[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



  THE AMERICAN ENERGY INITIATIVE, PART 12: IMPACTS OF THE ENVIRONMENTAL 
   PROTECTION AGENCY'S NEW AND PROPOSED POWER SECTOR REGULATIONS ON 
                          ELECTRIC RELIABILITY

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               ----------                              

                           SEPTEMBER 14, 2011

                               ----------                              

                           Serial No. 112-83


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov






 THE AMERICAN ENERGY INITIATIVE, PART 12: IMPACTS OF THE ENVIRONMENTAL 
   PROTECTION AGENCY'S NEW AND PROPOSED POWER SECTOR REGULATIONS ON 
                          ELECTRIC RELIABILITY

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 14, 2011

                               __________

                           Serial No. 112-83


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

                                _____

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JAY INSLEE, Washington
GREG WALDEN, Oregon                  KATHY CASTOR, Florida
LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas            EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         ELIOT L. ENGEL, New York
STEVE SCALISE, Louisiana             GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
PETE OLSON, Texas                    MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia     CHARLES A. GONZALEZ, Texas
CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)






















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     3
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     5
Hon. Pete Olson, a Representative in Congress from the State of 
  Texas, opening statement.......................................     6
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     7
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     7
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     8
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, prepared statement...................................   477

                               Witnesses

Jon Wellinghoff, Chairman, Federal Energy Regulatory Commission..    26
    Prepared statement...........................................    28
    Answers to submitted questions...............................   479
Philip D. Moeller, Commissioner, Federal Energy Regulatory 
  Commission.....................................................    38
    Prepared statement...........................................    40
    Answers to submitted questions...............................   491
Marc Spitzer, Commissioner, Federal Energy Regulatory Commission.    59
    Prepared statement...........................................    61
    Answers to submitted questions...............................   499
John R. Norris, Commissioner, Federal Energy Regulatory 
  Commission.....................................................    65
    Prepared statement...........................................    67
    Answers to submitted questions...............................   509
Cheryl A. LaFleur, Commissioner, Federal Energy Regulatory 
  Commission.....................................................   206
    Prepared statement...........................................   208
    Answers to submitted questions...............................   517
Jeff Davis, Commissioner, Missouri Public Service Commission.....   270
    Prepared statement...........................................   272
Stan Wise, Chairman, Georgia Public Service Commission...........   279
    Prepared statement...........................................   281
Jon W. McKinney, Commissioner, West Virginia Public Service 
  Commission.....................................................   306
    Prepared statement...........................................   308
Mark L. Shurtleff, Attorney General, Utah........................   341
    Prepared statement...........................................   343
H.B. ``Trip'' Doggett, President and CEO, Electric Reliability 
  Council of Texas...............................................   353
    Prepared statement...........................................   354
Susan F. Tierney, Managing Principal, Analysis Group.............   363
    Prepared statement...........................................   365
    Answers to submitted questions...............................   525
John Hanger, President, Hanger Consulting, LLC...................   403
    Prepared statement...........................................   405

                           Submitted Material

Letter, dated September 12, 2011, from Robert C. Flexon, 
  President and Chief Executive Officer, Dynegy, to Mr. Rush, 
  submitted by Mr. Rush..........................................    10
Letter, dated September 14, 2011, from Hon. Tim Scott, a 
  Representative in Congress from the State of South Carolina, to 
  Mr. Upton, submitted by Mr. Gardner............................    14
Editorial, ``An EPA Moratorium,'' published August 29, 2011, in 
  The Wall Street Journal, submitted by Mr. Shimkus..............   219
Article, ``Energy Regulatory Chief Says New Coal, Nuclear Plants 
  May Be Unnecessary,'' by Noelle Straub and Peter Behr, 
  published April 22, 2009, in The New York Times, submitted by 
  Mr. Shimkus....................................................   222
Letter, dated September 8, 2011, from Dave Heineman, Governor of 
  the State of Nebraska, to Lisa Jackson, Administrator, 
  Environmental Protection Agency, submitted by Mr. Terry........   241
Article, ``New EPA regulations could be costly to G.I. power 
  consumers,'' by Robert Pore, published September 7, 2011, in 
  The Grand Island Independent, submitted by Mr. Terry...........   243
Article, ``New EPA rules for coal plants could cost millions; 
  lawsuit in works by attorney general,'' by Algis J. Laukaitis, 
  published September 12, 2011, in The Lincoln Journal Star, 
  submitted by Mr. Terry.........................................   246
Statement, dated September 14, 2011, of Gerry Cauley, President 
  and CEO, North American Electric Reliability Corporation, 
  submitted by Mr. Whitfield.....................................   256
Letter, dated August 4, 2011, from Michael L. Krancer, Secretary, 
  Pennsylvania Department of Environmental Protection, to 
  Environmental Protection Agency, submitted by Mr. Murphy.......   434
Corrected comments, dated August 4, 2011, of PJM Interconnection, 
  LLC, submitted by Mr. Murphy...................................   439

 
 THE AMERICAN ENERGY INITIATIVE, PART 12: IMPACTS OF THE ENVIRONMENTAL 
   PROTECTION AGENCY'S NEW AND PROPOSED POWER SECTOR REGULATIONS ON 
                          ELECTRIC RELIABILITY

                              ----------                              


                     WEDNESDAY, SEPTEMBER 14, 2011

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:19 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Shimkus, 
Walden, Terry, Burgess, Bilbray, McMorris Rodgers, Olson, 
McKinley, Gardner, Barton, Rush, Inslee, Castor, Markey, Green, 
Capps, Doyle, and Waxman (ex officio).
    Staff present: Charlotte Baker, Press Secretary; Ray Baum, 
Senior Policy Advisor/Director of Coalitions; Anita Bradley, 
Senior Policy Advisor to Chairman Emeritus; Maryam Brown, Chief 
Counsel, Energy and Power; Patrick Currier, Counsel, Energy and 
Power; Garrett Golding, Professional Staff Member, Energy and 
Power; Cory Hicks, Policy Coordinator, Energy and Power; Heidi 
King, Chief Economist; Mary Neumayr, Senior Energy Counsel; 
Katie Novaria, Legislative Clerk; Jeff Baran, Democratic Senior 
Counsel; Greg Dotson, Democratic Energy and Environment Staff 
Director; Caitlin Haberman, Democratic Policy Analyst; and 
Alexandra Teitz, Democratic Senior Counsel, Energy and 
Environment.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. This hearing will come to order. This is the 
12th day of our American Energy Initiative hearing, and today 
we are going to focus on the impact of the EPA's new and 
proposed power sector regulations and the reliability of the 
electric power grid.
    The Energy Information Administration projects that 
electricity demand will increase 31 percent by 2035. That means 
new electric power plants will more than likely have to be 
built, and that includes all kinds of power plants. But getting 
EPA approval to do so was already enough of a challenge before 
utility MACT, new source performance standards for greenhouse 
gases, interstate transport, cooling towers, coal combustion 
residuals, and all the other new and pending regulations were 
added to the mix. As it is, this Administration has brought 
construction of new coal-fired generation to a near standstill, 
and things are only going to get harder as additional 
regulations take effect.
    At the same time, existing facilities are under threat. 
EPA's regulations are likely to force accelerated retirements 
of many coal-fired plants that are still badly needed. Studies 
from the North American Electric Reliability Corporation and 
several others estimate serious risks to reliability from these 
retirements.
    Add to that the units facing significant downtime as they 
are retrofit to comply with the host of new regulations, and 
there is genuine concern whether there will be enough electric 
generating capacity to meet the Nation's growing demand. The 
impacts of more expensive electricity are bad enough, and alone 
are reason to closely scrutinize the many new regulations 
likely to raise them. But the potential consequences of 
unreliable electricity, on the economy, on the military and on 
the lives of the American people, are even more disturbing.
    We need to know the cumulative impact on reliability of all 
the rules that are in the works in the pipeline, which is 
precisely why the TRAIN Act, in our view, is so important. This 
is a very serious problem, but I have yet to see serious 
treatment of it by EPA. The agency has shown insufficient 
concern over the cumulative burden of its regulations as it 
moves ahead to implement them. This attitude of ``regulate 
first, ask questions later'' needs to end.
    Nor is the EPA coordinating with the Federal Energy 
Regulatory Commission as well as other federal and State-level 
organizations responsible for the reliability of the grid. 
Needless to say, for EPA to embark on a regulatory agenda that 
threatens reliability without working closely with FERC and 
other federal agencies is simply unacceptable.
    I know that 14 different entities have examined the 
potential loss of energy-producing power, and they range 
anywhere from almost 80 gigawatts down to 10 gigawatts, and on 
the preliminary assessment, the lowest prediction of retired 
capacity was EPA, but the mere fact that we have so many 
different agencies with such different views on the capacity 
impact certainly would illustrate that we need better 
coordination on this issue.
    And so I look forward today to learning more from the 
leadership at FERC who are responsible for reliability on 
precisely what their views are on this issue and how 
comfortable they feel in assuring the American people that 
reliability will not be an issue.
    [The prepared statement of Mr. Whitfield follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Whitfield. At this time I would like to recognize the 
gentleman from Illinois.
    Mr. Rush. I want to yield, Mr. Chairman, to the ranking 
member.
    Mr. Whitfield. OK. I will recognize the ranking member, Mr. 
Waxman of California, for his opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman, and thank you, Mr. 
Rush, for the opportunity to make this opening statement.
    This Republican House has been the most anti-environment in 
history. And today's hearing builds on that unfortunate record 
with yet another attack on EPA's efforts to reduce air 
pollution.
    The rules under assault today will improve the health of 
millions of Americans. The first rule, the mercury and air 
toxics rule, will prevent up to 17,000 premature deaths each 
year. The benefits of this rule sharply exceed the costs by as 
much as 13 to one.
    The second rule, EPA's cross-state air pollution rule, is 
also a tremendous victory for public health. Each year, this 
rule will prevent up to 34,000 premature deaths. In 2014, this 
rule will cost $800 million but will produce annual health 
benefits to Americans of between $120 billion and $280 billion. 
That is an outstanding return on investment for the American 
people.
    Earlier this year, when Republicans wanted to block EPA's 
climate rules, they said they wanted to clean up other air 
pollution, just not greenhouse gases. Yesterday, when our 
committee voted to block air toxics rules for boilers and 
cement kilns, they said they care about air pollution but 
denied the health benefits from reducing air toxics such as 
mercury. Now, they are attacking the cross-state air pollution 
rule, which controls fine particulates. They ignore the severe 
effects of particulates on health documented in reams of peer-
reviewed studies, and they claim that the rules will force so 
many coal plants to shut down that the reliability of our 
electric grid will be threatened.
    Well, EPA examined this question and found that its rules 
will result in only a modest level of retirements, of older, 
dirtier, less efficient power plants, and that these 
retirements are not expected to have an adverse impact on the 
adequacy of electric generation. EPA's conclusions have been 
confirmed by several independent studies.
    In August 2010, the Analysis Group concluded that ``the 
electric industry is well positioned to comply with EPA's 
proposed air regulations without threatening electric system 
reliability.'' And they reaffirmed this finding in a June 2011 
report.
    The Bipartisan Policy Center's June 2011 analysis of the 
rules also found that ``scenarios in which electric system 
reliability is broadly affected are unlikely to occur.'' In a 
December 2010 study, Charles River Associates found that 
``implementing EPA air regulations will not compromise electric 
system reliability.''
    The Congressional Research Service and others have also 
examined the issue. The stack of independent studies agrees on 
the key points. First, there is currently a substantial amount 
of excess generation capacity from natural gas plants built 
during the last decade. The Analysis Group found that the 
electric sector is expected to have over 100 gigawatts of 
surplus capacity in 2013. That is much more capacity than 
anyone has suggested might retire as a result of EPA's rules.
    Second, the electric industry has a proven track record of 
rapidly installing large amounts of new capacity when it is 
needed. From 2000 to 2003, utilities added over 200 gigawatts 
of new capacity, and energy efficiency can often reduce the 
amount of needed generation even faster.
    Third, the potential retirements are of old, small, 
inefficient, less-used coal plants that lack pollution 
controls. On average, these units are 55 years old. According 
to CRS, the main threat to these plants is cheap natural gas. 
Regardless of EPA's rules, these old plants are being replaced 
by more efficient natural gas plants.
    Today, we will hear a lot about an informal assessment by 
FERC's staff that 81 gigawatts of generation are likely to 
close as a result of EPA's rules. Citing this assessment is a 
mistake, as we will hear today from FERC's chairman. This 
assessment was based on inaccurate assumptions and inadequate 
data, and it is out of date. It does not reflect the final EPA 
rules, as FERC has acknowledged.
    The NERC and industry studies are also based on inaccurate 
assumptions of what EPA rules would require. The results are 
unreliable because they assumed standards far more burdensome 
than those EPA adopted.
    The reliability of the electric grid is a serious topic, 
and it should not be used as an unfounded excuse to block 
important public health protections.
    Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you.
    At this time I recognize the gentleman from Texas, Mr. 
Olson, for his opening statement.

   OPENING STATEMENT OF HON. PETE OLSON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Olson. Thank you, Mr. Chairman. Thank you for your 
leadership in hosting the 12th hearing of the American 
Initiative.
    When the Obama Administration's Environmental Protection 
Agency blindsided Texas by including in its cross-state 
pollution rule at the last minute, Texas utility companies 
warned that the decision would lead to a shortage of 
electricity, layoffs and higher energy prices. That was over 2 
months ago. The EPA went full steam ahead with its rulemaking 
despite these concerns, and now we have learned that Luminant, 
the largest power generator in Texas, will close Texas lignite 
mines, idle two power plants and lay off 500 people. Luminant 
is one of the latest victims of an agency that is out of 
control. I hear it from my constituents, other Members of 
Congress and even President Obama himself when he withdrew a 
poorly drafted EPA ozone rule that was bad for the economy.
    Today, we will hear from public utility commissioners and 
independent system operations. They are not here to make a 
political statement. They are here to tell us that there is no 
realistic way to even partially mitigate the substantial losses 
of available operating capacity that will result from this 
rule. Hopefully, members on both sides will heed their message 
and work together to find a more sensible solution.
    I thank you, and yield to my colleague from Texas, the 
chairman emeritus, Mr. Barton.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Mr. Olson.
    I want to welcome the FERC commissioners. I think it has 
been a while since we have had all five of you, so we are glad 
to have you.
    It was interesting to me listening to Ranking Member 
Waxman. His assessment seems to be that we just overreact to 
all these EPA rules, that they are really not going to have 
much of an impact and we just need to hug each other and things 
will work out. Well, you folks are an independent agency, and 
EPA says all their rules might require 10-megawatt retirement. 
I think they say 10. You say 131. Well, that is quite a 
difference. Even if you split the difference, it is still 
approximately 70 megawatts. That is a lot of power. As my 
friend, Mr. Olson, just pointed out, this cross-state air 
transport rule that the EPA popped on us a month or so ago is 
going to cost a minimum of 500 jobs in my district, probably 
another 2,000 jobs that are directly impacted, and EPA's 
reaction to that was, the company that announced the layoffs 
yesterday just doesn't understand.
    Well, my good friends at the FERC, today we want to hear 
your honest assessment, whatever it is, pro or con. This 
subcommittee wants the facts. You are all appointed by the 
President and your job is to give the best assessment as you 
can. We need to build a lot of power plants in this country in 
the next 10 years. It doesn't look like anybody is going to 
build a coal plant. It is almost impossible to permit a nuclear 
plant. That kind of leaves it to natural gas and perhaps wind 
power in certain areas of the country.
    So Mr. Chairman, I will put my formal statement in the 
record, but I am delighted to have the FERC commissioners and 
the panelists that are going to follow them, and I look forward 
to an interesting hearing.
    Mr. Shimkus. Would the gentleman from Texas who originally 
had the time, Mr. Olson----
    Mr. Barton. I yield to the gentleman from----
    Mr. Shimkus. Would you yield?
    Mr. Barton. If I am allowed to.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you. I also want to just welcome the 
commissioners, and having the EPA make a determination of the 
reliability of the generating capacity of this country and the 
transmission grid is like asking you to make an analysis of 
nitrous oxide emissions or asking you to make a Safe Drinking 
Water Act. We look forward to your analysis. I would let 
Chairman Waxman know that it is not only your own analysis, and 
I will have this up on the screen when we go to questions, but 
FERC is at 70 for moderate restriction, Bernstein and 
Associates 65 gigawatts. EPA is the lowest analysis of the loss 
of power than any either industry-selected or non-industry-
selected evaluation of this. This is critical for the cost of 
energy and jobs in this country, and I agree with Mr. Barton 
that we really need your forthright and honest testimony the 
effect it is going to have on our consumers and jobs in this 
country.
    Mr. Whitfield. The gentleman's time is expired. At this 
time I will recognize the gentleman from Illinois, Mr. Rush, 
for his 5-minute opening statement.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman, and I want to 
thank all the commissioners as well as your other expert 
witnesses for appearing before this subcommittee today.
    Mr. Chairman, today we are holding a hearing to determine 
whether or not there is a need to further delay critical Clean 
Air Act rules including the Air Toxics Rule and the Cross-State 
Air Pollution Rule in order to address reliability issues.
    Mr. Chairman, in my opinion, this is yet another all-out 
assault, attack on the EPA. It is, as I might borrow my friend 
from Illinois's phraseology, yet another Republican jihad, 
assault on the EPA. When will it end? I guess not until after 
the elections in November of 2012.
    There has been much debate and widely divergent estimates 
over grid reliability issues stemming from the number of power 
plants that would need to be retired once these rules go into 
effect. As a matter of fact, some earlier reports speculated 
that a larger number of power plants up to 80 gigawatts or more 
may be retired as a result of EPA's regulations. However, Mr. 
Chairman, it must not go unsaid that these reports were based 
on the worst-case scenarios and the erroneous assumptions about 
what EPA might propose. More recent independent reports which 
look at what EPA actually proposed, including the Bipartisan 
Policy Center's entitled ``Environmental Regulations and 
Electric System Reliability'' only project 15 to 18 gigawatts 
of incremental coal plant retirements by 2015. This represents 
less than 6 percent of total coal-fired capacity and less than 
2 percent of total generating capacity.
    Additionally, many independent studies predict that these 
rules, including the Air Toxics Rule and the Cross-State Air 
Pollution Rule, will not threaten the economic health of the 
Nation but instead will in fact stimulate job growth while 
protecting the public health.
    Under these new EPA air regulations, a small percentage of 
the oldest power plants will need to install pollution-control 
equipment to continue operations. The capital investments in 
pollution controls and new generation will create an estimated 
1.46 million jobs or an average of 290,000 year-round jobs 
between 2010 and 2015. It is job stimulation in any way you 
want to look at it.
    Due to abundant low-priced domestic natural gas supplies 
and reduced electricity demand, some electricity generators may 
elect to retire the old inefficient plants rather than invest 
capital to install pollution controls. This is not a bad thing; 
it is a good thing.
    A new report from PJM Interconnection, the Nation's largest 
transmission operator, says since the reliability is not 
threatened by coal-fired power plant retirements spurred by new 
EPA rules despite the coal industry's claims that the impacts 
could be severe.
    I have, Mr. Chairman, and I want to insert into the record 
a letter from Dynegy, a Houston-based coal-fired power company 
which supplies the Midwest Independent System Operator in 
Illinois and who is supportive of the EPA's rule.
    Mr. Whitfield. Without objection.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Rush. The Congressional Research Service found no 
evidence of the majority's predicted train wreck but instead 
found that the primary impacts that the EPA rules will be on 
the coal-fired power plants more than 40 years old that have 
not installed pollution controls. Many of these plants are 
inefficient and they should be replaced and they are being 
replaced regardless of EPA's rules.
    Additionally, a Charles River Associates' report concluded 
that the electric system reliability can be maintained while 
improving public health through coal-to-gas conversion, new 
gas-fired generation, expansion of load management programs and 
established market and regulatory safeguards.
    So Mr. Chairman, I join with you and the rest of the 
Republican jihadists. I am very eager to hear the testimony 
from the FERC commissioners as well as other witnesses here 
today over whether the EPA and other federal and State agencies 
have taken practical steps to plan for the implementation of 
these rules and have adopted approaches to ensure the 
electricity industry can comply without threatening electric 
system reliability.
    Mr. Chairman, I thank you and I yield back the balance of 
my time, all of it.
    Mr. Whitfield. At this time before we go to the testimony, 
I would like to recognize Mr. Gardner for the purpose of 
requesting putting into the record some documentation.
    Mr. Gardner. Thank you, Mr. Chairman. I would ask the 
letter from Tim Scott regarding this hearing be submitted for 
the record with unanimous consent.
    Mr. Whitfield. Without objection. Thank you.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Whitfield. At this time I also want to welcome the FERC 
commissioners. We appreciate very much your taking time to be 
here. We are sorry for the delay this morning.
    We have with us today the Chairman of the Federal Energy 
Regulatory Commission, the Honorable Jon Wellinghoff. Also, 
Commissioner Phillip Moeller, Marc Spitzer, John Norris and 
Cheryl LaFleur, and at this time, Chairman Wellinghoff, we will 
recognize you for your 5-minute opening statement and then we 
will just go down the line.

    STATEMENTS OF JON WELLINGHOFF, CHAIRMAN, FEDERAL ENERGY 
REGULATORY COMMISSION; PHILIP D. MOELLER, COMMISSIONER, FEDERAL 
   ENERGY REGULATORY COMMISSION; MARC SPITZER, COMMISSIONER, 
     FEDERAL ENERGY REGULATORY COMMISSION; JOHN R. NORRIS, 
COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION; AND CHERYL 
 A. LAFLEUR, COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION

                  STATEMENT OF JON WELLINGHOFF

    Mr. Wellinghoff. Thank you, Mr. Chairman and members of the 
committee. I appreciate the opportunity to be here and testify 
before you today.
    Electric reliability and environmental protection are both 
important to this country's future. The issues are related as, 
for example, regulations that the EPA recently finalized or is 
considering will affect the operation of some electric-
generating units.
    With sufficient information and time, the electric industry 
can plan to meet both its reliability and environmental 
obligations. Most notably, existing planning authorities with 
developed modeling capabilities have or could obtain all the 
necessary data and tools to analyze the potential local and 
regional reliability impacts stemming from the EPA regulations. 
These planning authorities provide the appropriate forums for 
addressing this issue. Some are already taking steps to account 
for implementation of these EPA regulations. For planning 
authorities to conduct these analyses, they need early notice 
of retirements to accurately identify and address reliability 
issues.
    The Commission also has a role to play with respect to 
electric reliability. In general, the Commission has used its 
existing authority in the past to protect reliability. To this 
end, the Commission has overseen the establishment of mandatory 
and enforceable standards that protect the reliability of the 
bulk power system. Looking forward, the Commission does and 
will, for example, review studies to determine the changes that 
occur due to changes in mix and location of resources in a 
region as well as planning-related proposals that account for 
implementation of these EPA regulations.
    The Commission also can and will share our staff's 
expertise with the EPA when appropriate. Commission staff has 
had numerous consultations with EPA staff on issues related to 
these EPA regulations including informal assessments that each 
has conducted. Commissioner staff's informal assessments of 
generator retirements are inadequate to be used as a basis for 
decision making. More generally, it is important to recognize 
that although the Commission is well suited and able to perform 
its statutory duties including those with respect to 
reliability, it does not possess the data nor the models 
necessary to replace the industry's individual and collective 
planning processes in addressing the potential local and 
regional impacts of these EPA regulations on electric 
reliability.
    That completes my summary of my testimony. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Wellinghoff follows:]


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    Mr. Whitfield. Thank you.
    Mr. Moeller, you are recognized for 5 minutes.

                 STATEMENT OF PHILIP D. MOELLER

    Mr. Moeller. Thank you, Mr. Chairman and Ranking Member 
Rush, members of the committee. It is a pleasure to be here 
today. Thank you for inviting us to testify and your interest 
in this matter because it is of great importance to the Nation.
    At FERC, our statutory interest in this is primarily having 
to with bulk system electric reliability as that is the 
responsibility that you gave us in 2005 under Section 215 of 
the Federal Power Act but we also have an interest in policies 
that can affect rates because of our statutory direction there 
as well.
    I believe this Nation can retire a significant amount of 
existing generation. In fact, nearly all of our existing 
generation will be retired and replaced within the next 40 
years. The key questions are which plants are going to be 
retired, where are they and what is a manageable time frame in 
which to retire them.
    In retiring a significant amount of existing generation 
within a short period of time, though, does have cost impacts 
and so while there will be health benefits to closing certain 
plants, there are also consequences to rising electricity 
rates.
    Now, one common assumption is that many of these coal-fired 
plants, especially the baseload ones, will be replaced with new 
generation fueled by natural gas. But that assumption is based 
on the fact that we have new domestic supplies of natural gas, 
largely from shale deposits, that have been keeping prices in a 
moderate level, that appear to be a moderate level going out in 
the futures markets. But if there are legislative or regulatory 
efforts to restrict this new supply of gas, the price of 
shutting these coal plants will rise significantly, and in 
addition, the Nation's natural gas pipeline network will need 
to be expanded to meet this increased demand to keep prices 
reasonable. At a minimum, this will take a few years.
    Now, the suite of proposed EPA rules and the timelines 
associated with each of these proposed rules impact different 
regions in different ways, and this adds to the complexity of 
developing solutions. Although some regions do have excess 
generating capacity and can absorb retirement, the laws of 
physics dictate that analyzing the impact must be done on a 
granular level down to the specific load pockets that are 
affected. In my letter to Senator Murkowski that I attached to 
my testimony, I provide a case study of the successful 
retirement of four plants in the Philadelphia area, but there 
were challenges and costs associated with those retirements.
    Now, I have called for FERC to be more involved in 
analyzing the EPA rules from a reliability standpoint and a 
more open process for public input. Given the dynamic nature of 
the rulemaking process, we can't expect to have a perfect 
analysis of the impacts but we can make our best effort 
involving EPA, DOE, NERC, regions. The State utility 
commissions would be essential.
    In addition, there have been some other ideas and some 
other measures that have been suggested to minimize the 
disruption to the electric sector. Clarifying the conflict 
between the Clean Air Act and the Federal Power Act when 
reliability is at stake is one idea. Determining each agency's 
statutory authorities for reliability conditions is another, 
and requiring more advance notice of plant retirements could be 
helpful.
    Again, I appreciate the chance to testify before you, your 
interest in this issue, and I look forward to answering any 
questions you may have.
    [The prepared statement of Mr. Moeller follows:]


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    Mr. Whitfield. Thank you, Mr. Moeller.
    Mr. Spitzer, you are recognized.

                   STATEMENT OF MARC SPITZER

    Mr. Spitzer. My name is Marc Spitzer and I am a member of 
the Federal Energy Regulatory Commission. I thank you for the 
opportunity to appear before you today to discuss my views on 
the potential impacts of the Environmental Protection Agency's 
new and proposed power sector regulations on electricity 
reimbursement.
    In the Energy Policy Act of 2005, Congress assigned FERC 
authority with respect to the reliability of the bulk power 
system. I remain committed, as do each of my colleagues, to 
ensuring the reliable operation of our Nation's electric grid. 
Reliable service of electricity is essential to the health, 
welfare and safety of the American people and necessary to 
serve our economy. However, I recognize that environmental 
protection laws and regulations are important to the well-being 
of our Nation as well. The United States has superb records in 
both environmental protection and electric reliability.
    The issue before us today is how to best address the 
potential impacts of the EPA's new and proposed power sector 
regulations on the reliability of the Nation's bulk power 
system. I have several suggestions regarding the concerns 
raised.
    First, FERC and the EPA need to be proactive to ensure 
reliability concerns are considered and addressed in any 
analysis by the EPA of its environmental regulations affecting 
utilities. To this end, I recommend that FERC and EPA continue 
their dialog but in a more formalized and expansion fashion. 
Given the potential impacts of EPA's proposed rules on the bulk 
power system, such coordination is critical to ensuring that 
EPA does not enforce its rules in a vacuum.
    Second, the electric industry recognizes its obligation to 
comply with both environmental regulations as well as FERC-
approved reliability standards and to plan their systems to 
reliably serve customers while complying with environmental 
requirements. It is the regulated entity, whether an individual 
utility or an independent system operator regional transmission 
organization, with better knowledge of its operations, needs 
and requirements that is in the best position to determine 
through its planning process how it will meet the various 
regulatory requirements that it faces. Decisions as to whether 
a unit is retired or retrofitted are typically made at the 
local or State level and State utility regulators generally 
play a significant role in resource adequacy decisions as well 
as compliance with EPA's proposed regulations. My concern is 
that regulated entities must have adequate time to plan their 
systems to comply with the rules that the EPA promulgates and 
with the FERC-approved reliability standards. Inadequate time 
to comply with the EPA's proposed regulations may result in 
users, owners and operations of the bulk power system being 
compelled by their government to choose between compliance with 
environmental laws or with FERC-approved reliability standards 
and then a face a penalty from one of these agencies. Regulated 
entities should not be put in a position of having to elect 
which agency's penalty they would rather face. Requiring public 
utilities to make such a Hobson's choice does not serve 
consumers and frankly is not good government.
    As an example of one way to address this timing concern, in 
comments to the EPA certain of the ISO/RTOs propose a 
reliability safety valve that would permit a case-specific 
extension of time for compliance by a retiring generator needed 
to implement reliability solutions to replace the resource. I 
suspect it will be a rare situation when a regulated entity 
finds itself after having adequate time for planning in a 
position of having to choose between compliance with one 
regulator's rules over another's. It should be the duty of the 
regulators to work together and with the regulated entity to 
find a resolution that best assures reliable operation of the 
electric grid and compliance with environmental standards 
without violation of either regulator's rules.
    Mr. Chairman, I thank you for the opportunity to provide my 
views on these important matters and I would be pleased to 
answer your questions.
    [The prepared statement of Mr. Spitzer follows:]


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    Mr. Whitfield. Thank you, Mr. Spitzer.
    Mr. Norris, you are recognized for 5 minutes.

                  STATEMENT OF JOHN R. NORRIS

    Mr. Norris. Thank you, Mr. Chairman, Representative Rush 
and members of the subcommittee for inviting me here today. My 
name is John Norris and I am a commissioner with the Federal 
Energy Regulatory Commission.
    As I stated in my written testimony submitted for today's 
hearing, I am sufficiently satisfied that the reliability of 
the electric grid can be adequately maintained as compliance 
with EPA's regulations is achieved.
    Why do I say ``sufficiently''? Because, frankly, I don't 
think we can ever be totally satisfied. Situations occur every 
day that impact the reliability of the electric grid. I believe 
the key is to be vigilant in protecting the grid from a myriad 
of vulnerabilities while being cognizant of the costs, while 
maintaining a reliable grid, and being able to promptly address 
new and emerging threats to reliability.
    Nearly every decision involving reliability involves 
choices, choices between competing variables like cost, like 
level of reliability, environmental protections and more. The 
situation we face with the EPA rules is no different. That is 
why we have tools developed for meeting reliability and 
electricity supply challenges. So my colleagues have already 
cited the tool that you gave us with EPACT 2005 with the tools 
regarding reliability standards and the enforcement and penalty 
provisions that we have to oversee those standards with 
reliability. That is a tool we have going forward to address 
reliability concerns.
    FERC has other places in place as does the DOE, as does the 
EPA and even the President to deal with reliability concerns 
going forward. Specifically under our jurisdiction at FERC, 
there are markets in place under our jurisdiction to provide 
market signals to the upcoming rules and costs associated with 
them can produce the most effective solutions to meet the 
resource needs for implementing these rules. These markets have 
fostered the development of new capacity resources, demand-side 
resources, new technologies like energy storage and more that 
currently are meeting our needs and will in the future. I have 
confidence these same markets will enable us to address the 
resource needs as a result of the EPA rules. That is not say 
there will not be challenges, and we may need to adopt new 
market rules to deal with situations that arise for 
specifically addressing the impact of these EPA rules but that 
is not new or a reason to delay the rules. The transmission 
planning regions and processes under FERC's jurisdiction that 
we have established with Rule 890, Order 890, and recent Order 
1000 have put in place tools needed for transmission planning 
so that resources are there to address these types of 
challenges.
    There have been numerous studies conducted regarding the 
impact of the EPA rules and the impact they have on resource 
adequacy and reliability. The biggest takeaway I have from 
these studies is there is a wide range of potential outcomes 
and a wide range that is driven by many different scenarios the 
studies have studied for the many possible rules EPA may 
determine or may make final.
    But all of these studies reached the conclusion that there 
will adequate resources available. The challenge is, how do we 
make sure we apply the tools we have which we do every day in 
addressing reliability? These studies also revealed there area 
number of factors outside the EPA rules that are changing the 
makeup of our electric generation today largely driven by the 
market and largely driven by low natural gas prices as multiple 
studies have indicated. There is a transition occurring. We 
have a tremendous amount of our generation fleet today. 
Unfortunately, I would like to say unlike you and I, we can 
handle being members of AARP but I am not sure our electric 
fleet should be. We have an opportunity in this country to make 
a more efficient electric generation fleet to serve our needs 
going forward. This just presents another challenge of how we 
change that fleet out but it is happening right today 
irrespective of these EPA rules. With a marketplace as we have 
in place to make this transition most efficiently than what is 
already happening in the marketplace with natural gas and the 
change out of our generation, this is an opportunity to address 
health concerns and make our energy system more efficient for a 
more efficient economy in the future. We should not shy away 
from it. I don't think another study about potential outcomes 
or different scenarios will add to our ability to address 
reliability. We have tools in place today that if we use those 
tools, we continue to be diligent, we will be able to 
accommodate the impact of these EPA regulations.
    So thank you for the opportunity to share with you today.
    [The prepared statement of Mr. Norris follows:]


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    Mr. Whitfield. Thank you.
    Ms. LaFleur, you are recognized for 5 minutes.

                 STATEMENT OF CHERYL A. LAFLEUR

    Ms. LaFleur. Thank you very much, Mr. Chairman, Ranking 
Member Rush and members of the subcommittee. I also very much 
appreciate the opportunity to testify today.
    My name is Cheryl LaFleur. In July 2010, I was confirmed as 
a commissioner of the Federal Energy Regulatory Commission. In 
my past career, I had the privilege of serving electric and 
natural gas customers in New England and New York. That 
experience taught me firsthand how important electric 
reliability is to real people and real communities. Since 
joining the Commission a little over a year ago, I've made 
reliability one of my top priorities.
    For some time now, we have been hearing about the EPA's 
proposed air and water regulations and their potential to 
affect our energy supply. Although not all of the regulations 
are final, I believe it is important to consider them as a 
package when assessing their potential affect on reliability. 
This is because the owner of a power plant will appropriately 
consider all of its EPA regulations, among other factors, in 
determining whether it is economically feasible to retrofit or 
repower a unit or whether it makes economic sense to retire the 
unit.
    Should the owner of a power plant decide to retire a unit 
because the unit cannot be economically retrofitted to meet the 
new EPA regulations, it must notify the State and regional 
planning authorities of its decision. Those authorities must 
then determine whether there is enough available generation or 
transmission to allow the unit to retire without affecting 
reliability or whether the retirement will create the need for 
new generation, new transmission or other resources in order to 
maintain reliability. Like an owner's decision whether to 
retrofit a replace a unit, the reliability consequences of a 
retirement will be dependent on the specific facts of each 
case, each locality and each region.
    While the EPA regulations are not expected to affect our 
overall resource adequacy as a Nation, they may be present 
reliability issues in particular localities or regions. In some 
regions, conditions may be such that a retirement or several 
retirements related to the new regulations will not create a 
reliability concern. In other areas, the retirement of even a 
single unit may create the need for an alternative. In this 
regard, I believe that for studies about the potential effects 
of the EPA regulations to have the most accuracy and predictive 
value, they must be conducted after the regulations are final 
and unit owners have decided whether to retrofit or retire. 
Studies under these conditions don't necessarily require the 
extensive number of assumptions required for nationwide 
analysis that are driving all the different numbers we have now 
and are more likely to really drill down on the local and 
regional issues that we really need to face.
    If a retirement does create a potential reliability issue, 
the owners and the planning authorities must determine what 
resources will replace the unit and how long it will take to 
bring the new resources online. Given the long lead time for 
certain types of resources, there may be a gap of time when a 
replacement facility is not yet available but the retiring unit 
is no longer compliant with the new regulations. In such cases, 
a time-limited waiver of EPA regulations may be needed. In 
other cases, a reliability must-run contract under the 
authority of the Commission may also be needed to allow the 
power plant to operate within certain discrete parameters for a 
defined period of time.
    I believe that any waivers or flexible solutions must be 
targeted and discrete. Specific reliability analyses at the 
local and regional level are much more meaningful than all the 
nationwide estimates that are floating around. The 
circumstances of each retirement and the need for replacement 
are fact-specific. I do not support a blanket delay of EPA 
regulations but I will certainly champion specific extensions 
where needed for reliability. I believe that the EPA should and 
that the EPA does understand the need to be flexible in 
specific cases.
    Because of our jurisdiction over regional transmission, 
utility rates and reliability standards, FERC should be 
actively involved in these issues when they arise. I believe we 
can play an important role in discussions among regional 
planners, NERC and the regional reliability entities, 
utilities, States and the EPA. I think it would helpful for 
FERC to sponsor a workshop or series of workshops that bring 
together all these stakeholders to discuss the regulations, as 
Commissioner Norris said, the tools we have at our disposal to 
meet them. For example, FERC can examine and approve market 
rules designed to facilitate reliability and designed to 
increase the notice that planners get when retirements are 
happening. I am confident that we as a Nation can ensure that 
the EPA's proposed air and water regulations do not adversely 
affect reliability provided there is coordination and 
flexibility in their implementation.
    Thank you.
    [The prepared statement of Ms. LaFleur follows:]


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    Mr. Whitfield. Thank you, and thank all of you for your 
testimony.
    Ms. LaFleur, you made the comment that you thought it would 
be useful to have a workshop and bring in interested parties to 
maybe better coordinate or look at this issue of reliability in 
a more comprehensive way. Is that correct?
    Ms. LaFleur. Yes, and to look at the tools to make sure we 
have all the right tools in our tool chest.
    Mr. Whitfield. Mr. Wellinghoff, do you have any plans to 
have a workshop like Ms. LaFleur is discussing?
    Mr. Wellinghoff. I don't have any plans at this point in 
time. We have had a number of discussions with the planning 
authorities that come into FERC all the time and have 
discussions with them about the tools that they have available 
to adequately address the EPA proposed regulations. I actually 
talked to David Owens the other day from EEI about this issue 
of a workshop. He didn't feel that that was something that 
would be necessary from an industry perspective. So I haven't 
seen the need for it at this point in time.
    Mr. Whitfield. Are there any other commissioners that 
believe that a workshop like Ms. LaFleur is talking about would 
be useful? Mr. Moeller?
    Mr. Moeller. Well, I have been in favor of it because I 
think we can get some of these issues out there, we can talk 
about some of the reliability implications that need to be 
drilled down. I can go into more detail if you would like.
    Mr. Whitfield. Mr. Spitzer?
    Mr. Spitzer. Mr. Chairman, I am certainly respectful of 
Commissioner LaFleur's effort to get more discussion. My view 
would be, I would rather have that take place before the rules 
become final so that we are not dealing with a done deal that 
is able to--makes it more difficult to deal with a final rule 
as opposed to during the planning process of the promulgation 
of the rule.
    Mr. Whitfield. Mr. Norris?
    Mr. Norris. Thank you. As I said, another meeting, another 
study with multiple scenarios on the table really doesn't, in 
my mind, get us anywhere. The analysis should be, do we have 
the tools available. I believe we have tools available now. 
Once we know what the rules are, we see what the impact is 
going to be and see what the impact is in fact in motion, then 
a workshop would be useful to say is that tool right or do we 
need to change that based on what we are seeing happening in 
the marketplace, what we are seeing happening with plant 
retirement decisions. But to have a meeting now would be, in my 
mind, like another one of the studies. We need to have--I think 
a workshop following the implementation of rules to make sure 
we are watching this, we are being vigilant about how 
reliability is being impacted may be a very productive outcome.
    Mr. Whitfield. You say that you have the tools available 
and yet Mr. Wellinghoff in his testimony talked about that he 
felt like the best entities to really look at reliability 
because he said he did not have adequate resources was the 
utilities and other entities. But you say you have the tools 
necessary to look at reliability.
    Mr. Norris. I believe that is right because I think we have 
tools, we oversee the marketplace in those independent system 
operations/regional transmission organizations, so if they 
identify a problem out there, they can come to us and we can 
look at market rules and make adjustments. The States have 
tools through their oversight of generation and their 
integrated resource planning processes to address situations. I 
didn't mean to imply that we have the only tools. We have 
tools. There are multiple tools throughout this situation at 
DOE, at the EPA with the possibility for consent decrees. Also, 
the time I have already given to comply with these rules.
    Mr. Whitfield. Mr. Wellinghoff, does FERC intend to update 
its preliminary assessment in light of the new information and 
proposals issued by EPA?
    Mr. Wellinghoff. No.
    Mr. Whitfield. I noticed back in October, the FERC staff 
was recommending to conduct additional reliability studies.
    Mr. Wellinghoff. I am sorry. What are referring to, Mr. 
Chairman?
    Mr. Whitfield. In October, the Office of Electric 
Reliability at FERC said that the staff will continue to 
conduct reliability studies relating to this issue, but from 
your perspective, there is no need for additional assessment, I 
take it?
    Mr. Wellinghoff. No specific assessment. Those studies 
would relate to the interface between EPA and the planning 
regions and those studies would in fact look at the assurances 
that there is proper information sharing between the planning 
authorities that have the tools. And when we talk about the 
tools that Commissioner Norris was talking about, we have tools 
as well. Our tools are regulatory tools. The planning 
authorities are planning modeling tools and actually do drill 
down and do the discrete analysis that is necessary to really 
determine what are the mitigation strategies and activities at 
the planning level to ensure reliability. Those are the tools 
they have. The tools we have are things like our Order 1000 
which we recently issued. We explicitly set forth for the 
planning authorities the requirement that they look at public 
policy as part of their planning. That is the tool we have.
    Mr. Whitfield. Let me just ask one other question. I know 
that in March you all came out with an order relating to demand 
response, which was supposed to address problems at peak 
periods, and can all of you say very comfortably that you are 
really not concerned about reliability, the impact on 
reliability that the environmental regulations that EPA would 
have?
    Mr. Wellinghoff. That particular order on demand response 
actually was for using demand response in the energy markets as 
opposed to the capacity markets, which would have been the peak 
periods.
    Mr. Whitfield. OK. Mr. Moeller?
    Mr. Moeller. I am not exactly sure of your question, Mr. 
Chairman.
    Mr. Whitfield. Actually, I have gone a minute over anyway 
so we will get back to it.
    Mr. Rush, you are recognized for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman.
    Chairman Wellinghoff, recently Senator Murkowski issued a 
press release stating, and I quote, ``The Commission staff has 
preliminarily estimated that up to 81 gigawatts of existing 
generation are 'likely' or 'very likely' to be retired as a 
consequence of new EPA rules.'' Based on subsequent statements, 
however, you clarified that this estimate was way high because 
it included significant assumptions about the rules that were 
ultimately found to be incorrect. Would you please comment on--
--
    Mr. Wellinghoff. Well, as Mr. Waxman indicated in his 
opening statement, that back-of-the-envelope analysis was just 
a preliminary one to set the stage for us to enter into some 
discussions with EPA to determine the appropriateness of EPA's 
interaction with the planning authorities to determine 
ultimately how these rules could impact their planning 
requirements in each individual region. There was no intent for 
the use of that particular number to be used in any way for 
planning. It is not a planning number. It should not be used 
for planning. It is not appropriate to do that. And I believe 
in fact that number as the EPA's number of 10 is irrelevant 
because what is relevant are the numbers that will be developed 
by the planning authorities in each region determined 
discretely what the impacts are and how those impacts can best 
be mitigated in the time frames necessary.
    And I want to add to that that I think Commissioner LaFleur 
has mentioned, and I know that Commissioner Spitzer in his 
extended testimony has mentioned, you know, this flexibility 
that we need to put into the process. For example, the ISOs and 
RTOs have recommended a discrete safety valve that could be put 
in for particular locational plants that may have problems that 
are revealed in this planning process. We need some level of 
flexibility for those. But we do not need to, you know, stop 
these rules going forward. I think these rules are appropriate. 
These rules in fact do what needs to be done in this country, 
and that is, internalize the external costs that we have with 
respect to electricity, and once we start internalizing those 
costs, we will start giving the right market signals to 
consumers and the people who are consuming the energy, and 
those market signals can make us all more efficient and more 
prosperous and more economic.
    Mr. Rush. Well, Chairman Wellinghoff, I hear you saying 
that State or regional planning processes to identify future 
required infrastructure and resources are the appropriate 
vehicle for addressing EPA rules reliability impact. Give us a 
little bit more of the, say, intimate details. How will this 
process really work?
    Mr. Wellinghoff. Well, I think you will actually get some 
of the details from your next panel because there will be 
representatives from PJM. That is one of the planning 
authorities. There will also be representative from ERCOT, 
which is another planning authority, and they will describe for 
you how they go through their planning process, and in fact, 
they have a planning process that is either every year or every 
other year that looks forward on a 5-, 10- or 20-year basis, 
depending upon the--actually, it is a 10-, 15- or 20-year 
basis, depending upon the planning authority itself, and so 
they are very well equipped with discrete models that are 
specific to their region, that take data from all the resources 
in the region including the power plants, transmission lines 
and the demand-side resources and determine through that 
analysis on an ongoing rolling basis what is needed with 
respect to ensuring reliability in their particular regions. 
Now, we oversee that but it is not our job to do----
    Mr. Rush. My time----
    Mr. Wellinghoff [continuing]. Central planning. We don't 
think we should be in the business of central planning.
    Mr. Rush. Sorry for interrupting, but my time has come to a 
close. I have a question for all the commissioners. Are all of 
you aware or familiar with the recent bipartisan CRS report 
concluding that the primary impact of EPA's rules will 
primarily impact smaller, older, inefficient coal plants, many 
of which are uneconomic regardless of EPA's rules? Can you 
comment on the report's conclusion that the Nation has enough 
excess generation capacity that retirement of 45 gigawatts of 
capacity by 2014 will have little effect on reserve margins?
    Mr. Wellinghoff. I know, for example, Mr. Rush, in my 
State, Nevada, the Nevada utility has a 60 percent excess 
capacity above its reserve margin so they have huge amounts of 
excess capacity in my particular State, and as Congressman 
Waxman indicated, there is at least 100 gigawatts of excess 
capacity above the existing capacity. Plus if we look at the 
amount of new resources that we need to put in, even if it is 
80 megawatts, say, I think Commissioner Norris indicated in his 
testimony, in his full testimony, between 2002 and 2003 we put 
in over 200 gigawatts of new capacity in this country. So it is 
not unprecedented. It is something that has happened before and 
something that we certainly can take care of with respect to 
proper planning, proper analysis and review by the planning 
authorities.
    Mr. Rush. Anybody else?
    Mr. Moeller. Congressman Rush, I am familiar with both 
studies and their conclusions, but here is my concern from a 
reliability perspective. Smaller plants are typically dirtier 
and older but there are advantages in the system to smaller 
plants. They ramp up and down faster. They might be in 
locations where the voltage support is key, and I can go 
through a variety of other examples where where they are 
located can make a lot of difference, and that is why I think 
we need to dig down deeper into the impacts here because there 
will be a disproportionate number of smaller, older, dirtier 
plants affected but their role in the overall electric grid 
needs to be better analyzed.
    Mr. Spitzer. Congressman, the aggregate studies aren't 
helpful on the question of reliability. They have some merit in 
determining potentially wholesale power prices across the 
country and across the grid. But as my colleagues have all 
pointed out, location matters in electricity, and a substantial 
excess capacity in Nevada may not help the folks in Arizona, 
where I come from, if three coal plants that have issues 
disappear from the grid. So it is the local impacts that are 
serious, and that is why we are so interested in working with 
the local planning authorities because FERC doesn't have the 
authority with regard to demanding retirement or construction 
of plants, and it was expressively reserved away from us in 
EPACT 2005 Section 215. So we are more concerned with the local 
impact on reliability as opposed to some of these aggregate 
macro studies.
    Mr. Whitfield. Mr. Rush, your time is expired.
    At this time I will recognize the gentleman from Illinois, 
Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I am going to be 
quick. I have got tons I want to cover.
    First of all, I want to submit for the record the Wall 
Street Journal editorial that basically says calling for an EPA 
moratorium. The second line says ``immediately suspend the 
Environmental Protection Agency's bid to reorganize the U.S. 
electricity industry.''
    [The information follows:]


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    Actually, I would argue that some of you would like to do 
the same thing and impose a moratorium on EPA rules, at least 
until hiring and investment rebound for the extended period.
    We are in an economic crisis. We need jobs. Put the first 
slide up, please. For 1,000 gigawatts, these are the jobs in 
these industrial sectors. Five hundred jobs in the nuclear 
power industry, 220 jobs in the coal industry, 90 in the wind, 
60 in natural gas when we shutter these plants based upon these 
EPA rules, and I am going to argue, your negligence, we lose 
those jobs. And when these locations are in poor, rural 
southern Illinois, they are the primary tax base for local 
government. So you have a lot on your plate, and I think you 
all are being pretty negligent.
    You are the reliability folks based upon Section 215 of the 
power act, your own mission statement, your Office of Energy 
Reliability, recent actions that you have taken--put up the 
next slide. This isn't the fight against EPA's projections and 
your projections. These are the other industrial sectors that 
says these are the powers that are going to be offline if we 
allow these rules to go, and on average, you are at 60 
gigawatts of power, 60. EPA is at 10. They are doing the 
analysis of what the reliability and the production of the bulk 
generating plants. Just give me a break.
    Chairman, do you still believe as you were quoted, and I 
would like to submit this for the record, that we may never 
need any more coal or nuclear power in this country, that we 
can do this all on green and that will be our baseload 
production for the future?
    [The information follows:]


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    Mr. Wellinghoff. That particular statement in context was 
this: I believe that going forward, the resources that we have 
in this country include wind, solar, geothermal, natural gas--
--
    Mr. Shimkus. And your statement----
    Mr. Wellinghoff. Excuse me.
    Mr. Shimkus. Reclaiming my time, Chairman.
    Mr. Wellinghoff. I wasn't done. That was only half my 
answer.
    Mr. Shimkus. I know your statement.
    Mr. Wellinghoff. If that is all you want, that is fine.
    Mr. Shimkus. I understand who your loyalties lie to, and it 
is to the environmental left and it is to Harry Reid and this 
green agenda that can't produce the power needed for 
reliability and destroys all those jobs I just put up on the 
slide. Now, you were quoted as saying no more coal, no more 
nuclear. That is fine but you also have your own--your own 
staff said you can't have a one-to-one replacement. So that was 
the question of the chairman: Can you have a one--your own 
staff says you can't have a one-to-one replacement on power 
generation solely on green power.
    Now, let me go to the EPA.
    Mr. Rush. Mr. Chairman.
    Mr. Shimkus. Where I am really concerned on the negligence 
here is the EPA in their rule says in addition EPA itself has 
already begun reaching out to key stakeholders. You all are 
included in that. This is their rule. You are included. But you 
are saying, no, we are not going to determine this until after 
EPA promulgates these rules. Now, EPA is asking you to be 
involved. Actually, the rule says you, NERC, FERC, the public 
utility commissions, but your own testimony here, and 
especially Mr. Wellinghoff's, Mr. Norris's, Ms. LaFleur's says 
we are going to do it afterwards. Where does that leave us with 
after the fact on this debate on reliability? Do you reject 
that this is in the EPA in their rule?
    Mr. Wellinghoff. Mr. Congressman, with all due respect, my 
testimony is not that we are going to do it afterwards. My 
testimony is that----
    Mr. Shimkus. Your statement is that you are going to do it 
afterwards.
    Mr. Wellinghoff. No, it is not. My statement is that the 
planning authorities are doing it now. In fact, PJM was in my 
office the other day----
    Mr. Shimkus. I am not talking about planning. I am talking 
about you.
    Mr. Rush. Point of order, Mr. Chairman.
    Mr. Shimkus. What is the matter, Mr. Rush? Am I getting too 
close to home?
    Mr. Rush. No, point of order. You aren't allowing the 
witness to answer----
    Mr. Shimkus. I have got the questions.
    Mr. Rush. You are badgering the witness.
    Mr. Shimkus. I hope I get my time recovered, Mr. Chairman.
    Mr. Whitfield. You will.
    Mr. Rush. This is not within the established decorum of 
this subcommittee.
    Mr. Whitfield. Now listen, Mr. Rush. He has the opportunity 
to ask questions. He is asking questions.
    Mr. Rush. But he----
    Mr. Whitfield. Let me just say something else. You used the 
word ``jihadist'' in your opening statement.
    Mr. Rush. I only borrowed that term----
    Mr. Whitfield. And I tell you what, I think that is----
    Mr. Rush. I only borrowed that term from your side, Mr. 
Chairman. I only borrowed that term from my friend from 
southern Illinois who used it yesterday, and you----
    Mr. Whitfield. Who was that?
    Mr. Rush. He knows exactly who it is, my friend from 
southern Illinois.
    Mr. Shimkus. I would check the transcript, Mr. Rush.
    Mr. Rush. I heard you say it.
    Mr. Whitfield. Let me just say, these issues are quite 
contentious. We have very strong feelings about them. But we 
don't need to use----
    Mr. Rush. Just be courteous to the witness. That is I all I 
am saying.
    Mr. Whitfield. Let us not use these words ``jihadist'' any 
more on either side. Now, Mr. Shimkus has 30 seconds left so 
let him----
    Mr. Shimkus. I am glad we have kept the slide up here. For 
my friend from Chicago, those job statistics are per generation 
per 1,000 megawatts are those are the jobs that are going to be 
lost, and look at where coal and look at where natural gas is 
and look where wind is. And I would just ask this question. It 
is clear in your testimony provided here today in the materials 
provided by FERC detailing the meetings between EPA, FERC, DOE 
that the level of coordination suggested by EPA has not 
occurred. That is based upon your testimony and your documents. 
Why has this not happened? And Mr. Chairman, if I could ask 
each member of the Commission to answer that, I would 
appreciate it.
    Mr. Whitfield. Yes, go ahead and answer, please.
    Mr. Wellinghoff. Thank you. I believe the level of 
coordination that has occurred between our agency and EPA has 
been sufficient. I believe that we are continuing to coordinate 
with EPA and will do so to ensure that EPA can work with the 
planning authorities, provide them with the data that is 
necessary to have those planning authorities to take into 
account the EPA regulations and incorporate that into their 
final determinations to mitigate any impacts with respect to 
reliability.
    Mr. Moeller. Congressman, I believe there has been some 
informal discussions between the staffs and there have been a 
few meetings, one of which I was involved in between 
commissioners and EPA officials, but I have called for a more 
open process or transparent process so that we can get these 
issues in a higher spotlight.
    Mr. Spitzer. Mr. Chairman, Congressman Shimkus, I wasn't 
invited to the EPA meetings but I am of the strong believe that 
all five FERC commissioners are committed to reliability as is 
the case often----
    Mr. Shimkus. You weren't invited?
    Mr. Spitzer. Well, there were quorum issues and other 
reasons for that, and I was----
    Mr. Shimkus. So they only invited Democrat commissioners?
    Mr. Spitzer. I believe Commissioner Moeller was invited, 
and the chairman did advise me and notified me of these and has 
advised me of the progress of these, and all five FERC 
commissioners are committed to reliability. I would suggest to 
you five points. I will try to be quick running through them. 
Granularity--it is at the local level that these decisions are 
made. Power plant operators, State regulators who will follow 
us and FERC share responsibility for providing reliable power 
at reasonable prices to the ratepayers of the United States and 
it is that granularity that is essential, and FERC doesn't have 
the authority to mandate that a utility build a power plant nor 
does have FERC have the authority to require a utility to 
retrofit or retire a plant, and that was specifically decided 
by the Congress in 2005, and my friends who are going to 
testify next would be very angry in fact if FERC were to 
trespass on that authority.
    There are many variables. There are three plants in Arizona 
that are threatened with regional haze, which is not part of 
this suite of EPA regulations. It goes to a visibility issue 
over the Grand Canyon. And there are also economic issues apart 
from EPA. There are timing issues, and I try to discuss in my 
testimony the need for a safety valve to give more time. And 
then the fact that there are iterative processes. A one-time 
freeze frame doesn't do the job and the planning agencies look 
in some cases every year in some cases every 6 months. And then 
finally, I like all fuels, Mr. Chairman, members. I think there 
is room for all fuels. I would like to see fair and equitable 
rules so that market forces determine ultimately what power 
plants get constructed.
    Mr. Whitfield. We have gone 3 minutes over, so I am going 
to stop this and recognize Ms. Castor for 5 minutes of 
questions.
    Ms. Castor. Thank you, Mr. Chairman and Ranking Member 
Rush, and thank you to the witnesses for your testimony today.
    Opponents of EPA's public health rules raise questions over 
the potential for the retirements of the old, inefficient coal 
plants which I believe raises further questions about the 
electric industry's ability to address those retirements should 
they occur. First, several independent studies point to the 
current availability of excess generation capacity, what the 
chairman and Mr. Rush have discussed previously. The 
Congressional Research Service explained that there is a 
substantial amount of excess capacity, mostly from natural gas 
plants built during the last decade, and the Analysis Group 
also calculated that the electric sector is expected to have 
over 100 gigawatts of surplus generating capacity in 2013.
    Chairman Wellinghoff, you discussed this a little bit. Do 
you agree with these independent analyses that everyone should 
consider plant retirements and the existing excess capacity as 
we move forward?
    Mr. Wellinghoff. Well, certainly I agree that the planning 
authorities in considering the resource need for the future in 
those planning exercises need to look at not only potential 
retirements from the EPA regulations but also the amount of 
existing capacity that may be in excess in those particular 
regions as well as other resources that we are now depending 
upon including demand response, energy efficiency, distributed 
generation are all resources that are available within those 
planning regions, and in fact, resources that we require in our 
rules now, in our Order 890 and in our Order 1000 that the 
planning authorities consider in doing their overall 
assessments.
    Ms. Castor. I think you are right, because the focus in 
this resilient energy, the electric energy sector is not simply 
on what is happening with the retirement of old, inefficient 
coal plants. It is so much larger than that. In addition to 
building, monitoring the excess existing capacity, we can 
also--I think the sector can build additional capacity. The 
independent analysts also point to the electric industry's 
proven track record of quickly building new capacity when it is 
needed. For example, the Congressional Research Service noted 
that between 2000 and 2003, electric companies added over 200 
gigawatts of new capacity, and that is far more than anyone has 
suggested will be needed to offset any retirements resulting 
from EPA's rules, and as you mentioned, other options are 
demand response, energy efficiency measures that could lower 
the amount of generating capacity that the grid would need.
    Commissioner Wellinghoff, do you think that this resilient 
electric energy sector has the ability to respond to potential 
retirements by building new capacity? You mentioned reducing 
demand through energy efficiency and demand response but what 
do you think?
    Mr. Wellinghoff. It has the ability to respond in many 
ways, and that is ultimately why it is so important for us to 
get the market signals right, and that is why EPA is doing the 
right thing by getting the market signals right, by 
internalizing what are now external costs. If we can 
internalize those costs in the price, in the ultimate price, 
then we can find the lower-cost alternatives to compete and 
come into the market and make appropriate substitutes 
economically.
    Ms. Castor. Commissioner Norris, you indicated in you 
testimony that you have reviewed an array of studies and 
reports that analyze the potential impacts of EPA rules and 
steps that can be taken to cope with any retirements. What do 
you think? Do you believe that we have many options available--
excess capacity, energy efficiency, demand response--for the 
industry to respond to any retirements and maintain 
reliability?
    Mr. Norris. Yes, that is what I maintained in my testimony. 
I can't remember, I think it was Commissioner Spitzer that made 
the point, I think most of the studies indicate we will not 
have a resource adequacy problem across the country. There 
could be localized concerns, and that is why I maintain that we 
have tools to address those local concerns. But we have, and as 
you noted, the 2002-2003 data, the adding of 2,000 gigawatts of 
new capacity in this country was done in 3 years. That is 
double, more than double what the projected retirements might 
be.
    I think it is also important to note--in fact, I will give 
you this example. When I was chairman of the Iowa Public 
Service Commission, I believe it was 2007, it might have been 
2008, I voted to approve a generation certificate for a new 
coal plant but I rejected in the rationale for that argument 
that we should build this plant because it produced X amount of 
new jobs. Here is why I rejected it. If we take away jobs in 
old and inefficient plants, those jobs don't go away; they 
shift to more efficient production. That is not a bad thing for 
our economy. I am sensitive to the local concerns but the 
energy is still needed. It has just moved the jobs to generate 
that energy are done in a more efficient way and a more 
productive way for our economy.
    Ms. Castor. Thank you very much.
    Mr. Whitfield. I am going to just make one comment, Mr. 
Norris. This argument about, we have got new jobs over here, 
but for the people who lose their jobs, they are gone and it 
has the impact on them and their families. So somebody may be 
able to pick up a new job in one part of the country but these 
people lose their jobs.
    Mr. Norris. I am entirely sensitive to that, but most of 
these will be local reliability concerns, so it is my hope we 
can build new gas plants or build transmission at other 
facilities that help address the reliability concerns that may 
result from that. I am totally sensitive to people losing their 
jobs. Our economy changes a lot, that we shouldn't hold back 
efficiency.
    Mr. Whitfield. Ms. McMorris Rodgers, you are recognized for 
5 minutes.
    Mrs. McMorris Rodgers. Thank you, Mr. Chairman, and thank 
you, everyone, for your testimony and for being here today.
    I come from eastern Washington, the Pacific Northwest, 
where the majority of our baseload is reliable, renewable 
hydropower, and I recognize that a lot of the rest of the 
country does not have the hydropower facilities and relies 
heavily on traditional fuels such as coal for their baseload. I 
am concerned about the EPA regulations and the potential to 
eliminate 131 gigawatts of baseload power with the assumption 
that there will be a one-for-one replacement with renewable 
sources, and what we are trying to work on is amending the 
implementation timeframe for many of these EPA job-crushing 
regulations and give energy producers the ability to meet the 
achievable standards in a reasonable timeframe.
    What I would like to ask, where I would like to start is 
with Commissioner Moeller and Commissioner Spitzer. I think 
back to when I was first elected to Congress in 2004, and the 
cost of natural gas at that time, there was a concern that it 
was going to be going up in cost, and I would like to just ask, 
are there reliability concerns associated with becoming over-
dependent on natural gas to generate electricity and what are 
the advantages to having a diversified source of energy?
    Mr. Moeller. Thank you, Congresswoman. As Commissioner 
Spitzer said and as I said in my written testimony, I am fuel-
neutral. I think we need all fuels. I am a particular believer 
in hydropower, as you know. And we have to be concerned about 
becoming dependent on any source of fuel. The key is that 3 
years ago we wouldn't have been having this kind of discussion 
because natural gas prices were three times what they are now. 
They are down for two reasons. To some extent, economic output 
it down, but we have also had come on the system this 
incredible resource of domestic shale gas, and that has had 
worldwide implications, and if you look at the futures markets, 
which could be wrong, we are looking at a decade or so of 
moderate natural gas prices. Of course, that can change. But 
for this gas to take the place of coal in baseload generation, 
you are making the assumption that it will stay at a moderate 
price and we will also have to expand the pipeline network in 
this country. That is not done overnight. It can be done. I 
think our staff in the Office of Energy Projects does an 
excellent job of certificating projects in a safe manner but it 
takes time, and I think you will have utilities and other 
entities testify to that effect.
    Mr. Spitzer. Mr. Chairman, Congresswoman, natural gas is a 
wonderful success story for the ratepayers in the United States 
and it happened when the market signals sent price signals and 
new technology emerged, the horizontal drilling and the 
fracturing. That was a wonderful technological innovation. But 
we needed transmission to get the natural gas to the load 
centers, and FERC during my tenure has sited more miles of 
interstate natural gas pipelines than any time in the history 
of this country as well as natural gas storage facilities. So 
it was a combination of government working to put in 
infrastructure, steel in the ground, market signals and 
technology that created a great resource. I share your concern 
about overreliance on one particular fuel. I think we need all 
fuels, and obviously there is concern among those in the gas-
producing sector that there may be potential political or 
regulatory backlash towards their fuel but there is room for 
all fuels.
    A final point. The reason I am so concerned about the issue 
of forcing a generator to serve two masters, FERC's authority 
under Section 215 of the Federal Power Act to impose 
reliability penalties and potential EPA penalties. I share a 
trait in common with a former Member from your district who 
represented your district. For 25 years I was a tax lawyer 
representing taxpayer against the IRS, and there are some 
entities that are quite capable of conducting litigation 
against the federal government but for other entities it is a 
very daunting task, and it fills many with trepidation. And so 
I think for the reasons I stated in my testimony, it behooves 
both regulators to do everything they can to avoid creating 
this Hobson's choice where you will find yourself in violation 
of one rule or another. I am confident that we can do that.
    Mrs. McMorris Rodgers. Thank you. I have another question. 
Would the two of you describe some of the sunk transmission 
costs consumers are left paying when a power plant retires 
prematurely?
    Mr. Moeller. Some transmission costs would probably be 
determined on a very locationally specific matter but I think 
another concern would be that if again you have a smaller 
plant, say, between two larger towns that is needed for voltage 
support of the system, it doesn't put out a lot of energy but 
it puts the right amount of voltage support in, that would have 
to be replaced perhaps by more expensive and expansive 
transmission build-outs or another power plant in another 
place. That I think may even be a more significant cost than 
the sunk transmission costs.
    Mr. Spitzer. Mr. Chairman, Congresswoman, Congress has 
recognized the need for transmission and authorized FERC to 
pursue transmission aggressively in many forms, and that is 
certainly--steel in the ground is important but the 
hypothetical you allude to about potential sunk costs, I think 
highlights the need for granular and iterative analysis by the 
State commissioners, who you will hear from, from the planning 
authorities and from the generators who through various 
opportunities to retrofit or repower power plants can make 
economic decisions based upon market forces.
    Mr. Whitfield. At this time I will recognize the gentleman 
from Washington, Mr. Inslee, for 5 minutes.
    Mr. Inslee. Thank you. I am concerned about this GOP 
effort, not just for issues of public health but because I 
think it will adversely impact job creation in the United 
States, and this is a job-killing effort by the GOP and an 
effort to hang on to some old, inefficient economic activity 
rather than to create thousands of new jobs that would be 
associated with making our economy more efficient and more 
healthy, and I think the evidence is quite powerful in that 
regard.
    I would point to a study that our next witness, Dr. Susan 
Tierney, will talk about suggesting that between 2010 and 2015, 
capital investments in pollution controls and new generation 
will create an estimated 1.46 million jobs, or about 291,577 
year-round jobs on average for each of these 5 years. 
Transforming to a cleaner, modern fleet through retirement of 
older, less-efficient plants, installation of pollution 
controls and construction of new capacity will result in a net 
gain of over 4,254 operation and maintenance jobs across the 
eastern interconnection. The largest estimated job gains are in 
Illinois, 122,695; Virginia, 123,014; Tennessee, 113,138; North 
Carolina, 76,976; and Ohio, 76,240. Every single one of those 
jobs is at risk because of this wrongheaded, archaic, backward 
thinking of the GOP to think that we live in a static economy 
that doesn't create jobs when we go through transition, and 
this transition to a healthier United States is not just based 
on breathing or cardiovascular activity. It is based on job 
creation for thousands of new jobs. And this is an attack on 
jobs in my district, in my State. I will just mention some of 
them.
    In Moses Lake, Washington, we make the substrate for solar 
cells, the largest manufacturer in the western hemisphere in 
Moses Lake, Washington. This bill is an attack on those jobs. 
In Seattle, Washington, we are making efficiency improvements. 
In Spokane, we have a company called Itron that is making 
products for the smart grid that is more efficient so we don't 
waste as much electricity. This bill is an attack on those jobs 
because it allows the continued pollution that damages our 
health and retards the creation of thousands of new jobs in 
these new industrial sectors.
    So this bill is a job-killing job on a net basis. Yes, 
there is dislocation associated with any transition but we have 
got to understand that we have as many jobs to gain as we have 
to lose if we play our cards right, and some of these rules, as 
contentious as they are, recognize the value of new 
technologies. So I want to note, there seems to be some 
discussion that the only jobs that count are one coal plant in 
a Midwestern State. There are jobs all over the country that 
are at stake in this regard that will be lost if this bill 
becomes law and we stop the creation of all of these jobs.
    And by the way, it is not just in the high-tech field. In 
my State, we have steel workers, iron workers, carpenters, 
laborers and longshoremen in the production of these new jobs. 
Just look at one wind turbine that goes up, and we have had a 
huge expansion of wind power in the State of Washington. One 
wind turbine, we ship stuff in, a longshoreman has got a job. 
Driving it up to eastern Washington, a Teamster has a job. 
Putting it up, a laborer, a carpenter and an iron worker have a 
job. Stringing the wire to the wind turbine, an IBEW member has 
a job. Those jobs are at risk when we say that we are going to 
leave these old, dirty, polluting, unhealthy things at risk, 
and that is what is at risk and that is why I am opposed to 
this effort, besides the fact that we have got folks that want 
to be able to breathe.
    Now, that is much more of a statement than a question, but 
if any of our panel would like to comment or criticize that 
statement, I would be happy to allow them to do so. There are 
no takers, and thank you for your agreeing totally with my 
position.
    Mr. Whitfield. Thank you for that wonderful statement.
    Mr. McKinley, you are recognized for 5 minutes.
    Mr. McKinley. The Congressman sure left the door wide open. 
There are just so many things to go on in these 5 minutes. Let 
me just address that one issue that was just brought up. Gina 
McCarthy was here just last week on this panel, and that 
question was raised to her, that very study I think that he is 
referring to that talked about 1-1/2 new jobs for every $1 
million in environmental pollution controls put in effect, and 
she was asked about that, and she repudiated the study, said 
that was done independently and it doesn't wash. We used the 
example of a sawmill plant that was under the boiler MACT that 
it is going to cost them $6 million, and we asked her if she 
was going to create nine jobs, and she just laughed. She said 
that is the silliness of some of this, some of these reports 
that come out. They don't create new jobs; they destroy jobs.
    And as far as the IBEW, it is my understanding, I have got 
correspondence from them that they oppose a lot of these, even 
though it does create short-term construction jobs. They 
understand the long-term impact of higher utility bills, what 
it is going to do to the American economy if we do place all 
these and raise our utility bills. It is one of the things we 
have very effectively--we have powerhouses throughout West 
Virginia, very effective with AEP, First Energy. These are some 
of the leaders in the Nation in what they have done in 
producing very effective power.
    But my question back to the chairman, Mr. Wellinghoff, has 
to do with--it is my understanding--I am just 8 months into 
this job, and I saw the--it absolutely is accurate that there 
is a mindset here in Congress that I have come to understand 
attacking coal. Coal is the backbone of West Virginia, and it 
is crucial, but it wasn't until I came to Congress, Mr. 
Chairman, that I realized how much there was this attack on 
coal, and what I saw was the power plants were not shutting 
down. These powerhouses were not shutting down until the EPA 
started raising the regulations. They were meeting the 
standards currently but then when they raised the standards, 
these powerhouses said maybe they are going to shut down. There 
have been announcements of three to five plants in West 
Virginia that are going to shut down because of these 
regulations, but they were meeting the current standards until 
the new standard came into effect, and a new standard at a time 
when we have no jobs created whatsoever last month, 14 million 
people out of work. I think that is all that we are asking for, 
is this the time to be implementing new standards.
    So my question to you is, if it comes down to health 
issues, saving a person's health of saving a person's job, what 
would you recommend specifically?
    Mr. Wellinghoff. Thank you for that question, Congressman 
McKinley. It is my purview to recommend either. My purview is 
to recommend that we have a more efficient electric system and 
that markets in this country, I think we can rely on markets in 
this country to determine how that electric system should 
operate, and so what I advocate is that we do everything we can 
to make sure that those markets are structured properly and 
they are not jerry-rigged. If we can structure the market 
properly, that means we need to incorporate all the costs of a 
particular product in that market.
    Mr. McKinley. That is just about as evasive as all the 
other panels have been when I have asked those questions, but I 
appreciate it. It is not your responsibility but it something 
we face.
    I am not in the health industry; I am not in the coal 
industry. But the job that has been thrown to me is to try to 
make a decision. You hear the things that we are challenged 
with, the remarks earlier today that this is a jihad. That kind 
of incendiary language has no place in this. This is why 
America is rejecting the discourse here we have in Congress 
when those kinds of comments are getting made. I don't want us 
to be portrayed as being pro-pollution, that I am polluting the 
water, I am putting mercury in the water and the air, that I am 
trying to kill children. I want us to have an open dialog where 
we can have these kinds of discussion because that is the 
decision we have to make, not emotional but a scientific basis. 
I happen to be an engineer in Congress, and I hope we can use 
our science to make these decisions rather than emotion.
    Thank you very much for your testimony.
    Mr. Wellinghoff. Thank you.
    Mr. Whitfield. Thank you.
    At this time I recognize the gentleman from California, Mr. 
Waxman.
    Mr. Waxman. Thank you, Mr. Chairman, and I want to thank 
Mr. McKinley for his last comments. I fully agree with him and 
I look forward to working with him to reduce some of the 
rhetoric and see if we can work together.
    Chairman Wellinghoff, some members of the committee and 
several of the witnesses in their written testimony are citing 
the FERC's staff's informal assessment of the potential impacts 
of EPA rules as evidence that 81 gigawatts of coal generation 
is likely or very likely to retire. It is important for members 
to understand that the FERC staff is trying to do, how they did 
it, and the serious limitations of the informal assessment.
    The FERC staff who worked on this informal assessment 
briefed the committee staff. They told our staff that the 
informal assessment was intended as a back-of-the-envelope 
calculation to produce a ballpark estimate of potential 
retirement that could result from the EPA's rules. They said it 
was never intended as information for the FERC commissioners or 
to be relied on for decision-making.
    Chairman Wellinghoff, does this description match your 
understanding?
    Mr. Wellinghoff. It does, and I actually mentioned earlier 
that that number should in no way be used as a planning number. 
The planning determinations will be those that will be 
ultimately done by the planning authorities and so all the 
range of numbers that we have thrown out there and floating 
around out here are really irrelevant. What is really relevant 
is the actual work that each planning authority will do, and 
you will hear from a couple in the next panel. The actual work 
that the planning authorities will do and they do on an ongoing 
basis, it is not that they are going to start it all of a 
sudden because EPA has done this. They have been doing it for 
years and year and years. We have now put in place some rules 
that actually require them to incorporate into those planning 
activities considerations of things like federal and State 
regulations that in fact could impact their planning, and many 
of them have been doing it already despite our rules. We wanted 
to make sure that it was something that was actually being 
done. And so we have given them that tool and they are now--I 
expect fully that they will use it.
    Mr. Waxman. I appreciate your putting that in perspective. 
The FERC staff started this project in the summer of 2010 
before EPA had proposed or finalized certain rules so the FERC 
staff made assumptions about what the EPA rules would require.
    Chairman Wellinghoff, did these assumptions turn out to be 
accurate?
    Mr. Wellinghoff. No, they weren't accurate.
    Mr. Waxman. For example, FERC staff assumed that EPA would 
require closed-loop cooling systems under one rule but EPA's 
proposed rule did not require this approach. FERC staff 
explained how they actually did their assessment. They relied 
on publicly available information about existing coal plants. 
They came up with factors they thought could affect the cost of 
compliance at these plants and then assigned those factors 
subjective weights. For example, if a plant has no mercury 
controls, that was worth two-tenths of a point. If it was an 
anti-coal State, whatever that means, it got another tenth of a 
point. The FERC staff told our staff that this weighting was 
``completely arbitrary.'' Then the staff added up all of the 
weighted factors that applied to a plant and placed the plant 
in a category such as very likely or unlikely to retire. The 
total scores that would lead a plant to be placed in one of 
these categories was also just arbitrarily made up. This 
description isn't meant as a criticism. The staff was just 
trying to do a back-of-the-envelope estimate.
    Mr. Wellinghoff, is this your understanding how the FERC 
staff did their informal assessment?
    Mr. Wellinghoff. They did, and I do want to make clear, it 
had nothing to do with the level of competency of my staff. 
They used the information that they had at the time to do a 
very informal assessment to start discussions with the EPA so 
then EPA could be better informed about who they needed to talk 
to in more specificity, that is, the planning authorities with 
respect to the potential impacts of what they were doing.
    Mr. Waxman. The first time they did this assessment in July 
2010, the estimate was that 81 gigawatts of coal generation 
were likely or very likely to retire, but as the staff obtained 
more information about what EPA's rules actually required, 
later calculations produced lower estimates. In October 2010, 
the estimate was down to 72 gigawatts. By early 2011, the 
estimate had dropped to between 54 and 59 gigawatts of likely 
or very likely retirements. Isn't that right, Mr. Wellinghoff?
    Mr. Wellinghoff. That is correct. Actually, the February 
2011 range is 54 to 59 gigawatts. Again, these are----
    Mr. Waxman. Let me just, because I am running out of time. 
Even for these lower estimates, there was no estimated 
timeframe for retirements. FERC staff never examined how the 
industry could compensate for any retirements with new 
generation capacity, retrofits, demand response or energy 
efficiency measures. To make sure everyone is clear on this 
point, is the FERC staff informal assessment something that 
members of the committee or witnesses should be relying on or 
citing when assessing the potential impacts of EPA's rules?
    Mr. Wellinghoff. No.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    Mr. Whitfield. At this time I recognize the gentleman from 
Texas, Mr. Barton, for 5 minutes.
    Mr. Barton. Thank you. I was hoping in my absence, Mr. 
Chairman, that you all worked all this out.
    Mr. Whitfield. It has been very pleasant.
    Mr. Barton. There is still hope.
    My first question to the distinguished chairman of FERC is 
that several times in answer to questions, you have used the 
term ``irrelevant.'' Do you consider the FERC staff to be 
irrelevant?
    Mr. Wellinghoff. No, sir, I don't.
    Mr. Barton. Do you assume them to be honest, hardworking 
professionals who when asked to do something give it their best 
effort?
    Mr. Wellinghoff. Yes, sir, I do.
    Mr. Barton. OK. I agree with you, that to my knowledge the 
FERC staff is hardworking and very professional. In fact, I 
would say of all the agencies we deal with, the FERC staff is 
probably the least politically motivated or impacted. They tend 
to be very straightforward and professional, in my assessment, 
anyway. Are you aware that we have got a list of 14 different 
organizations that have looked at the impact of the EPA's rules 
on the power market and 12 of the 14 are basically in the 
general range of the FERC staff assessment? Are you aware of 
that?
    Mr. Wellinghoff. Yes, and again, I would indicate that 
those assessments are irrelevant as well, and I am not saying 
that there is----
    Mr. Barton. There is no assessment that is relevant?
    Mr. Wellinghoff. There is one, yes. The assessments that 
will be done by the individual planning authorities like ERCOT 
in your State, for example, PJM, the other RTOs and the 
planning authorities, those assessments that the planning 
authorities conduct are ones that in fact will be most informed 
at a local level based upon actual data with respect to actual 
specific resource requirements and resource needs and resource 
availability within those regions. Those are the critical----
    Mr. Barton. I would respectfully interrupt you, Mr. 
Chairman, and respectfully disagree with you that I think for 
whatever reason these groups that have looked at this issue are 
trying to give it their best estimate, if that is the right 
term, and I think they are relevant. I think it is odd, to be 
as mild as possible, that EPA consistently underestimates the 
impact of their rules, and, you know, I took probability in 
college, and I would say the probability is that EPA is going 
to be the most off in terms of realistically estimating what 
their impact is of all the groups because they have a bias 
against realistically evaluating their rules. And just in one 
of the rules that they proposed last year, their analysis, they 
admitted eventually was only off by a factor of 1,000, which is 
pretty off.
    I want to ask Mr. Moeller, Commissioner Moeller if you 
share the chairman's assessment about the irrelevancy of these 
estimates.
    Mr. Moeller. Well, I think the estimates are all 
informative but I probably share his opinion that what really 
matters is how they impact operations and reliability at the 
local level because of the specifics of load pockets and the 
physics of electricity flow, and I actually thought the FERC 
staff study was pretty good because it went into a lot of the 
variable factors. It was an estimate. It was done with what 
they knew at the time. Things have changed. But I commend our 
staff for what I thought was a very good document.
    Mr. Barton. I have only got about a minute. My last 
question, again, back to our distinguished chairman, you state 
in the letter that you think your organization lacks the data 
and the tools to fully assess the reliability impact of EPA 
regulation. What additional tools and data would you need, in 
your opinion, for the FERC to have that ability?
    Mr. Wellinghoff. Well, we would have to have the capability 
of the modeling that is done by all the regional planning 
authorities, and their modeling is extremely extensive with 
very sophisticated computer models and lots of computer 
equipment. PJM alone has 500 employees, I believe, and that is 
just one planning authority in and of itself. So again, we are 
not a central planner. We are not set up to be a central 
planner, and to do that would take a great deal of 
appropriations from this Congress that I don't think they 
really want to do.
    Mr. Barton. My time is expired, but is there any reason 
then that the FERC couldn't send a letter or make a request of 
the folks that have this modeling capability if you gave them 
the data sets that they couldn't do the modeling and report 
back to you? Is that allowed or not allowed?
    Mr. Wellinghoff. No, they have the data sets. We don't have 
it. They have it. They do the modeling already all the time, 
and you will hear from two of them. You will hear from ERCOT 
and PJM in your next panel.
    Mr. Barton. If the FERC staff under the direction of the 
Commission were to request certain models be run, then you have 
the authority to do that and they would have to comply. Is that 
correct?
    Mr. Wellinghoff. We could ask them to do modeling. That is 
correct.
    Mr. Barton. I have got some other questions. If I could 
have one non-related question. The former chairman of the FERC, 
Mr. Kelleher, called me this week, and the Department of Energy 
is floating an idea to give the delegate its authority under 
the Energy Policy Act to do transmission siting. Under current 
law, the DOE has to determine the corridor, but once the DOE 
determines that it is a high-priority, high-impact corridor, 
then the FERC can put together a plant to site transmission. 
There is a court case in Virginia that invalidated or at least 
called into question the ability of the Department of Energy to 
site these corridors, and the current Secretary is considering 
delegating his authority under the Energy Policy Act to the 
FERC. Do you have a position on that, Chairman?
    Mr. Wellinghoff. Yes, Mr. Barton. I think actually that 
would be an appropriate delegation. I think it would in fact 
make the current statute work more efficiently.
    Mr. Barton. Do all the commissioners share the chairman's 
position on that?
    Mr. Moeller. Congressman, I favor the proposal generally 
but I had a little bit of an issue with the dual siting track 
that was part of the details. So generally, yes, some of the 
specifics I don't fully----
    Mr. Barton. I will follow up with that.
    Thank you, Mr. Chairman, because I am the author of that 
section and I have been asked to take a position on it, and I 
see both sides of it, so I appreciate the information.
    Mr. Whitfield. Mr. Olson, you are recognized for 5 minutes.
    Mr. Olson. I thank the chair, and thanks to all the 
witnesses for coming today, for giving us your expertise and 
your time, and we are in the home stretch here, so I will get 
my 5 minutes done here.
    My first question is for you, Mr. Moeller, and this may be 
an understatement, but you seem to view FERC's role in 
addressing potential impacts of EPA regulations on electric 
reliability very differently from Mr. Wellinghoff and some of 
your colleagues at FERC. You note in your testimony that 
legislation clarifying the role of EPA and FERC in the event of 
a conflict over air policy electric reliability could be 
helpful, and my colleague, Mr. Shimkus, showed this graph which 
illustrates the disparity between EPA and all the other groups 
that are taking a look at the capacity loss resulting from 
EPA's power sector rules, and I know this is a small graph here 
but you all can see this little green line here, the very small 
one is what EPA's predictions are. FERC is right here, the 
first line. That is a big disparity.
    My question is, is there a conflict between FERC and EPA 
over any of EPA's new rules affecting the utility companies?
    Mr. Moeller. Well, Congressman, I haven't been involved all 
of the discussions. There have been staff discussions. Some of 
the individual commissioners have met with officials from EPA. 
I have had one such meeting, and I have called for a more open 
process so that we can discuss the ramifications from a 
reliability perspective of these rules because there are a 
number of them. The timelines differ. They will affect 
different markets differently. For instance, in a Texas market 
where it is a competitive market, the costs to, say, retrofit a 
plant cannot be passed on to ratepayers. They have to be 
absorbed by shareholders. In another area of the country that 
is vertically integrated, those costs can be passed on. That is 
going to make a difference as to the investment decision 
involved as to whether to keep a plant or not. I just think 
that the level of detail and the complexity of this Nation's 
electric system calls for a more open process to determine some 
of the ramifications of these rules.
    Mr. Olson. Thank you for that answer. I will just kind of 
follow up on that question, and this would be all for the 
commissioners. I posed this question to Mr. Joseph McClelland 
of FERC during his testimony here on May 31st on the grid 
reliability and infrastructure defense but he was unable to 
give me an accurate answer, so I will ask again, but I wanted 
to preface it but since that time I visited the power plant in 
the district I represent, the WA Parish plant there outside of 
Meadville, Texas. It is one of the largest power generation 
plants in the country, the largest one in Texas, obviously. It 
has four coal generating units, four natural gas generating 
units, and I was out there talking with them about some of the 
problems we could face in Texas in the future with this 
drought, it looks like another El Nino, La Nina effect and, you 
know, extended heat waves, and I talked to them about we have 
got the fastest growing population in America. I asked them if 
they have some plans to cover the generation capacity that they 
might have to cover, and they do say that they have kind of 
mothballed two plants there in Texas, two coal-burning plants, 
that they could bring up online in a couple of weeks if so 
needed. My question is, if FERC had to require or order a 
generating unit to operate for reliability purposes and doing 
so would result in the unit exceeding environmental permit 
level, would FERC indemnify the operator from any and all 
agency actions for private citizen lawsuit liability? 
Commissioner LaFleur, you are first, ma'am.
    Ms. LaFleur. I don't believe we would indemnify but I think 
that we would try to work out in advance with the other 
agencies to make sure that if we ordered a plant to operate 
that they would not face compliance violations, and I know 
there also have been legislative proposals, surgical proposals 
to remove individual liability to individuals for operating in 
response to a FERC order, and if there is a need for clarity, I 
would suppose those, but we would certainly try to work out 
that there was no compliance violation.
    Mr. Olson. Thank you.
    Commissioner Norris?
    Mr. Norris. I believe it is a situation Mr. Spitzer has 
addressed a couple times during the hearing here, and that is, 
it is an unfair situation to put a utility company where they 
have to abide by two different agencies' rules, FERC's and 
EPA's, and while I don't know if we can--we can't protect them 
from that agency suing them. I think there is some proposed 
legislation--I can't think of the name of it--to address that 
situation and I think it would be a positive outcome.
    Mr. Olson. Mr. Spitzer, I am sorry I didn't hear our 
testimony before, sir, but it sounds like, did Commissioner 
Norris give an accurate summary of your feelings?
    Mr. Spitzer. Yes, correct, Congressman. In my testimony, I 
discussed a safety valve proposal proposed by some of the 
entities including ERCOT, and we can supply you with this. It 
is comments they filed before EPA on May 3, 2011, that I would 
support that resolves this potential Hobson's choice of 
complying with--violating either an EPA rule or FERC 
reliability standard, and I suggest that proposal could solve 
that problem.
    Mr. Olson. Commissioner Moeller?
    Mr. Moeller. I agree. It is a problem, and I think if you 
talk to entities who had to face this situation in the past, 
they won't do it again because it is too risky having two 
agencies, choosing to violate one set of rules or the other.
    Mr. Olson. That was my experience with Parish. They are 
willing to do it but they won't do it if they can't be covered 
legally.
    And Mr. Chairman, I am sorry, last but certainly not least.
    Mr. Wellinghoff. Thank you, and I agree with the safety 
valve solution that Commissioner Spitzer discussed. I think 
that is a remedy that in fact would take care of the issue.
    Mr. Olson. Thank you, Mr. Chairman.
    Mr. Whitfield. Mr. Terry, you are recognized for 5 minutes.
    Mr. Terry. Thank you, Mr. Chairman.
    To start off, I have three documents I would like to enter 
into the record.
    Mr. Whitfield. Without objection.
    Mr. Terry. The first is a letter from our Governor to 
Administrator Jackson expressing his concerns with the number 
and substance of the regulations. The second is an article from 
the Grand Island Independent discussing the now-expected 
closure of the Grand Island coal-fired plant as a result of 
CSAPR. And the last is an article from the Lincoln Journal Star 
that just ran yesterday regarding the same issue. Thank you, 
Mr. Chairman.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Terry. It is interesting, I know that this issue has 
been beat to death, but just as a comment, I thought one of 
FERC's responsibilities was gathering data and providing models 
so that entities could make the right decisions, that FERC 
could make the right decisions, so learning that that is--you 
don't have the data or you don't have the modeling techniques, 
and I am kind of confused why you have 120 employees in a sub-
agency or sub-department called modeling. So Mr. Chairman, I 
think we have an area that we can save money. We should provide 
that information to the chairman who is part of the super 
committee. I don't think those 120 employees--I don't know what 
they do but they obviously aren't doing what the title says, so 
we could probably save money by eliminating that.
    Next, getting back to the issue of the news stories and our 
State Attorney General, who hosted a regional event based on 
the CSAPR rule, this newest version certainly is more stringent 
than the proposed rule, the Clean Air Transport Rule, so as 
CSAPR becomes effective in 3-1/2 months--and this is for Mr. 
Wellinghoff and Mr. Moeller, and we will let Mr. Wellinghoff, 
the chairman, be first. As CSAPR becomes effective in just 3-1/
2 months, are you concerned that States like Nebraska may not 
have enough time to adequately prepare for CSAPR's substantial 
increased requirements?
    Mr. Wellinghoff. Congressman Terry, thank you. I would 
first clarify your previous discussion. We don't have any 
division called modeling so I am not sure where you are getting 
that information from.
    But with respect to the CSAPR rule, I believe again that 
the planning authority that would encompass Nebraska and the 
State commissioners in Nebraska as well ultimately would have 
full authority and ability with respect to their modeling 
capabilities and their resource planning capabilities to plan 
for these contingencies.
    Mr. Terry. You are right, and I should have said the title 
of it correctly but I think the one that we can eliminate is 
the Office of Electric Reliability.
    Mr. Moeller. Congressman, to answer your question, yes, I 
am concerned because of the timeline of CSAPR and I think you 
will hear an articulate description of Texas's concerned from 
the ERCOT representative on the next panel.
    Mr. Terry. Thank you.
    Now, hearing those answers then, would it be justified in 
your opinion to delay the implementation of this rule so the 
States and entities can have a better grasp of its impact, Mr. 
Wellinghoff?
    Mr. Wellinghoff. I do not believe it to be appropriate to 
delay the rule.
    Mr. Moeller. I frankly don't know the implications enough 
to know where it is worth delaying or not but I know I would 
like to be a lot more comfortable about the reliability 
implications of it.
    Mr. Terry. Thank you.
    Mr. Whitfield. Thank you.
    At this time I recognize the gentleman, Mr. Gardner from 
Colorado, for 5 minutes.
    Mr. Gardner. Thank you, Mr. Chairman, and thank you for 
joining us today.
    Commissioner Norris, you stated in your testimony that you 
believe, and this is a quote, you believe that the ``EPA had 
adequately addressed reliability concerns.'' You base this 
conclusion not on FERC's own analysis but various studies, in 
your words, ``numerous studies by multiple entities that 
attempt to assess the reliability impact of EPA's proposed and 
final regulations.'' You have talked about those and you claim 
that you found those publicly available assessments and 
analyses the most informative for reaching your conclusions. 
Specifically, you cite in your testimony reports done by, 
amongst other, the Bipartisan Policy Center, M.J. Bradley and 
Associates.
    Mr. Norris, I don't think any of those organizations work 
for FERC or work within FERC but yet you are relying upon them 
and you are statutorily tasked with the responsibility of 
ensuring the reliability of the bulk power system. Do you 
believe, do you agree with members of this committee that 
perhaps FERC should be--that we should be concerned that a 
commissioner of FERC, the agency that has a prominent role in 
assuring reliability of the grid, is basing conclusions with 
respect to EPA's power sector rules on reports completed not by 
FERC but by outside interest groups with zero accountability to 
FERC or the American people?
    Mr. Norris. Let me start with saying I think those reports, 
they told us some consistent feedback on the situation. One is 
that there is not likely to be a resource adequacy problem 
nationwide. We have supplies or we can build supplies or build 
generation in time to address the overall generation needs of 
this country. I think that is consistent throughout all those 
reports. I think there are a lot of very knowledgeable folks of 
our electric system that work on those reports and provide 
information that I found valuable. I like to seek outside input 
when I come to a conclusion, and I did extensive research and 
reading multiple reports. I point at those as the most 
informative, and I think they represent a cross-section. There 
are differences in those reports but the consistent theme I saw 
in them was, we can meet our Nation's electric supply needs 
under the many different scenarios run.
    Secondly, the other consistent thing in that report as I 
stated earlier is the natural gas impact is having on the 
marketplace in general in terms of retiring old, inefficient 
plants. So, yes, I rely on those reports and I will continue to 
rely on those and other knowledgeable reports and how the 
proposed EPA rules may impact our system.
    Mr. Gardner. Do you think it is wise to rely on outside 
reports so heavily, though?
    Mr. Norris. Well, I probably erred in not putting our own 
report in there because I read that extensively as well. Yes.
    Mr. Gardner. And a question based on Ms. LaFleur's 
testimony. She stated in her second paragraph, third paragraph 
of her opening statement, ``Although not all these regulations 
are final, I believe it is important to consider them as a 
package when assessing their potential effect on reliability,'' 
talking about the effect of the rules together. There has been 
legislation introduced in Congress that talks about the effect 
of EPA regulations on energy costs and prices. Do you think 
that those ought to be looked at together as well in addition 
to reliability, what it does for cost? And Mr. Moeller, I will 
start with you.
    Mr. Moeller. Well, it is kind of society's choice as to the 
costs of health regulations versus the increases in electricity 
prices, but I think most studies would indicate that prices are 
going to rise and there is a variety of studies as to how much 
they will rise in different areas, depending on how dependent 
they are on certain fuels, particularly coals, but----
    Mr. Gardner. Do we have a mechanism to look at the costs 
cumulatively, as Ms. LaFleur says, on reliability, just as we 
do on reliability that she is suggesting that we do?
    Mr. Moeller. Yes.
    Mr. Gardner. Mr. Spitzer?
    Mr. Spitzer. Mr. Chairman, Congressman, my view, and this 
goes back to my serve in the State legislature and at the State 
commissioner and now at FERC, is government is about balancing 
competing interests, and you have air quality, health issues 
balanced against the costs and the Congress doubtless considers 
that as does EPA, as do the State commissions. In the narrow 
issue of reliability, that is why the aggregate numbers 
certainly have an impact on wholesale power prices but there 
are many other variables with wholesale power. The natural gas 
revolution that I discussed earlier, concern over nuclear power 
in the wake of Fukushima may have an impact on our fuel supply.
    Mr. Gardner. Should we, though, have a system in place that 
takes a look at the cost of regulations comprehensively, 
cumulatively as they are added to our energy sector?
    Mr. Spitzer. I hope this is not gratuitous, but I think 
government at all levels has an obligation to continually 
revisit the circumstances which change over time. FERC has a 
serious mission and all five of us are very serious about the 
authority granted by Congress in 2005 in Section 215 of the 
Federal Power Act, which is why we are so zealous with regard 
to our space in terms of the reliability.
    Mr. Gardner. Ms. LaFleur, would you take that same approach 
that you take on reliability to the cost that regulations have 
on energy production?
    Ms. LaFleur. Well, the point of my comment, I think, was 
that the only way to really assess reliability is at the local 
level. You know, my former Massachusetts fellow citizen in this 
body, Tip O'Neill, said all politics is local. I would say all 
reliability is local. So in order for a plant to decide whether 
to stay open, they can't just look at MACT, they have to look 
at the transport rule and they have to look at the cost of 
retrofitting totally. I think that for a plant deciding whether 
to stay open, they should look at all the costs, whether some 
kind of macroanalysis of all the costs would be meaningful 
across the country, I think you would get the same kind of 
modeling issues that we have for all the macroanalyses that go 
from, you know, 30 to 80 of how many retirements there would be 
because the costs will depend on what decisions people make how 
to comply. So I am not sure I think a big macro cost number is 
going to be meaningful but I think the individual units have to 
look at the costs.
    Mr. Whitfield. The gentleman's time has expired. I 
recognize Mr. Markey for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman.
    Mr. Chairman, thank you all for being here. How many of you 
believe that the threat of a cyber attack on the electric grid 
is the top threat to electric reliability in our country? Is 
that your belief, Mr. Wellinghoff?
    Mr. Wellinghoff. I certainly believe that both cyber and 
physical security are major issues that we need to be concerned 
with respect to maintaining our electric grid.
    Mr. Markey. Is it at the top of your list of concerns?
    Mr. Wellinghoff. Yes.
    Mr. Markey. Are there any on the panel that do not have 
that at the top of their list of concerns? No. So you all have 
that.
    Well, I agree with you, and last year this committee 
unanimously passed the GRID Act, which was co-authored by 
myself and Mr. Upton, and that bill gave the FERC the authority 
to quickly issue grid security orders or rules if 
vulnerabilities have not been adequately addressed through 
existing reliability standards or other industry efforts. Do 
you believe that giving FERC this authority would increase 
America's ability to appropriately respond to threats and 
vulnerabilities facing our electric grid, Mr. Chairman?
    Mr. Wellinghoff. Yes, I do, Mr. Markey.
    Mr. Markey. Yes or no, each member.
    Mr. Moeller. I have come around to support FERC having more 
authority.
    Mr. Markey. Thank you.
    Yes?
    Mr. Spitzer. Yes, Congressman.
    Mr. Norris. Yes. I would give you a little bit more if you 
would take it.
    Mr. Markey. Very briefly.
    Mr. Norris. OK. That is because the cyber attacks have 
orders of magnitude on reliability. It can wipe out a whole 
interconnect. We are talking about in this situation very 
localized reliability situations that we currently have the 
tools to deal with but we need the tool you are talking about 
to deal with cybersecurity.
    Mr. Markey. And the FERC needs that authority. Do you all 
agree with that?
    Mr. Wellinghoff. Yes.
    Mr. Markey. OK, yes.
    Ms. LaFleur. Yes, I do.
    Mr. Markey. Based on what industry has done thus far, do 
you think that industry is likely to quick move, Mr. Chairman, 
to take all necessary steps to secure itself if FERC is not 
given the authority contained in last year's GRID Act?
    Mr. Wellinghoff. Well, just to be a little fair to 
industry, they are setting up a group called the Transmission 
Forum and they are trying to move, but I don't know how quickly 
they are going to be able to move independently on their own 
with a voluntary group.
    Mr. Markey. Do you think that the FERC has to have this 
authority in order to make sure that the voluntary becomes 
real? They can work together but in the absence of FERC having 
that capacity to mandate a solution, do you think it will 
happen?
    Mr. Wellinghoff. Yes, they can work together but I do think 
FERC should have this authority.
    Mr. Markey. Do you all agree with that? OK. Well, that is 
very important for us to hear because ultimately it is just not 
enough in the absence of the FERC having that authority.
    Is there a reason to believe that we will be able to solve 
this problem in the absence of legislation passing, Mr. 
Wellinghoff?
    Mr. Wellinghoff. I don't see a solution in the absence of 
legislation.
    Mr. Markey. That is very, very helpful to us, so let us 
just hope that this year we can pass that legislation and then 
get it passed through the Senate as well, giving that 
authority.
    Now, the argument here today is that we have some kind of 
tension here between the air quality and air conditioning, and 
we have to pick one or the other in our country, but let us 
focus here on the fact that there are already 13 States--
Connecticut, New Jersey, Delaware, Illinois, Massachusetts, 
Maryland, Michigan, Minnesota, Montana, New York, Oregon, Utah 
and Wisconsin--who have already required their coal-fired 
plants to remove as much or more of their mercury emissions as 
has been proposed at the federal level by the EPA and about 70 
percent of coal-fired boilers that submitted data to EPA 
already meet the standards for particulate matter and 
hydrochloric acid. So it seems that this is possible. In fact, 
one example, Illinois receives 46 percent of its electricity 
from its 31 coal-fired power plants and has also reduced its 
mercury emissions by 90 percent, a level more stringent than 
EPA's proposal.
    Chairman Wellinghoff, have there been any reliability 
problems in Illinois due to their efforts to take the poison 
out of the air?
    Mr. Wellinghoff. To my knowledge, there have not been, and 
I assume that is because the planning authority that 
encompasses Illinois has taken this into account when they have 
done planning.
    Mr. Markey. Thank you. Now, Massachusetts required an 85 
percent reduction in mercury emissions in 2008, a level that is 
also more stringent than EPA's proposal. Were utilities in 
Massachusetts able to keep the lights on even thought this 
standard was being met, Commissioner LaFleur?
    Ms. LaFleur. Yes, they were, and there is an example in 
Massachusetts of a plant that they are planning to close right 
now through gradual planning and transmission reinforcement 
just a kind of replacement for old plants that we are talking 
about.
    Mr. Markey. The technology is there----
    Ms. LaFleur. Yes.
    Mr. Markey [continuing]. In an affordable way. Health gets 
protected. Air conditioning gets protected. All we have here 
are a certain small number of utilities that are in a sit-down 
strike against technological progress. We should just continue 
to keep that in mind.
    Thank you, Mr. Chairman.
    Mr. Whitfield. At this time I recognize the gentleman, Mr. 
Walden from Oregon.
    Mr. Walden. Thank you very much, Mr. Chairman. I want to 
follow up on what my colleague and friend from Massachusetts 
was talking about because he referenced Oregon, and in the case 
of the lone coal plant in Oregon, the cost to ratepayers was 
going to be roughly $520 million, so instead they are closing 
down that plant over a 10-year frame and will replace it with 
either two natural gas plants or some other alternative. So 
when they were trying to address the SOx, NOx, and mercury 
issues, the cost to ratepayers was so high to meet these 
requirements that instead they are going to close that plant, 
which really raises the question about reliability. And Section 
215 of the Federal Power Act permits FERC to direct NERC to 
conduct periodic assessments of the reliability and adequacy of 
the bulk power system in North America.
    And I think what we are trying to get at here, at least I 
am, is just as we make policy and watch policy being made, do 
we have a good basis of information upon which to make our 
decisions, and it strikes me that in the EPA's own rule on 
whatever page this is, 25,054, it says it is EPA's 
understanding that FERC and DOE will work with entities whose 
responsibility it is to ensure an affordable, reliable supply 
of electricity including State PUCs, RTOs, the NERC to share 
information and encourage them to begin planning for compliance 
and reliability as early as possible this effort to identify 
and respond to any projected local and regional reliability 
concerns will inform decisions about the timing of the 
retirements and other compliance strategies to ensure energy 
reliability, which is what we all want.
    Now, Mr. Wellinghoff, so in this initial look at the 
potential retirement of coal-fired generation, its effect on 
system reliability preliminary results, it talks in here on 
page 29 of this handout, which I am sure you are familiar with, 
that the industry must be directed to openly assess the 
reliability and adequacy impacts of retirement of at-risk 
units. Such studies should include frequently response, voltage 
profile, bulk power loading, stability loss, load probability 
calculations, deliverability of resources through planning 
studies.
    My question is, given what Mr. Barton just asked about 
whether FERC had the authority to request the information it 
needs and wants from the regional transmission organizations, 
in fact, in the FERC staff presentation, which I think you 
referred to as irrelevant, there is this slide I just 
referenced which talks specifically about this information. 
Have you solicited that information?
    Mr. Wellinghoff. I want to make very clear that I didn't 
suggest, Congressman, that the FERC staff presentation was 
irrelevant. What I said was irrelevant was the 80-gigawatt 
number would be irrelevant for planning purposes. Let us make 
it very clear. For planning purposes, what that number is again 
is a back-of-the-envelope number for the purpose of starting a 
dialog with EPA as to how EPA can interact with the planning 
authorities and those planning authorities can ultimately 
continue to do the work that they have done and will continue 
to do to ensure that we have a reliable system in the country.
    With respect to all those parameters that you referenced in 
that particular presentation, those planning authorities in 
fact have been directed by FERC to engage in those activities 
under Order 890 and under Order 1000. So we specifically with 
respect to those orders ensure that the planning authorities--
--
    Mr. Walden. Related to those EPA rules specifically?
    Mr. Wellinghoff. Yes. In fact, in Order 1000, we very 
specifically say that they must consider both federal and State 
public policies which would include the EPA rules. So yes, we 
absolutely have done that in Order 1000.
    Mr. Walden. So you have asked for information, all these 
points related to these rules?
    Mr. Wellinghoff. We haven't asked for information. We have 
directed them to in fact incorporate that information into 
their planning processes to ultimately conduct their planning 
processes that in fact when they conduct those planning 
processes take account for things like the EPA rules.
    Mr. Walden. Right. So let me try and understand this. So I 
would think FERC would play a more direct role in this.
    Mr. Wellinghoff. We don't do central planning, and we don't 
do planning. It is not our function. You haven't given us that 
function. We are not planners. The planners are----
    Mr. Walden. So----
    Mr. Wellinghoff [continuing]. The specific regional 
planning authorities----
    Mr. Walden. So what was the purpose of this preliminary 
report?
    Mr. Wellinghoff. The purpose of the preliminary report was 
to start the dialog with EPA with respect to informing them of 
the planning activities that the planners conduct and ensure 
that the planning activity was one that could be well informed 
by----
    Mr. Walden. So what has happened----
    Mr. Wellinghoff [continuing]. The EPA rules.
    Mr. Walden [continuing]. Since then?
    Mr. Wellinghoff. What has happened since----
    Mr. Walden. Why would----
    Mr. Wellinghoff. We are continuing the dialog with EPA. 
What has happened is that we are directing EPA to in fact 
interface directly with the planning authorities like PJM, like 
ERCOT and others, and to provide them all the data that EPA has 
to help those planning authorities have an adequate handle on 
what they need to do to do their job to ensure reliability in 
this country.
    Mr. Walden. But I thought your testimony said you basically 
stopped that effort in May.
    Mr. Wellinghoff. We haven't stopped the effort of talking 
to EPA, no.
    Mr. Walden. All right. My time has expired, Mr. Chairman.
    Mr. Whitfield. I think everyone has had the opportunity to 
ask questions, and I want to thank the commissioners for taking 
time to be with us this morning. I know it has been a rather 
lengthy session, and the next time you come we will try to be a 
little more----
    Mr. Rush. Mr. Chairman?
    Mr. Whitfield. Yes.
    Mr. Rush. Mr. Chairman, it seems to me that, and I wanted 
to say this in the presence of the commissioners here, that 
this subcommittee should hold a hearing on the Cross-State Air 
Pollution Rule specifically. We have not done so yet, and I 
believe that the conversation that we have heard today really 
merits such a hearing and I would just ask on the record that 
we do conduct a hearing on the Cross-State Air Pollution Rule.
    Mr. Whitfield. Well, thank you very much.
    Mr. Walden. Mr. Chairman?
    Mr. Whitfield. Yes?
    Mr. Walden. Can I just--because I have got a conflict going 
on here on an answer. Can I ask just----
    Mr. Whitfield. Sure.
    Mr. Walden. Mr. Wellinghoff, in your submission back to the 
subcommittee on a question that was asked about continuing 
communications, your answer, and I am quoting here, is ``Other 
than the discussion between Assistant Administrator McCarthy 
and I on August 26th, which was described in supplemental 
responses to the committee's May 9th information request, 
communications between FERC staff and EPA staff have not been 
ongoing.'' That is your answer to our question. Now, that is--
--
    Mr. Wellinghoff. Not ongoing, that is true, but that 
doesn't mean they are not continuing. I mean----
    Mr. Walden. Oh, I have to get a Webster's out.
    Mr. Wellinghoff. Since that period of time that we 
discussed there, there was no--nothing happened there in that 
particular period of time. I had a conversation with Lisa 
Jackson yesterday. I mean, we continue to have discussions all 
the time.
    Mr. Walden. OK. So I have to look up ongoing versus 
continuing. I am confused. I understand based on your written 
answer here that the staff have not been going, conversations 
have not been ongoing, communication between FERC staff and EPA 
staff have not been ongoing is your written response here.
    Mr. Wellinghoff. Congressman, perhaps that was a poor 
choice of words. It meant during that--in that interim period 
of time, there were no other meetings. That is simply all that 
meant.
    Mr. Whitfield. I am also going to enter into the record 
without any objections a statement from the North American 
Electric Reliability Corporation who wanted to testify but they 
were unable to do so, so they submitted their testimony for the 
record.
    [The information follows:]


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    Mr. Whitfield. And once again, thank you all very much for 
being with us. It is also a great privilege to have the entire 
Commission here, and we look forward to continued dialog with 
you as we move forward, so thank you.
    At this time I would like to call up the second panel, The 
Honorable Jeff Davis, who is the Commissioner of the Missouri 
Public Service Commission; the Honorable Stan Wise, who is 
Commissioner of the Georgia Public Service Commission; the 
Honorable Jon McKinney, Commissioner of West Virginia Public 
Service Commission; and Mr. H.B. Doggett, the President and CEO 
of Electric Reliability Council of Texas; and then the 
Honorable Mark Shurtleff, Attorney General of Utah; Mr. John 
Hanger, President and CEO of Hanger Consulting; and Ms. Sue 
Tierney, Managing Principal of the Analysis Group. So if you 
all would take a seat.
    Well, thank you all for joining us this morning, and we 
appreciate your patience. So I am going to call on each one of 
you to give an opening statement. You will have 5 minutes to do 
that, and Mr. Davis, we will recognize you first for your 
opening statement.

STATEMENTS OF JEFF DAVIS, COMMISSIONER, MISSOURI PUBLIC SERVICE 
    COMMISSION; STAN WISE, CHAIRMAN, GEORGIA PUBLIC SERVICE 
COMMISSION; JON W. MCKINNEY, COMMISSIONER, WEST VIRGINIA PUBLIC 
  SERVICE COMMISSION; MARK L. SHURTLEFF, ATTORNEY GENERAL OF 
  UTAH; H.B. DOGGETT, PRESIDENT AND CEO, ELECTRIC RELIABILITY 
    COUNCIL OF TEXAS; SUSAN F. TIERNEY, MANAGING PRINCIPAL, 
ANALYSIS GROUP; AND JOHN HANGER, PRESIDENT, HANGER CONSULTING, 
                              LLC

                    STATEMENT OF JEFF DAVIS

    Mr. Davis. Chairman Whitfield, Ranking Member Rush and 
members of the committee, thank you for allowing me this 
opportunity to testify here today. As a Missouri Public Service 
Commissioner, I am acutely aware of the potential impacts of 
EPA's pending regulations because it is my job to set the rates 
on customer bills, and I applaud this committee for reviewing 
the impacts those regulations are going to have on our citizens 
and on our Nation's economy.
    To summarize my testimony, I feel like my ratepayers are 
being attacked. Can we keep the lights on? Sure, we will do 
whatever it takes. That being said, it won't be easy. Nobody 
knew there was a problem in Arizona or southern California last 
week until 1.5 million Americans were left in the dark. 
Reliability is definitely going to be impacted because less 
generation equals less reliability.
    Also, replacing these old coal-fired units will cost more 
money. They will drive up rates because natural gas plants are 
still more expensive to operate than coal. Sure, we have got 
better than 20 percent reserve margins in both the Southwestern 
Power Pool and MISO footprint but the law of supply and demand 
says decreased supply increases price and the cumulative effect 
of these regulations will be to significantly reduce those 
reserve margins, the capacity, over the next decade by forcing 
the closure of many coal plants that are smaller than 300 
megawatts as well as a significant number of those coal plants 
between 300 and 500 megawatts of capacity.
    To put this in perspective, in Missouri, I have almost 
600,000 households, 1.5 million people approximately that make 
less $25,000 per year. That is according to the U.S. Census 
statistical abstract. I depend on these old coal plants to 
generate electricity almost every day for more than 2 million 
households. Why? Because they are still cheaper to operate and 
cheaper to dispatch than natural gas plants. Replacing them 
with renewables creates more of a reliability problem, and 
replacing them with gas will undoubtedly lead us back to the 
gas affordability crisis that we faced two or three times in 
the last decade.
    I submit to you that if you want the price of natural gas 
to go back up, all we have to do is have our utilities plan and 
build resources based on the premise that natural gas will be 
cheap and plentiful for the next 10, 20 or 30 years, and that 
is where we are headed.
    From a transmission perspective, by forcing the closure of 
a coal plant or small clusters of coal plants, these 
regulations are going to create pockets on the grid that have 
an increased risk of reliability issues because the grid was 
designed and built on the premise that those plants are going 
to be there providing voltage support to satisfy local load 
requirements throughout the country. I haven't plotted out 
where these plants are on a map but I can assure you that the 
absence of these plants will change the flow of power on the 
grid and create reliability issues in some areas.
    Turning to the actual effect of the EPA regulations on my 
State, these costs are going to be a significant burden. We all 
like clean air but the people I have need jobs. For example, 
the scrubbers used to remove particulates and gases cost 
anywhere between $250 million to $300 million per unit. We just 
spent $528.1 million to retrofit one coal plant to put 
scrubbers on. EPA has got more than a dozen regulations that 
are currently working their way through the pipeline. When you 
figure a 10 percent return on that investment, gross that 
number up for taxes and amortize the costs over 30 years, it is 
ultimately going to cost my ratepayers approximately $1 
billion. If you assume that utility has 1.2 million customers 
and divide the costs out on a per-customer basis, you are 
looking at close to $1,000 per customer over the next 30 years. 
It is that cost to a residential consumer as well as the impact 
it will have on small business and industry that I am concerned 
about.
    In Missouri this year already, we have an estimated 26 
heat-related deaths this year. Eighteen are still pending a 
final determination. In some cases and in certainly past cases, 
there was evidence that those customers actually had 
functioning air conditioners, they just weren't using them 
because in all likelihood they were afraid they couldn't pay 
their bills.
    In all honesty and in conclusion, I am just not sure how 
much more of this help my ratepayers can afford.
    [The prepared statement of Mr. Davis follows:]


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    Mr. Whitfield. Thank you, Mr. Davis.
    Mr. Wise, you are recognized for 5 minutes.

                     STATEMENT OF STAN WISE

    Mr. Wise. Thank you, Mr. Chairman. Thank you, Ranking 
Member Rush. My name is Stan Wise. I am a publicly elected 
commissioner of the Georgia Public Service Commission, and I 
currently serve as its chairman.
    As a utility regulator, I am responsible for ensuring that 
retail electricity customers in Georgia receive reasonably 
priced and reliable electric service, and like the rest of the 
United States economy, the economy of Georgia has suffered and 
our unemployment rates are above the national average. I worry 
that the cost and the reliability impacts of the new 
environmental rules will only further slow our recovery and 
cost jobs.
    During most of the last 10 years, Georgia was growing and 
we added 1.5 million new residents. Electricity generation 
increased by 40 percent and job growth increased by 140,000. At 
the same time, Georgia has been active in addressing power 
plant emissions with significant reductions including mercury 
through the State rules with reasonable compliance schedules. 
The cost of these emission reductions are already borne by the 
citizens of the State of Georgia. Customers of Georgia Power 
see an environmental line item on their bills currently 
averaging over $7 a month for household customers.
    My two principal concerns with this fleet of new 
regulations are this. First, I am concerned that there have 
been no comprehensive studies by the EPA to assess the impact 
of all of these rules on the price of electricity, on jobs, on 
the reliability of supply and the overall economy in our State. 
EPA only evaluates each rule in isolation, that is, the impact 
of one rule independent of all other regulatory actions. This 
is a very real issue for me because my Commission and Georgia 
utilities must consider the effect of all regulations in 
deciding how to comply cost-effectively while maintaining 
reliability. The EPA has not looked at these regulations in a 
comprehensive manner. Independent groups have examined the 
rules and they report double-digit increases in electricity 
rates over the next 10 years, job losses in the Southeast in 
the hundreds of thousands, and single-digit reserve margins. To 
me, the EPA's approach in analyzing the impact of these rules 
appears to be shortsighted and simplistic. It just doesn't make 
sense.
    My second concern with these fleet of regulations is the 
impact on reliability. How do they affect reliability? First, 
our reserve margins mentioned above in several studies 
represents actual assets that are available to provide 
electricity if demand increases or a plant fails. Without 
sufficient reserve margin, there is a highly increased risk of 
outages and blackouts. The assessment of future reserve margin 
is a critical component of my Commission's examination of 
future power needs and decisions on generation. This is key. 
The rules don't provide sufficient time for an orderly, 
deliberate technology installation program as has been the case 
with past environmental rules, nor do they allow time for 
construction of replacement generation.
    The emphasis on this point is, we just don't know how much 
technology is required or the potential requirements. We don't 
have sufficient time to install controls, do not have time to 
build new generation. This is what causes me and my colleagues 
great concern on reliability. It is not a responsible approach 
to managing our energy supply.
    I have other issues discussed in my written testimony where 
utilities have been forced to guess at compliance strategies, 
and the EPA's failure to engage State agencies such as mine in 
the development of these new rules. I am concerned about both 
the power industry that I regulate and the Georgia customers 
that I am entrusted to protect. These environmental rules have 
large impacts and the EPA has not studied the cumulative impact 
of the rules aimed at air emissions, coal ash and water issues. 
This hearing is focused on reliability, and I am concerned that 
for my State where we have already proposed the retirement of 
569 megawatts of coal capacity and deferring action on another 
2,600 megawatts of coal capacity until these regulations are 
final. The impossibly short time frame for compliance is also a 
concern that affects electricity reliability, not to mention 
the downrange jobs and community impacts associated with power 
plant retirement.
    Congress could aid in making this situation manageable by 
insisting upon a comprehensive study, preferably by an agency 
other than the EPA, on the impacts of these rules and by 
providing more realistic time frames for compliance that would 
both increase reliability and reduce cost. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Wise follows:]


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    Mr. Whitfield. Thank you.
    Mr. McKinney, you are recognized for 5 minutes.

                  STATEMENT OF JON W. MCKINNEY

    Mr. McKinney. Thank you, Mr. Chairman and Ranking Member 
and members of the subcommittee, and thank you for the 
opportunity to appear before the committee.
    I am used to being on the other side of the bench listening 
to the many different perspectives. You asked for my 
perspective on the impact of a number of new EPA regulations 
affecting the power sector, so I would like to share with you 
what I know about these impacts and the environmental 
regulations that have already taken place in West Virginia and 
my overreaching concern that the pace of these additional 
requirements does not allow sufficient time to evaluate their 
potential impacts on reliability or for cost-effective 
implementation.
    I am an economic regulator, and it is my sworn duty to 
balance the interests of ratepayers, utility companies and the 
State. That is a tough assignment. We regularly hear many 
passionate pleas from industrial customers and residential 
customers who have to live on fixed incomes. We have heard 
these arguments recently from power companies as they installed 
new equipment to comply with existing environmental 
requirements. According to EPA's Acid Rain database, 1990 power 
plants in West Virginia emitted 970,000 tons of SO2. In 2010, 
the emissions were reduced to 110,000 tons, an 89 percent 
reduction.
    To make these improvements, our electric industry has spent 
some $4 billion on environmental controls and the costs had to 
be passed on to our ratepayers. Even though West Virginia has 
relatively low electric rates, those rates have increased by 40 
percent in recent years. And although I am concerned about cost 
of compliance, I am equally concerned about reliability. The 
plants that have been equipped with modern controls are 
generally the largest and newest plants but there are many 
smaller plants in West Virginia, and those plants provide not 
only generation but make the grid more stable. As a result of 
the EPA's proposal, many of these plants are expected to 
retire. One utility has already announced three plants in West 
Virginia totaling over 1,800 megawatts will retire by 2014.
    My concern with both reliability and ratepayer costs will 
be negatively impacted by the new EPA rules led me to introduce 
a resolution at the July NARUC meeting that promotes increased 
flexibility for implementation of EPA rulemakings. That 
resolution was passed and is now the official policy of the 
National Association of Regulatory Utility Commissioners. 
Briefly, the resolution recognizes that by providing great 
flexibility, closer coordination with State and federal 
partners, EPA programs can achieve the same environmental goals 
at a lower cost to customers and without compromising 
reliability. Flexibility in the schedule of implementation of 
EPA regulations can lessen rate increases because of improved 
planning, selection of correction design to address multiple 
requirements, greater use of energy efficiency and demand-side 
resources, and orderly decision-making. Recently, several 
regional reliability organizations submitted comments to EPA 
echoing these concerns. Their comments are attached to my 
written testimony.
    The impact of these rules goes far beyond the utility 
sector itself and could threaten the recovery of the broader 
economy. The American Coalition of Clean Coal Electricity 
recently asked NERA to model economic impacts of the Transport 
and MACT Rule. Overall, the analysis shows that in 2016 
electric rates will increase by 11.5 percent in the United 
States and 12.9 percent in West Virginia. Moreover, net job 
losses are projected to be 1.44 million jobs in the total 
United States and 38,500 in West Virginia.
    Cost feasibility and reliability impacts of EPA regulations 
have not been thoroughly examined and consequences of 
implementing these requirements without adequate review could 
be irreparable. Greater flexibility could preserve both 
electric reliability and mitigate additional rate increases. 
With these challenges in mind, I urge you to consider 
legislation such as the TRAIN Act and to include pertinent 
portions of the NARUC resolution in the bill. Thank you.
    [The prepared statement of Mr. McKinney follows:]


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    Mr. Whitfield. Thank you.
    Mr. Shurtleff, you are recognized for 5 minutes.

                 STATEMENT OF MARK L. SHURTLEFF

    Mr. Shurtleff. Thank you, Chairman Whitfield, Ranking 
Member Rush, members of the subcommittee. It is an honor to be 
here today with you, and my name is Mark Shurtleff. I am the 
Attorney General for the State of Utah. It is a pleasure to be 
with all these great experts on this panel. I want to just 
focus if I may my brief remarks on one rule that is imminent, 
and that is the Utility MACT which the EPA seems intent on 
proposing or adopting before November 16th.
    As I heard Commissioner Spitzer say in the prior panel, the 
best time for analysis is before a rule becomes final. Time is 
running out clearly on this rule. Eighteen Attorneys General 
including, Mr. Chairman, my friend, the Attorney General of 
Kentucky, Mr. Conway, have sent letters to the EPA 
Administrator asking that they withdraw the proposed MACT rule. 
As the chief legal officers of our States, we are most 
concerned with the rule of law. The EPA has clearly failed to 
assess the impact of that rule on a cumulative basis in light 
of its other promulgated, proposed and pending regulations 
governing electric power generation, and without the cumulative 
analysis, neither the EPA, FERC, Congress nor the public can 
truly understand the effect of all these regulations and the 
reliability of the electric grid and indeed on the economy, on 
jobs and electricity rates to consumers.
    The law requires cumulative analysis. Under Executive Order 
13563 signed by President Obama in January of this year, 
federal agencies must assess the cumulative impact of their 
proposed regulations including costs and they must tailor them 
to impose the least burden on society. The EPA has failed to do 
so.
    A cumulative impact analysis is extremely important from a 
practical perspective. If it is adopted, the Utility MACT Rule 
will clearly not operate in isolation. Instead, there are a 
large number of related regulations that EPA has already 
adopted or has proposed for adoption and is currently 
considering. Yet Congressman Waxman and Chairman Wellinghoff 
had this interaction about whether FERC staff was reliable or 
unreliable and what they had to rely on in order to make their 
recommendations. The EPA should do this. They can do it. The 
private sector has done cumulative analysis and the results are 
very disturbing.
    As just mentioned by Commissioner McKinney, the American 
Coalition for Clean Coal Electricity, ACCCE, commissioned the 
highly regarded National Economic Research Association to 
prepare a report, and they just looked at just two regulations, 
the Cross-State Air Pollution Rule, which Ranking Member Rush 
mentioned ought to be something studied, but they looked at 
that and the Utility MACT Rule and said it would be a serious 
blow to the economy, as mentioned, a net loss. Now, this takes 
into consideration--I think Mr. Inslee earlier in the prior 
panel mentioned jobs created. They said there would be 430,000 
jobs created but 1.8 million lost, so the net loss would be 1.4 
million jobs by 2020. The combination of those two regulations 
would also be a substantial increase in costs, in some places 
as much as 23 percent increase in the cost of electricity 
prices, could be a total of $184 billion in the next 20 years.
    So last week's cascading blackout in the southwestern 
United States clearly shows what we all know already, and that 
is, the grid if very interdependent, that these disruptions in 
one location can have far-reaching consequences. So the EPA 
should not proceed with the whole suite of regulations designed 
to restructure the utility industry without that careful and 
complete analysis as required by law.
    Now, the EPA is claiming that it has to move forward with 
these proposed utility MACT rules under a federal consent 
decree. Listen, I understand, we have been under federal 
consent decrees and we can't get out from under them. I get 
that. But they--and that consent decree says they have to do 
this by November 16th, 2 months away. However, you need to know 
that the EPA agreed to that deadline. They proposed that 
deadline. So I think it is wrong for a federal agency to avoid 
its legal responsibilities by hiding behind a deadline of its 
own creation, that consent decree, and you have to understand, 
the consent decree is not hard and fast, either. They can 
clearly seek an extension for good cause shown. Clearly, this 
is a case of good cause for extending the deadline as required 
by law.
    Unfortunately, it seems like they are going to go forward. 
They will take action with this ill-advised regulation that is 
proposed, and so I would urge Congress to take whatever action 
it can. If EPA goes forward on November 16th and adopts the 
utility MACT, whatever you can do, to enact legislation that 
would defer that rule and other major power sector regulations 
at least and until they fulfill their responsibility under the 
law to perform a cumulative impact analysis. You know, State 
officials, we protect not only interests of local jobs and the 
economy and electric reliability but what the law mandates, and 
we would ask you to hold the EPA to that requirement as well.
    Thank you, sir.
    [The prepared statement of Mr. Shurtleff follows:]


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    Mr. Whitfield. Thank you.
    Mr. Doggett, you are recognized for 5 minutes.

                   STATEMENT OF H.B. DOGGETT

    Mr. Doggett. Good morning, Chairman Whitfield, Ranking 
Member Rush and members of the subcommittee. I am Trip Doggett, 
the CEO of the Electric Reliability Council of Texas. I have a 
brief footprint above you on the slip of the ERCOT territory. 
We are the independent system operator that manages the flow of 
electric power to around 23 million Texans representing about 
85 percent of our electric load in the State and 75 percent of 
the land area. You have asked me to come before the 
subcommittee today to discuss our report on the impacts of the 
Cross-State Air Pollution Rule on the ERCOT system.
    I will start by saying that I am not here to take a 
position on the merits of the rule. I am here to express my 
reliability concerns with the implementation timeline of the 
rule. As Mr. Terry mentioned earlier, in the proposed Clean Air 
Transport Rule, Texas was only included in the peak season NOx 
program and in the final rule, which is now known as the Cross-
State Air Pollution Rule, which I will refer to as CSAPR, Texas 
is included in the annual SO2 and annual NOx programs as well 
as the peak season NOx program, and in Texas, the annual SO2 
limits appear to be the most restrictive.
    In July, our Public Utility Commission of Texas asked us to 
review the impacts of the final rule, and I will highlight the 
rules effective on January 1, 2012, so our analysis was focused 
on the near-term reliability implications. We consulted with 
the owners of our coal-fired generating resources to determine 
their plans for rule compliance. The individual resource owner 
compliance strategies were reviewed and aggregated to determine 
the implications for overall ERCOT system reliability. It is 
important to note that our analysis did not include a 
calculation of the cost for compliance for resource owners or 
the impact on electricity market prices.
    Based on the information provided by the resource owners, 
we developed three possible scenarios of impacts. In what I 
will refer to as kind of the best case, our first scenario 
models successful implementation of their compliance plans. In 
this scenario, the incremental capacity reductions due to CSAPR 
are expected to be approximately 3,000 megawatts in the off-
peak months and approximately 1,200 to 1,400 megawatts in the 
peak months. You heard earlier today that Luminant announced 
this week that they would shut down 1,200 megawatts of their 
generation to comply with the rule, and that 1,200 megawatts 
was included in our analysis that reflects 1,200 to 1,400 in 
the peak months. What happens is, capacity reductions in the 
off-peak months are expected to occur so that they can save 
their allowances until the peak months. We have a healthy 
reserve margin within Texas. However, I will highlight that 
with our reserve margin of over 17 percent, during this past 
month of August, if ERCOT had experienced the incremental 
reductions in available generation that we expect to occur from 
CSAPR, customers in our region would have experienced rotating 
outages during the month of August.
    We also examined two other risks in scenario two. We 
recognized daily dispatching of units that were designed for 
baseline would increase potentially that impact to 5,000 
megawatts in off-peak, scenario three, up to 6,000 in the off-
peak months. Scenario three is related to the availability of 
low-sulfur coal.
    I will summarize by saying when the final CSAPR rule was 
announced in July, it included Texas in some compliance 
programs that ERCOT and our resource owners had reasonably 
believed would not apply to Texas. In addition, the 
implementation timeline by January 2012 does not provide ERCOT 
or our resource owners enough time to analyze the impacts. If 
the implementation deadline for CSAPR were significantly 
delayed, it would expand our options for maintaining system 
reliability. I think you have heard consistently from the FERC 
commissioners that this is not a one-size-fits-all issue of 
reliability and certainly within Texas we do have reliability 
issues with the implementation timeline.
    Thank you for inviting me.
    [The prepared statement of Mr. Doggett follows:]


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    Mr. Whitfield. Thank you.
    Ms. Tierney, you are recognized for 5 minutes.

                 STATEMENT OF SUSAN F. TIERNEY

    Ms. Tierney. Good afternoon, Mr. Chairman, Ranking Member 
Rush and members of the subcommittee. I very much appreciate 
the invitation to testify today on this issue.
    I want to focus my testimony on issues relating to the 
recent air regulations being proposed by the EPA for two 
reasons, and that is principally because those are the 
regulations with the most immediate impact on the power sector. 
I want to focus on two questions: can the Nation get the 
benefits of both public health and reliable electric supply, 
and will there be jobs and positive economic activity that flow 
from the issuance of these rules and their implementation by 
the industry.
    I believe the answer to both of those questions is yes and 
that the rules can proceed to implementation without a concern 
that in the end there will be reliability issues, and I am 
going to give you several reasons why. These are facts and 
conditions in the marketplace that give me confidence that we 
are in a manageable situation with regard to these rules.
    Number one, the electric industry has a very proven track 
record of addressing reliable power supplies and doing what it 
takes at the end of the day to make sure that the lights stay 
on. These are a group of people with a very strong mission 
orientation. Every person on my right fits that category as do 
all of the people in this industry, and they have ensured that 
we have reliable electricity supply as a priority.
    Number two, the new air rules are not a surprise. These are 
not coming at us in the last few months. These have been 
underway for over a decade of notice and they allow for more 
technology options and approaches than originally expected in 
prior versions of these rules. EPA's rules are technically and 
economically feasible.
    Number three, the owners of a portion, a substantial 
portion of affected plants, have already taken steps to 
modernize their facilities so that the companies are ready to 
comply with the new air regulations. As we heard previously 
today, many States have already had mercury rules that are 
tighter than what EPA is proposing. Many companies with 
facilities affected are under court order to address the issues 
that are coming forward. In fact, some of the recent 
announcements we have heard in the industry are coming from 
violations of current rules and not future rules of the EPA. 
And finally, we see that the CEOs owning a substantial portion 
of the power plants affected by these rules have indicated to 
securities analysts under the Sarbanes-Oxley requirements that 
they are ready to comply with these regulations.
    Number four, current fuel market conditions are already 
putting economic pressure on the least efficient coal plants. 
Since 2006, coal prices have gone up 30 percent. Natural gas 
prices have gone down by a third. These older plants are not 
operating very much. The relatively attractive outlook for 
natural gas prices which results from the abundant supply of 
gas including unconventional gas will enable the Nation to 
support modernization of the grid in affordable ways. Even so, 
every analyst that we have seen coming out with estimates of 
coal plant retirements and future electricity supply indicates 
that over 50 percent of our electricity supply will eventually 
come from coal even with these changes underway.
    Number five, there are many studies, you have heard about 
them today, about the amount of capacity that will retire. The 
more reasonable estimates are the ones that have been prepared 
recently. These are reflective of the actual rules that are 
being proposed. The most recent one is the Bipartisan Policy 
Center's, and that indicates 15 to 18 gigawatts across the 
country.
    Number six, and this is really the most important reason, 
at the end of the day, you can rely on the industry and its 
tools to make sure that the lights stay on. We have heard today 
about system planning. We have heard about least-cost planning 
from transmission companies and utility companies under the 
supervision of regulators. There are wholesale power markets 
where there is underutilized capacity. We have State and 
federal and grid operators who have an extremely strong record 
of taking action when necessary to make sure that they meet the 
obligation to provide reliable supply. Perhaps the most 
important one is at the end of the day, Congress has already 
given to the EPA, the U.S. Department of Energy and the Federal 
Energy Regulatory Commission tools that enable emergency 
conditions to allow for plants to keep open. The most recent 
example of this is across the river, the generating station in 
Potomac was required to stay on under an emergency order from 
the Department of Energy to keep the lights on for the District 
of Columbia.
    My time is up, and I am happy to answer any other 
questions.
    [The prepared statement of Ms. Tierney follows:]


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    Mr. Whitfield. Thank you, Dr. Tierney.
    Mr. Hanger, you are recognized for 5 minutes.

                    STATEMENT OF JOHN HANGER

    Mr. Hanger. Thank you, Mr. Chairman, Ranking Member Rush 
and members of the subcommittee. Again, good afternoon. And I 
have had the privilege to serve Pennsylvania as both a public 
utility commissioner and more recently as the Secretary of 
Environmental Protection. The Department of Environmental 
Protection in Pennsylvania also regulates the oil and gas 
industry and is responsible for the production numbers that are 
really rather extraordinary.
    The recent discoveries of natural gas from shale formations 
in Pennsylvania and other States will allow us to tap into a 
domestic cleaner fuel that can power America into the future. I 
am proud to have played a role in making Pennsylvania a major 
producer of natural gas and ensuring strong rules for its 
production. I think that the promise of this abundant fuel 
provides an important backdrop to our discussions today and in 
particular the concern about replacement power generation.
    From 2000 to 2008, just in Pennsylvania, 8,000 megawatts of 
new gas capacity was built. Pennsylvania is located in the 
middle of the region known as PJM, which spans 13 States and 
provides electric service to over 58 million people. This past 
May, PJM conducted an electric generation auction for the 2014-
2015 delivery year, which is the first time period in which 
both the Cross-State Air Pollution Rule and the Mercury and Air 
Toxics Rule will be in effect. The results of the auction speak 
for themselves. As a result of the auction, PJM knows that it 
will have sufficient resources to meet demand during the 
delivery year and also that it will have a reserve margin of 
19.6 percent, which is in excess of the target 15.3 percent 
installed reserve margin for the region.
    Some regulators and companies from other States say the 
grid cannot manage the retirement of a significant amount of 
coal generation but I am here to tell you that it can be 
managed. In Pennsylvania, we have already faced the retirement 
of some of our coal-fired power plants, and it was done in a 
responsible, orderly fashion, and the lights stayed on. Back in 
December 2009, one of our generator operators, Exelon, decided 
to retire four coal- and oil-fired units with a combined 
capacity of 933 megawatts at two stations in southeastern 
Pennsylvania. When they were built, they were state of the art, 
but they were built during the Eisenhower Administration. They 
do not produce energy as efficiently as newer technologies and 
therefore waste energy while they emit dangerous pollutants 
that sicken and indeed kill people. The EPA was also enforcing 
rules concerning thermal discharges from these plants.
    When Exelon notified PJM of its intention to retire the 
units by May 2011, PJM said transmission upgrades would first 
be required to protect reliability. As a result, the EPA, PJM 
and Exelon worked together to execute a consent order that had 
two units retire on the original schedule while two others were 
allowed to run for reliability reasons only for up to another 7 
and 12 months, respectively. The Cromby Eddystone example 
represents a workable model for EPA to follow in resolving 
similar situations in other States that may arise as it 
implements its air quality regulations in the coming years. 
Indeed, five RTOs have informed EPA that they are willing to 
assist EPA in identifying where certain plants needed for 
reliability should be eligible for an extension of time to 
achieve compliance. These five RTOs have proposed a safety 
valve or reliability safeguard, and I have attached those 
comments to my testimony. The RTOs also asserted that they 
anticipate the reliability safeguard, and this is their 
language, ``would not need to be invoked often, if at all.''
    In conclusion, I would like to end with a quote from an 
August 26, 2011, PJM report. The report says, ``Newer, more 
efficient generation resources that replace retiring generation 
may have lower forced outage rates and thus are more dependable 
than older generation resources that may be nearing the end of 
their useful lives. Additionally, new entry generation demand 
response and energy efficiency resources may also provide 
lower-cost alternatives to achieve resource adequacy and local 
reliability.''
    Mr. Chairman, across this country, we have some very good 
news. There is a lot of new generation being built. We focus a 
lot on retirement of old plants that are inefficient and highly 
polluting but there are tens of thousands of megawatts of new 
generation under construction and many more in the planning 
phase. It is time to get on with this and protect the people's 
health of this country as well as ensuring that the lights stay 
on. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Hanger follows:]


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    Mr. Whitfield. Thank you, and thank you all for your 
testimony.
    Mr. Wellinghoff in his testimony made it very clear that 
while FERC had responsibility for reliability, the planning and 
the detailed analysis of impacts of regulations really occurred 
at the planning levels and at the State level, the public 
utility commission levels and so forth. And so we have 
representatives here today from Georgia, Missouri, West 
Virginia, Utah and Texas, and every one of you has said that 
you are concerned about the reliability, you believe there is 
going to be an increase in cost, and my view, reliability is 
also an issue when people cannot afford to pay for electricity 
because they in effect are not receiving electricity, and I 
think, Mr. Davis, you touched on that yourself because you said 
there were certain number of deaths in Missouri during the heat 
spell, and one of the reasons was, people could not afford the 
additional cost of electricity. Is that correct?
    Mr. Davis. Yes, it is. Certainly everything points to the 
fact that they had air conditioning and that they made a 
conscious decision not to use their air conditioning.
    Mr. Whitfield. You know, so Mr. Wellinghoff, while I am not 
going to say he is not concerned about reliability because I am 
sure he is, but he did not leave us with the impression that 
this, I am going to call it the Air Transport Rule and Utility 
MACT, he did not leave us with the impression that he thought 
it would have a dramatic impact on reliability, but from your 
testimony, you five, who have responsibility for this, am I 
correct in that you have great concerns about reliability? Mr. 
Davis, do you have concerns about reliability as a result of 
these regulations?
    Mr. Davis. Absolutely, in certain areas.
    Mr. Whitfield. Mr. Wise?
    Mr. Wise. Mr. Chairman, in our State, we have an integrated 
resource plan that we do every 3 years, do a 20-year look. We 
have always been right. That doesn't mean that we couldn't be 
wrong, but we are concerned about it because of reliability. We 
heard comments about being able to fire up gas-fired 
generation. We don't have underutilized gas generation in our 
State and it does take time to design, build and construct new 
gas-fired generation. So nothing happens in a vacuum.
    Mr. Whitfield. Right.
    Mr. Wise. So, yes, sir, it is a concern.
    Mr. Whitfield. Mr. McKinney?
    Mr. McKinney. Yes, it definitely is a concern. I talked 
about overreaching concern about compliance deadlines, and that 
is really--we just don't have time to make the changes 
necessary.
    Mr. Whitfield. Mr. Shurtleff?
    Mr. Shurtleff. Yes, Mr. Chairman, and what is amazing is 
that while, as I mentioned, federal law requires the EPA to do 
this, they have all these tools and all these experts so it 
really becomes even a federalism issue as far as I am concerned 
in that they are not--it is not like they are being told to do 
it alone, they have help, but they are not taking advantage of 
that, and they could.
    Mr. Whitfield. Right. And Mr. Doggett, I think you said 
that you could expect blackouts as a result of this. Is that 
correct?
    Mr. Doggett. Yes, sir. We are one of the central planners 
that the chairman was referring to, and I have concern with 
this implementation timeline that there will be problems in the 
near term.
    Mr. Whitfield. Now, comments were made that EPA is reaching 
out to States and planning groups to discuss the impact of 
these regulations. Did EPA reach out to you, Mr. Davis, and 
talk about these issues?
    Mr. Davis. No, sir.
    Mr. Whitfield. Mr. Wise?
    Mr. Wise. No, sir.
    Mr. Whitfield. Mr. McKinney?
    Mr. McKinney. No, sir.
    Mr. Whitfield. Mr. Shurtleff?
    Mr. Shurtleff. I checked with our agency, and they said no, 
they have not.
    Mr. Whitfield. Mr. Doggett?
    Mr. Doggett. Yesterday afternoon.
    Mr. Whitfield. Yesterday afternoon? Before the hearing, 
right?
    Now, Mr. Inslee, who is a conscientious, very effective 
legislator, in his comments earlier today talked about all the 
job gains that we were going to have because of all this new 
technology. Now, Mr. McKinney, you and Mr. Shurtleff referred 
to an analysis conducted of the anticipated job gains or losses 
as a result of the Air Transport Rule and Utility MACT, and I 
believe that you said the net loss--that is including gains and 
losses--the net loss would be something like 1.4 million jobs. 
Is that right?
    Mr. McKinney. That is correct.
    Mr. Whitfield. Is that what you said also, Mr. Shurtleff?
    Mr. Shurtleff. Yes, Mr. Chairman. I have the chart before 
me, a negative 1.88 million, a positive 450,000, so negative 
1.4 million.
    Mr. Whitfield. So, you know, people make comments that we 
are going to have all these jobs because of new green energy. 
Yes, there is going to be new jobs but there is going to be 
lost jobs as well, and particularly in the area--it depends on 
what area of the country you are living in. And then we have a 
case like Solyndra where they received a $538 million loan 
guarantee, they were going to create 1,500 jobs. They got that 
loan guarantee from the federal government relating to solar 
panels and now they are in bankruptcy, and the taxpayers are 
out $538 million.
    Well, my time is expired, but Mr. Rush, I will recognize 
you for 5 minutes.
    Mr. Rush. Thank you, Mr. Chairman.
    I want to ask Dr. Tierney, first of all, just a quick 
question on the unfortunate death of the individual in Georgia. 
Would you say that that is a problem of reliability or 
inability to pay rates, and would the LIHEAP program have had 
an effect, a positive effect on that?
    Ms. Tierney. Based on my experience not only as a public 
utility commissioner, a head of an energy office in a State, a 
former secretary of the environment in a State and the 
assistant secretary for policy at DOE, I have experience in the 
LIHEAP program, and while I don't know the particulars at all 
about this person's unfortunate--or several people, I am not 
sure, in Missouri, I do know that the LIHEAP program is 
designed especially to deal with low-income issues relating to 
winter and summer, cooling and heating.
    Mr. Rush. I might add that some of my friends on the other 
side have been in opposition to LIHEAP and want to really kill 
the LIHEAP program off.
    But let me move to another area. You have been 
extraordinary in your conversation relating to job creation, 
and in your testimony you indicated two reports, and I just 
want to give you some time to expound on this whole--your item 
eight on your summary about job creation. What was the overall 
impact on jobs and investment and technologies from your 
perspective? Just give us a real thorough evaluation and 
assessment of job creation.
    Ms. Tierney. I am happy to do that, and I want to start by 
talking realistically about the fact that when people are 
talking about spending money on hardware for pollution control 
equipment and spending money on building new power plants to 
replace very old ones, we are talking about infrastructure 
jobs. We are talking about construction, we are talking about 
equipment manufacturing. This is heavy industry activity. These 
are job-creating activities, not to mention issues surrounding 
green energy jobs. I am not talking about those. What I am 
talking about is the job creation associated with replacing the 
kind of capacity that the estimates have said. Now, one of the 
estimates that I described in terms of my report, I provide 
information in detail of two studies, one by the Perry Group at 
the University of Massachusetts that looked at the national 
estimates as well as one by Professor Charlie Giachetti, and 
both of these indicate billions and billions of dollars of new 
investment that goes into jobs in heavy industry and in energy 
efficiency. As Representative Inslee said, energy efficiency is 
workers in communities putting on insulation in people's homes. 
Those are local jobs. And one of the things that we observed in 
the energy area is that the parts of the country that are very 
dependent on coal, 98 percent dependent on coal, 90 percent 
dependent on coal, have had not as much opportunity, let us 
say, to go after energy efficiency actions in insulating homes 
of consumers, and the jobs that can be created in those 
communities associated with putting in energy efficiency and 
buttoning up the buildings so that people's bills go down, 
their electricity bills go down, is a real opportunity here.
    Mr. Rush. In August of 2010, you co-authored a report on 
the electric system reimbursement in the face of impending EPA 
air pollution rules. You recently updated that report. Can you 
summarize your new findings?
    Ms. Tierney. Yes. The most important findings were that 
there are so many companies that have indicated out loud that 
they are ready to manage these. We updated it also to indicate 
that the regulations as proposed are more flexible. They allow 
for more available pollution control technology than people 
previously thought, and that led us to conclude that the more 
recent estimates about the impacts of these regulations are the 
ones that are more credible for understanding where we stand 
today.
    Mr. Whitfield. At this time I recognize Mr. Olson from 
Texas for 5 minutes.
    Mr. Olson. I thank the chair and I thank the witnesses for 
coming today. I greatly appreciate your time and expertise.
    I am from Texas, so I am going to focus on some of the 
challenges that we are facing in Texas, and my first question 
is going to be for you, Chairman Doggett. Thank you for leaving 
the Lone Star State and coming to Washington, D.C. I know 
people back home say you are crazy. They say that about me all 
the time, but we are fighting for Texas.
    I want to talk about the Luminant issue, and we have talked 
about it in the previous panel and we have talked about it 
here, but because of the CSAPR rules, we are going to lose at 
least two coal-fired plants in our State, 500 jobs, and I just 
want to make the panel aware and the committee aware of a 
letter that was sent from EPA. This is Deputy Administrator 
Bob, and I am going to mess up his last name, Perciasepe. He 
sent this to Luminant CEO David Campbell on September 11, 2011, 
just last Sunday, and the letter says, ``We will share with you 
data that illustrates how Texas Luminant can comply with CSAPR 
cost-effectively while keeping levels of lignite coal use near 
current levels, thus avoiding the need to idle plants or shut 
down mines in response to requirements of the rule.'' And 
Luminant's response is: ``We are very eager to receive this 
information. EPA has not yet laid out any specific alternatives 
that do not involve job losses and facility closures.'' I mean, 
shouldn't they have had that discussion with Luminant before 
CSAPR was being implemented? Mr. Doggett, do you care to 
respond?
    Mr. Doggett. I would prefer not to respond relative to job 
loss but certainly for reliability purposes, I think in 
discussions with EPA yesterday afternoon, they at this point 
are willing to sit and look at our numbers that generated the 
results from our report and let us try to determine why there 
are differences in the data that they used in preparing the 
rule versus the data that we are presenting so certainly that 
dialog would have been helpful.
    Mr. Olson. You would hope they have would that dialog 
beforehand, before the company announces that they are going to 
have to close two power plants. I mean, that is absolutely 
wrong.
    Again, to the public utility commissioners, same 
experience? Mr. Davis? Did the EPA not give you any warning, 
not consulting you or making promises it is not keeping.
    Mr. Davis. To my knowledge, to the best of my knowledge, 
our agency has not received any communications from the 
Environmental Protection Agency at all.
    Mr. Olson. Commissioner Wise?
    Mr. Wise. Yes, we have not, and we are just trying to 
figure out what the end rules are going to be and how we shoot 
at a target that we don't know where it is.
    Mr. Olson. And Commissioner McKinney?
    Mr. McKinney. To be fair to EPA, there has been several, 
from a NARUC perspective, several webinars and several 
discussions, but as far as reaching out individually and trying 
to understand what the local issues might be and what the real 
impact is going to be on both reliability and customers, no.
    Mr. Olson. And Attorney General Shurtleff?
    Mr. Shurtleff. My discussions with my clients over at PUC 
say they have not had that discussion, although I will point 
out that Utah has some of the cleanest coal in the world with 
very little mercury, and we would be able to share with all 
these folks if President Clinton in 2000 hadn't locked up the 
Kaiparowits Plateau designation, so we do have clean coal. It 
is not as big of an impact for us. We are concerned about the 
nationwide impact.
    Mr. Olson. And so just the committee members know and the 
American public knows how this decision came about, I mean, and 
this is in response to that EPA letter, but they based their 
inclusion of Texas in the final rule on a prediction of a very 
small contribution from Texas generation to a single air 
quality monitor, only one, in an Illinois town 500 miles away 
from Texas. In this location, the EPA established itself that 
has concluded that it is in air quality attainment based on 
actual monitored results, but because of EPA, they concede that 
whatever downwind Texas might cause, it is small and barely 
meets the statutory threshold and yet they have taken this 
action that is at least right now going to close two coal-fired 
power plants.
    Dr. Tierney, I want to ask you a question. I greatly 
appreciate your comments about natural gas and how that is the 
future of our energy generation in a lot of ways, but I am 
concerned about EPA because right now they are attacking some 
of the modern techniques we are using to recover natural gas, 
and we have got a great example in our home State of Texas 
where the EPA took over two wells in the Barnett Shale Play and 
took them from the railroad commission and the operator based 
on some sort of alleged contamination of drinking water. We did 
the tests and determined positively that there was no 
contamination from any sort of natural gas recovery operations 
near those wells.
    If the EPA is able to somehow curtail these techniques, 
does your model fall apart? Don't we have to have some other 
source of energy other than natural gas? We have to go back to 
coal because the wind and the solar, they are not baseline 
power loads. We have to have some alternative.
    Ms. Tierney. As you know very well, I am sure, most of the 
regulation that affects the extraction of natural gas is under 
State jurisdiction and State law, and so the terms and 
conditions under which extraction occurs in Texas is under the 
Railroad Commission. There are environmental issues. I have not 
heard anything in the past year and a half that I have been 
working on the National Petroleum Council study in the last 6 
months in which I have been working on the Department of Energy 
shale gas committee in which I have heard EPA is going to shut 
things down on shale gas extraction.
    Mr. Olson. I will get you some information on the two wells 
they took over in the Barnett Shale Play. EPA took it over.
    I yield back the balance of my time. Thank you.
    Mr. Whitfield. At this time I recognize the gentleman from 
Pennsylvania, Mr. Doyle, for 5 minutes.
    Mr. Doyle. Thank you, Mr. Chairman, and I just want to say, 
I was listening to your remarks and I am sympathetic to the 
concern about jobs. I think a lot of us feel the same way about 
some of these trade agreements. I know many Republicans support 
trade agreements, and where I am come from, NAFTA didn't feel 
very good in terms of whether it was jobs for Pittsburghers but 
apparently it created jobs in other parts of the country, and 
it just seems this is the same kind of issue where there is 
obviously going to be displacement in certain parts of the 
country and opportunities in others. So I am sensitive to that.
    With regards to your comment about Solyndra, we had 
administrations in Pennsylvania too that did loan guarantees 
for an auto company and a television manufacturer that both 
went belly up and left our State too, but I think we can all 
agree that we still want to encourage these types of 
opportunities. They don't always pan out and everyone isn't a 
winner, but I don't think we should stop trying to bring 
opportunity and jobs to all parts of the country. I think that 
is what we all want to do here in the committee.
    I want to thank both panels. I am sorry I missed all the 
fun earlier. I had another meeting and I couldn't get here for 
the first panel.
    Mr. Whitfield. It was a little boring.
    Mr. Doyle. Yes, that is what I understand.
    But I am especially pleased to see John Hanger here. I want 
to tell you, Pennsylvania has benefited from his many years 
both as a public utility commissioner and secretary of our DEP, 
and we are fortunate to have someone like John here to share 
his expertise with us.
    I was listening a little bit to the earlier panel, and I 
was rather surprised to see that on the broader issue of 
reliability, there seemed to be nearly unanimous agreement, 
which is a rare thing on this committee, that when these EPA 
regulations go into effect, that the lights are going to stay 
on. I have been reading some of the comments filed by the RTOs 
that point out while reliability at large doesn't seem to be a 
major concern, there is some potential for more localized 
reliability issues that are going to need to be addressed in a 
targeted manner.
    Mr. Hanger, I would like to ask you, I was looking at PJM's 
comments to the EPA, and they said specifically PJM proposes 
that EPA include in its final rule a reliability safety valve 
for specific units deemed reliability-critical units where an 
individual unit shutdown would adversely impact local 
reliability. In your testimony, you seemed to suggest that this 
may not be needed and you cite your experience with the consent 
decree with Exelon. Do you believe that similar outcomes, 
consent decrees, would be expected across the country when 
needed, or could you expand a little bit on why maybe you think 
this reliability safety valve isn't necessary?
    Mr. Hanger. Well, I agree that the safety valve idea is a 
good idea. My testimony embraces the point that we already have 
that kind of authority under current law. We have at least four 
provisions in the Clean Air Act and the Federal Power Act that 
allow environmental regulators working with planning 
authorities like PJM and State public utility commissions, if 
that is appropriate, to enter into consent decrees, and so I 
absolutely agree that whenever you retire an individual plant, 
there is a local reliability analysis that must happen. That is 
true whether or not we have these rules. There are some plants 
that are retiring today and we don't have the rules, and I am 
sure wherever that happened or is in the process of happening, 
they have gone through a detailed reliability analysis. And we 
did that at Eddystone Cromby and we found--well, PJM found a 
problem and they then brought it to me and we worked out with 
the existing authority a consent order that ensured that the 
environment was protected and the lights stayed on.
    Mr. Doyle. Very good. So you don't necessarily oppose this 
idea of a reliability safety valve?
    Mr. Hanger. No, I don't oppose the idea.
    Mr. Doyle. Thank you, John.
    Mr. McKinney, PJM oversees a portion of the grid that 
serves 58 million in 13 States including your State and my 
State. It has a forward capacity market that allows it to know 
that it has capacity that it is going to need for the future, 
and recently PJM conducted its auction for the 2014-2015 
period. The cross-state and mercury air toxic rules will both 
be in effect by then. This auction showed that PJM will have 
more than enough capacity to maintain reliability. More than 4 
gigawatts of new capacity will come to the market, mostly 
demand response, and the reserve margin will be 19.6 percent, 
which is in excess of the target of 15.3 percent. So based on 
this auction and additional analysis, PJM stated in its August 
2011 report that resource adequacy does not appear to be 
threatened. West Virginia is in the PJM footprint, and I am 
just curious, does your Commission have any modeling or 
analysis that disputes PJM's finding or auction results?
    Mr. McKinney. What we do have is, I think if you listened 
earlier to the FERC commissioners, they talked about local 
impacts, and local impacts is really many of the issues, and we 
can reach back just to D.C. recently who chose to shut down two 
coal plants and have waited a significant number of years to be 
able to replace those with some other source of generation or 
some source of transmission. So the issue really gets down to 
local issues. Yes, there may be--if you have got 10 gigawatts 
someplace but you can't get it to where it needs to be, it 
doesn't help.
    Mr. Doyle. Sure. I think we all realize that there is going 
to be local reliability issues in certain segments.
    Mr. McKinney. And that is what I am asking for. I am asking 
for some sort of flexibility, an ability to be able to move 
things and allow plants that don't need or you can't justify 
from an economic point of view to be retrofitted but allow them 
some safe harbor.
    Mr. Doyle. But you support this concept of reliability 
safety valve also?
    Mr. McKinney. Yes, I do.
    Mr. Doyle. Mr. Chairman, you are generous with your time as 
always, and I thank you.
    Mr. Whitfield. Thank you.
    Mr. McKinley, you are recognized for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    Mr. Hanger, you had referenced, I think you said in your 
remarks, I read through your printed remarks but in your oral 
statement you said that there were two plants or a couple 
plants that shut down in Pennsylvania. Am I correct on that, 
something about some plants in Pennsylvania?
    Mr. Hanger. Yes, there were two plants, four units, a total 
of 930 gigawatts.
    Mr. McKinley. And did they meet at one time the EPA 
standards?
    Mr. Hanger. They were built----
    Mr. McKinley. Yes or no.
    Mr. Hanger. At one time in the 1950s and 1960s and 1970s 
but they were very old plants.
    Mr. McKinley. OK. Old plants. I understand. But then you 
went on, which really caught my ear, you said that they 
sickened and killed people. Do you have a list of the people 
they killed?
    Mr. Hanger. I can't identify individuals but I----
    Mr. McKinley. But you said they killed people.
    Mr. Hanger. We can provide you----
    Mr. McKinley. That is said around here an awful lot. 
Everything is pretty loose about these remarks, about it causes 
asthma, it kills people, but no one gives us names of the 
people. I don't see the trial lawyers lining up at the doors to 
chase these people like ambulances. If they really have killed 
people, I would think someone would have pursued that, don't 
you think?
    Mr. Hanger. They do kill people, and unfortunately, we 
don't actually know their names. They kill, EPA data shows, up 
to 34,000 a year.
    Mr. McKinley. Thank you very much. You are just like so 
many other people here.
    Mr. McKinney, you have heard a lot of the testimony here, 
particularly from Dr. Tierney. I know often some of the other 
panelists would like to respond to some of the comments that 
have been made, so would you like to respond to Ms. Tierney's 
comments, her facts and conditions?
    Mr. McKinney. And respectfully, I do disagree with Dr. 
Tierney, and in fact, I have looked at the eight points and I 
can agree on one point and partially agree on another, but the 
rest I disagree, so that is two out of eight that I agree on, 
and I will go on a little background. One of the things we 
talked about, EPA has had years or decades of notice. Well, 
these rules are still not totally finalized, and until you see 
the final rule, there is no way you can make any judgment about 
what the impacts are going to be, and the second thing is that 
a substantial portion of affected plants have already taken 
steps to modernize. That is just not true. There are many 
plants out there. There are some plants that we have spent $4 
billion in West Virginia, and none of those plants meets the 
new rules. I mean, we have spent money after money trying to 
make adjustments in SO2, trying to lower and do the right 
thing. Those obviously have been just not enough.
    One of the things I really disagree with is the fact--and I 
ran--from my former life, I ran coal generation facilities and 
a chemical, and I recognized, we made study after study trying 
to decide whether to replace those coal generation facilities 
with natural gas, and when natural gas was much lower, and it 
was always what you did is, you took jobs out of the--and 
replaced that with a lower cost of natural gas at that 
particular time. We couldn't make it work. But in every case, 
we showed significant job loss. It was a four to one ratio 
there, at least, and I think Congressman Shimkus put a slide up 
that really shows you what that really is about.
    Mr. McKinley. Just in closing in the few seconds that I 
have left, you have heard a lot of folks from the other side 
try to make this a partisan matter throughout this day, but 
your registration, how are you registered?
    Mr. McKinney. I am a Democrat.
    Mr. McKinley. Thank you.
    Mr. Whitfield. Thank you, Mr. McKinley.
    Mr. Green, you are recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Doggett, I want to thank you for being here to testify 
today. The 100-plus-degree temperatures you are experiencing 
across Texas and then the extreme cold weather we had in 
February are reminders of how important the role that ERCOT 
plays in Texas, and I appreciate your working to ensure Texas 
has the electricity they need to get through the extreme 
temperatures. For members, in Texas, we have our own grid, and 
although parts of southeast Texas and parts of north Texas are 
not part of it, but ERCOT is our agency that controls it.
    Mr. Doggett, you are here today to testify about the recent 
analysis ERCOT conducted on what the CSAPR rule would mean for 
Texas, the cross-state rule. In doing so, I noticed you did not 
include how natural gas infrastructure would affect the three 
scenarios you discussed at length, and I know it may not be 
feasible for all the plants to switch from coal to natural gas 
but again, with some of our rich resources we are developing in 
Texas on the land side, it seems like some of those could be 
possible. Why didn't you or ERCOT account for natural gas in 
your analysis?
    Mr. Doggett. We interviewed each of our resource owners and 
identified their plans to comply, and in those interviews, that 
was not presented as a viable compliance option.
    Mr. Green. If you had accounted for natural gas, how would 
this have changed your numbers?
    Mr. Doggett. It would be hard for me to estimate that 
impact. I did talk to the Luminant owners and we confirmed that 
switching from coal to natural gas for those units was not an 
option, but I am unaware of whether that was even an option for 
the other plants.
    Mr. Green. I have been told, and I know recently with our 
heat wave in Houston, there was some natural gas plants taken 
out of mothballs. I have been told that only 40 percent of 
those natural gas plants are running. Is that a correct 
percentage?
    Mr. Doggett. Forty percent?
    Mr. Green. I have been told that natural gas plants in 
Texas only run 40 percent of the time.
    Mr. Doggett. Natural gas delivers a little over 40 percent 
of our energy, I am sure off peak because they are not 
necessary with baseload generation. I am not sure if 40 percent 
is the number but we economically dispatch the units, so it is 
likely that they are not running at off-peak times.
    Mr. Green. Is there any discussion on trying to make the 
baseline natural gas with prices now at $3.90 per MCF? Because 
I know baseload, particularly our nuclear power plants, we have 
two in Texas, and also with coal plants. Is there discussion on 
trying to do natural gas as a baseload?
    Mr. Doggett. We had a hearing in Texas yesterday where one 
entity outside of ERCOT in east Texas highlighted that they 
were going to reverse their fleet and make their gas units 
their baseload resources and let the coal units provide the 
variability. It was really presented as a concern because of 
the increased cost. I am not here to talk about the increased 
cost but that was their point, and they also highlighted the 
concern with increased maintenance and decrease in reliability 
when you use a unit that was designed for baseload cyclically. 
That creates maintenance problems.
    Mr. Green. I understand ERCOT has the authority to utilize 
reliability must-run contracts with companies. Can you explain 
what these contracts are and how they can used to mitigate some 
of the generation capacity we have experienced? I know you have 
at ERCOT. Is there a way that those contracts can be utilized 
at ERCOT?
    Mr. Doggett. There is a possibility. I mentioned earlier 
that EPA reached out to us yesterday to discuss some options 
moving forward, and that was one option that they mentioned. 
The challenge there is that we have to have a method for the 
resource owner to have some assurance that they will be given a 
variance from EPA. We certainly can't require a resource owner 
to break the law.
    Mr. Green. Texas was included both in the SOx and the NOx 
and the CAIR program that was rolled out in 2008. while I am 
incredibly frustrated not only with how the EPA handled the 
possibility of including Texas but frankly their entire 
assumption used to justify its inclusion, what do you say to 
the critics who say that these companies should have been 
working toward these reductions all along since they were 
supposed to be stricter standards under CAIR and the Texas 
ERCOT should have been better prepared for this. How do you 
respond to that?
    Mr. Doggett. Well, we analyzed the preliminary rule, and 
from our analysis of the preliminary rule, it did not appear 
likely that Texas would be included.
    Mr. Green. And believe me, I share your opinion on that, 
and we have had this discussion with EPA for a number of months 
on both a partisan and bipartisan basis, and it is frustrating.
    Bernstein Research examined the issue, finding that if 
Texas utilities would simply run their existing scrubbers 
continuously and switch unscrubbed units to lower-sulfur coal, 
Texas would likely comply with its SO2 budget under the rule in 
2012, and do you think that is correct?
    Mr. Doggett. We have been told by the resource owners that 
that is incorrect.
    Mr. Green. Thank you.
    Thank you, Mr. Chairman.
    Mr. Whitfield. At this time I recognize the gentlelady from 
California, Ms. Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman.
    We know that numerous independent studies conclude that any 
retirements of old, inefficient coal plants can be offset by 
large amounts of excess generating capacity, by new capacity 
that can be quickly built, and third, by demand response and 
energy efficiency measures that can reduce the amount of 
generating capacity that is needed at all, but it is always 
possible that there will be localized reliability challenges 
caused by retiring power plants, and I want to thank you, Mr. 
Hanger, for your answers and your responses to Mr. Doyle's 
questions. You noted a real-life situation that our Republican 
colleagues are often very worried about. You have demonstrated 
that the State and the utility and the grid operator were able 
at least in this instance to work together to keep the lights 
on while protecting the environment, so I thank you.
    Mr. Hanger. You are welcome. Thank you.
    Mrs. Capps. And I want to turn to you, Dr. Tierney, because 
Mr. Hanger's response is one approach to dealing with the 
potential localized reliability challenges, but hopefully there 
are some other flexibilities available as well to address 
situations where a plant needed more time and oftentimes this 
is the question that arises in a local community. They don't 
have time to assure reliability and the confidence that it 
engenders.
    Ms. Tierney. Well, thank you very much for the question, 
Representative, and there are quite a few instances of 
situations where a plant was going to retire for economic 
reasons or for environmental reasons, and it was found in the 
local reliability studies to be a problem if there were a 
retirement. I can think of an example in Massachusetts where 
there was a consent decree negotiated between the environmental 
regulators and the owner of the plant in conjunction with a 
must-run contract, very similar to what happened in 
Pennsylvania, kept the plant operating while there were 
remedies put in place. Transmission upgrades were put in place. 
Demand management was put in place to reduce the demand in the 
area.
    Another example is one that I mentioned previously across 
the river at the Potomac River Generating Station where 
Virginia, the State regulators were interested in having that 
polluting plant be shut down. The company wanted to shut it 
down. There were applications made to the Department of Energy 
to use its emergency authority under existing law to find a 
condition under which the plant could not be retired, and PJM 
came up with studies of transmission and transmission was put 
in place along with other alternatives besides just shutting 
down the plant to keep that plant operating during the period 
of the other remedies. Those are now in place, and the plant 
looks like it will be shutting down by voluntary action of the 
owner.
    Mrs. Capps. So there are some varieties of localities where 
the remedies have been put into place that satisfy the local 
people. Would you like--you might want to take a minute to 
comment on Mr. McKinney's statements in this regard to local 
reliability.
    Ms. Tierney. I could not agree with him more than local 
reliability issues are fundamental and important, and as one of 
the other panelists, John Hanger, said when there are--when 
there is an addition to the grid in terms of a new power plant 
or removal of a power plant from the grid, there are always 
local reliability studies. Those have to be done. And if there 
were to be a problem, the existing authorities will allow these 
varieties of tools in place to make sure that the lights stay 
on.
    Mrs. Capps. Thank you. And finally, I think this is the 
last question here, and this is fundamental to me, opponents of 
the EPA's public health and environmental protections are often 
essentially arguing that we have to choose between public 
health protections and the reliability of our electric grid. I 
have to give away too that I am a public health nurse in my 
background. There is only a minute left, but Mr. Hanger and Dr. 
Tierney, my question, are these goals really in tension? Do we 
have to choose at the local level between reducing toxic 
pollution and keeping the lights on?
    Mr. Hanger. I will go first, since I am afraid the 
Congressman took offense to my language. The language I am 
afraid reflects the truth. Old coal-fired power plants do emit 
pollution that can cause health damage. That is why we have 
these rules. We are not doing this just to harass the coal 
industry or any other industry. This is about human health. And 
they are not in tension. That is what has been demonstrated in 
Pennsylvania. It has been demonstrated in many States. We have 
ways to clean up the coal plants so they can continue to 
operate. We can build new coal plants that don't cause that 
damage and we have alternative fuels, and we just should get on 
with it.
    Mrs. Capps. Thank you.
    Any further comments from you?
    Ms. Tierney. He said exactly what I would have said.
    Mrs. Capps. And also from my background, the cost of 
damaged health to employees, to neighborhood families, we 
haven't really stopped to figure out exactly how that fits into 
this balance as well so that when we assess the cost, we need 
to look at a wide circumference, and maybe some of the rest of 
you would agree. I have 29 seconds--oh, no, I am over. Thank 
you.
    Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you very much, and I want to thank----
    Mr. Rush. Mr. Chairman, before we conclude, I have a 
unanimous consent request.
    Mr. Whitfield. OK.
    Mr. Rush. I can't help but just notice this young lady, I 
think this is Mr. Davis's daughter.
    Mr. Davis. That is correct.
    Mr. Rush. She has been so well mannered and so attentive to 
this proceeding that I just think that we should just give her 
a round of applause.
    Mr. Whitfield. What is her name?
    Mr. Davis. Micah Davis.
    Mr. Whitfield. And has she always been this interested in 
environmental issues?
    Mr. Davis. For the last 2 or 3 years, she has been 
following me around.
    Mr. Whitfield. I also have a unanimous consent request on 
behalf of Mr. Murphy, who is a member of this committee. He 
wants to submit for the record the Pennsylvania Department of 
Environmental Protection's comments regarding the Utility MACT 
rule and also PJM's comments on this rule as well, so I will 
admit that into the record.
    [The information follows:]


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    Mr. Whitfield. I want to thank the witnesses. Thank you for 
your patience. We appreciate your taking time to give us your 
thoughtful comments, and we look forward to working with you as 
we move forward to help solve these issues. Thank you.
    And the record will stay open for a minimum of 10 days for 
any additional comments or documents to be presented.
    With that, the hearing is adjourned.
    [Whereupon, at 12:52 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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