[House Hearing, 110 Congress] [From the U.S. Government Publishing Office] FULL COMMITTEE HEARING ON THE COST AND AVAILABILITY OF ENERGY AND THE EFFECT ON SMALL BUSINESSES ======================================================================= COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS FIRST SESSION __________ AUGUST 31, 2007 __________ Serial Number 110-43 __________ Printed for the use of the Committee on Small Business Available via the World Wide Web: http://www.access.gpo.gov/congress/ house ______ U.S. GOVERNMENT PRINTING OFFICE 38-201 WASHINGTON : 2007 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001 HOUSE COMMITTEE ON SMALL BUSINESS NYDIA M. VELAZQUEZ, New York, Chairwoman HEATH SHULER, North Carolina STEVE CHABOT, Ohio, Ranking Member CHARLIE GONZALEZ, Texas ROSCOE BARTLETT, Maryland RICK LARSEN, Washington SAM GRAVES, Missouri RAUL GRIJALVA, Arizona TODD AKIN, Missouri MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania MELISSA BEAN, Illinois MARILYN MUSGRAVE, Colorado HENRY CUELLAR, Texas STEVE KING, Iowa DAN LIPINSKI, Illinois JEFF FORTENBERRY, Nebraska GWEN MOORE, Wisconsin LYNN WESTMORELAND, Georgia JASON ALTMIRE, Pennsylvania LOUIE GOHMERT, Texas BRUCE BRALEY, Iowa DEAN HELLER, Nevada YVETTE CLARKE, New York DAVID DAVIS, Tennessee BRAD ELLSWORTH, Indiana MARY FALLIN, Oklahoma HANK JOHNSON, Georgia VERN BUCHANAN, Florida JOE SESTAK, Pennsylvania JIM JORDAN, Ohio Michael Day, Majority Staff Director Adam Minehardt, Deputy Staff Director Tim Slattery, Chief Counsel Kevin Fitzpatrick, Minority Staff Director ______ STANDING SUBCOMMITTEES Subcommittee on Finance and Tax MELISSA BEAN, Illinois, Chairwoman RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania BRAD ELLSWORTH, Indiana STEVE KING, Iowa HANK JOHNSON, Georgia VERN BUCHANAN, Florida JOE SESTAK, Pennsylvania JIM JORDAN, Ohio ______ Subcommittee on Contracting and Technology BRUCE BRALEY, IOWA, Chairman HENRY CUELLAR, Texas DAVID DAVIS, Tennessee, Ranking GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland YVETTE CLARKE, New York SAM GRAVES, Missouri JOE SESTAK, Pennsylvania TODD AKIN, Missouri MARY FALLIN, Oklahoma ......................................................... (ii) ? Subcommittee on Regulations, Health Care and Trade CHARLES GONZALEZ, Texas, Chairman RICK LARSEN, Washington LYNN WESTMORELAND, Georgia, DAN LIPINSKI, Illinois Ranking MELISSA BEAN, Illinois BILL SHUSTER, Pennsylvania GWEN MOORE, Wisconsin STEVE KING, Iowa JASON ALTMIRE, Pennsylvania MARILYN MUSGRAVE, Colorado JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma VERN BUCHANAN, Florida JIM JORDAN, Ohio ______ Subcommittee on Urban and Rural Entrepreneurship HEATH SHULER, North Carolina, Chairman RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska, MICHAEL MICHAUD, Maine Ranking GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada HANK JOHNSON, Georgia DAVID DAVIS, Tennessee ______ Subcommittee on Investigations and Oversight JASON ALTMIRE, PENNSYLVANIA, Chairman CHARLIE GONZALEZ, Texas LOUIE GOHMERT, Texas, Ranking RAUL GRIJALVA, Arizona LYNN WESTMORELAND, Georgia (iii) ? C O N T E N T S ---------- OPENING STATEMENTS Page Shuler, Hon. Heath............................................... 1 Davis, Hon. David................................................ 3 WITNESSES Eggers, Dr. Dolores, University of North Carolina-Asheville...... 5 Snowden, Stanley, Seven Wheels Trucking, Inc..................... 7 Hutchinson, John, Powell Construction............................ 9 Lamberts, Dr. Frances, Co-Chair, Natural Resources, League of Women Voters of Tennessee...................................... 11 Tiller, Dr. Kelly, Agricultural Policy Analysis Center, The University of Tennessee........................................ 14 Keiffer, Jim, Tennessee Valley Authority......................... 22 White, Robert, Johnson City Power Board.......................... 24 Elkins, Larry, Holston Electric Cooperative...................... 26 APPENDIX Prepared Statements: Shuler, Hon. Heath............................................... 33 Davis, Hon. David................................................ 36 Eggers, Dr. Dolores, University of North Carolina-Asheville...... 38 Snowden, Stanley, Seven Wheels Trucking, Inc..................... 42 Hutchinson, John, Powell Construction............................ 44 Lamberts, Dr. Frances, Co-Chair, Natural Resources, League of Women Voters of Tennessee...................................... 67 Tiller, Dr. Kelly, Agricultural Policy Analysis Center, The University of Tennessee........................................ 71 Keiffer, Jim, Tennessee Valley Authority......................... 75 White, Robert, Johnson City Power Board.......................... 79 Elkins, Larry, Holston Electric Cooperative...................... 81 (v) FULL COMMITTEE HEARING ON THE COST AVAILABILITY OF ENERGY AND THE EFFECT ON SMALL BUSINESSES ---------- Friday, August 31, 2007 U.S. House of Representatives, Committee on Small Business, Washington, DC. The Committee met, pursuant to call, at 10:04 a.m., in the Auditorium, the Johnson City Power Board, 2600 Boones Creek Rd., Johnson City, Tennessee, Hon. Heath Shuler [Chairman Pro- tempore of the Subcommittee], presiding. Present: Representatives Shuler and Davis. OPENING STATEMENT OF MR. SHULER Chairman Shuler. I now call this hearing to order. I would like to first thank the Johnson City Power Board for their hospitality in allowing us to hold a Congressional hearing here. And I want to extend an absolute special thanks to my good friend Congressman David Davis here in the First District of Tennessee. We are both freshman members, we are back to be freshmen all over again. And he has done an outstanding job and we have been able to work together on a lot of issues. And really as you can tell to truly start making--to cross the party lines to do what is right for America. And I think that is the most important thing. We are here today to hear from a panel of witnesses that can educate the two of us to go back to Washington and send that message what happens in western North Carolina and east Tennessee, we can send that message to Washington that the people there can listen to the testimony that will be today and they can educate us on being able to serve you better in our district and serve America. So we want to--I want a special thanks to Congressman Davis and what he has been able to accomplish in a very short time, he has certainly made a very good name for himself in Washington. Today's hearing will focus on the cost and availability of energy and the effects on small businesses. Here in Tennessee we will examine the matter of energy prices and how it impacts small businesses. It is an issue that affects nearly every industry, whether it is a retailer coping with the higher energy rates or small trucking companies that are dealing with the spiking gasoline prices. It is one of the most critical economic challenges facing our country today. The increasing cost of energy is making it difficult for small business owners to manage and survive. According to a recent survey published by the PNC, financial service groups, the rise in energy price is the leading concern among small and medium sized business owners. While gasoline prices have dipped recently, the cost of energy remains high for oil and natural gas as well as electricity. While gas prices have--unlike the large competitors, small businesses often lack the cash reserves to cope with a spike in prices. Here in Tennessee and in my home state North Carolina the manufacturing sector has taken a tremendous hit. Manufacturing jobs have gone oversees for a variety of factors and the cost of energy is adding to these problems. That is one of the reasons that Congress needs to act sooner than later as the energy must become another factor in this--must not become another factor in deciding to move good paying jobs oversees. I am proud to say that the Committee has worked to highlight the urgent and the significant impacts facing small business when it comes to energy. In our Committee, we have worked for both immediate and long term solutions for these challenges. The Committee has considered measures for helping and dealing with some of these issues. Earlier this spring, I introduced a Small Energy Effective Business Act, which was included in the comprehensive energy legislation we recently passed in the House. My bill helped small businesses acquire energy efficient technologies by providing more flexible loans through the SBA's 7A and the 504 lending program. The legislation also requires the SBA to develop a national strategic for education educating small firms about energy efficiency. The bill will create renewable fuel capital investment programs that invest in research and the production of renewable energy sources for small businesses. This includes the development of bio-diesel, ethanol, and related research considering other than more biomass fuels. While this is a start, I believe that we can do more to address this issue of energy prices. That includes making sure that we are encouraging the creation of energy supplies here in America while helping small businesses deal with the current situation. In the short term, small businesses must deal with the reality that they are going to pay higher prices for electricity, gas, and oil. To help them cope, I believe that we need to ensure that companies here in America are able to compete in light of these costs. Small businesses often lack the resources to identify equipment and techniques that would save their businesses money down the line through reducing energy consumption. I believe that there is a need for a greater tax incentive for small business to invest in energy efficient equipment. These policies would assist them in decreasing the overall energy consumption without harming their business growth. We also need to do more to promote more domestic supplies of energy production from organic material and that would otherwise be discarded. The State of Tennessee has obviously been a leader in this forefront. I am please that my alma mater, the University of Tennessee, is working to develop new techniques for these clean energies. This investment will pay off in a number of ways. It will not only help rural economics, but it will help the potential for long-term energy solutions. Quick action is needed to help small businesses contain their costs, remain competitive, and play the necessary role in reducing carbon emissions in the U.S. This Committee looks forward to working with you to continue solving energy issues important to our nation and small businesses. And at this time I would like to recognize Congressman Davis, the distinguished gentleman from the State of Tennessee who serves as a ranking member on the Subcommittee on Contracting and Technology, for his opening remarks. OPENING STATEMENT OF MR. DAVIS Mr. Davis. Good morning. Thank you all for being here to examine the availability and cost of energy and how it has an effect on small business. I am very appreciative of each of our witnesses who have taken time out of their undoubtedly busy schedules to be with us today. Thank you for being here. Before we begin, I would like to sincerely thank my good friend Congressman Heath Shuler for making the short trip across the Blue Ridge mountains. Heath and I were actually together yesterday on the other side of the mountain, to talk about healthcare. And I cannot think of two more important things facing small business right now than the availability and access to good quality healthcare and the availability and access of energy costs and energy products. Heath and I may come different states, be members of different parties, only one of us can still throw a 12 yard out pattern on the road, and you can probably guess who that is. [Laughter.] Mr. Davis. But we both care passionately about the survival and prosperity of our small businesses. Being back here in Tennessee is probably a little bit like a homecoming for you, Heath. I certainly hope that it is. For those of you who may not know, and there are probably not many of you who do not, before he was Congressman Heath Shuler he was Heath Shuler, the 1993 SEC player of the year and NCAA male athlete of the year while playing quarterback at the University of Tennessee-welcome back. Chairman Shuler. Thank you. Mr. Davis. What many of you may not know is that following his playing days in the NFL he became a successful entrepreneur and small business owner. He began a real estate brokerage firm and several other successful real estate companies. I consider Heath to be a strong asset to the small business community as he brings real world experience to the Committee as he, like myself, have owned small businesses. He knows the pressures of meeting a payroll, finding affordable health insurance for his employees and complying with government regulations. Across the United States, small businesses make up more than 99 percent of all non-governmental employees. They also lead our economic growth by creating anywhere between 60 and 80 percent of our new jobs created in the economy. Small businesses are dynamic and continually changing to meet consumer demands and market needs. Almost 700,000 small firms with employees start up every year in America. Today we are addressing on of the most significant problems faced by small business, the rising cost of energy. In recent years, it has become painfully clear that America is too far dependent on foreign oil. We import nearly two-thirds of the oil that we consume. With gas prices in east Tennessee and throughout the country hovering around $3 a gallon at times, it is important for Congress to continue to explore ways that we can produce more energy domestically rather than relying on oil from the volatile Middle East. It is quite apparent that the United States must work toward a balanced and diversified energy policy, including locating and developing our own domestic sources of fossil fuels, such as those located in the Arctic National Wildlife Refuge and in the ocean off of our shores. Exacerbating our dependence on foreign oil is the fact that new refineries have not been built in the United States for over 30 years. I believe we must take a long hard look at refining capacity as part of the solution. Due to the astounding technological advances in recent years, we can now look to the immense potential of renewable energy as alternatives to fossil fuels. Bio-diesel and ethanol are fast becoming household names and their prevalence in the marketplace has increased dramatically in a very short time. There can be little doubt that the increased demand for renewable fuels has had a positive impact on our nation's economy, including small businesses. When one considers the contributions of wind, solar, and nuclear power, we can begin to see that we have taken great strides in reducing our foreign oil dependence. Diversifying and improving our nations energy production and consumption increases competition, which we all know drives prices down, spurs innovation, and creates opportunities for niche industries to crop up and begin to thrive. In fact, more than 70 percent of renewable fuel producers are small businesses. With that said, there is still more that needs to be done, including examining more immediate fixes to help businesses and homeowners alike to cope with rising fuel prices. We have asked our distinguished panel to discuss both long and short term solutions to this pressing problem and I am very eager to hear their testimony this morning. Again, thank you all for being here today and now I would like to yield to the gentleman from North Carolina to introduce his guess Dr. Eggers. Chairman Shuler. Thank you, Congressman Davis. Again, we are faced with lots of adversity for small businesses and at this time, I would like to introduce our first panel. But before I do that, I ask unanimous consent that the record be held open for five days for all members to submit their statement. Hearing no objection so ordered. At this time I would like to introduce Dr. Dee Eggers as an assistant professor of environmental studies at the University of North Carolina at Asheville. Dr. Eggers previously worked for the Environmental Protection Agency as well as the North Carolina Department of Environment and Natural Resources. Dr. Eggers, you are recognized for five minutes. STATEMENT OF DR. DOLORES EGGERS, UNIVERSITY OF NORTH CAROLINA, ASHEVILLE Ms. Eggers. Thank you, very much. Congressman Shuler and Congressman Davis, thank you both for your service and, Congressman Shuler, especially for inviting me here today to speak on energy issues and opportunities as they relate to small businesses. I am an associate professor now, I got a promotion, but I am an associate professor in the environmental studies department at UNC Asheville and I also serve on the North Carolina legislative commission on climate change and I teach classes in policies, resource management, basic environmental science and strategies for sustainability. We are all feeling the effects of rising energy costs as global demand for energy increases. Unfortunately, those costs will continue to rise for the foreseeable future. So how can we address that growing impact on our local economy and small businesses? I think the best help you can give small businesses is to make energy efficiency and renewables more affordable and available. So why efficiency? The most affordable energy is the energy we do not use. According to research done for the North Carolina Utilities Commission, the cost of generating a new kilowatt hour from the least expensive source which is coal, is about seven cents. Whereas, the cost to save a kilowatt hour through an efficiency program is about three cents per kilowatt hour. And in the handout, there is a bar chart that shows the various cost of different sources of energy. One of the best things about investments in efficiencies is that the savings are usually permanent. A building with extra insulation will save money for that user year after year after year. And with the payback period on many of these investments being pretty short, like one to five years, six months even, those saving soon become additions to the bottom line. Now most of us--this is the part that you should really pay attention to. Most of us are steeped in the old design mentality of increasing marginal cost, that is for every additional kilowatt hour we conserve, it costs us more than the last kilowatt hour we conserve. But what we are finding is this effect that Amory Levens calls tunneling through the cost barrier--and there a graph representing that in the handout as well. With this effect, what happens is when we combine many approaches at once, like more efficient HVAC systems, better HVAC controls, efficient windows, better insulation, shading, et cetera, all of a sudden something transformational happens and we see new opportunities emerge for cost savings, because we can downsize certain systems and omit systems all together. So we can put in a more efficient smaller HVAC system and have fewer east and west facing windows while still having great natural light on the inside. Because of the cost savings from the smaller systems, the total investment decreases. In the example I included in supporting material, total investment in a new building for energy efficiency went from 26,200 down to $4330 and the payback period for some of those things, which may have been like for shading on the order of 17 years--the payback period for the entire package went to less than one year for a highly efficient building. Now this is a familiar concept, we call it the whole is greater than the sum of the parts. Everybody who has played on team knows how that works. But people do not expect to see it in efficiency. So this is an opportunity that we need to take advantage of. In some cases it actually costs less to build a highly efficient structure than it does cost to build a conventional structure. And these are some synergies we get to take advantage of and our small businesses get to benefit from these opportunities. It is a foreign idea for most places or most people in the United States, but it is not a foreign idea in other places. We are seeing this rapid emergence of these technologies applied in Japan, Germany, Holland, Denmark, and even China is coming on board with this. But in the U.S. right now only a handful of architecture and engineering schools are teaching their students those design techniques. For folks in existing structures or who want to build traditionally, we have known for a long time that various investments and individual efficiency projects can provide significant savings. I invested in retrofitting insulation in a house that I have as a rental, that paid back in less than two years. Most people do not know what the opportunities are for them though and they do not know what projects would be most cost effective for them and we need to bridge those gaps. So what can you do to help small businesses? I recommend that you support the following types of legislation, I have seven recommendations: The first one is to establish national goals for renewables and efficiencies to drive the development of this technology, the accessibility of information, et cetera. Number two, make sure that small businesses have access to tax credits for renewables and efficiencies. The tax credits need to be extended existing tax credits for at least a decade; because of financial planning, we have got to push it a lot farther out. They need to be available for much small projects so that small business owners can really take advantage. They also probably need to be transferrable or available to renters so that businesses that rent space and pay their own utility bills, but do not own the building can actually use the tax credit themselves or be able to transfer them back to the building owners, sell them to the building owner in some way. Number three, improve the availability of technical support programs. We have some good existing programs at HUD, DOE, and EPA, but they are separated and not coordinated, a lot of duplication of effort and because of that we do not have one that is really good enough at providing technical assistance at the level that we need to support small businesses. Number four--this is a big one, I recommend that you require all states to decouple utility profits from energy sales. In many places utilities can only make profit by selling electricity, they need to be able to make profit by having energy efficiency programs as well. We need a national carbon cap to simulate markets, address climate change, and meet our 1992 Real Earth Summit commitment. We need to require or encourage better training programs--this is the key--better training programs for architects, engineers, plumbers, electricians, builders, contractors, et cetera, so they know how to put these systems in place. And finally I would say we could use some moral authority of Congress to call for a change at the state and local level and perhaps even create a national challenge program, because Americans love a challenge. We really rise to a challenge. I want to thank you for listening and thank you very much for coming to the people and please let us know how we can help you. [The prepared statement of Dr. Eggers may be found in the Appendix on page 35.] Chairman Shuler. Thank you, so much. Now I yield to the ranking member, for the introduction of the remaining witnesses. Mr. Davis. Thank you, Mr. Shuler. The next witness will be Stanley Snowden. Stanley Snowden is the president of Walker Supply Company, which has locations in Alcoa, Morristown and Danridge, Tennessee. The company employs approximately 100 people and distributes plumbing, lighting, and cabinets to contractors primarily in new construction. He graduated from the University of Tennessee in 1970 and is past president of the Morristown Area Chamber of Commerce. Mr. Snowden, welcome. STATEMENT OF STANLEY SNOWDEN, PRESIDENT, SEVEN WHEELS TRUCKING, INC. Mr. Snowden. Thank you very much and thank you Congressman Davis and Congressman Shuler. After listening to Dr. Eggers I feel totally inadequate to be here. I do not make a living speaking, but I do appreciate the opportunity to be asked and to participate. As Congressman Davis said, I am president of Walker Supply Company, I am also president of Wallace Hardware Company in Morristown, Tennessee, which is a wholesale hardware distributor that employs approximately 250 people and I am representing today Seven Wheels Trucking, Incorporated, which is a Subchapter S corporation of Wallace Hardware Company. Our primary business at Seven Wheels is we provide transportation for both Wallace Hardware and Walker Supply Company. We have approximately 35 tractor trailers and 150 trailers on the road every day and obviously fuel is a huge concern to us. The biggest challenge that we have to face is the same challenge that the average consumer has to face and that is the spikes on the cost. When fuel goes from $1.97 a gallon to $3.25 a gallon within the same 12-month period of time, very few people can adjust to that without making some substantial changes in their life styles. And those changes in their life style result in economic depression upon our business. There are only so many discretionary dollars to be spent and when gas goes up as much as it has or diesel fuel, those dollars gets squeezed. From our standpoint, it really affects our customers, which our customers are primarily small independent retail hardware stores and building supply places. Now fortunately some of those are located in Congressman Shuler's area and they do not know that there is a depression going on or any economic slowdown or anything. But there is a lot of places when you go into in eastern Kentucky and southwest Virginia and West Virginia that are feeling the effects of it quick heavily. Our fuel cost at Seven Wheels in one year, from 2004 to 2005, increased 40 percent, while the miles driven increased three percent. In real dollars that was a difference of almost $300,000 just in fuel cost from one year to the next. And we do not make the kind of profits to be able to absorb those kinds of additional cost. We try to pass on as much as we can to our customers, but then that creates problems for them, because that adds to their cost of goods sold or adds to their expense. And then they try to pass it on to their customers in the form of higher prices or they get squeezed, and usually it is a combination of both. And that is the battle we have all been facing for the last three years is how much do we try to pass, how much can we pass, how much do we have to absorb and then trying to find other measures to maintain profitability because of those things. One of the things that I would hope could come out of this is two things, anything that can help us to promote energy savings, to identify those savings that are out there and that are available to us, and as Congressman Shuler alluded to, the technology that is available that might help us in conserving energy, many times it is hard to know what is out there. If you know what is there then you can do something with it, but the lack of knowledge and the lack of a common place to go to get that information is very difficult. And one example I will give, we are in the process of building a new building and we were looking at the lighting and we found out that there is lighting available now that will probably save us about $50,000 a year just in energy used, just in lighting in our warehouse. Well, obviously that got our attention and then we find out that there is a an Energy Act of 2005 that provides a tax benefit on that also. But getting the information on the how to do that is virtually impossible. Very few people know the mechanics of how that works or at least the people that we have tried to contact to find out how this truly works, it is very difficult to do. So one of the things that I would strongly urge is the availability of information, whether it would be a common source or one source or whatever, be made easier to the average person, because most people--we are much busier every day in fighting the battles of keeping people happy and taking care of customers. And if we can find ways to get that information easier and know specifically how to apply that information to where it is beneficial to us, then it also benefits all of us, because anything we do has a ripple effect, just as anything you all do has a ripple effect. And there is only so much that you can pass on and there is only so much that you can absorb. And while there is 700,000 small businesses starting up every day I think you alluded to, there is probably close to that many closing up every day too. Because the failure rate is extremely high in small businesses, exceptionally in the first three years. So again, thank you for allowing me to be here and I look forward to seeing the results of this work. Thank you. Mr. Davis. Thank you for presenting today and you did a great job. Our next witness is Mr. John Hutchinson. John is a graduate of West Virginia University and spent the first 50 years of his life in the hard West Virginia coal fields. He has over 38 years of experience in the coal industry working with construction of underground slopes and ventilation shafts, above ground in the construction of coal preparation plants and material handling and laying systems. Currently Mr. Hutchinson serves as Vice President of finance for Powell Company right here in Johnson City, Tennessee. He also serves on the board of director for the Johnson City, Jonesborough, Washington County Chamber of Commerce. John, welcome to the hearing. [The prepared statement of Mr. Snowden may be found in the Appendix on page 90.] STATEMENT OF JOHN HUTCHINSON, VICE PRESIDENT - FINANCE, POWELL CONSTRUCTION, JOHNSON CITY, TENNESSEE Mr. Hutchinson. Thank you very much, Congressman. It is an honor to be here today. Like Mr. Snowden said, I am new to this. I was asked to make a presentation today on coal and the coal industry of which I have spent my life in. From West Virginia I grew up with it, I lived it, I felt it, I learned it every day. I guess I could start out with a comment about our Powell companies and Mr. Snowden has touched on that. We offer a huge fleets of cranes, boom trucks, lot of Low-Boy equipment, a lot of pick-up trucks, in the hundreds and obviously we feel the impact every minute of the energy crisis; particularly gasoline, diesel fuel, oils and so forth. And as he said, many of those we are unable to pass on in our pricing to our customers. We absorb the upswings and do the best that we can, but that is obviously a major part of our cost. But that is not really why I was here today, I wanted to speak with you regarding coal. I feel that it is our most important and most abundant source of energy in this country for the past, the current days, and the future. In my handout--and I would encourage everybody to pick one up, if they have not already. I put in a lot of data there and I am not going to bore you with that at this time. But I would encourage you to go through and read some of the statistics, I provided some charts and graphs. But basically just to give you some information today, currently coal is providing about 23 percent of our energy sources in the U.S. today with oil at 39, natural gas at 24, and nuclear, hydropower and the other making up the balance. Worldwide, coal is at about 23 percent also, we are right in line with the world market. Oil is 35 internationally and natural gas is 21 percent internationally. So we are some where in line with the world, but the U.S. has the largest supplies, reserves of coal in the world. And there is a pyramid in the handout I would like for you to take a look at. Basically we are looking today at active mines, so this is the ones that are being worked, about 19 billion tons of coal with active mines. Keep in mind we use about one billion tons of coal per year in the U.S. So there is 19 billion tons there, but there is a total of 275 billion tons that are mineable and identified in this country. If you want to look totally at the reserves you can see somewhere near four billion tons, the balance are tons of coal that are probably not economically feasible to get out. So if we use a billion tons a year and we have a 275 billion tons reserve, we have about 275 or 280 tons at the current consumption available for use in this country. And most of you may not know this, our federal government is the largest owner of coal reserves in this country, most of that is out west, they lease those properties to coal companies for money. One of the of the points I would like for you to go away with today, is coal gasification. This is not a new concept, it has been around a lot of years, but I think it is pretty much new to the mainstream today. Basically what that means and I learned a lot with this study, is they take the coal, they react it at high temperatures with oxygen and out of that process comes a new fuel, a syn-fuel. It is available for use in internal combustion engines and it is used for methane gas and it can be used as others syn-fuel uses. So that is a new word and a new concept and a new use for coal that we all should consider strongly going forward. Also in my handout you will see more detail on the coal reserves; obviously, the eastern coal fields, the Appalachia coal fields produce bituminous coal, that is a very high quality coal. The coal fields in the west produce a lesser quality but greater tonnages and easier to mine and more economically mined. But certainly here in Appalachia we are more familiar with what we call bituminous coal reserves. In the U.S. coal-fired power plants account for over 50 percent of the electricity generated in this country. Coal provides 90 percent of that coal; and again, it is a billion tons per year that we are currently mining and using. Regionally, we have the TVA, it operates 11 coal-fired power plants producing 60 percent of TVA's total power outgo. And that is roughly 15,000 megawatts of electricity sold to 158 locally owned distributors, Johnson City Power Board I believe is one. I have given you some information in the handout on types of mining and you can review that on your own time. Just a comment, a couple of things, in a 30-year period, coal productivity has increased from two tons per man hour to today about seven tons per man hour. The workforce has gone from about 152,000 in 1973 to roughly half of that, 71,000 today. But the total production has gone from about 600 million tons to over a billion tons, less man power, more tons per hour. Again the world coal reserves, the United States is at 275 billion, Russia is next at 173 billion and China, India, and Australia are also big coal reserve areas. Coal is also used in the production of chemicals and fertilizers, not many people understand that. Another point I am going to make about Appalachia coal mines is that during World War II their coal supplies was used in the production of steel to make guns and planes and tanks, et cetera. And without that coal I would fear where we would be today. Coal use has grown in recent years, because of the secure abundant domestic reserves and relatively low prices. They have maintained the demand in both for the domestic and the international markets through increased productivity, larger mines and mega mines is the terms, new technology and all the while the fewer mine personnel. The coal mining industry as a whole provides many jobs in east Tennessee, southwest Virginia and eastern Kentucky. These jobs are in the form of not only coal mine jobs, but also construction, such as the Powell Companies, manufacturing, engineering, sales, marketing, and consulting. I am going to brag about the Powell Companies right now. We have over 500 jobs regionally to this coal industry and according to some statistics, I think there are about 4600 coal miners office worker type jobs in this area creating an estimated 11,500 additional jobs. History indicates that each significant action of government was accomplished with immediate and negative effect on production. However, the reverse is also true. That is, positive governmental encouragement will likely resulted in the capital investment necessary to sustain future production at or above current levels. This is what we should all strive for. In closing, it is essential that we as elected officials, business men and women, state and local officials, and everybody in this room today, should do all we can to sustain this eastern U.S. coal production. I want to thank you for inviting me to be here today. Again, I would encourage everybody to pick up a handout. I have included also some pictures in there of some coal preparation plants that the Powell Companies have been involved in and I think they are impressive. I hope everybody does too. I will try to answer any questions anybody has. Thank you, very much. Mr. Davis. Thank you for being here today. Our next witness is Dr. Frances Lamberts. She co-chairs the National Resource Committee for the League of Women Voters in northeast Tennessee and the State League of Women Voters. Previously Dr. Lamberts taught at East Tennessee State University and is a licensed psychologist and director of psychological services at the Green Valley Developmental Center. She has organized several regional educational forums on ground water protection ambient air health standards, endangered species for East Tennessee State University Lung Association League of Women Voters Education Fund. Dr. Lamberts, welcome. [The prepared statement of Mr. Hutchinson may be found in the Appendix on page 39.] STATEMENT OF DR. FRANCES LAMBERTS, COMMUNITY ACTIVIST, JONESBOROUGH, TENNESSEE Ms. Lamberts. Thank you. Thank you, Congressman Davis for inviting me to speak for the League of Women Voters on energy matters. Those have been a concern to the League of Women Voters for a very long time. In order to protect our natural resources, in order to make ourselves strategically more independent with regard to energy availability and in order to keep costs down, the League has for a long time promoted energy efficiency and thriftiness and conservation in energy use and expansion of renewable resources as our wisest course in energy policy. In my written testimony, I had highlighted a personal example to show how little we think the energy resource of efficiency investment has been capped in our area; namely, support for energy efficiency investments are not very available here. They are in other areas and for other utilities. Our major utility, the TVA, for quite some time has not had a serious program in energy efficiency. I have highlighted a small business, very close by here, a very modern recently opened meat packing facility that provides an enormously important service to hundreds of families in our area who when they modernized that plant took great pain to invest in insulation to reduce energy cost, but are still finding because they must meet high standards, health-related standards for processing and cooling, et cetera, and they conscientiously do meet these standards, their electric bill, their electric burden is very, very high, potentially putting them their viability at risk as a small business. I am very happy to hear therefore these efforts in the Congress to provide more incentives to small business and homeowners with regard to investments in efficiency and in renewable technology, which some generation in renewables this particular company is now looking to see if they can provide that. We think this is a very opportune time for us to work on efficiency investments, because the State of Tennessee, our legislature, just passed a bill asking the state to develop a comprehensive energy plan. We would hope that the TVA and state government would work together to put some very high energy efficiency goals and performance standards into that plan. I outlined a number of realizable concrete examples of how this can be done. One of which, relates to what Mr. Snowden was talking about namely, we recommend creation of energy consultant teams that go to homeowners and businesses and do baselines on energy use and then make technical recommendations like he was talking about and then do monitoring. We would recommend obviously for businesses and homeowners that should be a voluntary thing. But we think for public buildings that should be an obligatory measure, you know, for us to improve ourselves and also please be aware that Tennesseans, shame on us, at this time our per capita energy consumption is among the two or three highest in the whole country. So we have a long way to go. Energy efficiency and energy reduction can be accomplished very quickly and concretely. We would urge--we hope for an initiative between state, government and the TVA and hopefully our Congressional leaders so that energy growth demand in electricity be met at least for the foreseeable future in energy efficiency improvements. We do note with some concern the apparent steps or plans by TVA for a significant expansion in traditional energy, you know, in capacity through traditional sources; we would point out these sources, critical and must reduce dependence on our waters, to the extent that 83 percent according to the statistical abstract of our daily withdraws of fresh water from our rivers and lakes; namely, more than eight billion gallons a day, go to electricity production from the traditional coal- fired and nuclear power plants. And the latter particularly are especially vulnerable we think when we know and have already seen both in TVA recently and in other countries that in a climate changed world, water itself is becoming a threatened resource. And so we think that this is not a wise way to go when we have alternatives that are totally independent of water and we would like for us very seriously to think about this. We would urge a predominant redirection by the TVA of the plan for electricity expansion into the renewable resource program that they now have under the good green power switch program, which is however, very, very, small. At the federal level, the League of Women Voters supports adoption of a renewable portfolio standards for the very many benefits that it has with regard to protection of our environment, with regard to job creation and many other aspects with regard to that diversification of the fuel mix and some more competition in the industry, et cetera, et cetera. There are many, many advantages to this. Finally we would like to bring to your attention what we see as lack of public oversight in the TVA and we would like to see some accounting from the agency on how it can work on increased energy efficiency and expansion of its renewables. We know in Congressman Shuler's state, there is a Public Utility Commission, we do not have this for TVA. Perhaps some accounting in the form of quarterly reports to the Congressional TVA Caucus could accomplish something like this and we would like to have that accessible to the public. Thank you very much for your concern and for your interest and for your efforts in these regards. Mr. Davis. Thank you, Dr. Lamberts. You did a wonderful job. You mentioned the state legislature passing some legislation. I see at least two of my colleagues from the state legislature. I see Dale Ford, Dale, thank you, for being here. Eddie Oakley, thank you for both being here. Are there any other members of the State Legislature. I see some county commissioners, good friends out in the audience. Thanks to everyone at all levels of government for your willingness to participate in this Congressional hearing. Now it is indeed a pleasure for me to introduce Dr. Kelly Tiller. And thank you for bringing that mic to yourself there. Dr. Kelly Tiller, this will actually be the second time I have had her testify before a Congressional hearing and I know you have done that even before I took office. Dr. Tiller is the director of internal operations for the University of Tennessee Office of Bio-energy Programs. In this role she is coordinating a state and university commitment to more than $70 million to develop a cellulosic bio-fuels industry in Tennessee. Dr. Tiller also holds a faculty appointment in the Agricultural Policy Analysis Center at the University of Tennessee where she has been a faculty member of the Department of Agricultural Economics since 1999. She received her Ph,D from the University of Tennessee in Agriculture Economics. Dr. Tiller, thank you again for being with us today. [The prepared statement of Ms. Lamberts may be found in the Appendix on page 63.] STATEMENT OF DR. KELLY TILLER, ASSISTANT PROFESSOR, AGRICULTURAL POLICY ANALYSIS CENTER, THE UNIVERSITY OF TENNESSEE, KNOXVILLE, TENNESSEE Ms. Tiller. Thank you very much, Representative Davis, Representative Shuler, for the opportunity to be here today and talk to you about our countries energy needs. And the new domestic renewable energy opportunities and the effects on small businesses. The U.S. is the world's largest consumer of energy. The entire economy of the U.S. is designed to revolve around the availability of safe, reliable, abundant and affordable energy. In our energy supply picture, a reliance on petroleum as a base source of liquid transportation fuels is particularly problematic. Petroleum products account for 97 percent of our transportation fuel market. The U.S. holds less than three percent of the world's proven oil reserves, but account for 25 percent of the world's oil consumption. In fact, petroleum consumption in the U.S. is greater than in the next five leading countries combined. Today 60 percent of that petroleum is from imported sources, much of it from unstable and even hostile nations. America's dependence on petroleum, not only jeopardizes its national security, but drains billions of dollars from the U.S. economy and creates environmental concerns. The economic benefits of breaking this addiction to oil would be immense and widespread. Fortunately there is a commercially viable and sustainable way for the U.S. to transition to a low oil and high growth bio-based economy. The University of Tennessee and the State of Tennessee have made a significant commitment to developing a cellulosic biofuels industry. In July, Tennessee's Governor and legislature committed more than $70 million in funding for renewable biofuels research and programs including an investment of $49 million in the Tennessee biofuels initiative. Led by UT's Institute of Agriculture, the initiative is a synergistic partnership among the University of Tennessee, the Oak Ridge National Laboratory and our private industrial partners to construct and operate a five million gallon per year, cellulosic bio refinery in east Tennessee. Importantly, the initiative also includes a farm component to develop 8000 acres of switchgrass as a dedicated energy crop. The initiative focuses on research necessary to refine the conversion process, optimize the use of local farm and forest resources and generally improve the economics of the systems to allow commercial scale up and expansion throughout the state and regions. Businesses and farmers across the state and nation are watching with enthusiastic, yet cautious optimism, as Tennessee actively invests in this new paradigm for fuel production in the new bio-economy. There are several benefits of the cellulosic bio-economy approach that resonate with small businesses. First the potential for the U.S. farm and forest sectors to supply more than a billion tons annually of biomass feed stock for a mature cellulosic industry bears significant economic opportunities for the farm businesses, equipment dealers, service providers, and input suppliers that would form the backbone of the biomass feed stock supply chain. Second, on the second anniversary of Hurricane Katrina we are again reminded of the fragility of the system that has evolved to meet our seemingly endless energy demands. The economics of cellulosic biofuel suggests a highly dispersed system that is more secure and resilient with new opportunities for small businesses to participate in the energy sector. Third, small businesses are often particularly sensitive as we have heard today to wide and rapid price swings in energy cost and overall higher energy costs. Our research suggests that within three to four years we could be commercially producing cellulosic ethanol at a cost that is very competitive with gasoline and in line with corn based ethanol. Within five years, we could feasibly produce cellulosic ethanol at a wholesale price of a $1.50 per gallon or less. This is certainly good news for small businesses. In closing I believe that we are on the verge of a dramatic transformation from a hydrocarbon economy to a carbohydrate economy. As an economist, I know that the business economics of cellulosic biofuels industries will ultimately drive this development and expansion. But as a policy economist, I also know, that there are innovative system wide policy measures that can accelerate the growth of the cellulosic ethanol industry while protecting farm income, ensuring market discipline and supporting the sustainability of small businesses. Thank you, again, for the opportunity to be here today. [The prepared statement of Dr. Tiller may be found in the Appendix on page 67.] Mr. Davis. Thank you, Dr. Tiller, for your wonderful testimony. You did a great job today as always. Thank you for what you do. I would like to start with some questions if I may. Dr. Eggers, you brought up the point that we need to have a better system at the federal level to communicate what is available to bring down energy costs. Could you expand on that somewhat, who do you think would be the best department of government to do that? The SBA, the Department of Energy, Department of Commerce, do you think it would be better if there were a web site? What is your vision for that? Ms. Eggers. It is kind of a question where I will alienate most of government no matter what I say I guess, if I identify one branch. I think there are a lot of ways to get it right and there are also ways to get it wrong and there definitely needs to be significant resources on the Internet. And there needs to be live people with good technical backgrounds on the phone. Instead of giving a kind of magic bullet answer, my answer is that there are many ways to get it right and I would leave it up to thoughtful people who put a lot of time into thinking about where that should be housed. It should be in cooperation with some of the leading institutions, like the Rocky Mountain Institute who can help us provide what is now in this country cutting edge technical support, but is really just the very basic technical support that people at this table are asking for. Mr. Davis. Thank you for that. I heard most of what you had to say and I am sure my staff got the rest of it. Mr. Snowden, you mentioned that you had just put in some energy efficient lighting into your warehouse. Paul Chapman, my district director, and I have just had the opportunity to visit a warehouse last week and it was interesting. In this large warehouse, most of the building was dark until we walked down an aisle and as we would walk down the aisle the lights will come on. And as we passed through that area, lights would turn off automatically. Is that the type of system that you put in and if so, how did you find out about it? Mr. Snowden. Well, yes, it is a combination though. We have put it in one of our facilities and we are in the process of putting it in a new facility that we are building also and we are looking very strongly at retrofitting all of our existing facilities. We heard about it through a lighting supplier and it is basically T5 high bay lighting that replaces the current T12s and T8s that typically have been used. And basically what it does, it drives a tremendous amount of light from a high distance, which our ceilings are like 35 feet, down to the floor level where people are picking orders and things like that and they need a large amount of light. It gives a lot more light and it uses much less electricity in doing so. I do not really understand all the mechanics of how it does it. But it is very, very efficient. And that is one of the reason that the tax credit of 2005 is allowing, you know, that to be utilized as part of the lighting--there are three components of that package as we understand it. One of it has to deal with wall structures and roof structures and one of them has to deal with HVAC and the third component has to deal with the lighting. And all three of them enable you to qualify for certain tax credits if you meet the criteria. But again, getting the particulars on how that works is not easily done. But basically it is that type of lighting that you spoke of and also with electronic sensors so that the electronic sensors sense when somebody goes in and activates the lights. And then if somebody has been--if there has been no activity within that region within say five minutes, then the lights go off. So the electronic sensors allow the lights to be on when there is someone in the area and allow them to go off when they are not in the area. And both of those components are part of what I was referring to, yes. Ms. Eggers. How did you find out about it? Mr. Snowden. I found out about it through a lighting manufacturer, Lithonia Lighting manufacturer, is how we found out about it. And to be honest with you, one of their representatives out of Atlanta is the only person that we found that knows very much about it. And we had a meeting with him and our accountant and our CPA and our contractor to make sure that everybody was on the same page before we, you know, made the expenditure to do it. Mr. Davis. I think you make a very good point. And it goes sort of back to my question to Dr. Eggers. The government is always not the answer to every problem. Sometimes, as Ronald Reagan once said, they are the problem, they just shuffle problems around. It is good to know that there are other businesses that are helping your business to learn about new products and that is usually what makes America great, is we have a system of capitalism in America and people are willing to share great ideas and everybody does better. Have you had that system in place long enough to actually see how much savings you will receive? Mr. Snowden. No we have not. We have done the analysis on it based upon the usage of energy of the new fixtures versus what we are presently experiencing and that is where we arrived at our computed savings, we estimate a $50,000 in our existing facilities. We just put the first section of lighting in about two months ago in an addition that we did on our existing facility. It has been in effect about two months. Mr. Davis. Thank you for sharing that with me. Mr. Hutchinson, thank you again, for being here today. Coal, as you testified, is one of the products that we have domestically more of than anybody else in the world. Can you tell me how long you perceive the coal reserves actually holding out in number of years into the future? Mr. Hutchinson. Well, I think as I stated there earlier and this is, you know, based on estimation certainly, with the known and recoverable reserves today, we see about 285 years worth of reserves. There are other reserves out there that are maybe not attainable and maybe in the future with new technology would be, but at least 285 years worth. Mr. Davis. I have been told--and I do not know if it is true, maybe someone on the panel would know--I have been told that if we continue to rely on foreign oil for our energy policy, there is only about 30 years supply of oil. And can you imagine what that would do to our economy and our economic development here in northeast Tennessee, across the mountains in western North Carolina and across America, if we have to worry about energy. And we worry about it now, can you imagine where we would be 30 years from now. I do not know if that is a true figure or not. Mr. Hutchinson. Well, you know, here is my estimation and I am just going to off-the-cuff here. But, you know, I was around in the early 1970s when we had the gasoline situation and some of these younger ladies were not. But we were in lines and we were, you know, we were on alternate days and we were on license numbers and we were on all kinds of crazy things, that was 1972, 1973, 1974, in that area. And here we are in 2007 and unfortunately we, all of us, are in the same situation that we were back then. The only situation that is different is that we do now have the money to pay the higher prices and bring the product in. But we have not replaced that situation. That is just a situation that still exists. Now whether it be coal or natural gas or some of this new technology that we are hearing about today, we have got to do something. We have got to make a move, we have got to commit ourselves to doing something to replace this oil situation. Because as we all know, whether it is 30 years or three years or a war in Iran, we have got a serious issue on our hands in this country today; one that I feel that we have not approached properly in my life time, so I guess that is a concern I have. We talk and we meet and we hear and so forth, but when it comes to driving our automobiles and operating our trucks and our cranes, you know, I think there is a real issue out there for fuel. I would hope that this would spur some changes that helped us deal with this in the very, very near future. Mr. Davis. You mentioned that coal is producing about 500 jobs in east Tennessee and the surrounding area right now. Let me take that a little further, I am going to ask you what would happen to that number of jobs. Back in World War II Germany was taking coal, turning it into a liquid and running basically its war machine, over 50 years ago. So the technology was available then to turn coal into liquid and gas, do we still have that technology? Do we have it in America and do we have the opportunity to take coal that is abundant in these mountains and then turn it into gas and then what would that do to our economy in northeast Tennessee, southwestern Virginia, even over in the mountains of western North Carolina? Mr. Hutchinson. Certainly the technology for coal gasification is there. And let me back up, you know, I said 500 jobs, that is our company, that is the Powell Companies. I think that number for the region is about 4600 jobs. But, yes, the technology is there and it is a matter of having the capital to put into the plants to build the facilities. There is some underway in southern West Virginia right now and that is what we would like to see more of obviously that means another source for Appalachian coal and, you know, that is what is near and dear to us. Mr. Davis. One last question for you. There are some members of Congress that seem to be moving away from coal, want to discourage the use of coal, would in some instances not allow the use of coal, what would happen to our economy if coal was taken out of the energy equation? Mr. Hutchinson. Well, you know, if you go back to my handout, you look, we are right now providing 23 percent. I do not think that can do anything but go up. So if you remove that, then there is more dependence on foreign oil and natural gas which I guess, you know, the reserves there are kind of an unknown. Basically what they say about natural gas is they are not sure about the reserves until they mine them or pump them. So, you know, I think if we took coal out of the equation, you know, we have got major problems. We have got more dependence on the foreign oil right off the bat. Mr. Davis. Very scary to me. Mr. Hutchinson. Absolutely. Mr. Davis. Dr. Lamberts, thank you again, for being here. And you and I have talked several times about the green power switch. You have convinced me that was good for me to do. I am a member of that. Could you allude a little bit more to the green power switch and what it does for our environment? Ms. Lamberts. The green power switch program was initiated by TVA and I think on Earth Day 2000, and in 2001 our local utility was able to join it. It is a program under which the TVA through methane capture at sewage treatment at the sewage treatment plant that supplies the Allen Plant near Memphis and through wind turbines and through some solar installations provide electricity from these three, at this time, renewable resources. It is a voluntary program that subscribers need to pay additionally for, in order to obtain it. It has grown far too slowly, it is very small and we would hope that this would be a strong impetus to expanding that relative to additional generations. Mr. Davis. Thank you. Dr. Tiller, you and I have discussed this often. In my opening testimony, I talked about that we really have not had a new petroleum refinery in over 30 years in America. As we start this move over to biofuels and switchgrass and those type of things, I understand that there is going to be new refineries, but they are not going to be in the Gulf. They have the potential of being all across Tennessee. What do you think will be the economic impact in northeast Tennessee and across the state as we go to those and how will that work from the farmer up through the refinery and out to the consumer? Ms. Lamberts. I think we are looking at a totally different system than the one that we have become accustomed to. So rather than a very highly centralized and very large system, this is a very diverse and dispersed system. I think it brings tremendous opportunities for especially rural economic development, for ag development and for general economic development and even keeping that. Right now, we are sending not only money outside our state to those regions, but even outside our country to regions that are not particularly friendly to us. So it is an opportunity to not only generate those products in -- within our borders and within our region, but to keep that money and income and economic development opportunities inside our borders as well. As far as kind of how the chain works, there would be a very large number of farmers within about a 30 to 50 mile radius of a bio-refinery that would be producing dedicated energy crops and other biomass resources that would be creating job to transport and the logistics associated with getting that material to the bio-refinery, jobs inside the bio-refinery. They are not huge employers but at a large scale several hundred employees to a couple of thousands per those facilities. There also would be jobs with the transportation and local use and distribution. You cannot transport this very far since it does not go in pipelines today and so it would be more jobs in that distribution process. Also a lot of development of co- products that would lead to satellite industries that would be either collocated or located near those bio-refineries that would take some of those high values but low volume chemicals, the chemical building blocks, the lignin and other sources, and use those to make value added bio-products that today are largely petroleum based. Mr. Davis. Thank you so much. I would like to yield to my good friend, Mr. Shuler. Chairman Shuler. I guess I am probably one of the folks that probably disagree on the coal issue, as my colleague has probably alluded to. If you look at coal, you are talking about liquid coal, obviously has been a topic. Dr. Lamberts has obviously talked extensively about fresh water. Do you know how many gallons of water it takes in order to produce one gallon-- fresh water does it take to produce one gallon of liquid coal? Mr. Hutchinson. I do not. Chairman Shuler. Six to seven gallons. So what are we going to with the storage of this water after, because we cannot put it back in our streams? Mr. Hutchinson. For one thing, it is recycled in the process and filtered and put back into the system. And hopefully it is not discharged into the streams. Chairman Shuler. Hopefully. Mr. Hutchinson. But it is a closed system. Chairman Shuler. Sure. Mr. Hutchinson. Intended to be a closed system, yes, sir. Chairman Shuler. Dr. Tiller, if you were looking at, and we have obviously talked about that we have so many--you know, if we do not increase our production of coal that we may lose some jobs or if we lessen our dependence upon coal that we may lose jobs. You know, you obviously alluded to it. I mean if you look at our whole entire region. If you look at the state of Tennessee alone and we went into more biodiesel and biofuels, biomasses, you know, what kind of jobs--are we putting our farmers back into the economic structure again? Ms. Tiller. Absolutely, we estimate that within 20 years, we could have about 20,000 farmers in the state of Tennessee growing a million acres of switchgrass or other dedicated energy crops producing hundreds of millions of dollars in new farm revenue that is not there today. This is also not a zero sum game where it is either corn or soybeans, but since this fits very well on some marginal land, these are new opportunities. That is in addition to the economic opportunities within the facilities and jobs those would support as well. Chairman Shuler. And then from the environment standpoint which has a better impact on the environment, coal versus the biomass? Ms. Tiller. Well, that is a pretty complex question, but the simple answer is that the process that we are talking about which is an enzymatic hydrolysis technology for conversion of cellulose to ethanol or other biofuels is a very green process, very low impact, very environmentally friendly. Chairman Shuler. Dr. Eggers, one of the most important things that we talk about, you know, how does it benefit, what benefits are we going to have, small business benefits on a healthy environment, you know, if we have a healthier environment how will that impact our small businesses? Ms. Eggers. And that is another very complex question, but a good one, because there is definitely a relationship. I think the relationship that most people can easily see and find most tangible is that small businesses will be helped by cleaner air because of reduced healthcare costs and healthcare are--you know, we could all be sitting here talking about healthcare costs pretty easily and their effect on small businesses and everybody else. But just as an example, our local power utility, Progress Energy, had wanted to put in a peaking plant, about 120 megawatt plant, not very big. It would run 10 percent of the time outside of Asheville and just in Buncombe County alone, the federal government models estimated the county at the county health department would spend another $1.9 million a year on respiratory illness caused by the emissions from that plant. And so respiratory illness whether we are talking about asthma or heart attacks which can be stimulated by small, fine particulate matter, strokes which also can be caused by air pollution events, they cost us mightily through insurance, so a clean environment really helps us all out and fattens up our wallet, you know, a greener world, a greener wallet. And that is very tangible. But also there is a lot of aesthetic benefits and things like that. I did want to respond also that there is a tremendous opportunity to gain thousands and thousands jobs nationwide for increases in efficiency and if we have federal programs that are stimulating energy efficiency, we are going to be creating a lot more jobs so Mr. Snowden does not have to call Atlanta. Ideally everywhere in the U.S. people would be able to open up the Yellow Pages and find all kinds of local service providers to do energy audits and to provide renewable energy services. And while I agree the federal government usually is very much an inefficient service provider, the opportunity right now to help stimulate that market development and stimulate that job creation is one that I think is morally in the hands of the federal government. Chairman Shuler. And to refer back to Mr. Snowden's information, the Small Energy Efficient Business Act, which was my bill that we put through the House, which was passed, we will be able to gain that knowledge of these type of energy efficient tax credits if you will through our local chamber and our small business development areas throughout our region. So once it passes and it is signed off on by the President, hopefully it will be more--our local chambers will be more actively involved and talk about the tax credits that are available. I certainly would like to thank this first panel for your testimony and I think it has been very encouraging. We can take so much information back to us and I will yield to the gentleman from Tennessee, Mr. Davis for his closing remarks and actually also an introduction of our second panel. Mr. Davis. Thank you, first panel, you have been very informative, well prepared. Thank you for being here today. And now the Committee staff will actually switch panels and while we are doing that, I would like to thank Gary Mayberry with the Johnson City, Washington County Chamber of Commerce for helping putting this together. I would like to thank Homer G'Fellers and his staff at the Johnson City Power Board for your hard work in making this possible. Thank you for what you do. I know that we have been joined by Major Dick Grayson, thank you for being here from Johnson County, we have Mayor Lynch from Unicoi County. Thank you, Mayor Lynch for being here and we have Mayor Crockett Lee from Hawkins County. Thank you each and every one of you for being here today. And if we could we will go ahead and switch panels. [Brief pause.] Mr. Davis. If we could get the second panel and have everyone take their seats. Well I hope everyone found the first panel to be as informative as Mr. Shuler and I did. And I would like to welcome the second panel. And we are going to start out the second panel with Mr. Jim Keiffer. Jim is the senior vice president of marketing for the Tennessee Valley Authority, TVA, has over 30 years of experience in both natural gas and electric utility industries. He is responsible for partnering with the distributors of TVA power, to develop strategies to promote energy efficiency as well as efficient consumption electricity in homes and businesses. Jim holds a bachelor of science degree in civil engineering from West Virginia Institute of Technology and an MBA from West Virginia University. Jim thank you for your willingness to testify today. Welcome to East Tennessee. STATEMENT OF JIM KEIFFER, SENIOR VICE PRESIDENT OF MARKETING, TENNESSEE VALLEY AUTHORITY, KNOXVILLE, TENNESSEE Mr. Keiffer. Good morning and thank you both. Thank you Congressman Davis and Congressman Shuler for the chance to be here. I am Jim Keiffer. My title is Senior Vice President of Marketing with our company TVA. I am responsible for TVA'S energy efficiency and conservation efforts in our renewable energy program that is known under the trademark of Green Power Switch. On behalf of TVA I would like to thank you for the opportunity to discuss the role that energy efficiency is paying in our strategy and how it can affect homes and businesses. TVA is the nation's largest public power company, about 33,000 megawatts of capacity to supply electricity wholesale to those 158 power distributors that have been discussed this morning. They serve the 8.7 million people in our service region. It is also our responsibility that we generate and give our electricity at the lowest feasible cost and that we support and encourage our customers to use that energy wisely. The customers know and as the first panel mentioned that the cheapest kilowatt is the one that you do not use and that conserving energy can help TVA reduce the investments that are needed to build new generating plants. Ultimately energy efficiency and conservation is in everyone's best interest, especially the small business sector where it is essential that we keep those costs low. Earlier this year the new TVA board adopted a plan that makes energy efficiency and conservation a key part of our business plan for keeping TVA power rates competitive. We have set a goal to help make our service region a national leader in energy efficiency over the next five years. It is a goal that will produce economic and environmental benefits for everyone. But we cannot do it alone. It requires a cooperative effort with TVA, certainly with our 158 power distributors, with those 62 directly served customers and federal installations and by everyone who uses TVA electricity. To achieve our goal, we developed a three part approach. The three elements are first, conservation which we define as using less energy. And then there is energy efficiency which simply means using energy smarter and reducing the daily peak demand, which is the brief period each day when electricity is demanded at its highest. For us for TVA in the winter, that peak occurs in the early morning hours and in the summer it is in the mid to late afternoon. The process we are undergoing began this summer with a pilot program launched in cooperation with distributor customers in Chattanooga, Nashville, and Huntsville, Alabama. Through arrangements largely with small commercial users, we are employing what is known as demand response. In this program participants cut their energy use during critical peak periods in return for incentives. The results of the pilots will be used to determine if we can and should develop a broader program as part of our overall efforts to reduce peak demand growth by at least 700 megawatts during the next five years and make the region a leader in energy efficiency. TVA has always worked in the past with our distributor customers to provide energy efficiency programs and services for homeowners and for small business customers. We have an existing program called Energy Right where they can access energy management tools to help them reduce those overall energy costs. We also provide small businesses access to affordable financing to enable them to install high efficiency heat pumps as one of the programs. Today, we continue to work with our customers to identify, evaluate, and implement new cost effective initiatives to help consumers to use energy smarter and reduce the amount they use. These initiatives will give energy efficiency, conservation, and reducing peak demand as well as on site generation a greater role in the mix of resources that we use to meet the demand. Renewable energy is also important. Our efforts to responsibly control the need for new generation include the renewable program known as Green Power Switch, which was also mentioned by the prior panel. Green Power Switch was one of the first renewable energy programs offered by a utility in the southeast. It gives everyone--business, industry, and the homeowners--an opportunity to support the development and growth of green power and our energy portfolio. All of the money generated by this program is used to develop more renewable energy and to fund research aimed at making it even more cost effective. Currently about 12,000 residential users and almost 500 businesses are participating in Green Power Switch. It is marketed through 100 of the local utilities served by TVA including both the Johnson City Power Board and Holston Electric. Our numbers show that nearly three-fourths of the businesses enrolled in Green Power Switch came from the small business sector. They know it pays to display the Green Power Switch logo on their business fronts and to show their support for renewable energy. And I will also add the mix between business and residential in the Green Power Switch program is much stronger in the business area than it is many other green power programs. Currently we have 16 solar sites across the valley, one methane facility near Memphis and a wind farm on Buffalo Mountain near Oak Ridge, which made TVA the first utility in the southeast to use wind power on a commercial scale. Last month, these sites generated more than two million kilowatt hours of electricity. One of our solar sites is located here in the first Congressional District at Cocke County High School. It offers a good example of creative ways that solar technology is being used. Solar panels are arrayed to form a shelter for spectators at the high school soccer field. The panels themselves generate enough electricity to serve an average home. This types of innovation is helping to expand the use of solar energy here in the southeast and elsewhere. Homes and businesses account for about 70 percent of the total electricity consumption in our region. To encourage the broader use of renewable generation TVA has established a pilot program called Generation Partners. It pays homes and businesses for the electricity generated by their own wind and solar units. Currently we have about 30 generation partners participating in the pilot. Plans are underway to make this program part of a permanent net metering program to support the increased use of onsite winds and solar power. Finally as our plan makes clear, there is no single answer to meeting the growing demands of the Tennessee Valley. We must use a balanced combination of strengthening our current system, investing in new generations such as the restart of Unit 1 at the Browns Ferry Nuclear Plant, purchasing power from the marketplace, and using cost effective energy conservation, and energy efficiency initiatives to meet that growing demand. The Valley has enjoyed some of the lowest cost electricity available in the United States for the past seven decades. However, the cost of fuels to produce electricity such as coal and natural gas are rising due to the increased demand here in the U.S. and worldwide. By focusing on energy efficiency and conservation, we can all help keep the price of electricity as a competitive advantage for the region's economy and for the people in for the people and businesses who live and work here. Thank you, very much. Mr. Davis. Thank you, Mr. Keiffer. We appreciate what you do for the region. Thank you for being here in Johnson City today. Mr. Keiffer. Thank you for having me. Mr. Davis. Our next witness is Mr. Robert White. Robert, thank you for being here, thank you for your friendship. Robert is in his 23rd year in the Johnson City Power Board, I am making you older than you really are, Robert, a public electric utility company serving all of Washington County and parts of Sullivan, Carter, and Greene Counties. He has served in several roles during his tenure with the power board. His roles included, meter reader, assistant stock keeper, supervisor of stores, purchasing, transportation and manager of maintenance, purchasing transportation. Robert currently serves as the chief public relations officer, where he manages and oversees the public community relations and customer support departments. Robert, thank you for opening up your beautiful facility to us today. Thank you for your hospitality and thank you for your testimony. [The prepared statement of Mr. Keiffer may be found in the Appendix on page 81.] STATEMENT OF ROBERT WHITE, CHIEF PUBLIC RELATIONS OFFICER, JOHNSON CITY POWER BOARD, JOHNSON CITY, TENNESSEE Mr. White. Thank you. It is a pleasure to be here this morning. Congressman Davis and Congressman Shuler, thank you for the opportunity to appear before this Committee to address the subject of today's hearing, the Cost of Availability of Energy and the Effect on Small Business. I am responsible for managing and overseeing our public and community relations and customer support departments. So we hear a lot from our small business customers. With national energy costs on the rise, it is a pleasure to address you from within the Tennessee Valley Authority service territory. The Johnson City Power Board serves an area of approximately 357 square miles serving all of Washington County and parts of Carter, Greene, and Sullivan Counties. Johnson City Power Board is fortunate to have access to TVA generated electricity. It is some of the lowest priced and most reliable electricity available in the United States. We at Johnson City Power Board realize however contentedness is akin to stagnation. This is precisely why we continue to reevaluate our programs, practices, procedures, in our unrelenting pursuit of excellence. It is our mission as a power distributor to be recognized by our customers, non-customers, and competitors as the leading energy and energy services provider in the region and to promote and support economic development programs for the benefit of all. The Johnson City Power Board customer base has increased by an average of two percent the last eight to ten years. This growth rate has been a result of a mirror increase in both residential and our commercial and industrial customers. We currently serve 73,227 customers, residential customers represent 86 percent of our customer base and commercial and industrial customers represent 14 percent of our customer base. While commercial and industrial customers represent only 14 percent of our customer base, they generate 49 percent of our revenues. This fact is what drives us to promote programs designed to address our small business customers' needs. An asset that we offer to our customers, including our small business customer, is our ability to serve as a conduit to the many programs and services offered by TVA. Johnson City Power Board energy services and marketing department offer a key accounts program through which various TVA programs are administered. Although, the key accounts program serves mostly large commercial and industrial customers' special needs, the program also serves as a liaison for the small business customer as well. Our key accounts program partners with TVA to offer programs and services such as have already been mentioned, Energy Right, a program offering energy management tools help reduce overall energy cost; heat pump loans to provide access to affordable financing for installing high efficiency heat pumps; and comprehensive services, which provides technical expertise to increase efficiency or to explore the use of new energy technology. The Johnson City Power Board also participates in TVA's Green Power Switch and Generation Partners. Green Power Switch is a renewable energy program offering customers the opportunity to support the development and growth of more renewable energy. In 2006 our customers purchased over 1.3 million kilowatt hours of Green Power. Generation Partners is a pilot program that pays homes and businesses for the electricity generated by their own wind and solar units. We are proud to say that Johnson City Power Board currently has two customers of the 30 participating in Generation Partners. As the Johnson City Power Board plans for the future, we are committed to identifying and addressing the needs of all of our customers including our small business customers and to provide resources available to make them successful. In the words of our general manager Homer G'Fellers, for any challenge, we will either find a way or we will make one. Thank you. Mr. Davis. Thank you, Mr. White. Our next witness is my good friend, Larry Elkins. Larry has been employed by the Holston Electric Cooperative for 28 years and been general manager since 1984. During his tenure as general manager he actively participated in programs and served on numerous committees within the Tennessee Valley Public Power Association, Tennessee Electric Cooperative Association, Appalachian District Power Distributors Association, and the National Rural Electric Cooperative Association where he currently serves on the board of directors representing Tennessee. It was actually Larry and I that discussed about two months ago the need for this Congressional hearing. Larry, thank you for your foresight and thank you for being willing to testify today. [The prepared statement of Mr. White may be found in the Appendix on page 85.] STATEMENT OF LARRY ELKINS, GENERAL MANAGER, HOLSTON ELECTRIC COOPERATIVE, ROGERSVILLE, TENNESSEE Mr. Elkins. Congressman, thank you for allowing me to testify today and Congressman Shuler, we are glad to have you on this side of the mountain. We were just over on your side of the mountain a couple of weeks ago, at Mount Mitchell playing golf, so we really enjoyed your area. As Congressman Davis said, I am Larry Elkins, General Manager of Holston Electric. We serve 30,000 members in Hawkins and Hamblen Counties and then a spattering of customers all over Greene, Cocke, Grainger, even a few in the edge of Virginia. I have been in the business--I actually started in the business in 1974. And if you recall at that time that is when we started an energy crisis. As one of the gentleman spoke to earlier, this same subject matter that we are discussing today was in the headlines and on the evening news about 34 years ago in 1973. We had long car lines, I know there in Rogersville and the energy crisis that we are experiencing today is nothing new. It started back then. The 1973 oil embargo began a painful realization of the vulnerability of energy supplies. However, the crisis of today is much more than just a shortage of gasoline that led to long lines forming at the gas pumps. More than any time in the past, we are an industrialized nation that is dependent upon electric energy as a basis of our economy. And our appetite for electricity continues to increase. According to the Energy Information Administration, worldwide electricity consumption is expected to double during the period of 2002 through 2025. But while the demand for electric power continues to increase, no new base generating plants have been built in years. The plants that have been constructed are peaking units and we have talked a little bit about that earlier that have been built generally just to provide power during peaking times. So no baseload plants have been built. Some in Congress say to let the natural laws of economics, supply and demand control the price of electricity, let rates go up so the demand for electricity will go down. We found that out in the 1970s and that approach does work. When I came to work at Holston Electric, we were selling a kilowatt hour for a cent and a half and almost overnight it went to three cents. The demand for electricity was cut severely, but that is on the backs of people that can least afford to pay it. The consequences of such an action would prove to be devastating to our business and industry. Adding an increased power cost to the bottom line of major industries in this region who are already struggling with high labor and operating cost will only add to the elimination of local manufacturing jobs and their subsequent relocation to neighboring countries. And statistics show that every manufacturing job in our economy leads to six other jobs in related sectors. This higher rates, lower demand way of thinking also hurts, as I mentioned, the low income and those on fixed income to a greater extent that it does to middle and higher incomes. Drastic rate increases for electric power is not the solution. Efforts to conserve electricity and to develop alternative sources of energy such as has been discussed here today, such as solar wind, hydrogen fuel cells are all to be applauded and must continue. Nuclear plants produce power at minimal cost but are extremely expensive and they require an extensive amount of time to construct. But while these efforts inch forward, the United States is at the mercy of the Middle East for its energy. We are at a point that we are going to have to build a base generated plants to provide for the consistent demand for electric power for industrial, commercial, and residential customers or we are going to have to be ready to live with the consequences of an inadequate supply of electric power for this country. Electricity can be generated by many different sources. According to the latest Department of Energy statistics American electricity is currently being generated 50 percent by coal, 19 percent by nuclear reactors, 19 percent natural gas, 6.5 percent by hydroelectric, 3 percent by oil, and only 2.8 percent is produced by all other sources that we have talked about, solar and green power, and all the many ways that we have. By a wide margin, coal is the lead in energy source for generating electricity in the United States and the world, it is also the least expensive way to generate electricity, when you take everything into account. And a few other critical statistics to keep in mind, the United States has 26 percent of the world's supply of coal but only two percent of the world's supply of oil and three percent of the world's supply of natural gas. The protests in this country against pollution from coal- fired plants continue and have led to stricter emission standards and the development of new cleaner technology, such as coal gasification. Everyone wants clean air to breathe and to be environmentally responsible. But the United States does not control the emissions of the world. Asia, but primarily China, accounts for 50 percent of the global coal consumption. China uses coal for 82 percent of electricity generation, India 70 percent, South Africa 92 percent. Another staggering fact is that China is bringing in one new coal-fired generation plant on line every week. My point is, even if we restricted our use of coal in power generation to save the planet, we have no way to control the amount of emissions being put into the atmosphere by the rest of the world. We need baseload generation coming on line and we need it now. We have the coal reserves to fuel the power plants that are required for our future, but without additional generated plants, quite simply, there will not be adequate power for this region. The electric utility industry is in a standoff with the coalition of environmental and political activists who are coordinating the tax on new baseload plants projects all over our nation. In short, they do not nuclear plants, they do not want coal-fired plants, even with the promise of technology improvements. Rather they tout the folly that renewable generation and energy conservation measures alone will provide enough electricity capacity for our nation well into the future. Business and industries rely on us to supply their energy needs. Our customers expect to flip a switch and to have power, and not excuses. We implore the use of common sense in the legislative process. Let American ingenuity work out the details of clean coal and safe nuclear technologies and let the construction of new power plants provide for the future of our citizens business and industry. Thank you, gentlemen. [The prepared statement of Mr. Elkins may be found in the Appendix on page 87.] Mr. Davis. Thank you Mr. Elkins for your testimony. Mr. White, the first panel today talked about the need to market the availability of how you can keep your costs low and use less electricity and other energy sources. Could you tell us how you do that here at the Johnson City Power Board? Mr. White. Sure, I will be glad to. As I mentioned in my statement we have a key accounts program that is responsible for mostly large commercial and industrial customers, but they also work a lot with small business. And as I mentioned, they provide a way to administer programs that TVA does offer. I will give you an idea of some of the duties that they do handle. They handle billing issues, energy audits, HVAC recommendations, lighting recommendations-- Mr. Snowden would not have to go to Atlanta--you could have it right here via our relationship with TVA. Metering questions, power factor questions are becoming much more important to small business with their electronic machinery that they are using nowadays. Outage information, which is very important, technical assistance. We are very hands on with our small business customers through our key accounts program. We have several people who are available any time, they just need to call and make an appointment. We work with TVA real closely with their expertise, with their engineers, with their experts to provide small businesses that opportunity for these services. Mr. Davis. I have one last question and I am going to sort of spread it across all three of you if I could. Larry, I remember very well the gas lines back in 1973. I remember our dependence on foreign oil back then. I remember the change in our economy when we went from 30 cents a gallon up to 90 cents a gallon. And now we have gone up to 2.50-$3.00 a gallon for gasoline. So I remember that very well. As we continue to move forward, we have heard a lot today about renewable energy and that is something I think we have to do. I serve on Homeland Security Committee and I can tell you, I am very concerned about our dependence on foreign oil and our dependence on people that quite frankly do not like us. That is worrisome for me in the homeland security aspect, it is very worrisome for me for our economy as well. And I think that we need to do everything we can to use the domestic resources so we become less dependent on foreign oil. And I think we need to look at solar and we need to look at wind power, we need to use hydro power. I think all of those need to come into play. I think there are some people in Congress that would like to limit it to those three. Now the question, after I made my statement, the question across all three of you, what happens to our economy and our access to energy if we prohibit the use of coal and nuclear availability in the whole mix? And Mr. Keiffer, we will just start with you and work our way down the line if we could. Mr. Keiffer. I will say that the question I want to make sure is, if we limit the access to no more nuclear and no more coal what would happen. Let me say this, we are growing, TVA just said last, this past couple of weeks, we had the 13 highest peak days that we have had in the history. So our market area is growing. We believe we have to have a mixture of nuclear, of baseload generation of some sort, peaking and energy efficiency. If you were to take away the fact that you could not add any more nuclear or you could not add any more coal, and you try to serve the growing needs of the Valley, I simply do not think you can keep up with the demand. We believe you need to do all of the above. Mr. Davis. Thank you. Mr. White. I will reiterate that point. I do believe it is a balance approach. I feel that especially from our perspective as a distributor we are so, I guess we are at the mercy of what the purchase power cost and the additional cost may affect TVA, which is going to ultimately affect our wholesale power cost, which is going to affect our end use customer. I think that conservation, efficiency, cutting the peak demand, but at the same time realizing that if there is a demand for that electricity they expect us to have it. They expect when they flip that switch that the energy is going to be provided. And there is another thing we have to consider as well. We feel it is our responsibility to provide the infrastructure to make sure that as the power is generated and transmitted to us that we have our infrastructure in place to provide it. We are affected by so many different costs, whether it be fuel cost, the lead times for transformers are now up to 12 months. It is affecting our cash flow with our increased inventory, the cost of having to purchase so much in advance. When you combine all that with the fact that if we are under distress because customers do not want to have nuclear or coal generation, then I think it is going to affect our end use customer a whole lot worst than they would ever anticipate. Mr. Elkins. Congressmen, I would answer that question from not being from a power distributor point of view, but being chairman of the industrial development board of Hawkins County and serving in that capacity for the last 20 some years. We are primarily about creating jobs and economic development for our young people that are growing up here and that are going to East Tennessee State, Northeast State and University of Tennessee, we have got to supply jobs. And we are seeing more and more of our jobs leaving. And I know over in Congressman Shuler's neck of the woods, all of the industries that have left North Carolina. We have got to maintain an industrial base. We cannot live as a service society for long. And as I mentioned statistics show that one manufacturing job creates about six related jobs in the service industry and various things. And we are seeing so many jobs leave because of labor costs and things of that nature. You add on the back of that, electricity and energy costs going sky high and you are going to see industry leaving our country. And that is my main concern. I will be retiring here in a couple or three years out of the power business, but I see so many young people that need jobs and we are going to--if we are not careful in Congress by raising the price up just as I said in my speech to limit the use of demand of electricity, it is kind of like my mother used to say, cutting your nose off to spite your face, and we are going to end up losing a lot of industrial jobs which trickles down to all the other jobs in our economy and it really bothers me from that point of view. Mr. Davis. Thank you, Mr. Elkins. Thank you, panel, you have done a wonderful job. I also see Mike Browder out in the audience from Bristol Electric; Mike, thank you for being here. Thank every one of you for taking part in this hearing today and with that I yield back the remainder of my time. Chairman Shuler. Thank you so much, Congressman Davis. I want to commend all three of you because it is not until your power goes out that you realize what an impact you have on all of our lives. Whether it be a storm or snow or ice, and the people, the men and women work for your different organizations, the time and commitment that they put forth in those wet rainy cold nights. Please extend my special thanks to them, because they are true heroes when the lights come back on. You know I am very encouraged in a lot of things I hear today, obviously, Mr. Keiffer, what the TVA's approach has been, I commend the TVA for continuing to put scrubbers on those smoke stacks. And truly making a difference on energy efficient waste. There is so much that we possibly can do. You are exactly right, it is going to take a lot of pieces of a puzzle and we talk about homeland security, part of it is going to be diversifying our energy sources as Dr. Tiller had mentioned earlier. You know, putting back--biomass cellulosic fuels, putting that back into the economy for our farmers. That is going to create--Mr. Elkins, as you say, that is going to create jobs in our district. It is going to take a lot. I think we are very blessed both in western North Carolina and in east Tennessee. People like where we live. And so part of it, the people that has moved in here has caused some of the reasons for it. And I think one of the most important things is people are staying here, you know, when they go to East Tennessee State University or they go to UNCA they want to remain and live in the community. We have to do a very good job economically and industrial to be able to protect it. And we have done some things over many administrations that has created a problem and an issue and we talk about losing our jobs and not having adequate enough jobs here to really retain the people we would like to. As we say kind of retain our mountain values, retaining those mountain values is retaining our students. Whether it be NAFTA or CAFTA, however you look at some of the trade issues, I know the other night at 1:00 in the morning I was still up looking, going through the toys that had the recall on them from China, because of lead base paint, you know. It started out kind of being funny, but by 1:00 in the morning I was still looking through those toys and realizing every single toy that my two children, who are two and six, every one of them were made in China. And so you know, they kind of look Santa Claus brings them all, but momma and daddy took them all away in one day. So I mean, we have to, I guess that kind of gets back to my point, Mr. Elkins, you know, does China's wrong make it right for us to continue down that path of destroying our environment? That is a question. [Laughter.] Mr. Elkins. No, it does not. And I am concerned and I think it is going to some national treaties between countries the size of China and Russia and the United States on a global basis. And certainly we need to set the standard. I do not want to sound like I am just totally oblivious to everything going on, because as you said, I have spent my 59 years here in the mountains of east Tennessee and I love it and I love the lakes and everything and we want to guard against it. I just do not want to take a reckless approach that some of I have heard. As was mentioned, I serve on a national board and meet in Washington on several times during the year and I hear and read all of the comments from the Congressmen and Senators throughout the United States and there seems to be a movement toward what I would consider to be a reckless abandonment of common sense when it comes to energy. Chairman Shuler. I can assure you that Congressman Davis and I are not going to let it go reckless and abandon and some times, do not always pay attention to just the folks that talk on C-span because I do not think they always voice the opinion of the Congress. And, you know, some of them get up on both sides, I would say Congressman Davis, they get up there and I think it is for their--they want to become famous. So we do have to have those approaches, and I think we have to take every aspect. And even personally, I am very fortunate that I can--I am getting ready to put an anemometer up on the seventh, at my home to be able to track the wind right in my district at my home. I am hoping that is going to work. And we have been able to work with the power company and they are very excited about it. And it is going to take small steps and it ultimately takes each and every one of us as individuals and as a community to truly make that difference and I commend all of you for the work that you are doing, because I know that, you know, is building a plant what you really would like to do, you would probably like to maintain the stuff that you have presently because I know from the TVA and Mr. White, I know from you all of us would like to maintain what we have. If we could find a way to utilize other resources and create the jobs that we have. I think that would make it a better community for all of us. And if we can find technologies and ways to utilize some of the resources that we do have, then I think that is where we have to work together and truly be a big part of the solution and as government, we are a lot of problems sometimes and we have to be a better part of the solution. And hearing your testimony today, it seems like I looked at every single question that the staff had put together and you guys have done an outstanding job of truly answering all the questions and just a wonderful job. And in my closing, I would like to say thank you so much for having us here, Mr. White, in your facility. Mr. White. It is a pleasure. Chairman Shuler. And Tennessee always means a whole lot to me in so many different ways. And I feel privileged to come back and Congressman Davis, a ranking member, having me in his district. And I yield back. Mr. Davis. Heath--and we know you as Heath--thank you for being with us. And I would like to thank Bridget Baird with Senator Corker's office; Bridget, thank you for what you and the Senator do. I was with Lamar Alexander earlier in the week talking about important issues. I would like to thank my own staff. You can imagine, it takes a lot of work to put one of these together and, Heath, you know that first hand with your staff as well. It is a team approach. And I thank each and every one of you for being here today. And this is something that happens, very unusually, we actually end on time. Thank you. Chairman Shuler. Also the staff of the committee has done and understanding, terrific job and my staff as well. This hearing is adjourned. 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