. the first question is while our approach to winterization has shown dividends it is an incentive -based approach and we are asking if we need to implement more binding winterization standards and other specific resilience and high impact low probability to weather there caused by climate change or otherwise. the second question we are asking is whether we need that circuit breakers for scarcity pricing for power as well as for gas and extended shortage for natural disasters. the final question we are asking is what additional coordination is needed to ensure that natural gas is protected during load shed events. i'm sure there will be more questions but those are undermined at the moment. finally, the fourth point i want to share with you today is the development of renewable on pjm grid is accelerated and we are committed to ensuring reliability through this transition. today pjm has over one of 45000 megawatts of generation in our interconnection and of this 92% is wind, solar, battery or hybrid of these technologies. renewables while they are intermittent certainly can carry a portion of the grid reliability and we saw that during the winter storm. however, we must ensure that a market support and adequate supply of this backup generation well into the future if we will keepf our grid reliable. we are currently engaged with our stakeholders on this very subject. thank you for your focus on these important issues and i look forward to your questions. >> thank you. thank you to all of you. i will start the questioning now. to mr. wood, you've a very urunique perspective having firt been chairman of the texas public utility christian. there's been a lot of discussion and blame caps on texas for the way the grid was designed to be self-contained. this is seemingly to avoid federal oversight of the energy market and how the inability to import power made the situation worse. micros would be you've been on both sides of this so what is so bad about the oversight? >> that is true. i have been. i've shared both sides of the river. i have tried to be the voice of calm to both sides but it is not so bad on the other team. there are unique attributes of texas particularly in the power market that when i went from that role i would have lost and not would have lost but didn't have. for example, as we were signing up our power market in texas we ordered the utilities to become part of the arc or the equivalent of pjm appear. utilities still have that option to pull in and out and use that power sometime not in a great way to undermine the market and i would love for that not to have been an issue. >> my question would be this. since you have seen both up close and personal what is the objection or is -- overreaching and causing higher price or less competitiveness or what would be the objection that texas does not want to be involved? >> i think the issue that mattered the most to me was the ability to have a single regulator over the retail and wholesale markets. we had the ability to put that vision in place that governor bush and the bipartisan legislation said they wanted for both wholesale competition in four years later for a retail competitive markets and the ability to see that vision through. we were able to plan our transmission grid and pay for it in a simple way and we were able to interconnect our generation plans and a straightforward and way so we did not have to negotiate that with other states or negotiate that with the federal government but it was an easier thing to do. i wish for that for the whole nation that we had that unified vision and we've got to look for the congress for that and i know it's been hard to get through this generation. ... through that. >> as you know my home state is in pjm service area. 100,000 of my constituents were without power. in west virginia it was because of downed power lines and polls for the most part. you mentioned in your testimony some of the lessons learned from the 2014 polar vortex. do you believe the lessons learned were implemented in a way that lessenned the potential impact? what are some of the lessons learned from last month that you would prevent next time? >> yeah, senator, thank you for the question. i do believe the lessons from 2011 and 2014 were learned and implemented. we implemented winterization lists. we implemented under coordination and as a result we saw in 2014 and last month it was2 less than 10% so there have been significant improvements. >> this is directly to you, it is designed to have a memo backup generation will can you shed some light on whether the high price cap approach where the power price is shot up to a $9,000 per megawatt hour per days the bills consumers are receiving price gouging is a high price cap a reasonable way to incentivize generators to be ready? >> i appreciate that question. i am not a market design expert so i can't comment on whether it wass appropriate or not. i think in any way you look at it it didn't adequately in the past event. >> what is the best way to line uply sufficient capacity to come online when it is needed so we do not run into this? >> and needs to be reworded in the mechanism such as a capacity market or very high price opportunity as they have elected to do in texas or determined through a regulatory proceeding. >> so, you have a lower price cap. can you explain why they took that approach and what the trade-offs are? >> we took that approach and we wanted to make sure we had capacity available three years into the future. i do want to say i think that the underlined explanation is more complex. i think texas would have had a higher margin perhaps but it's important to know texas reported a margin for this winter 43% and so it was not a shortage of capacity. it was this incredibly cold weather and we are very focused on making sure they continue to be prepared. >> i have a series of short questions. do you agree we should produce electricity from a diverse set of energy resources including those capable of producing electricity at all times of day and night? and avoid the blackouts that we've witnessed in california last august, would they have been avoided of california simply installed more solar panels? >> i do not believe that would be the case. so the blackouts that we witnessed in texas, oklahoma and texas would they have been avoided if the state simply installed say more wind turbines? >> i think that it's required to keep all the groups operating. it's one of the foundationaled concepts. >> in texas, oklahoma, kansas and elsewhere last month have they been worse if we had acces and everyone had to rely on electricity to heat their homes? >> making sure we have diverse portfolios which certainly this day and age need to include natural gas. >> with those that we witnessed on california in 2020 and the middle of the country last month but they have been in even worse if everyone including responders had to rely exclusively on electricity to power their vehicles? we would have sufficient supply to have a diverse portfolio. >> first, making the trip coming all the way from berkeley california, you have written the big renewables will directly responsible for the blackouts and electricity prices. can you expand upon your comments for the committee? >> there was a on an analysis published by the california public utilities commission and the california grid operator which made a very similar point that in a more muted fashion, that point was made very dramatically in the midst of the crisis last august and a conference call with reporters where they specifically pointedd to the closure of the nuclear power plant which was about 200 megawatts of power as well as the closure of natural gas plans as the main factors that resulted in the shortage of energy. >> you said some have long pointed to renewables onto the grid however it is simply not up to the task and you went on to say they would need to be able to store the power for weeks and perhaps even months. can you explain the comments of the committee? >> it provides power for 16,005 aboutt four hours almost 40 million and perhaps most advocates of renewables now no longerho think that lithium batteries are going to be an important form of storage beyond managing minutes or hoursp but s i pointed out, the reason germany was able to prevent similar power outages this year simply that they maintained a very large coal and natural gas and nuclear fleet to be available when the wind is not blowing. >> and if i could ask you in your written testimony, you made the following observation. you said over the years, assessments have continued to identify three areas of primary concern, california, texas and new england. while recent events in the central south and westernnt pars of the country have attracted natural attention, new england is another reason, region that you've said is identified as particularly vulnerable to extreme cold weather. you know new england's problems include the capacity to import gas and its dependence on a handful of critical fuel assets. producing electricity at all times. >> we believe more natural gas infrastructure and including storage capacity needs to be a strong policyt focus. new england desperately needs more capacity to be resilient. finally, i have an article that was in green tech media from last august titled california's shift from natural gas to solar is playing a role in the blackout and the article the grid operator says the situation that we are in could have been avoided. the article goes on to say that the california grid operator has told california regulators for years that there is inadequate power available during the hours when the solar generation has left the system and i ask unanimous consent that we include this article in the record. >> thanknk you, mr. chairman. >> thank you mr. chair man for holding this important hearing for a more resilient grid that takes a level of investment and we had a couple of studies at the university of california study investing 100 billion and the transmission expansion that could achieve a higher andiv cleaner grid and help reduce wholesale cost so i was wondering if i could get you gentlemence to get me an assessment if you think that modernization of the grid we should be seeking and do you think the private sector will make those investments or the federal cost share and do you think that that is in the tens of millions of dollars it is going to need it to be enabled by transmission grids that will move the resources from where they are to where the people are and i think that's probably a nine figure number. it's a lot of money but it is over time quite frankly as we have learned in texas when you spend money on transmission, you save a lot more than you spend on getting low cost power into the power system we have the resources all around the country and the concept we haven't studied the reliability and practice of it other than to note the reliability fund,on so that is a good thing i would probablyly concur with your assessment as to the cost. i think the factor this committee needs to be aware of is that it is in the need for transmission or the desire to fund but the ability to cite transition that is the biggest obstacle of the development. there are seven ties between the eastern and western grid that are perfect examples of the sy1980s technology that could be upgraded and done within a two to four year timeframe so we've had some immediate benefit there. in addition to taking time right now there's a bit of a challenge with getting people to agree. folks are hesitant to get into that so to incentivize folks to take the power to free up the entire situation. >> i think i know what you've been up to. i just want to point out that texas, i understand 96% of its projects in the pipeline are either wind or solar. with texas being an ultimate free market, it tells me something but i would like to talk about where did the money go in texas 9,000 per megawatt hour emergency standard for longer than necessary. 90% of the business is done bilaterally so a number of customers were exempt. >> that's what i'm worried about consumers should be reimbursed? >> do you know of any that were involved in the texas and california markets that were caught trading now? >> i will have to check. i am not aware of any. >> i think that we have seen what happened here at least in the detail. i am not talking about the crisis that the aftermath. we need better tools to protect consumers and businesses the rate of the long-term contracts that were fraudulently manipulated so we passed the law to try to protect people and i think you said it best price gouging shall not be tolerated in these kind of emergencies. thank you mr. chairman. >> now we have senator daynes. >> thank you mr. chairman. plaintiff recent reports, the pacific northwest including montana will face a shortage of power supplies to meet the conditions. this means that while montana and the northwest can currently meet the day-to-day demand, there is a threat during the conditions we could face the same issues we have seen in california, texas and others. the distributors are worried about generation resources to meet the peak demand and the problem will only get worse if we continue to shut down coal and other baseload flexible generation across the region. i respect the senator's comments we would have had some serious issues last winter and even during the months of last year. while in montana we have a great balance with hydro and cool providing baseload. a growing wind generation ast well across the state of the administration moved blindly which we see them doing today to shut down all of the generations. that balance will be threatened and reliability concern turns into a stark reality. how is a rapid move away from the baseload affect power sources without equally flexible reliability of the grid? >> thank you, senator that is n important question and it relates to the former question by senator cantwell which is if you are building additional transmission, the assumption would be you are bringing power somewhere else but wind is already low during the cold snap and you build more wind turbines it isn't going to do much for you similarly in california more transmission lines from solar plants isn't going to help so there's noin substitute for the baseload power. it's creating a scarcity of sresources to meet the demand s you articulated and as we have seen recently what happens can also affect montana communities i think that is a keyword right now and reliability through the multistate markets it's related to both state and local but what i would point out is the rising complexity itself poses a significant problem. all of the academies from the 2012, 2017 and recently last month point to the complexity and i have to say that, when i read the other witnesses statements, i was struck by the solution to the complexity to add more to the system and that starts to become troubling therehave been recent calls to h and as you know having spent years with strong baseload power for the western montana and pacific northwest my question is how would the move to breach the dams affect the baseload energy in the region and by the way zero carbon emissions as well. >> only 3% of the 90,000 have power capabilities and it is a valuable discussion to have to make sure that we are thinking about increasing hydropower as it is a carbon free resource and one that can help bolster the grid in times of great stress. >> when it came to converse it wasn't classified as a renewable source of energy that was a political incorrectness and we finally got that change but the zero carbon emissions we watched what happens in places like montana but thanks for that answerst. at the same time protecting baseload power and ensuring a reliable grid. thank you, senator. i think this is clearly an issue that matters. we've built these demonstration projects and we become frustrated when they don't work out right away. i think we need to have more patience than that certainly in the case of carbon capture and storage in the case of nuclear too often i think we build these projects and then we are disappointed when theyin don't come to fruition. when we are thinking about our nuclear plants, because it is such an important technology for national security, we also need to be i think considering federal action to protect the plans that are currently not being valued for the contributions or the reliability and resiliency and affordability in different structured markets. >> i've heard some interesting things here today. one is that coal is a baseload generation and i say that because the average capacity factor now sits well below 50%. so, the average offshore wind capacity factor is higher in europehe than the u.s. coal capacity factorff and we have to recognize that as part of it because coal has become completely unaffordable as a power source. if you look at any of the independent analysis of what wholesale costs are with three or four cents a kilowatt or 13 to 20 cents per kilowatt you understand whatki some of the market pressures are and why we are being asked for example to subsidize with nuclear power. so, moving from that to what we went through, i want to w start with you and i will begin just by thanking you for the work you did to clean up the mess of that so thatenron gave us and the wou did was incredibly important but i would ask what policies you think would be wise to accelerate in the deployment of the storage that you mentioned on the grid both in texas and nationally. >> getting the diversity of the supply chain, we clearly are dependent on china and a few other countries in east asia for the current technologies that i think mr. shellenberger pointed out correctly. there's a lot of things other than lithium ions and certainly all of the storage technologies, so the cost that there could be some supplies to that. the policies in the u.s. make it as easy to interconnect a battery as we have made it to connect grasslands and windmills. we are version 1.0 talking with our utilities they haven't done it before. it's not easy learning to get these things done one by one. i think the market policies and most of the organized markets are very friendly. we've got that box checked so interconnection is important. i'm going to skip over the praising issue. it is pretty obvious that the desire by texas not to have direct oversight, would it have been helpful for texas either from the east or the west in this recent episode because i noticed that el paso for example didn't have the same because they were able to pull from the western grid and they were directly interconnected. there are proposals to put more in both east and west. to be honest, a few gigawatts wouldn't hurt but it wouldn't save us from the 20 gigawatt shortfall. >> what is the shortfall from the generation source? >> the largest supplier is the impact of gas dropping both out of the supply level and then at the power plant level and that is the interesting thing to figure out is how much to the lack of winterization as we would have learned from the experience how much was done from that and how muchch had too with the supply the need for increased transmission but there's also technologies like power flow control that use the existing transmission much more effectively. storage transmission to policy optimization. while other countries have started to utilize those things to take the longer way around so we can effectively use the existing grid we haven't done a lot of that in the u.s. what role could those play in the future? >> that is a c great question [inaudible] for the purpose it is hard to cite new transmission while increasing the reliability so we are going to see those technologies in the system. we are seeing them already but larger deployment very soon. it was about 32% of the generation gap. nuclear was 26% and so just from a fuel diversity perspective. >> thank you, chairman. i apologize for running over. now we have senator hoven. >> thank you, mr. chairman. recently i asked the former secretary to give me his thoughts i would like to submit that letter for the record. >> without objection. >> to read a couple of excerpts the national technology lab found in each instance the generation used between the increasing demand to the weather conditions with coal, oil and natural gas and these reports illustrate the importance of the sources of risk. thee market construct i would like to thank you for that response. do you agree it is essential to the grid reliability with extreme weather events? >> we don't have authority over the resource selection. we try to make sure that it is fuel agnostic however it's been brought up many times as a great thing for the reliability and i think until there is an alternative, those resources are going too continue to play an important role in the reliability of our finger print. >> and how do we make sure that the advent to givecu us that the stability? >> again i think that is up to the local state policies that affect resource selection or market incentives and market competitive states to ensure those characteristics are appropriately rewarded and technology continues to be developed to provide alternatives and to make those resources more compatible with the energy vision that we have as a country. >> what are they doing to make sure the regional transmission operators ensure that we maintain the base look generated and talking about what is needed during these weather events so that we have the reliability as well as portability at all times? >> we do not get involved in the market rule determination or some of the questions that you've raised. however, all of the market operators subject to the standards that are enforceable and require them to produce contingency plans for all sorts of unanticipated events and we are prepared to take appropriate action to preserve the reliability of the system. >> you referenced and importance for the reliability of the grid particularly extreme weather events. >> i would say it is no longer the base load on the system as a capacity factor. we have the traditional which is 95% of the time but i think your point is spot on which is we do need a diversity of resources. >> do you agree the general assets that provide electricity et cetera should be fairly compensated for the reliability? >> i absolutely do. >> how do we ensure that we maintain that fix and properly incentivize that? >> i think that is the challenge and we've got to specify that is a resource we are willing to pay for. the different markets can do that in different ways but at the end of the day, for a few days last month i can vouch for the fact that i want every kilowatt regardless of how it is generated to be on the grid on these days. if we arean not paying enough to make that happen, we have to figure out how to do it. >> the issues are an important part of making the existing facilities we have. i'm not willing to give up that we don't have a good portfolio. texas had 100 gigawatts of these capacities, but it didn't show up when we needed so the operational aspects are important, tomac and i want to make sure that we cover both. >> very much so. thank you for your response. >> i thank all of the panelists about 80 people have died as a result of the winter storm last month. do you describe in your testimony after the storm in 2011 caused power outages and reduced gas production in texas and neighboring states, they issued recommendations to the state regulators to weatherize the power and gas system and for those followed by regulators and officials in texas? >> compliance monitoring so i really don't know the answers to what actions were actually taken, but we will find out as we work through the inquiry. >> considering texas, i think that they probably didn't follow the recommendations very well. september, 2019 there initiated the development of the cold weather requirements and enhancements to existing mandatory reliability standards the standards which your testimony states will be submitted for approval for the trustees in june. how do you think that standard would have affected the response to this storm? >> there's no doubt that they would have helped. i think one of the things we do not yet know that we will uncover through the inquiry is whether they were adequate for the conditions that were in place whether it is the fuel system, natural gas system in texas would have been able to deliver fuel to those plans. that is an open issue and one that we want to get to the bottom of. >> we have this massive power outage in 2011 and now 2021 do you expect these to be recurring it is simply unacceptable. >> there is no question in my mind they need to start planning for more extreme weather events as more routine occurrences as opposed to treating these events as one-off. they are happening far too frequently. >> do the other panelists agree these are conditions that are going to occur more frequently and are not just a once in a thousand year occurrence? >> as i said in the opening statement, the impact on the floor and a half million people is not anything we need to be doing every ten years. a. >> all of the panelists agree we need to be better prepared. we are definitely not connected to any other state or to each island so they can't share power with each other and as the folks have said to evaluate the communities maintain power for critical services while the larger electric grid is shut down due to storms. you describe how texas should consider creating smaller circuits to allow the operators to conduct more targeted outages in the event of another extreme weather events. do you think there are benefits to support the critical services and if so, what more do the regulators need to do to encourage that use? >> you are right, senator. we are putting small batteries about the distribution level and enabling those things to happen. there is a lot more technology that is part of the open system we have in texas intended to bring that innovation in. but mine arem a big part of the future. they would have been an asset as they are for you in the islands and for the purposes of last month and i think that it's nowhere but for the microgrids i hope that they will follow that kind of assessment and recommendation because my understanding is basically the power is a competitive free market place model and there are commodities such as electricity that are so basic for the systems to deliver that necessary commodity. thank you. >> i would love to continue the debate, but i think that we are all in service that we want what's best for the customers and at a good price but we want to stay on. >> thank you. senator langford. >> let me ask a quick question and several to go through with other folks. talking through the team they have announced that they want the power sector to be 100% renewable by 2035. i would assume that will require transmission lines to connect places that have more renewables and places that do not. would you make the same assumption that we need a number of lines by 2035? >> yes, i do and i also believe in the existing transmission system that we have. a. >> i noticed just from what you are dealing with we started pulling through what i love the name the trend last expressed transmission project. i love the name the transmission project looks like this project started in 2007 and still hasn't commenced construction at this point based on permitting, studies, right-of-way, surveys; is that correct? >> that's correct i've only been here since 2013 and i will say that i signed a record of decisions for the project to move forward. it was similar to the comment i made earlier someone has to greet for these to be built let's do the renewable power and get it u all done when we have a transmission project starting for you in 2007 and it's still not close to be incomplete at this point. sometimes 2035 seems like a long time away unless you are doing capital projects and permitting and it's not that far away nor realistic. let me askte a series of questions. you had a very intriguing line of the statement you talked about complexity there seems to be a lot of work on this could bet done but it makes it so complicated. if we were to clean the slate as you are looking at it what is a straightforward way to be able to provide clean energy for the united states? there's a lot of folks in the sector that are good engineers and when asked the question whether they could do something they answer truthfully but they do not finish the sentence that you just said with all of that additional complexity brings challenges to the resiliency, affordability and reliability and that is just a very well-established literature. i interviewed the lead author of the sciences report and they were very clear about this issue. ideally we also know larger plans are more efficient, so what you want is a grid with the least number of power plants that you need and least amount of wires and transmission and storage. every time you put energy into storage and take it back out you are doing two new energy to enes and paying a penalty on the currently most efficient form of storage, so this headline pursuit you have to ask is that in the best interest of the american people? >> i want to ask a little bit about natural gas as we've had a lot of conversations if it is working and not working. fsi look at the place i happen to live and i had the wonderful experience of experiencing four hours with no power when it was kind of chilly at night, so for all of those that looked at not only reliability but the resiliency, natural gas has been in the conversation. when i talk to folks they say it is a unique challenge because they are approaching the tipping point for them to say it is quick to be able to turn on but when you are not asked for much further along period of time and then ask for a lot especially in an extremely cold weather event then suddenly it's like we can't turn it all on that fast that much. you have a small portfolio of natural gas and then the wind stops blowing and it's a cloudy day and you suddenly don't have those and the natural gas to turn on 50% suddenly but that isn't realistic because what is upstream isn't able to turn on. isha that a realistic conversation? >> i think that is the conversation. natural gas plans are the most flexible we have to accommodate. that's what the electric industry needs and this is the question i thinkkl policymakers and probably legislators are going to have to tackle which is how do we create a construct for natural gas to be able to serve these unique needs of the electric system for which it is nots designed to do. that will require some storage and other things we talked about for that increased storage capacity for natural gas to offset some of that as well. i'm always fascinated when i talk to my friends about the carbon footprint when the home heating oil has a 40% plus higher carbon footprint than natural gas and we use natural gas and they use home heating oil and lecture us about the carbon footprints. >> we have a good conversation ahead of us. >> senator. >> thank you for holding this very important hearing. your grandfather's power lines are not fit for your grandfather's weather event. this morning i introduced legislation to begin the modernization ofer america's por infrastructure so that we can deal with these horrendous weather events that we have been seeing around the country. oregon saw a once in a century windstorm last fall that just ignited. we had massive power outages in the state and members of congress are able after a few days to get on with their lives. ween have a lot that have been hurting even before this happened and now they a are in even worse a shape. so this is a huge matter of public safety as well as jobs issue, climate issue and in my legislation it creates incentives b for the private sector to step up and put in place both modern systems so that we can deal with today's blackout fires from underground equipment when possible to cleaning brush. my question is for the former chairman of the regulatory commission powerline okay for grandfather whether not fit for today. so i introduced legislation to update the system to make available funds for agencies like our marketing, utilities to uninstall some of the changes that i amng talking about, underground powerline and strengthening overhead lines and equipment to monitor the grid during the serious weather. what do you think of something like this and what kind of do you thinknding necessary especially in the rural areas? >> nice to see you again. i cannot emphasize enough how important the robustness of an infrastructure at both the local distribution level and up at the transmission level is for the future. the impact of the severe changes in the weather that we have all lived through and i was so busy with our own outages in texas i wasn't aware of what you had gone through in oregon. it was quite substantial. i think that the hardening of theug infrastructure has a cost and from my regulatory mindset, with the larger utilities it is easier to recover the cost over a large area. i'veve been a good fan of recovering these over the larger areas. i know we don't have those in the west yet, but it's been a great way to pay for transmission but the rural areas are often times in co-ops or small utilities that don't have the ability to internalize the broad costs just within their company. so, that is i understand your bill attempts to address that through the cost sharing mechanisms and we can't leave rural america behind. i think we learned we cannot do it in broadband, but we have never been able to do it on electrification since we fixed that issue a century ago and it's nod, different today you're right that is into the isn't the grandfathers line, but we've got to keep it 21st century for all of america starting with the rural aspects that you are talking about in your bill it makes a lotwi of sense. >> thank you and we appreciated your input over the years and that is the whole point of the 10 billion-dollar matching grant program fore organizations like power marketing. all over the country whether it's texas, oregon, same question for you, mr. gabriel, with respect to funding for the types of activities that i just outlined is that useful and something we should build on? >> any type of funding we could get to help bolster the system and keep in mind we already put $160 million or so in the long system. of course the challenge as said most of while the customers are very small and municipal co-ops and rural folks, so it is adding a significant burden to that would be a challenge but any money that is available, we want to add more sensors and make sure that we are bolstering lines and something as simple as switching to steal is a huge expanse to help the resilience. >> thank you both and we will watch your counsel on this. people will say can we afford it but i think when you flip the other side of the coin, you cannot afford not to do this. thank you for the time. >> senator marshall. >> thank you mr. chairman. good to be here today. thank you to the witnesses. i want to focus on the financial aspect of this. i feel like i am here with the weight of 3 million waking up to utility bills that are just through the roof. there is 100 different municipalities buying natural gas on the market. municipalities who in three days time spent more than they planned on in the next five years and the questions i'm going to ask you are questions i've asked dozens of times that i don't have an answer yet so please don't take them personally but somehow i have to get answers to figure out what happened financially. when we saw the rate went up at least multiple of ten or sometimes more than that. i understand what happened in the supply. i understand the wind turbines froze, that the gas had froze, natural gas plans were affected, some of the coal was frozen together by snow and all those things happening. but one thing that has been pointed out is as we saw this spike in the price go up it went down so quickly. if it was just supply demand, how would you answer that, why would the price go down so quickly if there were truly a supply shortage how would it go quso quickly and is there anythg nefarious, where would you look? >> on grass or -- >> the gas issue it will come back online. coming out of texas for example it's down to about ten. over that full weeks of the 15th through the 19th, monday through friday. so you are talking about the price going back down from 900? >> it is always a very open and transparent market. scarcity pricing and market manipulation sometimes were two sides of the same coin. it depends what the jury thinks about it. but when you've got a scarce supply of something, you want to charge for it. in texas for example, most of the states the attorney general is pursuing actions now looking at the power trades because it is a legal to price gouge in an emergency. >> who would have profited from this and would it have been on the markets, people playing the markets or was it the producer that owned the gas well? >> whoever has a precious commodity at the time that it's most precious and so that could be the person that has it in storage, the person flowing it from the wellhead, whoever has the title at that time. it could be anybody. it could be the landowner in the middle of kansas or oklahoma or texas. so, it is honestly depends on where you are at the moment and where the gas is, where the title is at that moment. >> the moment. >> how can we figure out, how can we follow the money? >> it took us years. >> are you convinced we used all of the storage that we had? >> i don't have any data that tells. >> did we use all the storage on the other witnesses? >> i do not. >> who can explain to me -- and mi passed my time? i'm going to guess, how could they investigate if there was anything nefarious, what was the process and i'm not saying there is, it is just hard for me to imagine the price going up exponentially and again i think of my parents on a fixed income and what's happening to their electric billga and their heatig bill coming up, how would they investigate this? >> they have authority over the market manipulation. the markets in general and the state markets of course and the natural pipeline and parts of texas asas well. the commodity futures trading commission were certainly involved 20 years ago those three camps for the futures -- >> it takes the decades to go through. >> we have a lot more capability than we did in 2001 to review the trades in this matter or any dother matter much more expeditiously. >> i need out of time and will yield back. >> now we haveus senator king. >> ythank you mr. chairman. i spent a good deal of my professional life i've developed hydro projects, biomass projects, wind and energy efficiency. i want to add the watchword of today's hearing seems to be diversity is good. i want to add another there is no free lunch in energy. everything has costs and benefits and they need to be carefully calculated as we are moving through. one of the costs is contribution of co2 to climate change. first is somewhat facetious question but can you tell us unequivocally that wind turbines did not cause the problem in texas? >> they didn't cause the problem. honestly with gas and coal, everything kind of help to solve it faster. the wind was slow to get back and so was gas. >> the wind project that i worked on has been on for ten years in maine and it's never been down because of the coal that i know of, it's a question that they are not winterizing. there's nothing intrinsic in the power that can't survive cold weather. i don't want to dwell on this. i think you said something important in your testimony. i consider the gas pipeline infrastructure part of the grid because of the use of the dependency in new england is 60% as you know of the electric supply and we've got to treat it that way and be sure that it's regulated and protected, and i w am surprised in this hearing nobody has talked about cyber because after an immediate weather event, cyber is the next most dangerous problem and i am particularly worried about the gas pipeline system, so i realize you don't have that in your jurisdiction, it isn't even in, but it seems to me we've got to remedy that. on the cyber, do you pen test your utilities and do red teaming on your utilities cyber security? >> we do not, but the department of energy does. >> i would urge you to do so. it doesn't hurt to have multiple because the grid's primary target in terms of the catastrophic cyber attack. my friend what are we going to have to do in terms of modification to accommodate the growth of electric vehicles? obviously an additional strain and most of itid will come at night. but can you give me just a short answer on what you anticipate? .. >> and put delaware on in those vehicles provide regulation services so there is a lot of capabilities. >> great. thank you very much. i will not spend a lot of time i disagree with pretty much everything you have said and i like to spend some time with you off-line to discuss it. but you did a calculation where you announced how much it cost to do renewables. do you remember that? 116billion. i would like you to do that calculation again with this committee if all that came from new nuclear power i would like to see that. if germany spent the 580 billion on renewables not only have 100 percent. >> i would like you to do that calculation instead of renewables that would come from the newly franchise nuclear plants and let's see enthe comparison. >> what is misleading when you count the elect trick cost when the sun is shining and imagine that's the cost of a solar powered grid. all of the transmission and storage and the associated cost are externalized. >> are those included in your calculation? >> yes. this is a simple question for nuclear. take the megawatts in production and calculate if it was nuclear and give me a number. >> we finish the answer. >> i'm running out of time give me the answer in writing if you could do that i appreciate it. >> is it for the - - entire united states? >> you announced the calculation in your testimony a big number 160 billion the ink incremental cost for this amount of power at an of it was one year or five years. that was your opening statement. do the same calculation for the same amount of power as if it were generated by new nuclear plants. >> university of chicago study the renewable cost? >> yes. >> i would be delighted to do that and send it to you. >> iha think i'm out of time but for the record if you could give me an answer to whether you consider the grid instabilityto problem a wired problem or technology software problem? do we have to rebuild all the wires and towers are have to modify the way the grid is managed? if you could supply that for the record i would appreciate it. >> thank you for this conversation today we appreciate the chair and ranking member holding this hearing. i agree with senator king on electric vehicles particularly what happened with this winter storm in texas. i have allied of legislation. it is the future and we should not ignore it. let me jump back to the issue of winterization and the infrastructure. in your written testimony you noted instituted incentives and penalties to winterize and a result you have seen improvements in generator performance in the face of extremep weather. in yourne opinion with these improvements then made if pg and mme did not make those incentives? >> i can give you my opinion it's impossible to know for sure. but we did implement performance penalties. and what wee saw happen and i believe those penalties helped it went from 22 percent in 2014 to 10 percent in this most recent event. there is certainly an improvement in those performance penalties and the incentives have helped. >> that's the question i've been asking the panel to ensure we are addressing weatherization across the country. if there is a role for congress what's the most effective incentive? that's what i'm looking for. mr. ross do you have any ideas on the role congress can play? >> those existing authorities congress has given, we can address the weatherization issue within the power generation sector. the areas congress should reflect on and take action how that extends into the natural gas and fuel sectors. having no plan with no fuel is not very valuable. and that's an important thing to work on. >> i could not agree more. natural gas is the fuel we use in emergency situations. hydropower, we are fairly well winterized obviously there is times when the rivers freeze and we have challenges but what we need for backup fuel an outline of natural gas is critical. >> texas example that i'm coming from, the legislature in austin would require weatherization for natural gas and power industry i suspect in light of what happened last month that would be adopted just like the airline industry if you don't have standards and good ideas you have rules and you don't say anything. this is the rule. didn't work after 2011 it will work now because it will be compulsory with performance penalties. >> that's what i want to verify i know there is an investigation underway right now with texas at the conclusion of that investigation how do weit be sure texas will take appropriate action? what i'm hearing from you there will be penalties associated with the failure to take any appropriate action. >> unfortunately i think the remedy will come before the analysis is through but there is broad consensus the weatherization issue as the weather events become more extreme, if we don't do it now we'll do it in the future. let's just do it now. getting that authority may already have this authority. would check to make sure states can't do it if they can't the fed should but the state closest to the people handle the problem but obviously minded not. we got the message from our citizens last month to fix the problem and bipartisan bills have been filedx in that regard. >> my time is up. >> our final senator. >> thank you mr. chairman. at the end of the line a lot of questions have already been asked and answered. i appreciate all of you for being here in person and virtually.n mr. gabriel, went to expand on what senator cortez master was getting at and expand how climate changes affecting hydropower generation the colorado river basin during the extreme heat wave last year so we will transition from texas too california , energy from the hoover dam and parker davis and grand canyon dam could've been delivered to arizona customers was called upon to keep the california grid from completely collapsing. against the backdrop of climate change and population growth in arizona, and in the colorado river basin in general, do you think o hydropower will be a more valuable resource in years to come? should the ratepayers be compensated for supporting black starts when power grids and other areas go down? >> thank you. certainly the customers are compensated in terms of sales but hydropower will become usmore valuable as we add more renewables because of the obaseload characteristics certainly in the emergency situation hydropower has serious advantages we don't need electricity to make electricity which is the tipple one - - typical situation but hydropower is not necessarily compensated for black start capability to be billed the grid shut the lights go out and that's something that needs to be dealt with over time. it is an embedded question. we always work to replace the power for our customers in arizona by buying it on the market but first and foremost we want to keep the physics of the system alive to work diligently we can dot whatever we can to keep the grid up and operating. >> how does that work? >> there are several models that could be used hydropower is compensated for black start and reliability and capacity given the fact we don't have a market yet and much of the west that's a critical issue to be determined what it will look like in the market. >> thank you. >> and oh we talk a lot about texas today already and the weather event here recently curtailed 40 percent of the gap which has a service territory across southern arizona. for the event the price of gas went up from $2.50 for a decatherm of that $300. more than an order of magnitude. fortunately we have some pretty good storage in the state to weather the storm in texas but the customers on those effects mightht not be fully known the way southwest gas does the billing on a 12 month rolling average. we only have a little bit of time but i understand texans embrace federal energy regulation. but what assurances do arizona customers have texas will move quickly to address the vulnerabilities of extreme weather? >> i wish i could guarantee but there are elected people back home calling this as an emergency item after the event last month senator kelly and very strong bipartisan issues the markup is the next seven days. >> the texas legislature is in session right now. when does that end? >>s memorial day. >> if it doesn't get done before memorial day it's another two years? >> the special session as possible because of the energy issue being so important. if not resolved, i think it will be for than. the dynamics are too intense. >> has governor abbott committed to a special session if it goes beyond memorial day? >> i have not heard that. he expects that to be done even before they do the budget. >> thank you. >> thank you to the witnesses for being here this thmorning, responsiveness to all questions on this extremely important topic. we appreciate your efforts to be here. members have until 6:00 p.m. to submit additional questions for the record. we arebm adjourned. [inaudible conversations]

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