▶ 0:15:36>> good morning. The committee will come to order. Today the committee will receive testimony on the current state of the book power system in united states. Before giving my opening statement I will set forth how we are going to proceed this morning. Ranking member heinrich and I will each give our opening statements followed by witness testimony and then we will move to questions.
▶ 0:16:03Members of the committee will be recognized in order of seniority . For those who are here gavel and based on the order of arrival for those arriving after the gavel. I also want to thank ranking member heinrich and his team for working with us on today's hearing. This is one of a series on the importance of permitting reform, to inform our deliberations on the challenges facing the bulk power system and what congress should do to address it.
▶ 0:16:35We will hear from three experts on this matter appear they are travis fisher, the director of energy and environment of policy studies at the cato institute, todd snitchler, president and chief the electric power supply association, and Dr. liza reed, director of climate and energy at the this can center -- at the niskanen center.
▶ 0:17:05We are facing a growing imbalance between supply and demand. For the last decade, we in united states have required dozens of gigawatts of reliable, dispatch will generation. For a time, that may have been manageable. Demand was relatively flat and the system had some margin and that is no longer the case.
▶ 0:17:30We are entering a period of sustained demand growth that would require more and more dispatch will energy. Data centers, advanced manufacturing, electrification of vehicles, and home appliances, these are structural changes in our economy that require large amounts of electricity around the clock. Our grid was designed to meet peace.
▶ 0:17:57Often it operates with excess capacity, but that cushion is shrinking. In some regions the margin is already gone and we are running out of headroom. Without additional supply, we face severe consequences. Higher costs, greater volatility, and increased risks to reliability. Some look at the surge in new demand and suggest the solution should be to limit demand.
▶ 0:18:23The slow or restricted -- slow or restricted data center development. I do not believe that is consistent with how this country approaches or ought to approach opportunity. The united states has never faced challenges -- certainly has not solved them by capping progress. We solve them by building. The better path is to unlock new supply. To ensure that our regulatory framework allows infrastructure to be built in a timely and predicable way.
▶ 0:18:53To ensure that markets are structured to send the right signals to attract investment and ensure reliability remains the foundation of the system. The federal power act envisioned a robust and interconnected grid, one that spreads costs, one that provides redundancy built into its own system, one that delivers affordable electricity reliably to consumers.
▶ 0:19:20That idea still matters, but requires a system that can respond to these changing conditions. We are falling behind that need. Permitting delays are slowing projects across energy infrastructure. Market distortions are affecting investment decisions and the pace of innovation and the -- in the electricity sector is not were needs to be. We have an opportunity in front of us.
▶ 0:19:46If we allow supply and demand to function, if we modernize permitting and ensure that markets are truly competitive, we can solve this challenge. If we do not, the imbalance we are seeing today will become more severe. The consequence is will be felt by american households and businesses. This hearing is about understanding those risks and identifying solutions to meet them. How can we reform permitting at the federal level?
▶ 0:20:16How can we build a framework that supports reliability and affordability? How can we foster the kind of innovation the electric sector requires amid this rapid demand growth? America needs to build and we need to do it in a way that keeps ratepayers at the center of our decisions. This is the standard that we should be aiming for, the benefit to the consumer. I look forward to hearing from our witnesses.
▶ 0:20:46The chair recognizes senator heinrich, a ranking member of the committee.
▶ 0:20:48Sen. Heinrich: Thank you for holding this hearing on the state of the bulk power system. The power grid is deeply personal for me. My father was in I bw lineman for decades. Our grid is undergoing strain from rising electricity demands, largely driven by data centers, advanced manufacturing, and electrification.
▶ 0:21:15Sen. Heinrich: The demand for electricity is significant how pacing the rate at which new low-cost generation can connect to the grid. This imbalance has led to electricity bills rising by as much as 13% since president trump took office.
▶ 0:21:31Sen. Heinrich: These costs, made worse by the administration fossil only agenda, which includes propping up uneconomic coal plants, stalling 160 gigawatts of new capacity from coming down the line, canceling clean energy projects and starting a war with iran that is driving up oil and gas prices. There is a way to bring down illiteracy costs while strengthening reliability and resilience. Doing so means taking four no regrets actions.
▶ 0:22:02Sen. Heinrich: First, we need to get more out of the grid than we have. Great enhancing technologies can unlock 20 to 100 gigawatts of additional capacity when demand is highest. The solutions cost less than one quarter of the traditional upgrade costs and can be deployed in three to five years. It can reduce grid congestion, saving customers $4 billion to $8 billion a year.
▶ 0:22:29Sen. Heinrich: The distributional system represents another opportunity to get more from the grid. The U.S. already has 30 to 60 gigawatts of distributed energy resources operating together like a single power plant, referred to as a virtual power plant. Technology providers are offering the software and hardware, allowing data centers to act.
▶ 0:22:53Sen. Heinrich: Deploying another 60 gigawatts could save consumers $20 billion by 2030 but these are not silver bullet solutions for long-term growth. We must also build a high-voltage transmission lines to reduce congestion and reliability risks. Transmission congestion costs consumers $12.1 billion in 2024 alone.
▶ 0:23:14Sen. Heinrich: Perhaps even more important, interregional transmission helps keep lights on during extreme weather by allowing regions to share electricity, yet interregional transmission made up only 2% of new circuit miles install between 2011 and 2020.
▶ 0:23:32Sen. Heinrich: We need to bring low-cost generation online faster, more than 2000 gigawatts of new power plants are stuck in interconnection cues, nearly double the capacity of the existing power plant fleet. Bringing even 10% of capacity online in the region would have saved customers $3.5 billion.
▶ 0:23:56Sen. Heinrich: Fourth, new large loads, especially data centers, must bear the costs associated with them coming online. It cannot be on the back of other customers or ratepayers. Data centers want fast, reliable power and are willing to fund upgrades. Furthermore, a study found if large loads agree to be flexible with energy use and a 1% curtailment rate, the U.S.
▶ 0:24:23Sen. Heinrich: Could unlock 120 six gigawatts of new capacity. This creates a want in new generation opportunity to leverage private capital. The grid is a national asset like the interstate highway system. It is the delivery network for the most universal commodity, electricity. Now is the time to invest in a grid for growth. I look forward to this discussion.
▶ 0:24:52Chair Lee: I will now proceed to opening statements from our witnesses. Mr. snitchler, we will hear from you first.
▶ 0:25:01Mr. Snitchler: Good morning and thank you for the opportunity to come before the committee to discuss the state of the bulk power system, including the dual mandates of ensuring grid reliability and electric affordability. My name is todd snitchler and I'm the president and ceo of the electric power supply association or epsa.
▶ 0:25:30Mr. Snitchler: Please know that my testimony represents the positions of epsa but not necessarily any particular member. Epsa's members own and operate generating assets across all the rto's in the country. The members also share a deep commitment to electric grid reliability.
▶ 0:25:52Mr. Snitchler: And as you note, for the first time in decades demand for electricity is rising and is expected to rise significantly by the end of the decade in many regions of the country. There is a wide disparity about just how much electricity will be needed and when the demand increases will be most prevalent and how quickly the predicted demand will actually materialize.
▶ 0:26:12Mr. Snitchler: This uncertainty creates perhaps the greatest risk to reliability and affordability for electric consumers and that is the danger of under producing capacity during a time of volatile demand projections. My written testimony includes several policies that could help ensure that our nation meets its reliability goals while protecting electric consumers from unnecessary costs or inefficient investments. Protecting consumers while delivering a reliable system will be a consistent theme through my testimony.
▶ 0:26:41Mr. Snitchler: First, over the last 25 years competitive power markets have proven to be the most efficient and transparent way to meet our nation's electricity needs what protecting electricity consumers from inefficient investment. Markets protect ratepayers when competitive power suppliers like our members invest in generation assets. They do so without guarantees for cost recovery and improve rate of return. The risk of investing in those generation resources remains on the developers and owners of the plants and not the ratepayer.
▶ 0:27:12Mr. Snitchler: There are ways to help achieve this outcome. First, epsa encourages policymakers to continue their commitment to wholesale energy markets. Second, investment environment that encourages and incentivizes voluntary bilateral or physical code location agreements could be transfer much of in sparking critical investment. Voluntary bilateral contracting isolates investment risk to the contracting parties and should be encouraged wherever possible.
▶ 0:27:42Mr. Snitchler: As I noted, the energy industry is tasked with diagnosing how much additional electricity demand is coming and when it will materialize and where it will be located. The consequences of inaccuracies could include reliability shortfalls and investors left with stranded generation assets, which in some regions is backstopped by captive electricity customers. In short, accurate load forecasting is foundational and the core of whether our nation will sufficiently and affordably meet future demand for electricity.
▶ 0:28:11Mr. Snitchler: Epsa remains engaged with grid operators, regulators, and policymakers to ensure more accurate load forecasts are there growing demand. Permitting reform is perhaps the most impactful benefit that congress can provide the energy industry to improve reliability and assist in the affordability effort. I will include several specific policy areas where permitting reform would be particularly helpful in my written testimony.
▶ 0:28:40Mr. Snitchler: Finally, epsa believes discussion about retail electricity rates should include examination of economic drivers impacting those retail goals. A pair of unaffiliated on dependent studies -- independent studies included increases in retail electricity rates are not solely the result of generation charges but they sustained spending on transmission and distribution infrastructure and state policies that have driven higher costs.
▶ 0:29:07Mr. Snitchler: To be clear, this is not a criticism of necessary utility investment and distribution and transmission assets. Epsa believes it is important to identify the economic drivers that impact retail energy bills as regulators are determining where to place investment risk and how to solve these complicated issues. Epsa and our members maintain a commitment to reliability and stand ready to help the nation meet its reliability and energy needs.
▶ 0:29:35Mr. Snitchler: Thank you for the opportunity to be here today and I look forward to answering your questions.
▶ 0:29:41Chair Lee: Mr. fisher?
▶ 0:29:43Mr. Fisher: Chairman lee, ranking member heinrich, members of the committee, thank you for the opportunity to testify. I'm the director of energy and environment of policy studies at the cato institute. Cato is a nonpartisan public policy research organization in washington, D.C. dedicated to the principles of individual liberty, limited government, free markets, and peace. The message I want to share is this.
▶ 0:30:12Mr. Fisher: America is exceptional because we value free enterprise. Our future will be bright if we can reimagine the electricity sector through the lens of american liberty. The U.S. has one of the most remarkable electric systems ever built. A power at a century of growth, innovation, and rising living standards. In recent decades, electricity demand has barely grown.
▶ 0:30:38Mr. Fisher: Although we saw some competition in electricity generation, overall the grid became slower and more regulated and sclerotic . Over the same period, many states and active renewable portfolio standards and at zero mandates while federal regulations held back electricity supply. Heavy government intervention was manageable in an era of minimal growth but that ship has sailed.
▶ 0:31:08Mr. Fisher: Electricity demand is rising again, sharply, and that is something we should welcome. The growth in artificial intelligence, data centers, and advanced manufacturing is a sign of an expanding dynamic economy. The grid cannot keep up. A company can plan and finance a major data center in a matter of months but getting power to it can take years, sometimes closer to a decade. New generation projects face the same backlogs.
▶ 0:31:37Mr. Fisher: The grid has become the rate limiter on economic growth. We do not need to overhaul the bulk power system overnight. We need a way to meet demand quickly without overloading the system or raising costs for existing customers. Consumer regulated electricity is one way to do it. The idea is straightforward. Allow a new large-scale customers like data centers to develop off grid power systems under voluntary contracts. The systems will be physically separate from the existing grid.
▶ 0:32:12Mr. Fisher: That means no reliance on congested transmission networks and no shifting of costs or risks onto existing ratepayers. The bottom line is speed. Projects can move at the pace of american businesses, not bureaucrats. That aligns with and complements the administration focus on speed to power and the bipartisan consensus that we need to expand transmission.
▶ 0:32:35Mr. Fisher: It does so while protecting communities as it avoids the need to socialize costs or impose new burdens on the existing system. Cre creates a parallel path for new investment that does not get stuck in bottlenecks. We have settled for a system that is more likely to tell a new customer wait a decade than to say yes, we can serve you quickly.
▶ 0:32:58Mr. Fisher: We had lost our way and in the famous pamphlet common sense thomas payne wrote, a long habit of not thinking a thing wrong gives it a superficial appearance of being right and raises at first a formidable outcry in defense of custom. That is how I feel about the past century of electricity regulation.
▶ 0:33:23Mr. Fisher: The old way of regulating the grade is hitting the new reality of increased demand, rising rates, and growing risks to grid reliability. It should be clear which paths not to take. Europe remains obsessed with net zero and is the industrializing with bad energy policy. China is building massive amounts of electricity generation but has doubled down on central planning and government control. We know subsidies, mandates, and central planning do not work.
▶ 0:33:54Mr. Fisher: What has always worked best at something simpler and american, free enterprise. We did not beat the soviets by being more soviet than they were and we shouldn't look to china as the paragon of good governance. We will win the ai race because we embrace freedom like no one else. I am optimistic that we are on the verge of an ai power economic transformation. The question is whether our public policies will hold it back or enable it.
▶ 0:34:23Mr. Fisher: As we approach the 200 50th anniversary of american independence, I urge you to apply our founding principle of free enterprise to the electricity sector. Thank you and I look forward to your questions.
▶ 0:34:35Chair Lee: Dr. reed.
▶ 0:34:38Dr. Reed: Chairman lee, raking neighbor heinrich, and members of the committee, thank you for the opportunity to testify today on the state of the bulk power system. I am Dr. liza reed, director of climate and energy policy at niskanen center. My work is focused on the challenges of building a transmission backbone to deliver reliable and affordable energy across the country.
▶ 0:35:07Dr. Reed: Transmission moves electricity from where it is generated to where it is consumed and allows regions to share power with one another. It is this that is essential to reliability, resilience, and affordability appear in the united states is entering a period of rapid load growth driven by data centers, advanced manufacturing, and electrification.
▶ 0:35:29Dr. Reed: We are building a more diverse set of energy resources, gas, nuclear, wind, solar, geothermal, and storage but no single resource is deficient on its own. Reliability depends on how these resources work together and transmission is what allows that coordination to happen and ensures that every american has access to that affordable power. Right now, our system is not built to do that well.
▶ 0:35:59Dr. Reed: Our electricity system is broken into regional grids with limited ability to transfer power between them. The consequences of those constraints are already clear. During recent winter storms, we have repeatedly seen one region have excess power while another faced shortages and high prices.
▶ 0:36:18Dr. Reed: At niskanen center, analysis of how the grid performed during winter storm fern found across the southwest, midwest, and mid atlantic region's wind power produced at more than twice the expected level while coal, solar , and natural gas all produced less power than expected. These reliability risks translate to real costs for consumers.
▶ 0:36:42Dr. Reed: Consumers experienced price differences of hundreds of dollars between neighboring regions, including negative power prices, indicating there was power not being used at all because the transmission was not available to move it to where it was needed. Transmission between regions could have captured nearly $200 million in savings during that one storm alone.
▶ 0:37:05Dr. Reed: The north american electric reliability corporation, the entity that congress and the federal energy regulatory commission look to for reliability assessments, determined last year it would be prudent to add 35 gigawatts of interregional transmission to the system to increase reliability, a 40 percent increase on our current capabilities to move power appear in interregional transmission lines are in the national public interest because
▶ 0:37:35Dr. Reed: Of these affordability and reliability benefits they provide. Yet they face much higher permitting barriers than other energy infrastructure because the authority to approve -- approve interstate projects still rests largely with the states or even sometimes counties. Existing market structures also create unnecessary barriers to new technologies. For example, high voltage direct current transmission technology.
▶ 0:38:04Dr. Reed: Grid operators do not allow this technology to be compensated for the grid services they provide, that provide reliability and balancing even though they pay generators and other grid participants for those functions. Our inability to grow and unwillingness to adapt his impacting american competitiveness.
▶ 0:38:26Dr. Reed: China has built tens of thousands of miles of high capacity transmission in the last two decades to our hundreds and has adopted this modern high voltage direct current system to move power long distances. We are behind on increasing capacity. We are behind on adopting modern technology and this will put us behind on attracting and maintaining top industries.
▶ 0:38:53Dr. Reed: A shortage of good capacity as the primary barrier to cost-effective and swift deployment of ai in this country. The data center infrastructure can go anywhere it gets power. It does not have to be here in the U.S. and will not be if we cannot deliver a dominant grid. We need a narrow and clear federal authority to build interregional transmission.
▶ 0:39:15Dr. Reed: We need to remove market barriers to advanced technologies to get more grid enhancing technologies and high voltage direct current systems online to move power efficiently in our system. Congress can deliver a grid that grows the economy, that provides affordable energy,'s and demonstrates america competitive edge. The next industry can be built anywhere there are electrons. Let's make sure it is here in the united states. Thank you very much.
▶ 0:39:44Chair Lee: We will now proceed to five-minute rounds of questions. I will go first, followed by senator heinrich. We will alternate between democrats and republicans in order of seniority. In your testimony, you know the importance of load forecast, which is a critical process utilities and power producers undertake to determine how much investment in their systems might be needed and where to place those investments.
▶ 0:40:15Chair Lee: Demand growth from data centers, electrification, and manufacturing is real, yet I missed -- admits this buildout -- amidst this buildout we have seen -- why is it that load forecast and can be so challenging and sometimes elusive and why is it so important to get it right, especially when prices have been rising in the last few years?
▶ 0:40:44Mr. Snitchler: The challenge of load forecasting is revealed in a couple examples. We have seen at least one utility that had a 30 gigawatt projected demand growth, that after applying a new tariff has resulted in the actual demand being something closer to six gigawatts of new demand on the system. What that suggests it is they have as much difficulty in determining what projects are real, what projects are being potentially double counted.
▶ 0:41:12Mr. Snitchler: It is no surprise data center developers and hyper scalars are shopping for the best alternative based on what their needs are but when it comes to powering that system it is important that we know what we are aiming for because in the event we do not consumers will be burdened with higher costs if we overbuild a system that is unnecessary so the criticality of getting the load forecast is accurate as you can, conceding upfront it will likely be wrong but be wrong by a little, not by five or six times, is the best
▶ 0:41:44Mr. Snitchler: Way to mitigate what those costs will be. If you are a competitive power generator, we bear the risk of investment in the event that power plant turns out to be unneeded or unnecessary. We are the ones who lose the revenue and file for bankruptcy as opposed to being backstopped by customers so we think it is important to make sure the numbers are as accurate as they can be because that facilitates investments that will happen while shielding customers from unnecessary costs that are likely to occur if we aim for a
▶ 0:42:14Mr. Snitchler: Large number that may not be based in reality.
▶ 0:42:16Chair Lee: When you say captive customers, meaning when the overbuild happens that gets built into the rate equation. The customer then pays more per kilowatt hour regardless of whether that demand might be needed. So if they overshoot the burden falls on the consumer.
▶ 0:42:33Mr. Snitchler: Correct. When you do ratemaking cases as a regulator and you're making determinations about what resources are needed that becomes a charge that is collected over a period of years . It is just a different approach than what competitive generators utilize but that cost is passed on to consumers.
▶ 0:42:53Chair Lee: There seems to be some bipartisan consensus in this committee that we need to build more transmission in addition to generation. They are both important. There is some disagreement as to exactly how much transmission buildout should occur. Expanding transmission can lower costs for consumers but for some of the same reasons mentioned by Mr. snitchler overbuild an increased cost for consumers and put pressure on rates.
▶ 0:43:23Chair Lee: My priority is for the electric industry to deliver reliable power that meets demand growth at the lowest cost to consumers. You spent nearly a decade -- where you see the opportunities, the best opportunities to improve the existing regulatory framework and tell us how congress could help ensure that grid expansion delivers the best value to consumers.
▶ 0:43:50Mr. Fisher: I look at this from the consumer point of view. We are aligned on that. As long as we take a consumer first approach through that lens, transmission expansion could lower costs. We can all agree the status quo is broken. We are still spending a lot on transmission.
▶ 0:44:06Mr. Fisher: It is just not the wisest spending we could do so I think there is a bipartisan consensus to change the status quo appear in the way we have expanded transmission so far is low-voltage local lines built on a reliability or immediate need basis. That has become very expensive so it is not like we are not spending on transmission. We are, just not wisely.
▶ 0:44:31Mr. Fisher: One thing congress can do, and a thank you for the repeal of the ira, that has changed my posture where we do not have subsidies expanding transmission could benefit consumers instead. Something has to be done to incentivize the larger transmission and get away from the small ball.
▶ 0:44:51Chair Lee: When you refer to wise decisions and allocation, you are just thinking about people who are smart, like people with fuller, grayer beards with more experience. You are referring to ability to receive and interpret market signals. Market signals can tell us how best to allocate. Is that the point?
▶ 0:45:14Mr. Fisher: As my beard gets grayer I rely more on the wisdom of the market than anything I would want to bring to the table but absolutely. You built the transmission system customers need so have opportunity now to have large customers with high willingness to spend and high time preference. We could leverage that new set of customers to build some of this transmission.
▶ 0:45:43Chair Lee: I realized both our male witnesses have beards and one has a beard that is more gray than the other. I did not mean to make a value judgment. I apologize.
▶ 0:45:52Sen. Heinrich: To any of you think that we are building -- obviously I think the affordability argument is well received by everyone on this committee because all of us have constituents who are under pressure -- but to any of you think that we are building enough interregional transmission to service the existing grid and the kind of growth we would hope for for the electric sector in the economy?
▶ 0:46:25Sen. Heinrich: I will go down and let you all answer. You can start and we will go the other way.
▶ 0:46:33Dr. Reed: Thank you, senator. We are not building the amount of interregional transmission we need right now and there are particular barriers preventing that from happening. Utilities are not incentivized or expected to be looking to their neighbors so we are losing the economies of scale and that is costing consumers.
▶ 0:46:54Mr. Fisher: My short answer is no. My longer answers we should look back at the history. I think the intent was good, but the track record is poor. The transmission line miles of the high-voltage lines -- that stat has plummeted. We should acknowledge that fact and try to do something different.
▶ 0:47:17Mr. Snitchler: I think it is clear being able to move electrons from where they are being generated where they are needed, particularly in times of stress, is important. That is how we ensure reliability. As we have seen, the importance of that transfer capability continues to be highlighted as an area of importance.
▶ 0:47:41Sen. Heinrich: You talked about how to capture value for customers and save the money as opposed to just bring additional costs onto the rate base. Go deeper into how we can capture that value and actually benefit customers.
▶ 0:48:07Dr. Reed: What is causing us to lose this valley for consumers as we are not building the transmission find that on average 100 million dollars is lost per gigawatt transmission line not billed per year in the last 10 years. These transmission lines are not being built for a handful of reasons. One is that they are very complicated.
▶ 0:48:29Dr. Reed: This is an interstate and interregional project and it does not enjoy a federal permitting authority as natural gas pipeline steel. These electrons are moving or intended to move in interstate commerce and instead they are being held up by processes at the individual states requiring approval. This is a duplicate of red tape that encourages -- discourages developers and makes it longer for them to be able to complete projects.
▶ 0:48:57Dr. Reed: There are also not expectations at utilities to be looking to the regions to build these interregional lines. We have an opportunity to enable utilities and private merchant developers who do not show up on customer utility bills to build more if we can fix these regulations.
▶ 0:49:14Sen. Heinrich: I was involved in facilitating and working on one interregional power line and it took 17 years to get all of the approvals to actually make that a reality. I think there are a number of places where our incentives are not aligned. You mentioned the issue of compensation for values that those powerlines provide.
▶ 0:49:43Sen. Heinrich: Walk through that a little because I think there is a mismatch between transmission and generation.
▶ 0:49:52Dr. Reed: I'm happy to appear in high voltage direct current was the topic of my phd thesis. I do not think I can cover that in a minute but I will note it is a semi conductor-based technology that has the ability to act differently than our existing grid system so it provides different services and different values.
▶ 0:50:14Dr. Reed: It can move power long distances , which captures value for consumers, by the way that it controls electrons also provide stability to the grid. There are complicate in reasons involving voltage and frequency we can discuss off-line but it ensures we are keeping electric equipment online by keeping voltage and frequency where it needs to be.
▶ 0:50:37Sen. Heinrich: One of the tools that has been used effectively in other parts of the world and sporadically in the U.S. are a great enhancing technologies. But we have this model particularly within state regulating utilities where the incentive is often -- the response will parties, for example in central new mexico, they have leaned into gas but there's also incentive for utilities to build big and then
▶ 0:51:08Sen. Heinrich: Get rate based. How do we make -- how do we create a more aligned incentive with -- so we can get more out of the existing grid?
▶ 0:51:19Dr. Reed: There are a number of options that congress and ferc can pursue to incentivize these grid enhancing technologies and part of it is expectation. What are we requiring of the grid? We should be using the lines that we build to a higher capacity.
▶ 0:51:38Dr. Reed: Grid enhancing technology, power flow control, all these can help us use those lines better and move power around and the way we set expectations on how reliability is achieved and provide financial incentives to utilities or private developers to provide those services are ways we can get more of this advanced technology incorporated.
▶ 0:52:04Chair Lee: Senator king. Sorry, senator hickenlooper was next. >> I will yield to the senior senator from maine.
▶ 0:52:16Chair Lee: Such a wonderful, deferential group of governors now.
▶ 0:52:23Sen. King: Thank you, senator. I was involved in our industry starting in 19 83, involved with the birthplace of independent power production. Let me make a quick statement about permitting reform, which I think all of you have mentioned here and I been advocates as I have been here for permitting reform because I have lived it.
▶ 0:52:46Sen. King: However, at this moment I have no intention of participating in permitting reform discussions as long as this administration is arbitrarily putting his thumb on the scale and canceling wind and solar projects that in many cases have already been permitted because there is no point.
▶ 0:53:03Sen. King: If we have permitting reform and one side of the equation current renewables quintessentially killed by the arbitrary actions of the administration, permitting reform only benefits one side of the equation, fossil fuel. I'm not going to participate in that discussion.
▶ 0:53:21Sen. King: When the ministry she decides we're going to play it straight and let all forms of energy be -- compete, then we can have a profitable discussion and I think we are in many ways almost there on permitting reform but I want to be clear I feel like I am being dumb to agree to permitting reform which only affects one half of the equation so I want to make that point. Mr.
▶ 0:53:49Sen. King: Fisher, I like with the cato institute does and I like your emphasis on free markets. One of the problems it seems to me in transmission and distribution is it is not a free market. It is a monopoly in most cases. How do we import the principles of competition and free markets into the development of the grid so that it is not an entirely monopoly operation and we have this perverse incentive to build and invest rather than do
▶ 0:54:20Sen. King: Because utilities make their money on a rate of return on how much they invest so there is an incentive to invest as much as possible? Talk to me about free markets and the virtues of competition.
▶ 0:54:32Mr. Fisher: An excellent question. Thank you. I brought up the concept of consumer regulated electricity, which is I would view as a private grin, a parallel path that could work alongside
▶ 0:54:45Esterline Sen. King: Does that mean two sets of wires down the road?
▶ 0:54:50Mr. Fisher: Not necessarily. I would envision a large industrial campus on a single site in a single state. Each could have their own if they like what your question is about the public grid and optimizing the public grid despite the monopoly influence on it. That is where I think we are so far afield from free markets that a lot of things are on the table. On the plus side with the status quo so broken that just been a thing you can do them any reform you make will probably be positive.
▶ 0:55:18Mr. Fisher: So on the one hand mandating and making a monopoly make decisions that it will not otherwise make come in other words having a heavy-handed regulator to basically say these are investments that we know you will not make given your incentives --
▶ 0:55:32Sen. King: How about at the regulator says before you build new poles and wires you have to try and incorporate low cost, options like dynamic line rating, this conductor will carry twice as much electricity as a similar steel conductor because it has a fiber core.
▶ 0:55:56Sen. King: I do not see that as -- I do not know how else we crack this without somebody saying you have to do the more efficient things first and then tell us what you're going to build.
▶ 0:56:08Mr. Fisher: I agree. Way to implement that is to make sure there is solid oversight of these investments. What we are locking down -- there is a regulatory gap between the voltage level that states coordinate, that ferc coordinates. There is a lot operating in the gray area that is not subject to strict oversight so you could say before building your next transmission project you have to look at different alternatives. That I am comfortable with.
▶ 0:56:37Sen. King: Everybody is now talking about ai bringing its own power. Has anybody done a calculation -- we all have this doomsday calculation of increasing demand and increasing demand on the grid and construction into the trillions of dollars that will require. Has anyone done a calculation of -- take ai out of that growth projection? Because theoretically they are going to bring their own power?
▶ 0:57:03Sen. King: How much does that reduce this doomsday scenario in terms of demands on the grid? Dr. reed, do you have thoughts on that?
▶ 0:57:14Dr. Reed: I'm not aware of a particular calculation but we have done analysis on the range of expectations and even at the lower end of demand expectations we still find that we need more power and more transmission on the grid.
▶ 0:57:28Sen. King: I hope somebody will do that. I think that is important to know. We know we are going to need this much more power but if 50, 60% of that is ai that is going to have its own power, that changes these discussions. Thank you.
▶ 0:57:48Chair Lee: Senator hickenlooper.
▶ 0:57:51Sen. Hickenlooper: Now I will yield to the senior senator for california because I'm trying to get in good with people this week.
▶ 0:57:59Chair Lee: Senator padilla.
▶ 0:58:01Sen. Padilla: Thank you, Mr. chairman. I appreciate my calling from colorado not just for the deference this morning but you will hear me talk a minute about an exciting new proposal that he has been leading a group of us on. I want to begin by -- I think recognizing the urgency for today's discussion.
▶ 0:58:28Sen. Padilla: Families and businesses are paying the price for an aging and overworked grin that is delivering not just higher bills but more frequent outages and missed opportunities for significant investment in job creation. I like to think both sides of the aisle here agree when I say that america cannot leave the next generation on a grid built in the past.
▶ 0:58:53Sen. Padilla: And using older technologies so this week I was proud to work senator hickenlooper and other colleagues to build on the bipartisan energy in permitting reform act last congress and develop new legislative language to tackle these issues and lead us toward the construction of a next-generation electrical grid.
▶ 0:59:16Sen. Padilla: I believe our effort represents not just a commonsense plan but one that will build a cheaper, stronger, more reliable electrical grid that protects ratepayers, respects communities, and keeps our economy competitive. I'm going to start by not just asking us to look at the fault or shortcomings of the grade of the past but to envision what the grid could and should look like. In the next 20 years.
▶ 0:59:43Sen. Padilla: Since the era of edison, there has been talked about the potential promise of high voltage D.C. transmission but now these technologies are not just proven them here and they are ready to provide efficient transfer of power over long distances. That is important to recognize. Dr. reed, if we built out the backbone of a high voltage D.C.
▶ 1:00:07Sen. Padilla: Transmission line over the next couple decades, what would be some of the benefits in terms of ratepayer bills and reliability particularly during extreme weather events? If you can touch on that and any other technical benefits.
▶ 1:00:22Dr. Reed: I'm happy to discuss the benefits of high voltage direct need for a backbone to our alternating current system is it particularly clear when we see severe weather such as winter storms and severe heat because it can dispatch power long distances quickly and directionally and our alternating current system, electrons flow or there is the least resistance.
▶ 1:00:47Dr. Reed: It can move it exactly where it needs to go so it works well with that alternating current system to move around congestion and provide economic power where you have excess power you can move it to an area that needs power while also providing reliability benefits. There is tremendous opportunity for building this type of transmission, particularly across regional lines for economic and reliability reasons that will ultimately save hundreds of millions of dollars a year.
▶ 1:01:19Sen. Padilla: Are there any key regulatory or procedural barriers holding us back?
▶ 1:01:26Dr. Reed: There are specific barriers holding us back. One of them is the siting constraints on interstate and interregional transmission lines. These types of lines face the most number of exciting and permitting barriers because even though they are participating in interstate commerce they are subject to the specific rules and regulations of each state individually.
▶ 1:01:51Dr. Reed: That is an incredible burden for a utility or emergent developer to take on that risk and timeline to complete. We also are not -- we do not have the expectation in markets. Ferc has not set the expectation that these technologies can receive compensation for the benefits they provide. They are providing the same benefits -- they are built on the same semi conductor technology of the products that we do allow to be enumerated in the markets.
▶ 1:02:20Sen. Padilla: I want to associate myself with the comments and enthusiasm of senator king and talking about rick and doctoring -- re-conducting. Could each of you explain where interconnection procedures may be improved to expedite connection of generation to the grid?
▶ 1:02:49Mr. Snitchler: The interconnection process has been slow. At first direction, all the regions have worked to modify their process. We have seen improvement to the process. I do not think it is complete. I do not think anyone would agree that is the case but I think there has been improvement so we are going to need to accelerate that process to make sure studies are done in a different approach used in the past.
▶ 1:03:14Mr. Snitchler: Ferc recently approved a model which is taking a more innovative approach to look at interconnection of generation and transmission at the same time and effort to accelerate it more quickly and was very enthusiastic in their order about what he could do for the system. I think thoughts and approaches like that are going to be helpful to accelerate the need to be the moment and move speed to power.
▶ 1:03:39Sen. Padilla: Anything to add?
▶ 1:03:42Mr. Fisher: I will say I agree with todd.
▶ 1:03:49Chair Lee: Senator hickenlooper.
▶ 1:03:54Sen. Hickenlooper: I think all three of you for being here. This is an all hands on deck moment. I have gotten a masters in environmental science back in 1979.
▶ 1:04:10Sen. Hickenlooper: Back then we refer to climate change as the greenhouse effect but much of what we predicted, the droughts and wildfires, these gyrations in temperature and precipitation, has come true more and more to the point where now many counties across the united states, a significant number people can no longer get insurance for their homes. That happens in small communities, the values of the homes go down. They are not worth as much to anyone and that means the tax base for the small communities is at risk and gets worse.
▶ 1:04:42Sen. Hickenlooper: One example I wanted to put out that we just got recently, we have a mind called -- and various sulfite minds. They measure the snowfall every year. The average of the last hundred years has been 240 inches. When it snows, they measure it and then throw it out. It does not get compacted. This is a consistent measure.
▶ 1:05:12Sen. Hickenlooper: The all-time low in 100 years was 100 82 inches so 400 -- 200 40 inches average and then an all-time low of 182 inches. This year we had 60 inches and we are seeing that across the west and I think as we look at these solutions the grid is one possible, the interconnections -- a powerful solution on how do we get clean energy fast and
▶ 1:05:45Sen. Hickenlooper: Making our grid better. Let me start with you. As you point out in her testimony where struggling to build the transmission lines necessary to keep pace with surging growth and electric vehicles. We look at the different places where we need more and more advanced manufacturing and all these places where we need more electricity. The U.S. is only building 375 miles a year of new grin while china is building 8000 or slightly over a thousand miles.
▶ 1:06:17Sen. Hickenlooper: We are also falling behind our european partners when it comes to deploying the advanced technologies that you have all been talking about, dynamic line ratings, advance conductors, etc. Can you talk about the need to have a holistic view of modernization that includes transmission and improvements to our existing infrastructure?
▶ 1:06:39Dr. Reed: I'm happy to discuss the multiple ways we can bring new technology and new developers into the grid system to provide reliability and affordability. I will start with great enhancing technologies and rick and doctoring -- reconductoring.
▶ 1:07:02Dr. Reed: These are opportunities to use the rights-of-way we have and get more power through them got more value to consumers because it is a less cost effort for moving more power. It is a shorter-term solution that buys time for building larger transmission lines which are essential for providing long-term robot -- liability -- reliability.
▶ 1:07:26Sen. Hickenlooper: To either if you want to opine?
▶ 1:07:36Mr. Fisher: The way that I view, especially addressing climate change, we should focus on adaptation in the U.S. but if we want any chance at mitigate climate change in the long run we need to promote the kinds of technologies that will take hold globally and I could see the U.S. but not just on the technology but the transmission technology front, we have a private sector in the U.S.
▶ 1:07:58Mr. Fisher: That can lead on this and then the goal -- we have to take into account there is the law of climate that if you're ever up against economic growth versus climate everybody chooses economic growth. We have to come up with technologies where people choose involuntarily.
▶ 1:08:18Mr. Snitchler: The only thing I'll add it as it is available now. The technologies exist to better utilize the wire systems already there. The permitting of citing challenges to existing rights-of-way are not the same as you would have in new development so deployment of the technologies that already exist on existing technology are a quicker and generally lower cost opportunity to enhance the performance of the system in a way that helps achieve all the
▶ 1:08:48Mr. Snitchler: Objectives you have been describing.
▶ 1:08:50Sen. Hickenlooper: I'm out of time. Certainly our grid is in need of modernization. You all say that under think -- and I think you're going to the same point the data center demand could help us fix the underlying -- we've been accepting subpar grid. I yelled back. -- yield back.
▶ 1:09:19Sen. Cortez Masto: It has been an interesting discussion. I have been listening to opening statements. Yesterday, senators markowski, shaheen, and I introduced a piece of legislation called the secure grid act. It would empower states to really assess the risk to their electric grids, including extreme weather, cyber threats, and other vulnerabilities. How should the U.S.
▶ 1:09:49Sen. Cortez Masto: And the states work to reduce the risk of cyber and physical attacks?
▶ 1:09:57Dr. Reed: I don't want to speak outside my expertise on cyber security in particular, but I will speak to overall security as a reliability metric. Removing these regulations that make it difficult is a security measure because we are able to move power and isolate parts of the grid. There is tremendous opportunity if we can build it.
▶ 1:10:29Mr. Fisher: I'm also a touch out of my depth when it comes to security questions but I will note anyone who has looked deeply into these questions of the vulnerability of the grid, especially during times of peak demand, could be devastating. Anybody who has looked into that has been correctly terrified about it. I think the answer is to be resilient. I don't know if we can prevent every attack, but being resilient in recovery.
▶ 1:11:01Sen. Cortez Masto: It is not just specific attacks. It is vulnerability.
▶ 1:11:08Mr. Snitchler: I would share the desire not to get too far out of my depth, but at the same time I think it is clear that the grid is persistently under attack. The technology being deployed by nation state against our electric system is a daily routine event and you are seeing the industry respond in a favorable way to defend against those attacks. Further enhancement are likely to be required as we see technology involving.
▶ 1:11:38Mr. Snitchler: The concern about ai is what it can do and how quickly we will see these things happen for and against the white hat, black hat technologies so I anticipate we will see more and more this in the future. I do not have a great answer other than to say the industry is responding and working to -- we are perpetually in the situation where we have to be defending 100% of the time.
▶ 1:12:05Sen. Cortez Masto: There has been discussion about new technologies and more transparency and interconnection that would better allow energy sources to hook up to the grid faster. Let me ask Dr. reed or any of the panelists, are there certain rto's that are taking an innovative approach that we should be lifting up as a model?
▶ 1:12:39Dr. Reed: I will speak to the southwest power pool and I believe Mr. fisher can speak to this as well. The southwest power pool is looking at transmission planning, including the interconnection queue and brought her transmission planning as a holistic solution. That has the opportunity to be looking to build more of these high-capacity lines so we can provide reliability and move power cost-effectively at the same time.
▶ 1:13:07Dr. Reed: We have seen interconnection even when different rto's take on solutions where they are moving different types of technology or different generators to the front of the line. We still see regardless of how long the study process takes which does need fixing, there is still the build process afterward, which inevitably says we need billions of dollars of transmission that we did not build and now we need to so we can get this energy online.
▶ 1:13:35Mr. Fisher: I will reinforce the thumbs up on spp. The other concept out bring up is this idea that we have to deal with the queues in the order in which you join, sort of a first-come, first-served basis. That needs to go. We should move beyond that.
▶ 1:13:56Mr. Fisher: I have heard proposals such as an open season approach or requiring new customers to put up more financial backing. The key was clogged and -- queues are clogged and the status quo is broken.
▶ 1:14:15Mr. Snitchler: I will add the recent developments in the spp order for ferc are instructive. Going all the way back to last june's ferc hearing, which was dealing with issues around interconnectivity, where all the rto's participated, the directive was made clear that accelerating in unclogging the cues is important. You have seen the rto's try to do that. Pgm has gone through the process.
▶ 1:14:44Mr. Snitchler: They were able to shed nearly two thirds of the projects in the queue that were holding places that may or may not have allowed them to interconnect with the system and move projects that had a greater sense of completion to the front of the line. Last congress are introduced to the interconnected procedures act. We will introduce it, talking to various innovations. I think it is important that we move in that direction.
▶ 1:15:14Mr. Snitchler: I would invite my colleagues to join in on this legislation. Thank you very much.
▶ 1:15:18Sen. Wyden: I just want to say that as usual my colleague who also does such good work on the finance committee, spot on making the focus innovation. I want to pick up right where she left off. My question for you Dr. reed, thank you for working with the staff on the legislation I'm introducing today. It is well understood that a significant portion of the grid is practically from the dark ages we have to start with that.
▶ 1:15:50Sen. Wyden: It is really a trifecta for rurl communities. We are seeing it in combinationo we are seeing it in combinationf we are seeing it in combination, drought and escalating energy prices comes together and it is why this is such an important hearing. Thank you for scheduling it, Mr. chairman. My question to you is how would bills like the one I'm introducing today, the wildfire and the grid reliability act help us fight this manufactured energy crisis?
▶ 1:16:21Sen. Wyden: That is what we are dealing with. This is a crisis we did not have to have. Tell me if you would because you have been helpful to us in terms of working through some of the aspects of this with your thoughts.
▶ 1:16:33Dr. Reed: Thank you for the question. I don't have any specific thoughts on the bill you referred to in particular but I can speak to wildfire resilience and the importance of investing in wildfire resilience and investing in a grid that can be resilient to numerous concerns, including wildfires.
▶ 1:16:55Dr. Reed: There are aspects of that resilience which are difficult to put on a ratepayer because of the small rural utility footprint and there are different mechanisms that could be effective for covering those costs.
▶ 1:17:10Sen. Wyden: Aren't small utilities, would you describe correctly as the footprints you are seeing, aren't they getting clobbered by the circumstances we are seeing right now?
▶ 1:17:23Dr. Reed: Wildfires are an incredibly important risk to be addressing. I also want to highlight the value that transmission can provide in wildfire mitigation, by being able to move power away from where areas are at extreme risk and route power in different ways so that consumers can still be served while the risk itself can be mitigated.
▶ 1:17:49Sen. Wyden: Thank you for your good work. I'm going to spare my other witnesses unless they would like to contribute but we should all start with the proposition that my colleague started with. This is a modernization job . We stick around with these outdated systems, there is nothing that you can do but waive your wand. Mr. fisher, I know you have been interested in this area. Be careful what you wish for.
▶ 1:18:19Mr. Fisher: If I could just briefly agree with you on the need for innovation. Peaceful agreement on -- there is way too much of the grid, far too many that were patented. If we brought thomas edison back, he would recognize the technology. Alexander graham bell would have no idea what this is. That is a problem and we need to address it. I agree with you.
▶ 1:18:47Mr. Fisher: >> there is no way we can make alexander graham bell aware that it is exists. Senator cassidy.
▶ 1:18:57Sen. Cassidy: I will refer to my democratic colleagues as I review the testimony. Can I let one of them go before me? >> senator hirono, you are up next.
▶ 1:19:11Sen. Hirono: Thank you so much. Dr. reed, you mentioned that wildfire resilience is a very important aspect of the grid. Knowing that what happened on maui which was a massive wildfire, can you give me an example of how the grid can be made wildfire resilient?
▶ 1:19:32Dr. Reed: Thank you for the question. I am not a resilience expert when it comes to wildfires. I can speak to how transmission can provide resilience, this type of backbone transmission that can move power around so that consumers are still served while isolating areas of the grid that can be at high risk of wildfires.
▶ 1:19:57Sen. Hirono: Do you know if power companies are adapting those suggestions so they can provide power while the wildfire is occurring and parts of the grid is shut down?
▶ 1:20:10Dr. Reed: I cannot speak to any particular power company.
▶ 1:20:13Sen. Hirono: When you mentioned wildfire resilience, that caught my attention but I do have a question. Over 100,000 people in hawaii recently lost power due to a severe storm. It caused widespread damage and down power lines across the islands and hawaii cannot rely on power from other states during these instances.
▶ 1:20:35Sen. Hirono: What are some of the grid technologies that can be most helpful for increasing the affordability and reliability of power in hawaii, alaska and other remote locations?
▶ 1:20:46Dr. Reed: Thank you for the question. Allows me to talk about high voltage current and the ways that this technology can be used to restart the grid. So when there are blackouts, these technologies, if we bring them onto the grid, we find it easier to restart the grid after there is a blackout and to manage the grid itself, the voltage and the flexibility that can cause blackouts so we do not have them in the first place so we need more of this advanced
▶ 1:21:18Dr. Reed: And innovative technology incorporated into the grid and building a backbone so we can recover.
▶ 1:21:22Sen. Hirono: Is incorporating this technology into the grid an expensive proposition that will result in ratepayers having to pay more? Hawaii ratepayers paid the most per city than any state in the country.
▶ 1:21:38Dr. Reed: I cannot speak specifically to the costs borne by hawaiians but I can speak to what we have seen in studies by the north american electric reliability corporation, natural labs and private analysis that interregional transmission and advanced technologies save consumers money by investing in the right kinds of transmission infrastructure that we need.
▶ 1:22:02Sen. Hirono: Thank you. Now the cost of utilities scale battery storage has fallen dramatically, 27% in 2025 according to a recent estimate from bloomberg.
▶ 1:22:19Sen. Hirono: What rule can battery storage play to reduce transmission bottlenecks and reduce the overall cost of power paid by customers and also do you think that state or federal regulators to require data centers which are massive uses of energy to incorporate energy storage to reduce their impact on the grid?
▶ 1:22:37Dr. Reed: Thank you for the question and I welcome the opportunity to work with your office on the specifics of energy storage. I cannot speak to the need for more generation and more power on the grid and energy storage is a valuable way to provide sex ability in the same way that transmission provides flexibility and moving power over time and over distance.
▶ 1:22:59Dr. Reed: As far as the data center question, I think it is important when we talk about what data centers need and what industry needs to provide options and the best options are solutions that let the market decide what works best. But one of those options has to be reliable and affordable energy on the grid.
▶ 1:23:21Dr. Reed: If we set expectations of exclusively bringing your own power than we are telling industries you must be able to adopt high cost and high risk choices to thrive in the american economy. If we provide options, that gives markets the ability to develop and compete in the U.S. and abroad.
▶ 1:23:40Sen. Hirono: Speaking of batteries, this was for Mr. snitchler, am I pronouncing your name correctly? As I mentioned, hawaii faces the highest electricity costs in the country and in march 2025 the ceo of vistra described batteries as being the cheapest, fastest and easiest way to meet surging power demand.
▶ 1:24:08Sen. Hirono: If you take renewables and storage off the table, we will force electricity prices to the moon. Hawaii is seeking to become energy self-sufficient by 2045. That means we need to rely on batteries, etc. Do you agree with the comment that we really should be spending a lot more on bringing batteries online, making those things affordable for users?
▶ 1:24:35Mr. Snitchler: Thank you for the question, senator. Our members operate some of the largest battery installations in the country and are very supportive of the technology because they are part of the solution on how we will address both the reliability and the affordability question in the future because batteries have the ability to have impacts on driving --
▶ 1:24:54Sen. Hirono: I agree with you as far as the efficacy. The question becomes how quickly can we get more of these things in place for the consumer.
▶ 1:25:02Mr. Snitchler: To your follow-up question I think part of that is depended on permitting and siting, that the state and federal and local level. It is also depended on supply chain related issues because not only is it the supply of batteries but it is also the switchgear that is required at substations that ultimately moves the power from where it is to the ultimate consumer to continue to feel stress under the current conditions we are in. It is true for generators. It is true for substation equipment. It is true for transformers.
▶ 1:25:33Mr. Snitchler: Addressing some of those longer term supply chain issues would be instrumental in trying to accelerate the deployment you are asking about.
▶ 1:25:38Sen. Hirono: Thank you, Mr. chairman. >> I will again defer to my republican colleagues. My democratic colleagues. >> yes. Go ahead. >> in a kind of irony, remember I asked how much of the projected load is a.I.? I asked claude and he said it is 50%.
▶ 1:26:06Sen. Hirono: 50% of the projected load growth over the next 10 years or so is attributable to a.I.. A.I. Told me that. I thought that was kind of interesting. I think that is an important point, don't you? If we can take a.I. Demand off, then the problem is half of what we think it is. I think that is something we should be discussing. The second is with regard to the queue, my understanding is a.I.
▶ 1:26:34Sen. Hirono: In some cases has dramatically increased or decreased the time that is important for assessing applications for interconnection. You are nodding. Can you say yes? >> that's correct, in fact pgm and google put the tapestry project together in an effort to do exactly that, to enhance and accelerate the process because everyone recognizes that we need to move more equipment. >> they worked to reduce it from months to days, is that correct?
▶ 1:27:03Mr. Snitchler: You would have to ask them for the specific time horizon. I don't have the exact adjustment. >> that goes with one of the themes of this hearing which is utilizing technology effectively to deal with this problem rather than doing it the way that thomas edison would have done it 100 years ago. Dr. reed, we talked a lot about direct current and you seem to know a lot about that. D.C. lines are also less line losses, is that correct?
▶ 1:27:33Dr. Reed: Yes. D.C. has a number of efficiencies including lower line losses because of how the current flows on the line.
▶ 1:27:41Sen. King: Thank you. >> Mr. fisher, I was really interested as to your thoughts for what we should do but it sounds like from a libertarian viewpoint we should just de-regulate and Mr. snitchler your testimony said the same thing. It is not the generation cost, is the transmission cost that is driving the price of electricity. Is that fair?
▶ 1:28:10Sen. King: >> in general I think that is a fair statement although we should be very sensitive to the cost of input fuels.
▶ 1:28:20Sen. Cassidy: Let me ask you as well because globally as a country you have a balance of electrons but if those electrons are being generated by wind and the panhandle of texas in oklahoma but they need to be used in atlanta, it is speaking of permitting means for example, taking people's land in order to get the highest voltage wires to take it from there to here, correct?
▶ 1:28:48Mr. Fisher: Yes. I believe you are talking about a federal backstop citing authority and the use of eminent domain and that makes me very nervous.
▶ 1:28:56Sen. Cassidy: We want a the regulatory environment but the environment almost does require -- you see where I'm going with this.
▶ 1:29:07Mr. Fisher: I do and I should note that I am only speaking for myself. Each cato scholar has their own independent thoughts. I very much agree with a 2002 book that referred to the military open access model of transmission which is basically what we are dealing with now. I would not call it de-regulation. It is restructuring from the late 1990's, referred to as infrastructure socialism. That is a fair way to characterize the public grid.
▶ 1:29:40Mr. Fisher: That is why I've been advocating for a new parallel path to allow private grids and I think that can solve a lot of the problems.
▶ 1:29:47Sen. Cassidy: Are you ok with the private grid? >> our members take no position on that. We have talked with travis and with glenn lyons who helped develop the issue. We think option now that he is the way forward so we don't think there is a perfect path or a silver bullet. There probably is not even a silver buckshot.
▶ 1:30:08Sen. Cassidy: We think having a number of approaches applicable to parties who want to contract at arms length and make determinations about what works best, all options should be on the table so if they want to pursue cre, they should do that. If they want to take power off and be a regular customer, they should do that. If we think there is a model that works best for them, they should be able to do that. Some of the decisions that ferc is currently undertaking can help enable those transactions to take place and take place --
▶ 1:30:37Sen. Cassidy: Much of that has already happened in louisiana so much of what you just described is currently an option. Do you wish to weigh in Dr.
▶ 1:30:46Reed: ?
▶ 1:30:47Chair Lee: I agree with both of my fellow witnesses that option a lady is the key and if we can provide a reliable, affordable grid, that should be one of the options for growing competitively and providing affordable electricity for consumers.
▶ 1:31:02Sen. Cassidy: This is the rug in which does the federal government have a backstop in terms of regulation in which you get electrons from texas to atlanta. Do you follow what I'm saying? I think everything else we agree on. Northeast louisiana which is I think the size of manhattan has all of these different ways simultaneously by which to provide electricity. Except that I don't think it is bringing electrons from the panhandle of texas. How would you will resolve that?
▶ 1:31:33Sen. Cassidy: Do you follow my question? Should we on the federal level b basically endorsing eminent domain to take private property in order to allow high-voltage lines to go from interstate settings? >> it is a valid question. The answer that I would fall back on is that we should accomplish as much of this is possible through voluntary means. The use of eminent domain should be minimized.
▶ 1:32:03Sen. Cassidy: I don't think it will ever get to zero but with the class of customer we have now, the balance sheets that they bring, the speed, the power, the impetus that they bring to solving this problem, we should take full advantage of that. I would look more to the private sector than to the public sector. >> I would simply add that I think all options need to be on the table. If you could look more close to the load instead of moving it across long distances --
▶ 1:32:31Sen. Cassidy: Wind right there is really good, right?
▶ 1:32:34Mr. Snitchler: That is a separate discussion. We are a generation oriented company so if you want to build closer to where your load is, we would be willing to do that.
▶ 1:32:44Dr. Reed: Thank you senator for the question. I think a clear federal authority for exciting interstate transmission lines would be efficient with how we cite natural gas pipelines and that interstate commerce is a necessary role for the federal government. Right now states use their eminent domain authority but they also use practices that reduce competition so that we cannot have private developers who are able to access the economic power and move between states.
▶ 1:33:15Dr. Reed: So we have multiple state regulations and laws in many places that are suppressing competition in ways that are costly to the consumer and a narrow federal authority could clarify this. >> senator heinrich.
▶ 1:33:29Sen. Heinrich: Dr. reed, if each one of these large load data centers was its own generator, would that be the most sufficient use of capital to power that part of the demand sector?
▶ 1:33:47Dr. Reed: Thank you for the question, senator. The most efficient use of capital to power data centers is the choice of the data centers themselves. I think the best option we can provide for american competitiveness and for growing industries here is to ensure that they have options available to them, both a robust grid that can provide affordable power and options for building their own private grids to provide their own power.
▶ 1:34:13Sen. Heinrich: Described to me any risks associated with customer impact with the sort of private grid model.
▶ 1:34:21Dr. Reed: Thank you for the question. I think the way that we think about transmission benefits is important to consider here where if we have a robust backbone to our grid that can provide affordable power that benefits consumers. The more consumers of electricity that there are on the grid including high consumers such as data centers, there would be more ratepayers who are helping pay for that valuable infrastructure.
▶ 1:34:52Dr. Reed: >> Dr. reed, I want to start with you. You recently wrote that durable federal permitting reform and enhanced federal citing for electric, you wrote about the need for it and enhanced federal citing authority for electric transmission projects. Section 216 of the federal power act provides citing authority for ferc and doe.
▶ 1:35:21Dr. Reed: This authority has yet to be issued, has yet to be used rather to cite a line but it is going to be used in the future. If that authority were going to be used in the future, do you think lines cited using that authority would still likely face hurdles under some of our environmental permitting statutes like nhpa and the clean water act?
▶ 1:35:49Dr. Reed: Thank you for the question. These regional lines you're describing that would be cited under the authority of 216 would benefit from reforms to nebo and in hpa. The backstop citing authority you are citing and regulations require numerous iterations so we need to resolve these iterations that cause delay and simplify procedures including that two 16 authority which actually has multiple federal authorities that need to be satisfied before we can even get
▶ 1:36:21Dr. Reed: To approving an interstate line. So there is a lot of opportunity for clarification and limitation of procedures for merchan developers.
▶ 1:36:30Sen. Heinrich: Thank you. But these are things we should focus on to make sure that we are ready to go. Mr. fisher, electric utility ratemaking has been noted in this conversation today, it is a complicated process that varies from region to region and state to state.
▶ 1:36:51Sen. Heinrich: According to a report from pgm's independent market monitor, transmission in the pgm region now accounts for a total of 32% of total hill -- total wholesale electricity costs. This is up from 23% of total wholesale electricity costs just two years ago. In your view, what happened there?
▶ 1:37:21Mr. Fisher: That is an excellent question. The general thesis that I could forward especially in the wake of quarter 1000 there was a retreat away from regional and interregional lines toward what I have characterized as a ball projects. Pjm is the immediate need projects designed to meet a short-term reliability constraint that they are designed to reduce those.
▶ 1:37:49Mr. Fisher: In my opinion utilities have taken full advantage of that and in their profit maximum say some -- profit maximization they have been allowed to put a lot of small ball transmission in rate based. It works very well for them but does not work very well for the consumer and increases the overall cost of power.
▶ 1:38:10Sen. Heinrich: Relined me how you define small ball.
▶ 1:38:14Mr. Fisher: I would characterize it as a voltage threshold distance. Shorter lines and lower voltage that often operate in this gray area between state jurisdiction and federal. If we wanted to close the regulatory gap there I think that is an opportunity for congress to step in and clarify that the voltage threshold could perhaps even go lower in terms of federal oversight.
▶ 1:38:37Sen. Heinrich: Ok. But this all factors into the equation we have been talking about previously about the fact that overbuilt or inefficient allocation of resources might result where the cost is spread out, perhaps where the utility company is held harmless regardless because the ratepayers are going to make up the difference, is that right?
▶ 1:39:00Mr. Snitchler: That's right.
▶ 1:39:03Sen. Heinrich: States like new york have weaponized sections of the clean water act and they have done so among other things, they have done so to block expansion of natural gas pipelines into new england. During winter storm fern, that bottleneck resulting from that weaponization of the clean water act forced the region to rely heavily on fuel oil in order to keep the power on.
▶ 1:39:32Sen. Heinrich: According to an industry trade publication, oil fire generators ran more frequently because natural gas was expensive due to the lack of pipeline infrastructure going to new england and again, that lack of basic infrastructure could be traced to the web as a station -- traced to the weaponization of section 41.
▶ 1:39:58Sen. Heinrich: Higher electricity prices led to emissions spiking compared to the year before. It is not just that this result in higher costs. It is not just that it is bad for consumers. It is also that it results in more emissions. In your assessment, what with the impact of sufficient natural gas infrastructure going into new england the -- be on prices and grid reliability?
▶ 1:40:28Sen. Heinrich: >> you have identified the two competing issues, the first of which is how will we ensure you have the commodity that impacts the price of power be able to be delivered to the generator, that is natural gas, in the instance that we are discussing and how do you get greater access.
▶ 1:40:46Sen. Heinrich: That input cost ultimately drives the greater cost of electricity and the inability to move more natural gas into new england necessitates that there is going to be a reordering of the units dispatched because oil because cheaper when gas gets more expensive.
▶ 1:41:00Sen. Heinrich: So being able to address the questions about your input cost will ultimately affect the price for generation and also to your point about emissions, it will also impact what your emissions profile looks like because there are limits that can be both hit and exceeded up in very early parts of the year given a cold winter in new england and there are still the summer months that have to be accounted for when you are looking at what your emissions limits are going to be for the course of the year.
▶ 1:41:27Sen. Heinrich: It really resonates on both the price front and on your emissions limits front.
▶ 1:41:30Sen. Heinrich: That makes sense. I have two more questions but I don't want to go over time. Do either of you want a second round? Thank you. Mr. fisher, you have written about epa's authority to regulate emissions from the power sector.
▶ 1:41:54Sen. Heinrich: Thankfully in 2022 the supreme court ruled that -- it ruled against the epa using vague language to mandate really broad economically impactful changes in the electricity generation sector largely targeted at retiring coal and gas powered electric generation.
▶ 1:42:21Sen. Heinrich: I am grateful that the supreme court overturned the legal basis for such regulations in the power sector. You released a statement supporting apa reversing this funding and you argued that this authority rests solely with congress and I could not agree more.
▶ 1:42:41Sen. Heinrich: How has the -- is this epa policy and subsequent regulations affected greater reliability and affordability?
▶ 1:42:52Mr. Fisher: That is an excellent question. Added support -- I did support the reversal. The management of record reads to me like the epa' choice to regulates emissions was a major policy question and it is subject to the major questions doctrine.
▶ 1:43:14Mr. Fisher: Where that has the practical impact or how it impacts the grid is if the power plant rules change every four years and these assets are designed to be operating for 40 plus years, you really have a radical degree of regulatory uncertainty. If congress could establish durable rules or no changes in the rules all, that would provide the foundation for a more robust power sector.
▶ 1:43:45Mr. Fisher: For example, the second iteration of the clean power plant would have essentially shut down a large portion of the existing vcoal plants butted it through a lot of uncertainty into whether you could invest in a gas unit which for most of the country is the new efficient way to meet demand. If you were going to operate above 40% capacity factor, you would have been required to capture the co2 emissions. That technology is not proven.
▶ 1:44:14Mr. Fisher: The basic question, can you even consider it a best system of emissions reduction if the technology is improving, we need more clarity on these things and the regulatory uncertainty, that dark cloud that has been over the industry since 2009 has been incredible.
▶ 1:44:31Chair Lee: Even from an omission standpoint if you have that kind of environment, when demand surge comes, we are not prepared for it. We all of a sudden see the need to rely on what we saw in new england during winter storm fern, increased use of oil that is not good from an admission standpoint, even from the standpoint of environmental quality.
▶ 1:44:59Mr. Fisher: That is exactly right. The broader question of how do we get caught so flat-footed in this era of new demand growth, I think it is in part because we were focused too much on the emissions question and not enough on are we building a nimble industry that can respond to new demand. We clearly were not. I believe we are in a new posture now and I credit the epa for changing that.
▶ 1:45:24Chair Lee: Thank you. Senator hickenlooper.
▶ 1:45:29Sen. Hickenlooper: Thank you. Thank you all for being here. I don't want to re-litigate what you have already covered. I think there is a pretty general consensus that modernization is long overdue and essential. I think we can nibble around the perimeter of what is the most efficient way to do that and to do that in such a way that the public embraces it and supports it.
▶ 1:45:56Sen. Hickenlooper: Obviously people do not like having pipelines or grids, transmission lines coming across their property. You look at reform within our entire permitting process, recognizing that the public comes first. They have to have full transparency. They have to have the right to speak their mind.
▶ 1:46:19Sen. Hickenlooper: But ultimately some of these decisions are going to affect a much larger hole and require very difficult decisions. That is one of the challenges when you look at the grid, how do we get to that. Putting lines underground is prohibitively expensive in most situations. Similar to pipelines, it is hard to put them deep underground.
▶ 1:46:45Sen. Hickenlooper: What do each of you or how would you provide an opinion in terms of how to approach this because that is going to be the question we will all deal with. We may not get you here to testify again but I would love to while we've got you here, hear your opinion.
▶ 1:47:03Mr. Snitchler: Thank you for the question. I might be the only one here who was ever had to vote on a power citing. A really good issue in my prior role is we had a power citing board. We had a statute that was robust in the jurisdiction that it gave us to make decisions trying to contemplate a statewide or broader perspective than nearly the local county or region that put through agencies in an effort to make sure that we were getting all of the appropriate
▶ 1:47:35Mr. Snitchler: Input into the decision-making and ultimately make a decision that was for the good of the state as well as ultimately where we fit into the region. The ability to utilize the subject matter experts but ultimately have that decision-making authority rest with one body was very effective in being able to allow us to approve projects whether it's transmission infrastructure, intrastate or whether it was pipelines that were intrastate or large generating facilities under the jurisdiction of the power citing board.
▶ 1:48:05Mr. Snitchler: That model worked effectively because you funneled all that information in, narrowed the funnel and left that authority with the power citing board to make those decisions. >> got it.
▶ 1:48:16Mr. Fisher: At the risk of over sharing my opinion, when some folks have characterized the system as a de-? See, it resonates with me because it seems there are too many chokepoints, too many ways to stop work, too many ways to sue a project into oblivion.
▶ 1:48:33Mr. Fisher: The more we can limit those chokepoints or get complete buy in upfront, that a project should move forward and then have the permit certainty as the project does move forward, that in itself would be a game changer. I have seen firsthand these projects that break ground and they are halfway done and there is a new suit or a judge finds something new and the project has to stop.
▶ 1:48:59Mr. Fisher: I would say to my friends in the environmental groups, they are excellent at stopping work and I think what we need is a regulatory framework that does not allow them to do that.
▶ 1:49:09Sen. Hickenlooper: I would argue that the infant compensate costs -- to even contemplate that, we need a robust system where people really feel heard.
▶ 1:49:23Dr. Reed: Thank you for the opportunity. I agree we need a single process. A clear and narrow federal authority for the types of transmissions that are providing intrastate and intraregional value to consumers is incredibly necessary.
▶ 1:49:37Dr. Reed: What we have right now, we have talked about really different types of permitting and transmission experiences this level of iteration on the state level and on the federal level and we have an opportunity here, congress has an opportunity to clarify and narrow this iteration that is happening by limiting the number of federal actions that that need to be taken by identifying clearly if it is a state or federal decision that needs to be paid -- that needs to be made and the intrastate flow of electrons and natural gas and an opportunity
▶ 1:50:07Dr. Reed: To open up transmission development to private developers who are ready to capture that value and bring it to consumers that are barred from that by both state regulations and complicated federal restrictions.
▶ 1:50:18Sen. Hickenlooper: Exactly. There is a long history there of the interfacing between the utility regulators and private sectors versus the big utilities. My great-grandfather andrew hickenlooper came back from the civil war to cincinnati, Mr. snitchler. He was the lieutenant governor of ohio for two years, he hated it, quite rightfully.
▶ 1:50:47Sen. Hickenlooper: Other things he wasn't happy with but he ended up becoming the second president of cincinnati gas and electric. He was one of the few people having a stellar history in the civil war that people trusted so as they figured out these conflicts between one neighborhood, originally they were just going from neighborhood to neighborhood. The wires were going everywhere.
▶ 1:51:09Sen. Hickenlooper: Andrew hickenlooper became the arbitrator and created a sense of public trust that you can figure out what is the right value to put on this self versus that self-interest so that we can judge what is the best solution, how do we get the greatest good for everyone. I think that is your challenge and our challenge. We appreciate your help and your wisdom and your experience as we go forward. We are just beginning.
▶ 1:51:37Chair Lee: Anything else? All right. As we wrap up I would like to enter into the record a letter from toby rice, the ceo of eqt corporation and natural gas production. In his letter he notes how insufficient gas supply and infrastructure are not inextricably intertwined.
▶ 1:52:03Chair Lee: He noticed that since 2015 states with the sharpest increase in retail electricity rates that are in states that oppose expanding natural gas infrastructure including maine, rhode island, massachusetts, connecticut and california. I asked unanimous consent that we enter those into the record. Seeing no object is, they will be entered into the record. That will conclude today's hearing. I want to thank our witnesses for their outstanding contribution.
▶ 1:52:33Chair Lee: Your testimony has been insightful and very helpful to us. The record will remain open both for submitting questions for the record and for adding statements to the record from members. We will keep that open until 6:00 p.m. Next wednesday, april the first. Thank you again to our witnesses , for your testimony today. The committee stands adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]