Hearings to examine the state of the bulk power system.

Good morning. The committee will come to order. Today the committee will receive testimony on the current state of the bulk power system in the United States. Before giving my opening statement, I'll set forth how exactly we're going to proceed this morning. Ranking Member Heinrich and I will each give our opening statements followed by witness testimony, and then we'll move to questions. Members of the committee will be recognized in order of seniority for those who were here at the 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 hearing is one of a series on the importance of permitting reform to inform our committee's deliberations on the challenges facing the nation's bulk power system and what Congress should do to address them. We'll hear from three experts on this matter. They are Travis Fisher, the director of energy and environmental policy studies at the Cato Institute; Todd Snitchler, president and chief executive officer of the Electric Power Supply Association; and Dr. Liza Reed, director of climate and energy at the Niskanen Center. On behalf of the committee, I want to thank each of you for being here, and we look forward to hearing your testimony. We're facing a growing imbalance between supply and demand. Over the last decade, we in the United States have retired dozens of gigawatts of reliable, dispatchable generation. For a time, that may have been manageable. Demand was relatively flat, the system had some margin, but that's no longer the case. We're entering a period of sustained demand growth that will require more and more dispatchable energy. Data centers, advanced manufacturing, the electrification of vehicles and home appliances, these are structural changes in our economy that require really large amounts of electricity around the clock. Our grid was designed to meet peaks. Most of the time it operates with excess capacity, but that cushion is shrinking. In some regions, the margin is already gone, and we're running out of headroom. Without additional supply, we face severe consequences: higher costs, greater volatility, and increased risks to reliability. Some look at this surge in new demand and suggest that the solution should be to limit demand, to slow or restrict data center development, to constrain growth. I don't believe that that's consistent with how this country approaches or ought to approach opportunity. The United States has never faced challenges, certainly hasn't ever 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 a predictable way, to ensure that markets are structured to send the right signals to attract investment, and to ensure that 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. That idea still matters, but it requires a system that can respond to these changing conditions. Right now we're falling behind that need. Permitting delays are slowing projects across all forms of energy infrastructure. Market distortions are affecting investment decisions, and the pace of innovation in the electricity sector is not where it needs to be. So we have an opportunity in front of us. If we allow supply and demand to function, if we modernize permitting, and if we ensure that markets are truly competitive, we can solve this challenge. But if we don't, the imbalance we're seeing today will become more severe, and the consequences will be felt by American households and businesses. So this hearing is about understanding those risks and identifying solutions to meet them. How can we reform permitting at the federal level? How can we build a regulatory framework that supports reliability and affordability? And how can we foster the kind of innovation the electric sector requires amid this very 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. And now the chair recognizes Senator Heinrich, the ranking member of the committee.

Thank you, Chairman Lee, for holding this hearing on the state of the bulk power system. The power grid is deeply personal for me. My father, Pete Heinrich, was an IBEW lineman for many decades. However, our grid is undergoing strain from rising electricity demand, largely driven by data centers, advanced manufacturing, and electrification. The demand for electricity is significantly outpacing 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 percent since President Trump took office. These rising costs, made worse by the administration's fossil-only agenda, which includes propping up uneconomic coal plants, stalling 116 gigawatts of new capacity from coming online, canceling clean energy projects, and starting a war with Iran that is driving up oil and gas prices. Fortunately, there is a way to bring down electricity costs while strengthening the grid's reliability and resilience. Doing so means taking four no-regrets actions. First, we need to get more out of the grid that we have. Grid-enhancing technologies can unlock 20 to 100 gigawatts of additional capacity when demand is highest. These solutions cost less than one-quarter of the traditional upgrade costs and can be deployed in three to five years. GETs could reduce grid congestion by 40 percent or more, saving customers $4 to $8 billion a year. The distribution 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 already offering the software and hardware allowing data centers to act as VPPs. Deploying another 60 gigawatts could save consumers $20 billion by 2030. But these aren't silver bullet solutions for long-term growth. We must also build high-voltage transmission lines to reduce congestion and reliability risks. Transmission congestion cost consumers $12.1 billion in 2024 alone. Perhaps even more important, interregional transmission helps keep the lights on during extreme weather by allowing regions to share electricity. Yet interregional transmission made up only two percent of new circuit miles installed between 2011 and 2020. Third, we need to bring low-cost generation online faster. More than 2,000 gigawatts of new power plants are stuck in interconnection queues, nearly double the capacity of the existing power plant fleet. Bringing even 10 percent of capacity in queues online in the region would have saved customers $3.5 billion. 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 already willing to fund upgrades. Furthermore, one study found that if large loads agree to be flexible with their energy use at a one percent curtailment rate, the U.S. could unlock 126 gigawatts of new capacity. This creates a once-in-a-generation opportunity to leverage private capital. The grid is a national asset, like the interstate highway system, ports, or broadband. It is the delivery network for the economy's most universal commodity: electricity. And now is the time to invest in a grid for growth. I very much look forward to this discussion, Chairman.

Thanks so much. We'll now proceed to our opening statements from our witnesses. Mr. Snitchler, we'll hear from you first.

Chairman Lee and Ranking Member Heinrich, 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 both grid reliability and electric affordability. My name is Todd Snitchler, and I am the president and CEO of the Electric Power Supply Association, or EPSA. EPSA is the national trade association that represents America's competitive power suppliers that compete in all regions of the country that utilize competitive wholesale power markets. Please note that my testimony represents the positions of EPSA, but not necessarily the views of any particular member. EPSA's members own and operate approximately 225 gigawatts of generating assets, including dispatchable, intermittent, and storage resources across all the RTOs in the country. EPSA's members also share a deep commitment to electric grid reliability. 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. However, there's 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. This uncertainty creates perhaps the greatest risk to both reliability and affordability for electric consumers, and that's the danger of over- or under-producing capacity during a time of volatile demand projections. My written testimony includes several policies that can help ensure that our nation meets its reliability goals while protecting electric consumers from unnecessary cost or inefficient investments. Protecting consumers while delivering a reliable system will be a consistent theme throughout my testimony. First, over the last 25 years, competitive power markets have definitively proven to be the most efficient and transparent ways to meet our nation's electricity needs while protecting electricity consumers from inefficient investment. How do markets protect ratepayers? When competitive power suppliers like our members invest in generation assets, they do so without guarantees for cost recovery and an approved rate of return. The risk of investing in those generation resources remains on the developers and owners of the plants and not the ratepayer. There are a few ways to help achieve this outcome. First, EPSA encourages policymakers and regulators to continue their commitment to well-functioning competitive wholesale energy markets. Second, an investment environment that encourages and incentivizes voluntary bilateral or physical co-location agreements could be transformative in sparking critical investment. Voluntary bilateral contracting and co-location isolates the investment risk to the contracting parties and should be encouraged wherever possible. Third, as I previously 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 both reliability shortfalls and investors left with stranded generation assets, which in some non-market regions are backstopped by captive electricity customers. In short, accurate load forecasting is foundational and the very core of whether our nation will sufficiently and affordably meet future demand for electricity. EPSA remains engaged with grid operators, regulators, and policymakers to identify ways to ensure more accurate load forecasts are there for growing demand. Fourth, permitting reform is perhaps the most impactful benefit that Congress can provide the energy industry to improve reliability and assist in the affordability effort. For brevity's sake, I include several specific policy areas where permitting reform would be particularly helpful in my written testimony. And finally, EPSA believes that any discussion about retail electricity rates should include a close examination of the economic drivers impacting those retail bills. A pair of unaffiliated independent studies in 2025 concluded that increases in retail electricity rates in the last few years are not solely the result of generation charges; rather, the sustained spending on transmission and distribution infrastructure and state policies that have driven higher costs. To be clear, this is not a criticism of necessary utility investment in distribution and transmission assets. Instead, EPSA believes that it's 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 strong commitment to reliability and stand ready to help the nation meet its growing reliability and energy needs. I thank you again for the opportunity to be here today, and I look forward to answering your questions.

Thank you so much, Mr. Snitchler. Mr. Fisher, you're up next.

Chairman Lee, Ranking Member Heinrich, members of the committee, thank you for the opportunity to testify. I'm Travis Fisher. I am the Director of Energy and Environmental 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 today is this: America is exceptional because we uniquely 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. It powered a century of growth, innovation, and rising living standards. In recent decades, however, electricity demand in this country has barely grown. Although we saw some competition in electricity generation, overall, the grid became slower, more regulated, and sclerotic. In fact, over the same period, many states enacted renewable portfolio standards and net-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. Electricity demand is rising again, sharply, and that's something we should welcome. The growth in artificial intelligence, data centers, and advanced manufacturing is a sign of an expanding, dynamic economy. But the grid can't 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. The grid has become the rate limiter on economic growth. We don't 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, or CRE, is one way to do that. The idea is straightforward: allow new large-scale customers, like data centers, to develop off-grid power systems under voluntary contracts. These systems would be physically separate from the existing grid. That means no interconnection delays, no reliance on congested transmission networks, and importantly, 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's focus on speed to power and the bipartisan consensus that we need to expand transmission. And it does so while protecting communities because it avoids the need to socialize costs or impose new burdens on the existing system. CRE creates a parallel path for new investment that doesn't get stuck in bottlenecks. We have settled for a system that's more likely to tell a new customer, "Wait a decade," than to say, "Yes, we can serve you quickly." We have lost our way. In the famous 1776 pamphlet Common Sense, Thomas Paine wrote, quote, "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," end quote. That is how I feel about the past century of electricity regulation. The old way of regulating the grid is hitting the new reality of increased demand, rising rates, and growing risks to grid reliability. As we greet this new reality, it should be abundantly clear which paths not to take. Europe remains obsessed with net-zero and is deindustrializing itself 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 don't work. What has always worked best is something simpler and quintessentially American: free enterprise. We didn't beat the Soviets by being more Soviet than they were, and we certainly 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'm optimistic that we are on the verge of an AI-powered economic transformation. The question is whether our public policies will hold it back or enable it. As we approach the 250th 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.

Thanks so much, Mr. Fisher. Dr. Reed. Thanks so much, Mr. Fisher. Dr. Reed.

Chairman Lee, Ranking Member Heinrich, and distinguished members of the committee, thank you for the opportunity to testify. Chairman Lee, Ranking Member Heinrich, and distinguished members of the committee, thank you for the opportunity to testify today on the state of the bulk power system. I'm Dr. Liza Reed, the Director of Climate and Energy Policy at Niskanen Center. For over a decade, my work has focused on the challenges of building a transmission backbone to deliver reliable and affordable energy across the country. Transmission moves electricity from where it's generated to where it's consumed and allows regions to share power with one another. It is this that is essential to reliability, resilience, and affordability. The United States is entering a period of rapid load growth, driven by data centers, advanced manufacturing, and electrification. We are building a more diverse set of energy resources at the same time: gas, nuclear, wind, solar, geothermal, and storage, but no single resource is sufficient 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. 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 extremely high prices. A Niskanen Center and Grid Strategies analysis of how the grid performed during Winter Storm Fern found that across the Southwest, Midwest, and Mid-Atlantic regions, 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. 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. The North American Electric Reliability Corporation, NERC, the entity that Congress and the Federal Energy Regulatory Commission look to for reliability assessments, determined last year that it would be prudent to add 35 gigawatts of interregional transmission to the system to increase reliability. That's a 40 percent increase on our current capabilities to move power. Interregional transmission lines are in the national public interest because of these affordability and reliability benefits that they provide. Yet they face much higher siting and permitting barriers than other energy infrastructure because the authority to 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. Grid operators do not allow this HVDC 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 is impacting American competitiveness. 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. A shortage of grid capacity is 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 it will not be if we cannot deliver a dominant grid. We need a narrow and clear federal authority to build interregional transmission. 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, and that demonstrates America's competitive edge. The next industry can be built anywhere there are electrons. Let's make sure it's right here in the United States. Thank you very much.

Thanks, Dr. Reed. We will now proceed to five-minute rounds of questions. I'll go first, then I'll be followed by Senator Heinrich, and we'll alternate between Republicans and Democrats in order of seniority subject to the early bird rule. Dr. Snitchler, let's start with you. In your testimony, you note the importance of load forecasting, which is, of course, a critical process both utilities and power producers undertake to determine how much investment in their systems might be needed and where to place those investments. Demand growth from data centers, electrification, and manufacturing is real, of course, yet amidst all this build-out, in some instances, we've seen utilities drastically reduce initial demand forecasts. So tell us a little bit about why it is that load forecasting can be so challenging, sometimes elusive, and why it's so important to get it right, especially when prices have been rising in the last few years.

Thank you for the question, Senator. I think the challenge of load forecasting is revealed in a couple of examples. We've 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 is they have as much difficulty in determining what projects are real, what projects are being potentially double-counted. It's no surprise that data center developers and hyperscalers are shopping for the best possible alternative based on what their needs are. But when it comes to powering that system, it's vitally important that we know what we're aiming for because in the event that we don't, consumers are going to be burdened with higher costs if we overbuild a system that's unnecessary. And so the criticality of getting the load forecast as accurate as you can, conceding up front that it will likely be wrong, but be wrong by a little, let's not be wrong by five or six times, is the best way to mitigate what those costs will be. And if you're a competitive power generator, we bear the risk of the investment in the event that that power plant, it turns out to be unneeded or unnecessary. We're the ones that lose the revenue and ultimately file for bankruptcy as opposed to being backstopped by the captive customers. And so we think it's vitally important to make sure that the numbers are as accurate as they can be because that facilitates the investments that will happen while shielding customers from unnecessary costs that are likely to occur if we aim for a large number that may not be based in reality.

And just to be clear, when you say the captive customers, meaning when the overbuild happens, that gets built into the rate equation. Customers then pay more per kilowatt-hour regardless of whether that demand might be needed. So if they overshoot, the burden ultimately falls on the consumer.

Correct. When you do rate-making cases as a regulator at the state level and you're making determinations about what resources are needed, that becomes a non-bypassable charge that's collected over a period of years with a rate of return. It's just a different approach than what IPPs or competitive generators utilize, but that cost is ultimately passed on to consumers.

Thank you. Now, Mr. Fisher, there seems to be some bipartisan consensus in this committee that we need to build more transmission in addition to generation. They're both important. There is some disagreement, however, as to exactly how much transmission build-out should occur. Expanding transmission can lower costs for consumers, but for some of the same reasons mentioned by Mr. Snitchler, the overbuild can also increase costs for consumers and put pressure on rates. My priority is for the electric industry to deliver reliable power that meets demand growth at the lowest cost to consumers. Now, you spent nearly a decade at FERC. Where do 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?

It's an excellent question, Chairman. Thank you. You know, I look at this from the consumer point of view as as you said, we're completely aligned on that. As long as we take a consumer-first approach through that lens, transmission expansion could lower costs. We can all agree that the status quo is broken. We are still spending a lot on transmission, it's just not the wisest spending that we could do. So I think there's a bipartisan consensus to change the status quo. The way the way we've expanded transmission so far is very low voltage local lines built on a reliability or immediate need basis. That in a cumulative way has become very expensive. So it's not like we're not spending on transmission, we are, we're just not spending wisely. So I think one thing that Congress can do, and I already I thank you for the the partial repeal of the IRA, I think that has somewhat changed my posture on this where if we don't have a bunch of subsidies on the table, expanding transmission could actually benefit consumers instead of those producers. But something has to be done to incentivize the the larger transmission builds and get away from this small ball.

And when you refer to, you know, wise decisions, wise allocation, you're not just thinking about people who are smart, like people with fuller, grayer beards with more experience, you're referring to what the ability to receive and interpret market signals, that market signals can tell us how best to allocate, is that is that the point?

Absolutely. As my beard gets grayer, I rely more on the wisdom of the market than anything that I would want to bring to the table. But yes, absolutely. So sort of you you build the transmission system that customers need. So we actually have a great opportunity now to have very large customers with very high willingness to spend and very high time preference. I think we could leverage that new set of customers to help build some of this transmission.

Only after I asked that last question did I realize that both of our male witnesses today have beards and that one has a beard that is more gray than the other, and I apologize, I didn't mean to make a value judgment there. Senator Heinrich.

Do do any of you think that we're building, and 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 do any of you think that we are building enough interregional transmission to service the existing grid and the kind of growth that we would hope for both the electric sector and the economy?

Thank you for the question, Senator. I...

We'll go down, let you all answer that. Yeah. No beards first, you can start and we'll go the other way. That's fine.

Thank you so much, Senator. We are not building the amount of interregional transmission that we need right now, and there are particular barriers that are preventing that from happening. Utilities are not incentivized or even expected to be looking to their neighbors, and so we are losing the economies of scale and that is costing consumer purses.

My short answer is no. My longer answer is we should look back at the history of, you know, FERC Order 1000, for example. I think the the intent was good, but the track record is very poor. The transmission line miles of the very high voltage lines has that that stat has plummeted. We should acknowledge that fact and try to try to do something different.

Senator, thanks for the question. I think it's clear that being able to move electrons from where they are being generated to where they are needed, particularly in times of stress, is critically important. That's how we ensure grid reliability, and as we have seen retirements come off the system and the slow addition of new resources, the importance of that transfer capability continues to be highlighted as an area of importance.

Dr. Reed, go a little deeper. You talked about how to capture value for customers, how to save them money as opposed to just bring additional costs onto the rate base. Go a little deeper into how we can capture that value and actually benefit customers.

Thank you, Senator, I'm happy to. What is causing us to lose this value for consumers is that we are not building the transmission. We have seen a number of economic analyses that find that on average $100 million is lost per gigawatt of transmission line that was not built 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. This is an interstate and interregional project, and it does not enjoy a federal siting and permitting authority as natural gas pipelines do. 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 duplicative red tape that discourages developers and makes it longer for them to be able to complete these projects. There are also not expectations at utilities to be looking to the regions to build these interregional lines. We have an opportunity to enable both utilities and private merchant developers who would not show up on a customer's utility bill to build more if we can fix these regulations.

To your point, I was deeply involved in 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 our incentives are not aligned. You mentioned the issue of compensation for some of the values that those those power lines provide. Walk through that a little bit because obviously I think, you know, there's a mismatch between transmission and generation.

I'm happy to, Senator. Thank you. High voltage direct current was the topic of my PhD thesis. I don't think I can cover that in a minute, but I will note that it is a semiconductor-based technology that has the ability to act differently than our existing grid system, so it provides an excellent backbone because it provides different services and different values. It can move power long distances, which captures a value for consumers, but the way that it that it controls electrons also provides stability to the grid. There's complicated reasons involving voltage and frequency that we can discuss offline, but HVDC ensures that we are keeping electric equipment online by keeping the voltage and frequency where it needs to be.

One of the one of the tools that has been used very effectively in other parts of the world and sporadically here in the U.S. are grid enhancing technologies. But we have this model particularly within state regulated utilities where the incentive is is often, I mean the responsible parties, my utility as an example in central New Mexico has really leaned into GETs, but there's also an incentive for utilities to build big and then get rate based. How do we make how do we create a a more aligned incentive with with GETs so that we can get more out of the existing grid?

Thank you, Senator. There are a number of options that Congress and FERC can pursue to incentivize more of 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. Grid enhancing technologies through dynamic line rating, power flow control, all of these can help us use those lines better and move the power around. And the way that we set expectations on how reliability is achieved and provide financial incentives to utilities or private developers to provide those services are ways that we can get more of this advanced technology incorporated.

Great. Thanks.

Senator King. Wait, wait, I'm sorry. I'm sorry, Senator Hickenlooper was next. He arrived since...

I'll yield to the the senior Senator from Maine. It is such a wonderful deferential group of governors now, Senators.

Thank you, Senator. Mr. Snitchler, I was involved in your industry starting in 1983 involved with what was then PURPA, which really was the birthplace of independent power production. Let me just make a quick statement about permitting reform, which I think all of you have mentioned. I've been an advocate ever since I've been here for permitting reform because I've lived it. However, at this moment, I have no intention of participating in permitting reform discussions as long as this administration is arbitrarily putting its thumb on the scale and canceling wind and solar projects that in many cases have already been permitted because there's no point if we have permitting reform and one side of the equation, that is renewables, is essentially killed by the by the arbitrary actions of the administration, then permitting reform only benefits one side of the equation, that's fossil fuel. I'm not going to participate in that discussion. When the administration decides we're going to play it straight and let all forms of energy be compete, then we can have a very profitable discussion and I think we're in many ways almost there on permitting reform, but I just want I want to be clear, I feel like I'd be dumb to agree to permitting reform which only affected one half of the equation. So I just want to make that that point. Mr. Fisher, I I like what the Cato Institute does and I like your emphasis on free markets. One of the problems it seems to me in in transmission and distribution, which we've talked about, is it's not a free market, it's 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 GETs because the utilities get their make their money on a rate of return on how much they invest, so there's an incentive to invest as much as possible. Talk to me about free markets and the virtues of competition.

It's an excellent question, Senator. Thank you. I will note I brought up the concept of consumer regulated electricity, which is I would view that as a private grid that's a parallel path that could work alongside the public grid.

But does that mean two sets of wires down the road? I don't think that's...

Not necessarily. I I would envision it as a very large industrial campus on a single site within a single state, each state could have their own if they like. But your question is about the public grid and optimizing the public grid despite the monopoly influence on it. That's where I think we're so far afield from free markets that I think a lot of things are on the table. On the plus side, the status quo is so broken that just about anything you do, any reform you make is probably going to be positive. So on the one hand, mandating, making a monopoly make decisions that it wouldn't otherwise make, in other words having a heavy-handed regulator to basically say these these are investments that we know you wouldn't make given your incentives, but we know they're good.

But how about if the regulator says before you before you build, before you build new poles, wires, and rights of way, you have to try and and incorporate low cost, no cost options like dynamic line rating, reconductoring. This conductor will carry twice as much electricity as a similar steel conductor because it has a fiber core. I don't see that as as I mean, I don't know how else we crack this without somebody saying you got to do the the more efficient things first, then tell us about what you're going to build. You see what I'm saying?

Yes, and I completely agree with that. And I think the way to implement that is to make sure that there is solid oversight of all of these investments. What we are lacking right now, there's I believe a regulatory gap between the voltage level that states coordinate, the voltage level that FERC coordinates, there's a lot operating in the gray area in between that is not subject to strict oversight. So you could say before building your next transmission project, you have to look at a whole bunch of different alternatives. That I am very comfortable with.

Everybody's now talking about AI bringing its own power. Has anybody done a calculation? I mean, we've all got this sort of doomsday calculation of increasing demand and increasing demand on the grid and all the construction that's going to, the billions, if not trillions, of dollars that's going to require. Has anybody done a calculation of if AI, take AI out of that growth projection because theoretically they're going to bring their own power? How much does that reduce this doomsday scenario in terms of the demands on the grid? Dr. Reed, do you have any thoughts on that? We ought to make that calculation, it seems to me.

I am not aware of a particular calculation, Senator King, 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.

Okay. Well, I hope somebody will do that. I think that's an important calculation to know. We know we're going to need this much more power, but if 50, 60 percent of that is AI and that's going to have its own power, then that changes all of these discussions, it seems to me. Thank you, Mr. Chairman.

Thank you very much. Senator Hickenlooper.

Now I'm going to yield to the senior Senator from California just because I'm trying to get in good with people this week.

We're going to give you the Mr. Congeniality award. Exactly. Thank you. Senator Padilla.

Thank you, Mr. Chairman. Appreciate my colleague from Colorado, not just for the deference this morning, but you're going to hear me talk in a minute about an exciting new proposal that he has been leading a group of us on. I want to begin, though, by I think recognizing the urgency for today's discussion. We know that families and businesses, for that matter, are paying the price for an aging and overworked grid that's delivering not just higher bills, but more frequent outages and missed opportunities, frankly, for significant investment in job creation. I'd like to think both sides of the aisle here agree when I say that America cannot lead the next generation on a grid built in the past and using older technologies. So this week, I was proud to work with Senator Hickenlooper and other colleagues from this committee to build on the bipartisan Energy and Permitting Reform Act from last Congress and develop new legislative language to tackle these issues and lead us towards the construction of a next-generation electrical grid. I believe our effort represents not just a common-sense plan, but one that will build a cheaper, stronger, more reliable electrical grid that protects ratepayers, respects communities, and keeps our economy competitive. So I'm going to start by not just asking us to look at the faults and the shortcomings of the grid of the past, but to envision what the grid could and should look like in the next 20 years. I mean, since the era of Edison and Westinghouse, there has been talk about the potential promise of high-voltage DC transmission. But now these technologies are not just proven, they're ready to provide efficient transfer of power over long distances. I think it's important to recognize. My first question is for Dr. Reed. If we built out the backbone of an interregional high-voltage DC transmission line over the next couple of decades, what would be some of the benefits in terms of ratepayer bills, reliability, particularly during extreme weather events, if you can touch on that and any other technical benefits that you want to highlight?

Thank you, Senator, for the question, and I'm happy to discuss the benefits of high-voltage direct current because this need for a backbone to our alternating current system is particularly clear when we see severe weather, such as winter storms and even extreme heat. Because HVDC can dispatch power long distances very quickly and directionally. In our alternating current system, electrons flow where there is the least resistance. HVDC can move it exactly where it needs to go, and so it works very 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's 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.

Are there any key regulatory or procedural barriers that you think are holding us back?

Thank you, Senator. There are very specific barriers that are holding us back from adopting HVDC technology. One of them is the siting constraints on interstate and interregional transmission lines. These types of lines face the most number of siting 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. That's an incredible burden for a utility or a merchant developer to take on that risk and that 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 that they provide. They are providing the same benefits, they are built on the same semiconductor technology of the products that we do allow to be remunerated in the market.

Thank you. Before I ask my last question, I just want to associate myself with the comments and the enthusiasm of Senator King in talking about reconductoring and other upgrades and their benefits on a cost-effective manner. But Mr. Snitchler and Dr. Reed, could each of you please explain where interconnection procedures may be best improved to expedite the connection of generation to the grid?

Thank you, Senator, for the question. I think it's clear that the interconnection process has been slow. I think at FERC's direction, all of the regions have worked to modify their interconnection queue process in an effort to try and accelerate that, and we have seen improvement to the interconnection process. I don't think it's complete. I don't think anyone would agree that that's the case, but I think there has been improvement. And so we're going to need to accelerate that process to make sure that studies are done in a different approach than has been used in the past. In fact, FERC recently approved the SPP's model, which is taking a more innovative approach to try and look at interconnection of generation and transmission at the same time in an effort to accelerate it more quickly and was very enthusiastic in their order about what it could do for the system. I think thoughts and approaches like that are going to be incredibly helpful to accelerate the need to meet the moment and move speed to power.

Mr. Fisher, anything to add?

I'll keep it short and say I agree with Todd.

Thank you, Mr. Chairman.

Thank you. Senator Hickenlooper.

Thank you, Mr. Chair. Thank all three of you for being here. I think this is kind of an all-hands-on-deck moment. You know, I've gotten, I got a master's in earth and environmental science back in 1979. Back then we referred to climate change as the greenhouse effect. But much of what we predicted, the droughts, the wildfires, these gyrations in temperature and precipitation, has come true more and more to the point where now in many counties across the United States, a significant number of people can no longer get insurance for their homes. When that happens in small communities, the values of the homes go down. They're not worth as much to anyone, and that means the tax base for those small communities already at risk gets a little worse. One example I wanted to put out that we just got recently in Leadville, we have a mine called the Climax Mine, a molybdenum and various sulfide mines been going for 100 years. They measure the snowfall every year. The average over the last 100 years has been 240 inches. And when it snows, they measure it and then throw it out. It doesn't get compacted. This is a fairly consistent measure. So the average is 240 years. The all-time low in 100 years was 182 inches. So 240 inches average, and then all-time low was 182 inches. This year we have 60 inches. And we're seeing that all across the West. And I think as we look at these solutions, the grid is one possible, the reconductoring, the interconnection, there's a powerful solution on how do we get clean energy fast, really inexpensively. It's making our grid better. Dr. Reed, let me start with you. As you point out in your testimony, we are struggling to build the transmission lines necessary to keep pace with the surging growth and electric vehicles. You look at all the different places where we're needing more and more advanced manufacturing, all these places where we need more electricity. The U.S. is only building 375 miles a year of new grid, while China is building whatever it is, 8,000 or slightly over 8,000 miles. We're also falling behind our European partners when it comes to deploying the advanced technologies that you have all been talking about, dynamic line ratings, advanced conductors, etc. So start with you, Dr. Reed. Can you talk about the need to have a holistic view of grid modernization that includes both new transmission and improvements to our existing infrastructure?

Thank you, Senator, for the question. I'm happy to discuss the multiple ways that we can bring new technology and new developers into the grid system to provide reliability and affordability. I'll start with grid-enhancing technologies and reconductoring. These are opportunities to use the lines that we already have, the towers that we already have, the rights-of-way that we already have, and get more power through them. That's more value to consumers because it's a less-cost effort for moving more power. It is a shorter-term solution that also buys time for building these larger interregional transmission lines, which are essential for providing long-term reliability and affordability by sharing power between regions.

Great. Thank you. Either of you, Mr. Fisher, either of you want to opine?

Yeah, I'll be brief. Excellent question. The way that I view, especially if we're talking about addressing climate change, we of course should focus on adaptation in the U.S. But I think if we wanted any chance at mitigating climate change in the long run, we need to promote the kinds of technologies that are going to take hold globally. And I could see the U.S. as a proving ground, not just on the technology, on the transmission technology front, but on generation technology. And we have a private sector in the U.S. that can lead on this. And then the goal, because we have to take into account there is, you know, the iron law of climate, that really if you're ever up against economic growth versus climate, everybody chooses economic growth. We have to come up with the technologies where people choose them voluntarily.

Exactly right. Mr. Snitchler?

The only thing I'll add, Senator, to your good question is that it's incredibly available now. The technologies exist to better utilize the wire systems that are already there. The permitting and siting challenges to existing rights-of-way aren't the same as what you would have in doing new greenfield development. And so deployment of the technologies that already exist on existing technology and existing rights-of-way are a far quicker and generally lower-cost opportunity to enhance the performance of the system in a way that helps achieve all of the objectives that you've been describing.

Right. Thank you. And I'm out of time. I don't know how I got one question in and I've got a little too verbose, I apologize. But certainly our grid is in need of modernization, you all say that. And I think you're all getting to the same point that this data center demand could actually help us fix many of the underlying and have for a long time we've been accepting subpar grid. This might be our opportunity to really do a lot of things at once. I yield back. Thanks so much. Okay, I believe Senator Cortez Masto is up next.

Thank you, Mr. Chairman. Thank you to the panels, this has been an interesting discussion. I've been listening to it and read your opening statements. Yesterday, Senators Murkowski, Shaheen, and I, we introduced a piece of legislation called the Secure Grid Act. The legislation would empower states to really assess the risks to their electric grids, including extreme weather, cyber threats, and other vulnerabilities. So I want to ask the panels, and maybe Dr. Reed, I'll start with you, how should the US and the states work to reduce the risk of cyber and physical attacks on the grid?

Senator, thank you for the question. I don't want to speak outside my expertise on cybersecurity in particular, but I will speak to overall security as a reliability metric, and providing more interregional transmission, removing these regulations that make it difficult to build interregional and build HVDC, is a security metric because we are able to move power and isolate parts of the grid if they are under attack. There's tremendous opportunity in these new technologies and new transmission if we can build it.

Yeah, thank you. Mr. Fisher, any thoughts?

I am also a touch out of my depth when it comes to security questions, but I will note that anyone who has looked deeply into these questions of the vulnerability of the grid, especially to a coordinated physical attack, 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.

Yeah, and it's not just specific attacks, it's extreme weather as we have seen now that we are dealing with that could be a vulnerability and a risk. Mr. Snitchler?

Senator, I would share my fellow panelists' 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. That is clear. The technology that is being deployed by nation-state actors against our entire electric system is a daily and routine event, and I think you're seeing the industry respond in a favorable way to defend against those attacks. I think further enhancements are likely to be required as we see technology evolving. The benefit and the concern about AI is of course what it can do and how quickly we'll see these things happen both for and against, kind of the white hat, black hat technologies. And so I anticipate that we're going to continue to see more and more of this in the future. I don't have a great answer to your question other than to say the industry is responding to it and working in ways to try and stay ahead of it because we're perpetually in the situation where they only have to be right once, we have to be defending 100 percent of the time.

That's right. Thank you. I appreciate that. There's been a lot of discussion this morning about new technologies and more transparency in the interconnection queue process that would really better allow all energy sources to hook up to the grid faster. Let me ask, Dr. Reed, maybe start with you, or any of the panelists, are there certain RTOs or regions of the country that you believe are taking an innovative approach to queue management that we should be thinking of or using or lifting up as a model? I'm curious.

Thank you for the question, Senator. I'll speak to the Southwest Power Pool, and I believe Mr. Fisher can speak to this as well. So the Southwest Power Pool is looking at transmission planning, including the interconnection queue and broader transmission planning as a holistic solution. That I think has the opportunity to be looking at these looking to build more of these high capacity lines so that we can provide reliability and move power cost effectively at the same time. We have seen in interconnection queues, even when different RTOs take on solutions where they are moving different types of technology or different generators to the front of the line, we still see that regardless of how long the study process takes, which does need fixing, there's still the build process afterwards, which inevitably says we need billions of dollars of transmission that we didn't build and now we need to so that we can get this energy online of all types.

Yeah. Anyone else?

Excellent question. I will reinforce the thumbs up on SPP. The only other new concept I would bring up is this idea that, you know, we have to deal with the queues in the order in which you joined the queue, sort of a first come, first served basis. That I think needs to go. We should move beyond that. I've heard some proposals such as sort of an open season approach or requiring new customers to put up more sort of a financial backing to it. The queues are clogged, and I think there's a bunch of different ways to unclog them, but the theme of the day is the status quo is broken.

Thank you.

I will add the recent developments in the SPP order from FERC, I think are instructive. I do think going all the way back to last June's FERC hearing, which was dealing with issues around interconnectivity where all of the RTOs participated as well as industry, the directive was made explicitly clear that accelerating and unclogging the queues is incredibly important. You have seen the RTOs try to do that. PJM in particular has gone through the process and when they reevaluated the queue, they were able to shed nearly two-thirds of the projects that were in the queue that were holding places that otherwise may or may not have actually allowed them to interconnect with the system and then move projects that had a greater chance of completion to the front of the line.

Thank you. And I know my time is up. I ask the question because last Congress I had introduced the Expediting Grid Interconnection Procedures Act. We are going to reintroduce it, talking with the very organizations that you have lifted up as a model for innovation. And I do think it is important we move in that direction and I would invite my colleagues to join me on this legislation. Thank you very much.

Thanks so much. Okay, I believe Senator Wyden is up next.

Thank you, Mr. Chairman. Before she goes, I just want to say that as usual, my colleague who also does such good work on these issues on the Finance Committee is spot on making the focus innovation. And I want to pick up right where she left off and a question for you, Dr. Reed, thank you for working with the staff on the legislation that I'm introducing today. It is well understood that a significant portion of the grid is practically from the dark ages. You have to start with that. And it is really a trifecta of punishment for rural communities and we're seeing it in Oregon, basically the combination of wildfire, drought, and then escalating energy prices comes together and it's why this is such an important hearing and thank you for scheduling it, Mr. Chairman. My question to you is to start with Dr. Reed, how would bills like the one that I'm introducing today, the Wildfire and Grid Reliability Act, help us fight this manufactured energy crisis? That's what we're dealing with. This is a crisis we did not have to have. Tell me if you would, because you've been helpful to us in terms of working through some of the aspects of this, what your thoughts would be on our bill.

Senator, thank you for the question. I don't have any specific thoughts on the bill you refer 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, particular and including wildfires. There are aspects of that resilience which are difficult to put on a ratepayer because of the small often rural utility footprint that would then have to pay for it and there are different mechanisms that I think could be effective for covering those costs. And I think it's really important...

Aren't these small utilities which you described correctly as the footprints that you're seeing, aren't they really getting clobbered by the circumstances we're seeing right now?

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.

Well, thank you for your good work. I'm going to spare my other witnesses unless they'd like to contribute, but I think we all ought to start with the proposition that my colleague from Nevada started with. This is a modernization job. I mean, if we stick around with these outdated systems, there's nothing that you can do to wave your wand around and make things get better. Mr. Fisher, I know you've been interested in this area and you've raised your hand, careful what you wish for and I'd be happy...

If I could just briefly agree with you, Senator, violent agreement on the need for innovation.

No violence.

Kidding. Peaceful agreement on, there's way too much of the grid, there are far too many grid technologies that were patented 100 years ago or more. The fact that Thomas Edison could come back today if we brought him back, he would recognize much of 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.

Thank you, Mr. Chairman. Thank you, Mr. Fisher.

I mean, there's no way we can make Alexander Graham Bell aware now of that it exists, but... Senator Cassidy.

I'll defer to one of my Democratic colleagues as I kind of review the testimony.

Okay.

Sorry. Could I let one of them go before me and I'll...

Of course. Senator Hirono, you're up next.

Thank you. I was just trying to figure that part out. Thank you so much. Okay, Dr. Reed, you mentioned that wildfire resilience is a very important aspect of the grid and knowing that what happened on Maui, which is was a massive wildfire and all of that. Can you give me an example of how a grid can be made wildfire resilient?

Thank you for the question, Senator. I am not a resilience expert in particular when it comes to wildfires. I can speak to how transmission can provide resilience, particularly this type of backbone transmission that can move power around so that consumers are still served with electrons they need while isolating areas of the grid or particular lines that could be of high risk of wildfires.

So do you know if power companies are adopting some of those kinds of suggestions so that they can provide power while the the wildfire is occurring and parts of the grid is shut down?

I'm sorry I can't speak to any particular power company.

Okay. When you mentioned about the wildfire resilience, that certainly caught my attention, but I do have a question for you. Over 100,000 people in Hawaii recently lost power due to a severe storm that caused widespread damage and down power lines across the islands and of course Hawaii cannot rely on power from other states during these instances. What are some of the grid technologies that could be most helpful for increasing the affordability and reliability of power in Hawaii, Alaska, and other remote locations?

Senator, thank you for the question. It allows me the opportunity to talk about high-voltage direct current and the ways that this particular technology can be used to restart a grid. So when there are blackouts, these sort of advanced technologies and innovations, if we bring them more onto the grid, then we find it easier and faster to restart a grid after there is a blackout and to manage the grid itself, the voltage and the flexibility that can cause blackouts so that we don't have blackouts in the first place. So we need more of this advanced and innovative technology incorporated into the grid and building a backbone of a grid so that we can recover.

And is incorporating this kind of technology into the grid an expensive proposition that is going to result in the ratepayers having to pay a lot more because Hawaii ratepayers pay the most for electricity of any state in the country?

Thank you, Senator, for the question. I can't 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, national 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 to move power affordably in the long run.

Thank you. Now the cost of utility-scale battery storage has fallen dramatically, 27 percent in 2025 according to a recent estimate from Bloomberg New Energy Finance. And Dr. Reed, what role 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 and federal regulators should require data centers, which are massive users of energy, to incorporate energy storage to reduce their impact on the grid?

Senator, thank you for the question, and I'd welcome the opportunity to work with your office on the specifics of energy storage. I can speak to the need for more generation and more power on the grid, and energy storage is a valuable way to provide flexibility in the same way that transmission provides flexibility in moving power over time and over distance. As far as the data center question, I think it's 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. If we set expectations of exclusively bringing your own power, then 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 thrive.

Speaking of batteries, so this is 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, John Ketchum, the CEO of NextEra, described renewables and batteries as being the cheapest, fastest, and easiest way to meet surging power demand. And if you take renewables and storage off the table, we're going to force electricity prices to the moon. Now Hawaii is seeking to become energy self-sufficient by 2045, and that means that we need to rely on batteries, etcetera. So do you agree with the comment that we really should be spending a lot more on bringing batteries online, making those things affordable for our users?

Thank you for the question, Senator. Our members actually own and 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're going to address both the reliability and the affordability question in the future because batteries have the ability to have impacts on peak shaving and driving down...

So I agree with you as far as efficacy. So the question becomes, you know, how quickly can we get more of these things in place for the consumer?

To your follow-up question, I think part of that is dependent on permitting and siting at the state, federal, and local level. I think it's also dependent on supply chain-related issues because not only is it the supply of batteries, but it's also the switchgear that is required at substations that ultimately move the power from where it is to the ultimate consumer that continue to feel stress under the current conditions that we're in. It's true for generators, it's true for substation equipment, it's true for transformers. And so addressing some of those longer-term supply chain issues will be instrumental in trying to accelerate the deployment you're asking about.

Thank you, Mr. Chairman, for letting me go over.

No problem. Senator, I'll again defer to my Republican colleagues.

Yeah, to your Democratic... Yes. They've all... Yes. Yeah, go ahead.

In a kind of irony, remember the question I asked about how much of the projected load is AI? I asked Claude. And Claude said it's 50 percent. Fifty percent of the projected load growth over the next 10 years or so is attributable to AI. AI told me that, so I thought that was kind of interesting. A second AI... But I think that's an important point, don't you? I mean, if we can take the AI demand off, then the problem is half what we think it is. I think that's something we should be discussing. The second is with regard to the queue. My understanding is AI in some cases has dramatically increased or decreased the time that's important for assessing applications for interconnection. Is that... You're nodding. The record won't show a nod. Could you say yes, Senator, if that was...

Yes, Senator, that's correct. In fact, PJM and Google put the Tapestry project together, if I'm remembering the name correctly, in an effort to do exactly that, to try and enhance and accelerate the process because everyone recognizes that we need to move more quickly.

And it worked to reduce it from months to days, is that correct?

You'd have to ask them to get the specifics on the time horizon, but it actually did reduce it dramatically. I don't have the exact adjustment from weeks to days.

But again, 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 Thomas Edison would have done it 100 years ago. Final, Ms. Reed, we've talked a lot about direct current, and you seem to know a lot about that. DC lines are also less line losses, isn't that correct?

Yes, Senator, thank you for the question. DC has a number of efficiencies, including lower line losses because of how the current flows on the line.

Thank you. Thank you, Mr. Chairman.

Okay. Yeah, go ahead. I thank you all.

Mr. Fisher, I was really interested, you from Cato as to your thoughts as to what we should do. But it sounds like from the libertarian viewpoint, we should just deregulate. And Mr. Snitchler, your testimony is to the same thing. It's not the generation cost, it is the transmission cost which is currently driving the increased expense of electricity. Does that fair?

In general, I think that's a fair statement, Senator, although we should be very sensitive to the cost, especially of input fuels.

But let me ask as well, because yes, globally or countrywide, you have a balance of electrons, but if those electrons are being generated by wind in the panhandle of Texas and Oklahoma, but they need to be used in Atlanta, speaking of permitting means, for example, and this is where the kind of Cato tension comes, taking people, expropriating people's land in order to get the high, you know, voltage wires to take it from there to here, correct?

Yes, I believe you're talking about a federal backstop siting authority and the use of eminent domain, and that does, I'll be candid, makes me nervous.

So how does Cato resolve that? Because we want a deregulatory environment, but the deregulatory environment almost does require basically a usufruct or a kind of... You see where I'm going with this.

I do, and I should note, I'm only speaking for myself. Each Cato scholar has their own independent thoughts. I will note, I very much agree with a 2002 book by Cato that referred to the mandatory open access model of transmission, which is basically what we're dealing with now, which is the restructuring. I wouldn't call it deregulation. Restructuring from the late 1990s referred to that as infrastructure socialism. Now that is, I think, a fair way to characterize the public grid. That's why I've been advocating today for a new parallel path to allow private grids, and I think that could solve a lot of the problems.

And sir, did you... Are you okay with the private grid?

Our members take no position on that. We've talked with Travis and with Glenn Lyons, who have helped develop the issue. We think optionality is the way forward. So we don't think there's one perfect path, there's no silver bullet, there's probably not even silver buckshot. We think having a number of approaches that are applicable to parties that want to contract at arms length and make determinations about what works best for them, all options should be on the table. So if they want to pursue CRE, then they should do that. If they want to take power off the system and be a regular customer, they should be able to do that. If they want to co-locate and bring their own gen and they think that's the model that works best for them, then we think they ought to be able to do that. And we think some of the decisions that FERC has made recently and is currently undertaking are ways to help enable those transactions to both take place and take place more quickly.

But much of that is already happening in Louisiana, so it seemed like that's much of what you just described is currently an option. Would you wish to weigh in, Dr. Reed?

I agree with both of my fellow witnesses that optionality is the key here and that if we can provide a reliable, affordable grid, that should be one of the options for growing industry competitively and providing affordable electricity for consumers. And that grid can be built by private developers.

But let me go back to, because I think this is the rub. This is the rub in which does the federal government have a backstop in terms of regulation in which you get electrons from Texas to Atlanta? You follow what I'm saying? And so I think everything else we agree on. And the meta-center in Northeast Louisiana, which is I think the size of Manhattan, has all these different ways simultaneously by which to provide electricity. Except that I don't think it's bringing electrons from the panhandle of Texas. So how would you all resolve that? You follow my question? Which should we on the federal level be basically endorsing eminent domain to take private property in order to allow high-voltage lines to go from interstate settings?

It's a valid question, sir, and I think the answer that I would fall back on personally is that we should accomplish as much of this as possible through voluntary means, and I think the use of eminent domain should be minimized. I'm not sure that it'll ever get to zero, but I think with the class of customer that we have now, the balance sheets that they bring, the speed to power, the sort of the impetus that they bring to solving this problem, we should take full advantage of that. So I would look more to the private sector than to the public sector.

And Senator, I would simply add that I think all options need to be on the table. So if you can locate generation more close to the load instead of having to move it across long distances, and that's the option that's preferred...

I accept that, but wind right there is really good, right?

Well, that's a separate discussion, and we're a generation-oriented organization, so it won't surprise you that if you want to build a power plant and electrons are closer to where your load is, we'd certainly be willing to do that.

Thank you, Senator, for the question. I think a clear and narrow federal authority for siting interstate transmission lines would be consistent with how we site natural gas pipelines and that interstate commerce is a necessary and narrow 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. 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 help clarify this.

Dr. Reed, if each one of these large load data centers was its own generator, would that be the most efficient use of capital to power that part of the demand sector?

Thank you for the question, Senator. I think the most efficient use of capital to power data centers is the choice of the data centers themselves. And I think the best option that we can provide for American competitiveness and for growing industries here is to ensure that they have those options available to them, both a robust grid that can provide reliable and affordable power and options for building their own private grids to provide their own power.

And describe to me any risk associated with customer impact with the sort of private grid model.

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.

Right. Dr. Reed, I want to start with you. You recently wrote that durable federal permitting reform and enhanced federal siting authority for electric, you wrote about the need for it and an enhanced federal siting authority for electric transmission projects. Section 216 of the Federal Power Act, of course, provides siting authority for FERC and DOE. Now, this Section 216 authority has yet to be issued, has yet to be used, rather, to site a line, but it most certainly will be used in the future. If that authority were used in the future, whenever it's used, do you think lines sited using 216 authority would still likely face hurdles under some of our environmental permitting statutes like NHPA, NEPA, and the Clean Water Act?

Thank you for the question, Senator Lee. These interstate and interregional lines that you're describing that would likely be sited under 216 authority would benefit from reforms to NEPA and NHPA. Both the backstop siting authority that you're describing and often these regulations require numerous iterations. So we need to resolve these iterations that cause delay and clarify and simplify procedures, including that 216 authority, which actually has multiple federal authorities that need to be satisfied before we can even get to approving an interregional or interstate line. So there's a lot of opportunity for clarification and limitation of procedures for merchant developers.

Thank you. But these are things we ought to be focused on to make sure that we're ready to go, that that can be used. Mr. Fisher, let's go back to you for a minute. Electric utility ratemaking is, as has been noted in this conversation today, it's a complicated process. It varies from region to region. It varies from state to state. Now, according to a report from Monitoring Analytics, which is PJM's independent market monitor, transmission in the PJM region now accounts for a total of 32 percent of total wholesale electricity costs. Now, this is up from 23 percent of total wholesale electricity costs just two years ago. In your view, what happened there? Why this jump? of total wholesale electricity costs just two years ago. In your view, what happened there? Why this jump?

It's an excellent question, sir. I think the general thesis that I would put forward is that, especially in the wake of FERC Order 1000, there was a retreat away from regional and interregional lines towards what I've characterized as small ball projects. So in PJM, it's the immediate need projects that are designed to meet a short-term reliability constraint. They're designed to reduce those. In my opinion, utilities have taken full advantage of that and in their sort of profit maximization, they have been able to put a lot of small ball transmission in rate base and that works very well for them. It does not work very well for the consumer and it increases the all-in cost of power.

Right. Remind me how you define small ball.

So I would characterize it as a voltage threshold, a distance. So we're talking about shorter lines and lower voltage. And they often operate in this sort of gray area between state jurisdiction and federal. And that, I think, if we wanted to close the regulatory gap there, I think that is an opportunity for Congress to step in and to clarify that the voltage threshold could perhaps even go lower in terms of federal oversight.

Okay. But this all factors into the equation that we've been talking about previously about the fact that overbuild 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?

That's right.

Mr. Snitchler, states like New York have weaponized Section 401 of the Clean Water Act. And they've done so, among other things, they've done so to block expansion of natural gas pipelines into New England. During Winter Storm Fern, that bottleneck resulting from that weaponization of Section 401 of the Clean Water Act forced the region to rely heavily on fuel oil in order to keep the power on. Now, according to an industry trade publication, oil-fired 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 infrastructure can be traced to the weaponization of Section 401. So lack of gas pipelines led to higher gas prices, which in turn led to higher electricity prices, which in turn led to emissions spiking by nearly a quarter compared to the year before. So it's not just that this results in higher costs, it's not just that it's bad for consumers, it's also that it results in more emissions. So in your assessment, what would the impact of sufficient natural gas infrastructure going into New England be on prices and on grid reliability?

Thank you for the question, Senator. I think you've identified the two competing issues. The first of which is how are we going to ensure that you have the commodity that impacts the price of power be able to be delivered to the generator? That's natural gas in the instance that we're discussing. And how do you get greater access? So that input cost is what ultimately drives the greater cost of electricity. And the inability to move more natural gas into New England necessitates that there's going to be a reordering of the units that are dispatched because oil becomes cheaper when gas gets more expensive. So being able to address the questions about your input cost will ultimately affect what the price for generation will be 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 in very early parts of the year given a cold winter in New England and there's still the summer months that have to be accounted for when you're looking at what your emissions limits will be for the course of the year. So it really resonates on both the price front and on your emissions limits front.

That makes sense. I've got one or two more questions I want to ask, but I know I'm over time. Do either of you want a second round? Thank you, Angus. Mr. Fisher, now you've written a fair amount about EPA's authority to regulate emissions from the power sector in particular. Thankfully, in 2022, the Supreme Court of the United States ruled against the EPA using very vague statutory language in order to mandate really broad economically impactful changes in the electricity generation sector, largely targeted at retiring coal and gas-fired electric power generation. I'm grateful that the Trump administration overturned the EPA's 2009 endangerment finding, which created the legal basis for such regulations in the power sector. Now, you released a statement supporting EPA reversing this finding and you argue that this authority rests solely with Congress, of course, and I couldn't agree more. How has this EPA policy and subsequent regulations affected grid reliability and affordability?

That's an excellent question, sir. And I did support the EPA's reversal of the endangerment finding. I think it's fairly straightforward. I'm not an attorney, but the administrative law record reads to me like the EPA's choice to regulate greenhouse gas emissions, especially in the way that they did, was a major policy question and is subject to the major questions doctrine. Now, where that has the practical impact, or how it impacts the grid, is if the EPA's power plant rules change every four years and these assets are designed to be operated for 40 plus years, you really have a radical degree of regulatory uncertainty. And so if Congress could establish durable rules or no changes in the rules at all, that would, you know, provide the foundation for a more robust power sector. For example, the second iteration of the Clean Power Plan would have essentially shut down a large portion of the existing coal plants, but it also threw a lot of uncertainty into whether or not you could invest in a combined cycle gas unit, which in a lot of parts of the country is the most efficient way to meet new demand. Now, if you were going to operate it above a 40 percent capacity factor, you would have been required to capture the CO2 emissions. That technology is not proven. So the basic questions of, you know, can you even consider it a best system of emissions reduction if the technology isn't proven? We need a lot more clarity on these things and the regulatory uncertainty, the sort of dark cloud that's been over the industry since 2009 has been incredible.

And even just from an emissions standpoint, if you have that kind of environment, then when a demand surge comes, we're 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 heating oil that is not good from an emissions standpoint, even from a standpoint of environmental quality that produces some bad outcomes.

Right. So that's exactly right. And the broader question of how did we get caught so flat-footed in this era of new demand growth? I think it's 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're in a new posture now and I credit the EPA for changing that.

Thank you. Senator Hickenlooper.

Thank you, Mr. Chair. And again, thank all of you for being here. I don't want to relitigate what you've already covered and I think there's actually a pretty general consensus that grid modernization is long overdue and essential. I think we could 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. Obviously, people don't like having pipelines or, you know, grid, you know, transmission lines coming across their property. So we look at reform within our entire permitting process, recognizing that the public comes first, they've got to have full transparency, they've got to have the right to speak their mind, but ultimately some of these decisions are going to affect a much larger whole and are going to require very difficult decisions. And I think that's one of the challenges when we look at the grid, how do we get to that? I mean, putting lines underground is prohibitively expensive in most situations, similar with pipelines, hard to put them deep underground. What do each of you or how would you provide an opinion in terms of how to approach this? Because that's going to be the question we're all going to deal with. We might not get you up here to testify again, but I would love while we've got you to hear your opinion. So Mr. Snitchler.

Thank you, Senator, for the question. I think I may be the only one here who's ever had to vote on a power siting related issue in my prior role as the chair of the Ohio Power Siting Board. And so we had a statute that was fairly robust in the jurisdiction that it gave us to make decisions and try to contemplate a statewide or a broader perspective than merely the local community or merely the county level or a region that incorporated input from a number of state agencies as well as the legislative branch in an effort to make sure that we were getting all of the appropriate input into the decision making and then could ultimately make a decision that was for the good of the state as well as ultimately where we fit into the region. And so 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 that were under the jurisdiction of the Power Siting Board. And that model worked very effectively because you funneled all of that information in, narrowed the funnel and left that authority with the Power Siting Board to make those decisions.

Got it.

At the risk of oversharing my opinion, sir, I believe when some folks have characterized the system as a vetocracy, that resonates with me because it seems like there are too many choke points, that there are too many ways to stop work on a project, there are too many ways to sue a project into oblivion. The more we can limit those choke points or get complete buy-in upfront that, you know, 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 because I've seen firsthand these projects that, you know, they break ground and they're halfway done and then there's a new suit or a judge finds something new and, you know, the project has to stop. 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 doesn't allow them to do that.

I hear you, although I would argue that to even contemplate that, we need a really robust public process that is comprehensive and inclusive and where people really feel heard. Dr. Reed?

Thank you, Senator, for the opportunity. I agree that we need a single process. I think a clear, narrow federal authority for the types of transmission that are providing interstate and interregional value to consumers is incredibly necessary. What we have right now, we've talked about many 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 need to be taken, by identifying clearly if it is a state or federal decision that needs to be made in the interstate flow of electrons, just as we do in the interstate flow of natural gas. And an opportunity to open up transmission development to private developers who are ready to capture that value and bring it to consumers but are barred from that by both state regulations and complicated federal restrictions.

Exactly. And there's 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, and I say this, Mr. Snitchler, so he was lieutenant governor of Ohio for two years, hated it, quite rightfully, and had other things he was unhappy with, but he ended up becoming the second president of Cincinnati Gas and Electric because he was one of the few people having a stellar personal 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, Andrew Hickenlooper became the arbitrator and created the sense of public trust that you could figure out what is the right value to put on this self-interest versus that self-interest so that we can judge what is the best solution, how do we get the greatest benefit, the greatest good for everyone. And I think that's kind of your challenge and our challenge, and we appreciate your help and your wisdom and your experience as we go forward because this is, we're just beginning. Martin, anything else?

Nothing to add.

All right. As we wrap up, I'd like to enter into the record a letter from Toby Rice, he's the CEO of EQT Corporation, a natural gas production and midstream company. In his letter, Mr. Rice notes how high retail electricity rates and insufficient natural gas supply infrastructure are inextricably intertwined with each other. Specifically, he notes that since 2015, states with the sharpest increase in retail electricity rates are in states that oppose expanding natural gas infrastructure, including Maine, Rhode Island, Massachusetts, Connecticut, and California. So I ask unanimous consent that we enter those into the record. Seeing no objection, they'll be entered into the record. That'll conclude today's hearing. I want to thank our witnesses for their outstanding contribution. Your testimony has been insightful and very, 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'll keep that open until 6:00 p.m. next Wednesday, April the 1st. Thank you again to our witnesses for your testimony today. The committee stands adjourned.