March 16, 2026 · ENERGY · 12,907 words · 11 speakers · 82 segments
Thank you. Thank you.
Good morning. I'd like to call this meeting of the House Energy Committee to order at 12.01. Nick, will you please call the roll?
Chair Fiedler. Here.
Representative Boyd. On leave.
Representative Brown. On leave. Representative Serrato. On line. Representative Davidson. On line. Representative Donahue. On leave. Representative Friel. On leave. Representative Here. Representative Ingles Representative McAndrew on leave Representative pelli Representative Russnock On Line Representative Venkat
The chair Costin On Leave
representative barton virtual here representative cook on leave representative ham he is virtual also representative kale on leave representative keppart online online representative mihalik on leave
representative Rapp joining us virtually representative Stamball here representative Warner on leave representative Williams and he is virtual also
attendance is recorded proceed Madam Chair thank you Nick
and thank you to our members our guests and our testifiers for attending today's public hearing on House Bill 2223 printers number 2952 sponsored by the chair, and House Bill 2264, printers number 2962, sponsored by Representative Davidson, who is joining us online. Many of you know that electricity demand is rising rapidly here in Pennsylvania and across the entire country, and that all of us have our minds on the bills of the people back home who come into our district offices often facing very very difficult choices when it comes to how to pay their energy bills We know that we are dealing with serious supply chain problems and demand problems and that we need to do everything we can to get as much as possible out of our existing infrastructure. I believe we need to do that while we are also getting more energy online, and it's the first piece that is the topic of today's hearing. Today we're going to hear about two ideas I think could help Pennsylvania rate payers and businesses in this moment. Advanced transmission technologies, if you are not familiar, they are modern systems that improve how power moves across our grid, potentially reducing the need to build new expensive energy infrastructure. These costs are too often shouldered by residential electricity customers, and that goes back to my first point of us all as state representatives, regardless of where we are from, trying to protect our constituents. The other item we'll hear about today is called virtual power plants or VPPs. They're a network of distributed energy resources such as rooftop solar panels, battery storage systems, and smart thermostats that are digitally coordinated to operate like a single power plant. A VPP aggregates and optimizes many smaller assets to balance supply and demand in real time, potentially reducing energy consumption during the moments when it is most expensive, like on those very hot or very cold days. I am excited to hear from our testifiers today and grateful to you all for joining us. Chair Causer, do you have any opening remarks?
Thank you, Madam Chair. The one thing that I know for certain is that we need more energy on our grid, and that has to be our focus. I'm looking forward to the information presented today, Looking forward to the details of these two bills to determine whether the bills help us in that effort or hinder that effort. So I'm looking forward to the details, and thank you, Madam Chair.
Thank you, Chairman. We will begin today's meeting with House Bill 2223, sponsored by the Chair. Before we move on, I'll mention that Rep Friel is joining us online. Before we start with our first panel, I will offer some very brief remarks on the bill as the prime sponsor. As Pennsylvania faces rapidly rising energy demand, it is clear that we need to do more, get more energy online, and get more energy out of our existing grid. Building new transmission lines is incredibly expensive for ratepayers, and the use of eminent domain to acquire land or rights of way is often disruptive, and of great concern for families and businesses. We believe that ATTs offer a path forward that can be helpful on both these fronts. They are a neat, near-term, cost-effective solution that helps us simply get more out of the infrastructure we already have. This bill would require utilities to evaluate and incorporate these grid-enhancing technologies where they make sense, ensuring that our constituents are not stuck footing the bill for transmission upgrades that are more expensive than they need to be. Our panel today has three testifiers for House Bill 2223. Jenny Netherton, Energy Modernization Officer at the Pew Charitable Trust. Paige Rodriguez, Senior Manager, Policy and Grid Strategy at CTC Global. And Kelt Wilska, Senior Manager of State Policy for Advanced Transmission Technologies at Grid Strategies LLC. see. I also want the members to know that the Public Utility Commission was invited to take part in today proceedings They are unable to attend but they have submitted written testimony on both bills They have also agreed to answer any submitted questions from members of the committee. So please make sure to get those to your chair if you have them. Thank you again, testifiers, for joining us. Please know any remarks you submitted, members do have in their packets, whether they're online or in person. So feel free to summarize your remarks, and that will allow us to get to questions. Ms. Netherton, you may begin.
Thank you so much. Can you hear me?
Yes.
There we go. Thank you to Chair Fiedler, Chair Causer, and the rest of the committee for inviting me to provide testimony in support of HB 2223. My name is Jenny Netherton, and I'm an officer for the Pew Charitable Trusts. Pew is a nonpartisan policy organization that uses research and data to address the nation's most pressing challenges. Pew was actually founded right here in Pennsylvania in 1948. Our energy modernization program works to build a modern, reliable grid that can meet growing demand for electricity. ATTs, or Advanced Transmission Technologies, are a key piece of that puzzle. We are pleased to testify in support of HB 2223, which will strengthen Pennsylvania's grid while reducing costs to consumers and making it easier to bring new generation online. ATTs are hardware and software solutions that can be installed quickly on new and existing transmission lines to unlock capacity on the grid and maximize existing infrastructure while reducing energy costs for Pennsylvanians. ATTs can be deployed quickly in as little as three to six months, and studies show that they often pay for themselves in only six months to two years as a result of reducing congestion and their ability to bring new generation online. Eighteen states, including five in PJM, have adopted policies that encourage consideration of ATTs. Today, I want to highlight three key benefits of ATTs. ATTs help relieve grid congestion. they reduce construction costs, and they help to strengthen the grid. So the first big benefits of ATTs is that they can help to ease grid congestion, which occurs when the grid lacks sufficient capacity to deliver the lowest cost energy from where it's generated to where it is needed. This means grid operators have to dispatch more expensive electricity to meet demand. In 2024, congestion costs in PJM total $1.75 billion. ATTs ease congestion by giving grid operators more situational control of the transmission system, allowing them to increase capacity and reroute power. For an example, 1ATT is dynamic line ratings, which are small sensors that monitor conditions on lines and allow grid operators to safely increase the flow of power. With real-time weather and temperature information, grid operators can adjust to allow more power when conditions are optimal. DLRs are already working in Pennsylvania. In 2002, PPL deployed DLR systems on three bottlenecked lines in central Pennsylvania for under $1 million, which resulted in a $65 million reduction in congestion costs for Pennsylvania consumers. Another benefit of ATTs for consumers is that they can reduce or defer construction costs. Building new construction building new transmission or reconductoring has historically been the only way to increase grid capacity but ATTs now provide another cost way to do that The DLRs installed by PPL not only decreased congestion, but also avoided a $50 million line rebuild because of the system efficiencies created. Lastly, ATTs strengthen the grid by increasing reliability, capacity, and efficiency. Nobody wants to lose their power, and ATTs give grid operators more tools to fix outages and situational awareness to avoid them entirely. Another ATD, called Advanced Power Flow Controllers, are modular devices installed at substations that allow grid operators to reroute power more efficiently to minimize the number of customers impacted by outages. In regular conditions, they help to direct electrons off over capacity lines and onto underutilized lines. I'll end with the most exciting benefit of ATTs. They make it easier to bring new energy projects online. There are currently 21.9 gigawatts of projects sitting in the PJM interconnection queue for Pennsylvania alone. And ATTs can help bring these projects online by increasing the ability of the grid to accommodate and deliver additional low-cost power to consumers while making the most of our energy infrastructure. Thank you again to Chair Fiedler and Chair Causer, and I'm happy to answer any questions.
Thank you so much. We will ask members to hold their questions until the three panelists have spoken. Ms. Rodriguez, you may go next.
Good afternoon, Chair Fiedler, Chair Causer, and other members of the committee. Thank you for the opportunity to testify in support of House Bill 2223. My name is Paige Rodriguez, and I serve as a senior manager for policy and grid strategy at CDC Global. CDC Global is the world's leading manufacturer of high-performance conductors, which are a type of advanced transmission technology. Our ACCC conductor technology has been installed over 140,000 miles of transmission lines in over 65 countries. Utilities use this technology because it allows them to dramatically increase the capacity of existing transmission lines and quickly and cost-effectively increase transmission capacity. High-performance conductors can often double the capacity of an existing transmission line in months, rather than the 7 to 10 years typically required to build new transmission lines. Because these upgrades reuse existing towers and rights of way, they can also cost up to 75% less than constructing a new transmission line. And they're significantly less than rebuilding an existing line with larger structures. Today, I want to focus on one simple point. Advanced transmission technologies, like high-performance conductors, can help lower electricity costs for Pennsylvania families and businesses. And House Bill 2223 would help encourage utilities to consider these solutions. This conversation is particularly important right now because electricity prices in the Commonwealth are rising rapidly. This past November, the Pennsylvania Public Utilities Commission announced supply and price increases for several utilities, including a 10.6% increase for Duquesne Light, a 9.9% increase for Pike County Light and Power, and an 8.9% increase for MetEd customers. At the same time, transmission constraints are preventing new generation from connecting to the grid. PJM, the regional grid operator covering Pennsylvania, has dozens of gigawatts of generation waiting to interconnect to the grid. When transmission cannot move effectively, the result is is higher cost for consumers. High-performance conductors address this challenge in several ways. First, high-performance conductors reduce the amount utilities must spend on transmission infrastructure. One of the most cost-effective ways to increase transmission capacity is a process called reconductoring, which simply means replacing the existing wire on existing transmission lines with a high-performance conductor while keeping the same towers and rights of way. For example, a Southern California Edison 230 kV transmission project was originally estimated to cost $135 million, but it was ultimately completed for roughly $48 million after the utility chose to reconductor instead of build a new line. The timeline for that project was also shortened dramatically, from about four years to roughly 18 months, allowing new transmission capacity to come online sooner. Second, high-performance conductors reduce line losses, which mean less electricity is wasted during delivery. Whenever electricity travels long distances across transmission lines, some of that energy is lost as heat. When losses occur, utilities must generate additional electricity just to deliver the same amount of usable power to customers, and those costs ultimately appear in electricity bills. High-performance conductors use composite cores and additional aluminum which significantly reduces electrical resistance. As a result, they can reduce transmission line losses by up to 40% as compared to traditional conductors. For example, American Electric Power reconductored a 345 kV line in Texas using ACCC high-performance conductors and they reduced line losses by about 30%. This effectively freed up the equivalent of 34 megawatts of generation capacity. Third, increasing transmission capacity can reduce congestion costs, which are a major driver of electricity prices in regional power markets. Transmission congestion occurs when the grid cannot move low-cost electricity to where it is needed, thus forcing grid operators to rely on more expensive generation that is closer to load. In PJM alone, transmission costs, congestion costs reached $1.75 billion in 2024 and exceeded $2.2 billion in just the first nine months of 2025. By increasing transmission capacity, especially through faster upgrades like reconductoring, utilities can move lower cost power more efficiently across the grid and reduce those congestion costs that ultimately show up in customer bills. Finally, expanding transmission capacity helps bring new, lower-cost generation online, which can lower both energy market and capacity market prices. PJM currently has dozens of generation that have been completed in the interconnection study process and are waiting to connect to the grid. When transmission capacity is limited, these resources cannot come online quickly. But when transmission is upgraded, lower-cost generation can enter the market and help push electricity prices down. House Bill 2223 takes a practical step toward unlocking these benefits. This bill requires utilities to evaluate and consider ATTs when proposing transmission projects to the Pennsylvania PUC. By encouraging utilities to examine these cost-effective solutions, the bill helps ensure that Pennsylvania is taking advantage of technologies that can expand transmission capacity faster and at a lower cost. In closing, high-performance conductors provide a fast, proven, and cost-effective way to expand transmission capacity using existing infrastructure. By reducing project costs lowering line losses reducing congestion and enabling new lower generation to connect to the grid these technologies can help lower electricity bills for Pennsylvania families and businesses House Bill 2223 helps move the Commonwealth in that direction Thank you again, Chair Fiedler, Chair Causer, and the other members of this committee, in addition to the bill's co-sponsors, for your leadership on this issue and for the opportunity to testify today. I would be happy to answer any questions.
Thank you so much. And I think those are the first props brought before our committee, so we'll make a note of that. I have x-rays for anyone who wants them. Thank you. And Mr. Wilska, you may go ahead.
Thank you. Thank you. Good afternoon, Chair Fiedler, Chair Causer, and members of the House Energy Committee. My name is Kel Wilska, and I am the Senior Manager of State Policy for Advanced Transmission Technologies at Grid Strategies, LLC, a power sector consulting firm based in Maryland. I support the Watt Coalition and Amp Coalition, which together represent a dozen companies that sell and manufacture advanced transmission technologies. I appreciate the opportunity to testify today in support of HB 2223. Our country's electric grid is clogged up and at the worst possible time. Grid congestion adds cost to power prices when there isn't enough room on the grid to deliver the cheapest power. How much cost? $3.2 billion in PJM last year. The year before, congestion was only $1.8 billion. Congestion costs change year to year depending on fuel costs and other factors. But without intervention, congestion is likely going to get worse because of two main drivers. One, sharply rising demand from energy-hungry industries like data centers and advanced manufacturing that are crucial to maintaining U.S. global competitiveness and national security. and two, limited capacity on aging transmission lines, some of which go back nearly 100 years to the time of Thomas Edison. Grid congestion is separate from another big cost driver that I'm sure everyone here is very familiar with, capacity costs. However, they are interrelated. Adding more grid capacity means we can plug in more generators. Congestion and capacity costs go down as we increase overall grid capacity. Advanced transmission technologies are the fastest and cheapest ways to increase grid capacity, relieve congestion, and create savings on electric bills. HB 2223 will bring them into more common practice in Pennsylvania, which has already shown some of the best results in the country for ATTs. High-performance conductors are modern conductor technologies, including carbon core and superconductors, that can be used to restring existing power lines. This doubles the capacity of a line much more quickly and at half the cost of a full conventional rebuild with traditional technology, all while using existing infrastructure and rights of way. PJM has stated that two-thirds of all bulk electric system assets on its grid are more than 40 years old, and more than one-third of its transmission assets are more than 50 years old. The replacement of this infrastructure should not be done in a silo. Utilities should be using these asset renewal investments as an opportunity to maximize and optimize grid capacity and benefits to ratepayers. Grid-enhancing technologies are ATTs that go on existing poles, wires, and substations and can often increase usable capacity on constrained lines by 20% or more. A little bit of capacity goes a long way. GETs often reduce congestion by 40% or more at anywhere from 1 20th to 1 200th the cost of fully rebuilding a transmission line, and in a matter of months as opposed to years. Regionally, a 2019 study of a software-based grid-enhancing technology, Transmission Topology Optimization, found that across the PJM region it could reduce congestion costs by 30 to 50%, potentially representing over billion annually in wholesale power savings at negligible cost It just software helping grid operators make better use of the existing grid Pennsylvania is fortunate to be starting with a winning record on ATT deployment thanks to the innovation of two of its leading utilities, Pennsylvania Power & Light and Duquesne Light Company. Duquesne deployed dynamic line ratings in 2022, resulting in an average increase in line capacity of 25%. Also in 2022, PPL deployed dynamic line ratings for less than $1 million compared to the projected $40 to $60 million for a full conventional rebuild of the transmission line. It was operational in less than one year with no outages compared to three to five years with extended outages for a full rebuild. A line that had $60 million in congestion the year before only had $1.8 million when DLR was operating. There is ample room for continued innovation and success in ATT's deployment in Pennsylvania and the PJM region. Advanced Power Flow Control is a grid-enhancing technology that is particularly well-suited to enabling the exponential growth of data centers in Pennsylvania, along with their significant tax revenue and job benefits. Last year in 2025, the utility PG&E in San Jose, California, deployed Advanced Power Flow Control to unlock 100 megawatts of electricity near data centers under construction in less than 12 months. Central Hudson Gas and Electric in upstate New York deployed Advanced Power Flow Control in 2024 to unlock 185 megawatts in capacity and save $10 million on project costs due to faster delivery. I strongly support HB 2223's requirement that a utility provide evidence in its siting application or letter of notification that it fully evaluated and assessed the implementation of ATTs on existing transmission infrastructure and all proposed transmission infrastructure. This bill ensures that utilities evaluate ATTs that can deliver significant savings to ratepayers in the near term, rather than choosing solutions that may appear cheaper up front but may offer comparatively lower net benefits over the project's full lifecycle. Utilities are naturally conservative entities in that their priority is to keep the lights on for customers while minimizing risk. Introducing new technologies at little cost goes against their business model of being incentivized to build large, traditional infrastructure to maintain reliability. By encouraging them to evaluate ATTs and grid planning, the hope is to help them become more comfortable using this technology and see its many benefits. This policy is part of a bigger regulatory and technical change moving through the industry. The Federal Energy Regulatory Commission has required evaluation of these technologies in transmission planning and generator interconnection, but those requirements will be slow to take effect. Nothing is stopping Pennsylvania from moving first. Meanwhile, the U.S. Department of Energy just announced $1.9 billion in grant funding to support and accelerate ATT deployment. Policymakers should ensure that Pennsylvania utilities are pursuing these funding opportunities, which provide a discount to ratepayers on investments. The time to move is now. HB 2223 strengthens Pennsylvania's already formidable position as a leader in cost-effective grid modernization. While new transmission lines will continue to be necessary to reliably meet growing demand, widespread ATT deployment will ensure that the state maximizes the value of existing and future infrastructure, reduces unnecessary costs to rate payers, and accelerates solutions that can be implemented on a fast, near-term timeline. I urge a favorable report on HB 2223. Thank you for your time.
Thank you, and thank you to all of our panelists. I love hearing about things we can be doing to keep costs down and to move energy more quickly to the places it needs to go. So thank you. My question, I think I'll direct it to you either Mr. Wilska or Ms. Netherton. You can take your pick. Between the two of you you mentioned that a number of the utilities that do work in Pennsylvania PPL Duquesne Light are already doing things like this The ATT technology, they're already implementing it. Why is legislation like this useful? If you could just lay that out. I feel like that's a question that's going to come up. I understand the effectiveness of it. I understand it saves money. But if you could just explain why legislation is helpful for something that the utilities are already doing. Yes.
So I would point out that both of those projects, the PPL project and the Duquesne project, were earlier in the 2020s. These were 2021 and 2022, I believe. So I would point to kind of the time period that has maybe elapsed there as a reason that policy mechanisms are good to encourage this. I will also say that, you know, in terms of utilities taking action on things, they also like to have indications by regulators of, you know, what direction they can go in. And kind of to the point Kelt was making towards the end of his testimony, I think that also provides an additional incentive to look into it and more of a reason to evaluate it. Yeah.
I'll just add that we've found that as states begin to consider these technologies and as utilities start to think about evaluating them in their planning processes, the more that they become integrated into the utility workflows, the more comfortable the utilities are in using them. We've seen this not only in the United States but also across the world. There's an example in Belgium where I believe in the 2010s a utility in Belgium was very reluctant to start using dynamic line ratings. didn't really know how to incorporate it into their system. Now they can't get enough of it. They have scaled it up to use it throughout their entire system, and they really have found a lot of benefits with it. So our thinking is that by just encouraging utilities, not requiring, encouraging them to consider advanced transmission technologies in their planning and in submitting their applications here, it will become more ingrained in their utility workflows. Thank you so much.
Chairman? Thank you very much to all three of you for your testimony. I guess I'd like to follow up on that question just a little bit and ask, can you quantify how much this technology is being used already in Pennsylvania? How many lines across Pennsylvania are using the technology currently? Is there any way to quantify that? And then along with that, how much is the technology being used in other states?
So I know the PPL dynamic line ratings in particular were on three specific bottlenecked lines. So that was a pretty limited geography in terms of where they were installed. You know, they have been using those. It's funny. Paige and I both cited one number for congestion from 2024, and then Kelt used the 2025 one. So I think, you know, the benefits of these also extend beyond the specific lines they are installed on, but they are typically installed on lines that are, you know, congested and have issues. So I would say that. Do you have anything to add, Kelt?
What about the question about other states? Do you have any ideas?
In terms of how in use they are, you know, most of the states that have passed policies have passed similar evaluation policies, and we're really, kind of just now starting to get to the implementation phase of that. So the legislation that has been passed in the last couple of years that includes this in, for instance, the IRP process, we haven't really gotten to the time period where the public utility commissions are evaluating those yet. So that's something that we are certainly keeping an eye on and, you know, helping as much as we can with helping commissions understand these technologies in order to effectively evaluate. I can only speak on behalf of my company, CTC Global, but I think an interesting statistic is that we have over 140,000 miles installed globally, and only 8% of those are here in the U.S.
But in terms of other states in the United States, we have over 240 projects in the United States. And Texas, Arizona, and California are some of the states with the most projects, and they have dozens of projects. And right now we don't have any in Pennsylvania. However, we are talking to PPL about multiple projects here. So hoping to have some soon. I'll just add as well that in terms of grid-enhancing technologies,
the other family within that ATT's umbrella, they have been deployed all over the country. Like Jenny said, these bills that are being implemented now will further incentivize the adoption of these technologies. but there is already deployment all across the country in terms of dynamic line ratings. Advanced power flow control has popped up in New York, California, Georgia. Transmission topology optimization is being used by various grid operators, SPP, ERCOT in Texas, New England. They're using these for outage mitigation and congestion mitigation as well. There is a lot of room for progress, but they are being used all over the place.
You know, this committee has spent a considerable amount of time looking at impact to rate payers. And, you know, the cost of electricity to rate payers across the Commonwealth is of significant concern, I think, to all of us. And when looking at this bill specifically and the language in the bill, is there any protective language in the bill that will protect rate payers, put guardrails on to make sure that these costs aren't just imposed on rate payers across the state? Because to be honest with you, it's a mandate that's being placed on electric producers. So how do we prevent this from just being passed on to the rate payers?
So, you know, ATTs are a much cheaper option than line rebuilds, which is generally kind of the other option that you're talking about when you're using ATTs. So I think, you know, one of the biggest pieces of my job is explaining kind of where ATTs fit in, because it's not exactly a one-to-one, right? It's not, you know, you need to build a transmission line. Now you don't have to do that. It requires evaluation of the existing lines. It requires you to look at what you have. And so I would note that, you know, ATTs are cheaper than building new transmission overall. This evaluation will help ensure that that is what's happening. That's why, you know, the numbers are important on this. the actual use of this is important. And so I think you know my truthful answer to that is really that you know if utilities are choosing these they are likely choosing the cheaper option overall Just usually if there a mandate there a reason why it needs to be mandated Yeah.
And, you know, I would point to kind of what Kelt said about general unfamiliarity. I also, to your earlier question about kind of these being in use, one of the challenges of these projects being conducted by utilities is that it is sometimes hard to get good information about the increases unless they decide to put that out there. So I did want to kind of raise that as an issue of why we maybe don't have as many numbers to point to is because much of that is utility control data. Thank you.
Thank you. And, Chairman, I agree we should do everything we can to make sure costs are not passed on to consumers. So thank you.
I want to note that joining us in person, joining us online is Rep McAndrew, and joining us in person now is Rep Pieli. And I will give the first question to Rep Pieli. Go ahead.
Thank you, Madam Chair. This question is to Mr. Wilska. I was hearing, and from Ms. Netherton, I was hearing about the different projects and multiple states that are doing it. And I might have missed this, but I'm wondering if you could cite some examples of actual legislation that is passed by other states. That's similar to this bill, of course.
Yes. So there are different legislative mechanisms for integrating ATTs into utility workflows. There are some states that have passed legislation that incorporates ATTs evaluation into planning processes like integrated resource plans. There are also states that have done very similar to what Pennsylvania is considering now with incorporating the consideration of ATTs into the siting process with letters of application, certificates of public convenience and necessity. States that have passed this, I would need to get back to you on the exact states. I track over 30, and it's a little difficult to keep track of them all, but I'm happy to give you the number of states that have passed legislation like that. But they have been passed in other places.
Okay. And following up on that, maybe you can give us a rundown of what their experience was when they did implement this, even including a timeline and any hiccups along the way or success stories.
Yeah, we are still in the implementation phase for those bills. We haven't really been able to get any success stories yet because states are still in the early stages of implementing that legislation. I would say that it's very important for these bills to incentivize the consideration of ATTs. As utilities consider different projects, we really want to make sure that ATTs are seen as potential enhancements to projects and not exactly alternatives. If a utility says, hey, we really need this line when they're submitting an application, they probably need it. So let's make sure that the ATTs that are considered add to it and optimize it instead of being floated as an alternative, which it probably wouldn't be able to do. Okay.
Well, of course, but with the projects that you have, Sid, and what has been done, it sounds like success all the way around. So I'm looking forward to supporting this legislation. Thank you.
I can add more specifically to some of the mechanisms and kind of where some states are at. Actually, just last week, Ohio, part of their bill instructed the Ohio Public Service Commission to conduct their own report on ATTs, and that was actually released last week. I'd be happy to send that to y'all if you'd like. One of the other states I work in Utah is also working on implementing ATTs And there we have hosted a technical conference for their public service commission and invited the utility as well to talk about you know how are we going to evaluate this What is this going to look like? And I can say that those initial conversations have been very promising. The utility highlighted some of what Kelp mentioned about kind of unfamiliarity with technologies and areas where they need more information to make these decisions. And so I I think that's a productive dialogue that, you know, that is the goal in the states that this is happening, is education and everyone understanding how these technologies are used.
If I could just add as well, Ohio recently passed a law called HB 15, and that actually has a firmer mandate than the legislation here. So that required utilities to look at areas of congestion and then create implementation plans where they were required to use ATTs to address that congestion. And so that has just gone into effect, I believe, in the past few months. So still looking at that, but I think that's a good example to point to that's even firmer than this mandate here. Maine also recently passed a law. I don't have the number off the top of my head that requires consideration of ATTs. And your neighbors in New Jersey are currently looking at multiple ATT bills, three of them, one of which requires utility consideration of ATTs.
Thank you very much. You're welcome. Thank you.
And final question for this hearing will come from Rep. Jarrell. Go ahead.
Thank you, Madam Chair. I want to start by thanking the panel for the testimony. My question is for Ms. Rodriguez. You talked a little bit about, can you talk a little bit more about the cost of advanced conductors from manufacturing to installation and also the value of electricity loss saved when we adopt these technologies?
Yeah, absolutely happy to do that. So I'm going to answer your question two different ways. So there's two ways to look at the cost of an advanced conductor. And so that's just the cost of the conductor itself. And when you're looking at that, compared to this, this is called an ACSR transmission wire. And this is what you're going to see up like the vast majority of the time. This is going to cost about twice of this per foot. What's important here, though, is this is also giving you double the capacity. So you're paying about double the price for double the capacity. and that is just looking at the line itself. The second way to look at that is an overall project cost. So the transmission line is a very small portion of the overall project cost. What's going to cost the most is the transmission towers which use a lot of steel and concrete and so this is able to save significant amounts of money either by one avoiding new builds so you can instead of just building new towers or taller towers you can just replace the existing line. So you're avoiding the costs the most expensive part of new transmission projects. The second is rebuilds. The biggest benefit of this conductor is that it doesn't really sag. It has very minimal sag compared to this. So even if you're doing rebuilds, which is essentially you wreck the existing towers you have but keep the right-of-way, you don't need to build taller towers to accommodate the additional capacity as you would if you were using this. So you can build fewer towers because there's not as much sag so you don't have to worry about it hitting the ground and they don't have to be as tall so that is how i answer the price of like these conductors and you know two ways of looking at it right in terms of manufacturing i think that's kind of answered by the fact that it costs twice as much the biggest difference is the core here which is made of carbon fiber and this uses aluminum so that going to give you a little bit more of a cost increase but like i said you getting double the power And then I think the third part of your question was installation The installation is slightly different but does not cost really any more than it would to do this It just you use slightly different tools to install it, but you also have to use tools when you use this too. So to my knowledge, there's not a big difference in cost at all in terms of installation. Thank you.
Thank you so much. That was really interesting. I'm glad. I will.
Great. Seeing no more questions, I would like to thank the testifiers from this panel for joining us. We will take a five minute break and then we will move on to the next bill, which is House Bill 2264. Thank you again so much for being here. Energy Committee is always interested in what we can be doing to get more energy online and to save taxpayers money. Thank you. We'll take a five-minute break and we'll be right back. Thank you. Thank you. We are on to our second bill for the day, House Bill 2264, sponsored by Representative Nate Davidson, who is joining us online. Davidson. If you'd like to offer any remarks before we hear testimony on the bill, please go ahead.
Yes, thank you, Madam Chair. Can you hear me okay? Yes, we can. Thank you. Wonderful. That's great. Well, thank you. I apologize. I have a family commitment that prevented me from being there in person today. But this is a timely topic. And with energy prices on the rise, we need solutions that can be implemented quickly. So I'm very grateful. for you for bringing up House Bill 2264 for consideration today. I'm looking forward to the testimony from our testifiers. You know, we all know we live in an increasingly connected world, and I don't know many people who anticipated that we would have smart refrigerators or washing machines connected to the internet, but here we are in the 21st century, and these new connections are part of the reason that electricity costs are going up, But I think that they can also be part of the solution as well. Virtual power plant programs are becoming necessary because electricity demand is soaring and everyone is seeing their bills increase as a result. And instead of building more large power plants and adding more capacity to the grid, which I think we all generally support in a variety of ways, virtual power plants connect things like rooftop solar panels, home battery storage systems, and smart thermostats so they can work together in support of a strained grid, particularly in times of large peaks in energy demand, in cold weather or hot weather events, and other types of events. like that. They help supply extra power during times when demand is high, which can reduce strain on our grid system overall and prevent brownouts or outages. And they can also bring costs down quickly by deploying energy that people already have in their homes and communities. And I think this bill is a practical solution to a problem that we are all feeling today. In addition, you know, this bill is a bill that has had bipartisan support across our country. Notably, our neighbors to the south and the Commonwealth of Virginia, Governor Youngkin signed legislation similar to this to start a virtual power plant pilot program in their Commonwealth as well to enhance their grid reliability and efficiency. I'd just like to give a few quick additional thank yous. In addition to the chair for bringing up this timely bill, the committee staff deserve much praise for their work to get this bill to this position today. I would also like to extend a thank you to our testifiers who are with us, Their expertise and experience will be valuable to the members of this committee as we deliberate this bill and other legislation. And thank you to the members for their attention to this important effort. And with that, I will turn it back over to the chair and our testifiers.
Thank you so much, Representative. I am excited to hear from our testifiers about House Bill 2264. I will just say briefly again, I think this is part of a package of bills that we can hopefully get over the line to help get as much as possible, to squeeze as much as possible out of our existing grid while we also work to bring more energy online. As the rep said, all going back to our constituents and trying to keep people's bills low, keep their service reliable. And VPPs are a relatively new concept for me, but I think the rep explained them well, and I'm looking forward to hearing the testimony from all of you.
Mr. Chairman, do you have any opening remarks?
All right, we will jump right into it. We have two testifiers in person and one joining us online. In person, we have Chris D'Agostino, PA Policy Principal at Advanced Energy United, Leah Gibbons, Senior Director of Regulatory Affairs at NRG Energy,
and online Rod Williamson, Executive Director of the Industrial Energy Consumers of Pennsylvania. Thank you all for being here. Please know the members do have your testimony in their packets. All right, Ms. Gibbons, we'll begin with you if that's okay. Would you like to go first? You could do the setup. Sure, go ahead. Check one two Great So thank you for the opportunity to testify in support of HB 2264 legislation to advance virtual power plants in Pennsylvania. My name is Chris DiAgostino, and I serve as the Pennsylvania Policy Principal for Advanced Energy United, a national industry association representing businesses across the full range of advanced energy solutions. Our member companies are working to expand economic opportunity, lower consumer costs, and strengthen energy reliability and resilience across the country. Pennsylvania has long been an energy leader, yet today the Commonwealth faces growing challenges with energy affordability and reliability as demand continues to rise. The traditional response is straightforward. Build more power plants and expand grid infrastructure to meet that demand. This will be necessary. Yet at the same time, Pennsylvania needs additional tools in the toolbox, solutions that are cost-effective, efficient, deployable quickly, and make better use of the assets we already have. Virtual power plants are one such tool. So, what the heck are virtual power plants? To understand how a virtual power plant works, it helps to compare it with a traditional power plant. A traditional power plant, as we know, is a centralized facility that generates electricity, delivers it to the grid, and is compensated for its services. Virtual power plants operate on the same core principle, but instead of relying on one large facility typically, they coordinate many smaller energy resources located in homes, businesses, and other distributed sites. These resources can include devices that can adjust its electricity use or output almost instantaneously. These are battery storage systems, heat pumps, smart thermostats, electric vehicle chargers, and building automation systems in commercial and industrial facilities. When coordinated together, they operate like a single power plant from the grid operator's perspective. Virtual power plants help the grid in two main ways during peak events. And these peak events are when it's a hot summer day and you have the air conditioner running and there's a lot of strain on the grid. So first, they can supply electricity to meet high demand. This involves storage assets from residential and commercial batteries to EV or plug-in hybrid batteries, collectively sending electricity to the grid in response to peak events. Second, virtual power plants shave peak demand. With participating customers' consent, small adjustments can be made such that devices like thermostats, EV chargers, or heat pumps are adjusted during periods of stress. These adjustments are minor and often barely noticeable, but when coordinated across thousands of devices, they can significantly shave peak demand and defer costly energy and infrastructure investments. So these two functions that virtual power plants serve, I'm going to combine them into one phrase. I'm going to call it peak management services this coordinated this coordination is typically handled by an entity known as an aggregator which may be a third-party provider or the utility using advanced software and real-time signals aggregators coordinate participating devices so they respond together effectively operating as a single resource in the market a helpful way to think about this is through the analogy of an orchestra each distributed energy resource acts while the aggregator serves as a conductor. The conductor ensures that all instruments play in synchrony, signaling when to be louder or softer In the same way the aggregator coordinates thousands of distributed devices so they respond together providing reliable and coordinated support to the grid And here's a key point. Participation in these programs is entirely voluntary. Customers who own distributed energy resources can choose to enroll and allow program operators to make small adjustments during periods of grid stress. In return, participants are compensated for the flexibility their devices provide. Depending on the type of resource and the service provided, these payments can reach hundreds or even thousands of dollars per year. These programs also benefit the whole distribution grid, including participants who don't enroll. By shaving peak demand and deferring costly energy and infrastructure investments, VPPs lower overall system costs for all ratepayers. On the subject of cost, according to a 2025 Department of Energy report, virtual power plants can provide capacity at 40 to 60 percent lower cost than conventional peaker power plants. Again, this is not to replace peaker power plants, but it can provide a cost-effective option by maximizing the use of assets that are already on the grid right now and minimizing the need for new physical build-out. Virtual power plants can also be deployed quickly. They can deliver electricity and reduce demand within months, often faster than building a conventional peak or plant, while avoiding lengthy interconnection queues and siting challenges. At a time when capacity costs in the PGM market are elevated, virtual power plants offer a fast, cost-effective way to add capacity and lower system costs. Pennsylvania would be aligning with other states that are advancing virtual power plant programs. As the representative said, Virginia recently passed bipartisan legislation supporting virtual power plants, and states like Illinois and New Jersey are moving forward with similar initiatives. And then there's Texas, which I know NRG is going to speak more to. But Texas launched a virtual power plant program after winter storm URI, and it just has demonstrated how these systems can strengthen grid reliability, particularly in the case of extreme events. These programs demonstrate that virtual power plants can deliver meaningful reliability benefits while lowering system costs, and those savings ultimately flow to consumers through lower electricity bills and improved grid reliability. Pennsylvanians deserve the opportunity to realize these benefits as well. So thank you again for the opportunity to testify. Thank you for allowing me to give my VPP 101. Advanced Energy United represents a diverse range of energy businesses eager to bring power plants, virtual power plants to Pennsylvania, including distributed energy providers, demand response providers, third-party aggregators, hoping I'm not leaving anyone else out. But our member companies are ready to work with stakeholders to design programs that provide a more affordable and flexible alternative to peaker power plants. while also being a tool in the toolbox. This is an added tool in the toolbox. I want to emphasize that. Thank you very much, and I look forward to questions.
Great. Thank you so much for your testimony. Ms. Gibbons, you may begin.
Can you hear me? Okay. Great. Good afternoon, Chair Fiedler, Chairman Causer, and members of the committee. My name is Leah Gibbons. I am Senior Director of Regulatory Affairs at NRG. We have submitted some written comments that more fully explain our position and experience with VPPs. Today my comments will really just try to touch on the key points for you And let me start by telling you a little bit about NRG so that you get a better idea of where we coming from NRG is a leading supplier of electricity, natural gas, and smart home solutions, serving 8 million customers across North America, including 2 million smart home customers. In Pennsylvania, we serve hundreds of thousands of customers. We operate a customer-first platform that is supported by 25 gigawatts of generation, including 2,400 megawatts of generation here in Pennsylvania. And our three Pennsylvania offices in Pittsburgh, Philadelphia, and Wyomissing are the base for hundreds of employees. Our companies include PUC-licensed electric generation and natural gas suppliers, Vivint, which is a smart home company that delivers integrated smart home systems across the country, and CPower, which is a leading virtual power plant platform that serves business customers. NRG has deep experience delivering VPPs. In fact, last year we partnered with Renew Home and Google Cloud to build what will be one of the largest residential smart thermostat VPPs in the country. It's targeting a half a million customers and one gigawatt of peak demand reduction by 2035. We have big ambitions to bring VPPs to the PJM region and to Pennsylvania specifically. NRG supports House Bill 2264, which establishes a VPP program that draws on the vast experience and innovation of the competitive market to deliver affordable energy solutions to Pennsylvania consumers. VPPs really are the most economic means of delivering affordability to Pennsylvania consumers in the near term. We do have a few targeted amendments that are designed to strengthen the customer benefits and clarify the important role of the competitive market participants. And just to give you a big-picture sense of what do you need to have a successful VPP program, particularly for residential customers, it requires three things. First, you need to have devices installed at scale, so you need a lot of people participating. You need some strong customer engagement, so people understand that their load is going to be shifted, so then they're paying attention. And then you really need a clear means to monetize those reductions in energy, capacity, transmission costs, so that the savings that a customer who changes their usage flow back to that participating customer. House Bill 2264 sets a solid framework for a utility-run program, and so our amendments that we've offered really are targeted very narrowly at a couple things. One, so that third-party aggregators have a little more flexibility to participate, that the compensation mechanisms to give money back to consumers are flexible, and then probably the most important one that I'll spend a little more time on this morning is that the value that customers create by reducing their peak demand is accurately measured so that those savings that they achieve can be shared with them. As Chris mentioned, VPPs can function in a couple of different ways. He talked about the peak demand reductions that happen during big events, right, when it's really cold or really hot. That's clearly one way. Another way that they can operate is through something called daily load shifting, which operates a bit differently. It's every day. It's very small adjustments, but overall it can reduce a customer's costs and reduce load on the system. and save money for consumers. So our experience operating VPP peak reduction programs demonstrates that customers can save anywhere from $80 to $120 annually simply by reducing their usage during those peak times 20% to 30%. And that's pretty typical in our experience. And if you've got smart home technology, those savings can get even bigger. On the daily load shifting side, Vivint has a program called Smart Comfort. That has achieved remarkable savings for residential consumers, and it's been doing so for several years across the country. On an annualized basis, it has reduced HVAC run times by roughly 12%, and it provides the average U.S. household of approximately $156 a year in direct energy savings from having that load shifted. Thanks to Act 129, smart meters and AMI usage data are now ubiquitous across Pennsylvania. The usage data from these meters is really essential to monetizing the benefits of customer participation in VPPs. We have proposed an amendment to the bill to require the EDCs to use AMI data to calculate customer-specific capacity and transmission costs so that if a customer actually shifts their load and doesn't override or opt out of the event, they're actually able to then receive the benefits that those actions generate. Not all of the EDCs do this today, but they need to. And just to kind of give you a little bit of a more real-world example of what are we talking about here, because some of this stuff can sound a little esoteric when you don't deal with it every day, the representative said a minute ago smart thermostats are around, smart refrigerators, smart, you know, there's all kinds of smart equipment, including smart watches, which I'll be willing to bet a lot of people in this room have a smart watch. If you can imagine for a minute if Apple or Google, instead of telling you how many steps you took today, how many calories you burned, how many flights of steps you climbed, you can imagine that the data that they showed you in their app was, this is the average of what everybody walked today. This is the average of how many steps everybody climbed and the average calories everybody burned. If you think about that from a customer experience, well, gosh, That's not motivating me to climb up some more steps. It's not motivating me. It's also not showing me that, oh, I did a great job. You know, I can see exactly what all of my efforts today to work out and do all the things that I do had. So when we talk about, so that's sort of like the closest example I can think of. You know, we're metering usage. We're metering our steps. We need to calculate what that change has made for me so that when I have reduced my usage, I actually get to see the reduced cost. Okay, so finally, VPP participation works only really when it's customer-friendly. We need clear communication, easy opt-out, visible incentives, and technology that integrates naturally into people's daily lives, just like our watches and our apps do. NRG's experience shows that customers will stay engaged when those benefits are transparent and that tools are intuitive. Our VPP in ERCOT has achieved a 98% retention rate and an 88% demand response activation rate amongst our enrolled customers, so it really does work. With our proposed amendments, HB 2264 can really unlock the meaningful affordability, strengthen the grid reliability, and create a competitive, innovative VPP market for Pennsylvania.
So I thank you for your consideration, and I'm happy to answer questions. Thank you so much for your testimony. And our final panelist for today is joining us online. Mr. Williamson, you may go ahead.
Yes thank you Can you hear me Yes we can Thank you All right Excellent Well Chair Fiedler Chair Cosser members of the committee on behalf of the Industrial Energy Consumers of Pennsylvania thank you for allowing me to join virtually this afternoon, as I appreciate the opportunity to provide comments on House Bill 2264, which would establish a virtual power plant program in Pennsylvania. All right, there was enough Ps in that sentence. ACPA members are large industrial electricity consumers in Pennsylvania, collectively employ tens of thousands of Pennsylvanians. Reliable and affordable electricity is essential to maintaining the competitiveness of these facilities in national and global markets. So you have my written testimony, so I'm not going to bore you and read that entire testimony this afternoon. I want to be efficient and highlight a few key points. One, IECPA absolutely supports the concept of virtual power plants. Utilizing distributed energy resources in a coordinated manner can play an important role in supporting grid reliability and reducing system cost. However, sorry, there always seems to be a however. As currently drafted, House Bill 2264 raises some concerns regarding the program design and the potential for overlapping compensation mechanisms, utility customer cost impacts, and PJM market coordination. So I respectfully offer the following five recommendations, And I'll be quick to ensure that any VPP program adopted in Pennsylvania supports this grid reliability without imposing unnecessary cost on customers. Number one, risk of duplicative programs and payments. Pennsylvania customers, as you know, already participate in well-established demand response programs. Many IECPA members currently participate in PJM capacity market demand response programs, PJM emergency load response, utility-sponsored demand programs, third-party aggregator demand response. Pennsylvania also has a well-established net metering program that allows customer distributed energy generation resources to bring that generation back to the grid and receive compensation for that. House Bill 2264 states that customers cannot be excluded from the VPP program due to receiving other financial incentives from an electric distribution company. So without clear safeguards, this structure could allow a customer to receive compensation from multiple programs for the same distributed generation kilowatt hours or load reduction event. Such overlapping compensation would distort market signals and could result in excessive costs being recovered from all customers, including industrial facilities. Therefore, IABA recommends that legislation explicitly prohibit duplicative compensation for the same grid service or load reduction event. Number two, retail rate credits could unnecessarily increase cost. The legislation requires that energy exported from participating resources be credited at the full retail rate. This includes generation, transmission, capacity, and distribution components. Retail rate compensation for exports may significantly exceed the actual system value of the exported energy or capacity product This approach could shift cost to non customers and increase electricity rates for large industrial facilities So, ACPA recommends that export compensation be based on avoided cost or market value rather than just simply full retail rates. Number three, the proposed utility incentive structure may encourage excessive program spending. What I mean is the bill directs the PUC to establish utility incentives that are equal to or greater than the rate of return for traditional capital investment. This provision could unintentionally create incentives for utilities to maximize program spending on this rather than minimize system cost. IACPA believes that VPP programs should be designed to reduce overall system cost, not create new opportunities for earnings unrelated to traditional infrastructure investment. Number four, potential rate impacts from cost recovery. House Bill 2264 allows for upfront payment before the VPP resource is delivered, and utilities can recover all reasonable and prudent program costs from customers. And there's a number of costs that would fall underneath that category. IACB is concerned that these costs may not align with the benefits received. It could be significant and may disproportionately affect large industrial customers. Therefore, the legislation should require rigorous cost-effectiveness analysis and rate impact evaluation before the Public Utility Commission approves any VPP program. As you heard from both of the others who offered testimony this morning, BPP programs can lower system cost and provide benefits to customers. But there's nothing in this legislation that requires that cost-benefit analysis before these programs are approved. So lastly, coordination with PJM markets. As you know, Pennsylvania is part of the PJM Regional Transmission Organization, which operates wholesale markets for energy, capacity, ancillary services. To avoid operational conflicts and market distortions, any VPP program should be designed to ensure compatibility with the PJM market rules and avoid interference with existing wholesale market mechanisms. So in our written comments, I have respectfully submitted amendment language to address these concerns. In conclusion, we appreciate the committee's efforts to explore innovative approaches to improving grid reliability and integrating distributed energy resources. Virtual power plant programs may provide meaningful benefits if they are carefully designed to support reliability, avoid market disruptions, protect customers from unnecessary costs, and maintain compatibility with existing wholesale markets. Thank you for your opportunity to provide testimony on this important legislation.
Great. Thank you so much, Mr. Williamson. And rest assured, we do have the points that you made along with your proposed amendment language here. So I appreciate you outlining that so clearly and promise that we will take a look at it. We will move to questions now. We have just a few questions. I know there's some extreme weather out there, so I think we're going to let out a little early. But I did want to ask, I wanted to thank all the testifiers. I wanted to ask you Mr D so in 2024 Pennsylvania had a lot of major power outages So 65 70 71 the highest number of power outages that we had in decades And obviously that disrupted the lives and livelihoods of millions of people in Pennsylvania Can you talk about how a VPP program might be able to help prevent power outages and improve resiliency on our local grids to avoid something like that from happening again?
Sounds good. So I'll actually speak a bit broadly about Texas's program. So after winter storm, storm Urie, many Texas residents wanted a wanted to be off the grid and wanted wanted grid or energy independence, I should say. And that's when we see a surge in battery storage among Texas residents. And the regulators followed by making sure that these systems could come together and be synchronized into a virtual power plant program. And when you have a virtual power plant program operating and synchronized during an extreme weather event, not only does it provide reliability at that time, but you don't necessarily need fuel costs because the devices that are aggregated, they don't necessarily have fuel costs. And I believe that NRG has an example from Texas specifically from a winter storm.
Absolutely. Thank you. Yes, so winter storm fern was just at the end of January, obviously really cold. As I think I mentioned at the beginning, we've got a growing VPP in Texas in the ERCOT market. But over a period of six days during that storm, we were able to reduce demand by 1.7 gigawatt hours. So this is just from a real-time perspective. So what happens is when an alert gets called by the RTO, we're able to almost instantaneously, by controlling folks' thermostats, lower them down, and it effectively helps avoid blackouts, right? So by having that resource at your disposal where customers have signed up and said, yep, we're going to be participating in this, we have the ability to literally send signals to people's thermostats. You can turn them down a degree or two. Comfort is always an issue that we take great care of. But especially during these emergency events, it's very effective, very effective.
That sort of thing might feel troubling to some people. I hesitate to even think of what it is, right? People are used to be able to adjust the thermostat in their house, and nobody else is changing that number. But it sounds like people in Texas, this is something that they've already accepted.
You wouldn't notice that it was suddenly freezing in your home or something like that. That's right. And you get comfortable with this concept, I imagine.
That's exactly right.
And I think, as I said a little bit earlier, I mean, the key to having these programs work is that they're transparent. They're very easy to understand, right? So we've got people that sign up for our program, have the apps on their phone. They can see that things are happening. They also can override them at any time, right? There's absolute ability for people to opt out and just change the thermostat setting at any time. But I think, as I also said, I mean, especially from the last Storm's experience, 88% demand response activation. So folks let us activate them. And 98% retention rate. So folks are staying in. And part of that is because they see the value. They don't want their lights going out. They've lived through that, right? A couple years ago, there was the URI that caused lots of outages as well. I mean, people understand from their own learning, but I really do think that part of it is the customer-friendly nature. And honestly, that's why we are such strong advocates for especially the way this bill is designed – Let competitive, innovative companies come in and participate because they can bring those really nice, slick customer platforms that are easy to understand and use. And it just helps a lot, helps keep people understanding what they're getting.
Don't mind me just quickly adding consumer choices at the center of this program. And I'm happy to keep repeating until the cows come home. This is a opt-in, voluntary, compensatory program. If you don't want to enroll, you don't have to. You might miss out on some savings, but you don't have to. You're usually given terms and conditions, shown success in Texas.
Thank you. I believe our testifier online, Mr. Williamson, you have your hand up. Would you like to respond?
Yeah, I just wanted to share one other important point of consideration here. as we look to expand the number of distributed generation resources at the customer level. The other thing that we have to be very mindful of are the safety aspects of this. As an electrical engineer, you know, when a storm comes through, things can be very chaotic. You can have down lines. You have linemen that are out there trying to get everything reconnected. And we have to make sure that these customer-based resources are appropriately connected and disconnected from that system. We can't create a situation where these resources are going to be exporting generation out onto a grid when there are down lines and lines that are out of service. So any component of an expansion of these programs as well also has to make sure that there is a very robust interconnection and interconnection verification process where customers are utilizing certified electricians to have these things connected to ensure that we maintain the safety of the linemen and personnel during these storms and emergency events as well.
Thank you. Thank you. And I do think this is a good bill. I think it might take some getting used to for people, but as one of you mentioned, our testifiers, if the choice is between optional enrollment in this program and saving a little bit of money and not facing some of these worst-case scenarios, folks might agree to opt in, and it sounds like they have.
Chairman Couser. Thank you to all three of you for your testimony. I guess my question is, you know, electric companies are required to give rebates, up-front payments, performance incentives to program participants. How does the program work for consumers who aren't participating in the program, and how will they be protected from companies recouping the costs of the financial incentives that they are required to give participants if the program struggles? So I'm happy to return to actually what Jenny said earlier in the ATT testimony,
which is this is potentially a cheaper option to building a new Peeker power plant. So that one point I like to make It minimizes physical build and maximizes digital connectivity so it not particularly capital and with regard to the protections, this legislation right now is designed such that it expands the market as much as possible for virtual power plants, but we're happy to have a conversation about ways to ensure that there's protections. Yeah.
Yeah, I would add in a little bit there. I mean, so you're right, right? So the utilities currently have lots of rebate programs for smart thermostats. Ratepayers are already paying for all those rebates. I think that's the happening, right? And the rebates through this program can continue to get used to get more thermostats on walls. I mean, our past experience with thermostats is you send them out to people, and like 40% of them get on walls, if that. One of the things that we do is we go install them. That's just part of the way we have envisioned our VPP. In Texas last year, we installed 40,000 thermostats. So it ensures they actually get on the wall and that customers sign up to participate in the VPP. And so then the other part there in terms of savings and who pays for that savings that gets, that's shared savings that is generated by the customer's own reduction in their use. So we can see what was it last year that it cost you. This year it cost you only this much. As the supplier, from our perspective, one of the things we do is supply electricity. That's a reduced cost for us. So we can actually take your reduction and share that savings back to you. So it's not actually funded by anybody else. It's actually a result of you reducing your own usage, which is why I keep harping on this concept about making sure we're calculating transmission capacity costs for that individual customer who reduced their usage because we can then take that reduction in cost and share it back and flow through. So there's not another pot of money coming from rate payers to pay for that.
It's literally coming from the reduced cost. Mr. Williamson?
Yeah, so this becomes a bit more nuanced in a state like Pennsylvania where we have retail choice, right? because there are customers who are not purchasing their electricity supply from the utilities. So when you talk about avoided cost of generation resources, well, industrial customers aren't buying their generation for the most part from the utilities. They're participating in the marketplace to get that. So there really does need to be a robust benefit cost analysis and cost allocation performed by the Public Utility Commission that looks at the cost of the program. Does this program will it provide distribution savings or distribution costs Very likely will Many times distributed resources help avoid the need for traditional distribution investments So there could be an appropriate cost allocation to the distribution rates that gets collected from all customers. But regarding distributed energy resources as far as generation resources that are bringing that generation to the marketplace, that can be a little bit more nuanced and looking as far as which customers are actually benefiting from that. MS.
Thank you. We have two member questions. We'll begin with Representative P. Ellie. MR.
Actually, a lot of my questions were answered by your previous. MR.
Sorry. Thank you, Madam Chair.
And thank you to the testifiers, all of you, for giving us this information. A lot of what I was going to ask was actually covered by both Chair Fiedler and Chair Causer's questions. But I just wanted to get a better definition and understanding of the costs that are saved and how the customer is compensated. When you do finally find out what the savings was for the customer, how are they exactly compensated?
Is it a check? Is it a reduction in their bill? It could be any of those things. I mean, first and foremost, if they've reduced their usage, then their bill is just going to naturally be reduced if their costs are calculated for them. right so if i've if i've if i'll just put my little utility hat on for a second if i've calculated your transmission costs i've calculated your capacity costs just for you and so that's that's all you're going to be responsible for if you're if you're not if that's not what's happened and you're paying to some average then it doesn't matter what you do you're not going to see that natural savings because you're paying what the average is instead of what you use so that's that's one one way um in terms of the the shared savings piece you're Right. There's different ways you can – it can be a bill credit. It could be a check. I mean, there's – and the innovation in the market is going to probably come up with, you know, other ways to share that savings back. But, yes, that's effectively – I don't know about any other ways.
Perhaps you can tell me what they do in Texas, for example, since that seems to be established. I think we do bill credits in Texas.
In Texas, we bill all of our customers directly, and all the charges are on that bill, so we can easily pass those kind of things on. Okay. Thank you. Also just worth mentioning that there's flexibility with regard in this legislation itself. It's not necessarily prescriptive, so you could get a rebate. You could get some other compensation, so it's open.
Good question. Thank you. Final question of the day from Representative Stamball.
Thank you, Madam Chair. The question is, do you see this being used as supplying power to the grid, or is it more of a demand-side management resource? Okay. I think I see the head nodding yes on the ladder. Okay. I just point out that one of the issues why the utility companies in Pennsylvania haven really adopted this is sort of the fact that you know they rate regulated and they out to make a profit That's part of their mission of being a rate regulated utility company. The electric co-opers in Pennsylvania have been doing demand side management since the 70s and started with water heaters, electric resistance water heaters, where they would shut them off during peak times to cut their wholesale power bill, and the member got a small credit on their electric bill, but they saved a lot of money on their power bill every month, and there was a lot of buy-in. I mean, they realized what they were saving. So I do think that once consumers start to realize that there's savings with this on their electric bill, there will be a lot of buy-in on the demand-side management side. I think there's more problems with issues coming in selling the power to the grid or aggregating that power to sell to the grid with net metering and those kinds of costs that do get cross-subsidized to consumers that aren't participating. So anyway, I'll just leave it at that. So happy to address some of those points. Number one, so if it was to be deployed in Pennsylvania tomorrow, it would be more on the shaving demand side than the supplying energy side. And that's just because the residential and commercial battery space is still relatively nascent in Pennsylvania. And there's a lot more deployments of, say, smart thermostats. But one of the advantages of a virtual power plan is that it can grow as more distributed energy resources get on the grid. When we think of a power plant, we usually think of it as like a stagnant thing, like, oh, you have a one gigawatt gas power plant. But this power plant can grow as the distributed energy resources grow, so it's not stagnant. It's going to grow alongside distributed energy resources. I would totally agree. And just to sort of reiterate the data point I shared a little earlier, you know, we've got a goal of getting to a gigawatt in Texas by 2035. we've already, we had to actually up our goal. When we first initially put our goal out there, it was much lower. But we were having such good success of people signing up and then participating that we've increased it. So Chris is right. I mean, it is one of these things that can keep growing as more people participate. Thank you so much.
Thank you to all of our panelists. I think there was some really interesting information presented today about new technologies and how it can help us to keep people's bills down and to get as much as possible out of our existing grid. So thank you to everyone. Mr. Chair, do you have any closing comments?
Thank you, Madam Chair. I'd just like to say that I would also like to thank the testifiers today for the information presented on both bills. They've presented information that will be important for us to consider going forward. So thank you. And thank you to the members who joined us. With no further business on the agenda, this meeting is adjourned at 1.28.