[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
   AMERICAN ENERGY SECURITY AND INNOVATION: AN ASSESSMENT OF PRIVATE-
                                SECTOR 
      SUCCESSES AND OPPORTUNITIES IN ENERGY EFFICIENT TECHNOLOGIES

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                       TUESDAY, FEBRUARY 26, 2013

                               __________

                            Serial No. 113-8


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
79-891                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        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
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             ANTHONY D. WEINER, New York
ROBERT E. LATTA, Ohio                JIM MATHESON, Utah
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            JOHN BARROW, Georgia
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky                  Islands
PETE OLSON, Texas                    KATHY CASTOR, Florida
DAVID B. McKINLEY, West Virginia     JOHN P. SARBANES, Maryland
CORY GARDNER, Colorado               JERRY McNERNEY, California
MIKE POMPEO, Kansas                  BRUCE L. BRALEY, Iowa
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
STEVE SCALISE, Louisiana             BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
LEE TERRY, Nebraska                  EDWARD J. MARKEY, Massachusetts
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
ROBERT E. LATTA, Ohio                GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
BILL CASSIDY, Louisiana              MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas                    JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia     DORIS O. MATSUI, California
CORY GARDNER, Colorado               DONNA M. CHRISTENSEN, Virgin 
MIKE POMPEO, Kansas                      Islands
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California (ex 
FRED UPTON, Michigan (ex officio)        officio)



                             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...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
    Prepared statement...........................................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     5
    Prepared statement...........................................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
    Prepared statement...........................................     8
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................   214

                               Witnesses

Hon. Lisa Murkowski, A United States Senator from the State of 
  Alaska, Ranking Member, Senate Energy and Natural Resources 
  Committee......................................................     9
    Prepared statement...........................................    12
Hon. Jeanne Shaheen, A United States Senator from the State of 
  New Hampshire..................................................    14
    Prepared statement...........................................    17
Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency, 
  Office of Energy Efficiency and Renewable Energy, U.S. 
  Department of Energy...........................................    21
    Prepared statement...........................................    23
    Answers to submitted questions...............................   279
Kevin C. Kosisko, Vice President Service, North America, ABB, 
  Inc., on Behalf of National Electrical Manufacturers 
  Association and Industrial Energy Efficiency Coalition.........    51
    Prepared statement...........................................    54
Britta MacIntosh, Vice President, Business Development, NORESCO, 
  on Behalf of Federal Performance Contracting Coalition.........    95
    Prepared statement...........................................    97
James Crouse, Executive Vice President of Sales and Marketing, 
  Capstone Turbine Corporation, on Behalf of U.S. Combined Heat 
  and Power Association..........................................   102
    Prepared statement...........................................   104
Helen A. Burt, Senior Vice President and Chief Customer Officer, 
  Pacific Gas and Electric Company...............................   114
    Prepared statement...........................................   116
R. Neal Elliott, Associate Director of Research, American Council 
  for an Energy-Efficient Economy................................   127
    Prepared statement...........................................   129
Ted Gayer, Co-Director, Economic Studies and Joseph A. Pechman 
  Senior Fellow, The Brookings Institute.........................   144
    Prepared statement...........................................   146

                           Submitted Material

Press release from cable companies, submitted by Mr. Shimkus.....   216
Report entitled, ``Doubling U.S. Energy Productivity by 2030,'' 
  by the Alliance Commission on National Energy Efficiency 
  Policy, submitted by Mr. Kinzinger.............................   219
Statement of Arkema, Inc., submitted by Mr. Whitfield............   253
Statement of The Pew Charitible Trusts, submitted by Mr. 
  Whitfield......................................................   258
Statement of The Alliance for Industrial Efficiency, submitted by 
  Mr. Whitfield..................................................   261
Statement of the American Chemistry Council, submitted by Mr. 
  Whitfield......................................................   265
Statement of the Heat is Power Association, submitted by Mr. 
  Whitfield......................................................   270


   AMERICAN ENERGY SECURITY AND INNOVATION: AN ASSESSMENT OF PRIVATE-
  SECTOR SUCCESSES AND OPPORTUNITIES IN ENERGY EFFICIENT TECHNOLOGIES

                              ----------                              


                       TUESDAY, FEBRUARY 26, 2013

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:08 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Scalise, 
Shimkus, Pitts, Terry, Burgess, Cassidy, Olson, McKinley, 
Gardner, Pompeo, Kinzinger, Griffith, Upton (ex officio), Rush, 
McNerney, Tonko, Capps, Barrow, Matsui, Castor, Welch, and 
Waxman (ex officio).
    Staff present: Nick Abraham, Legislative Clerk; Gary 
Andres, Staff Director; Charlotte Baker, Press Secretary; Mike 
Bloomquist, General Counsel; Matt Bravo, Professional Staff 
Member; Allison Busbee, Policy Coordinator, Energy and Power; 
Patrick Currier, Counsel, Energy and Power; Carolyn Ferguson, 
Staff Assistant; Tom Hassenboehler, Chief Counsel, Energy and 
Power; Heidi King, Chief Economist; Ben Lieberman, Counsel, 
Energy and Power; Gib Mullan, Chief Counsel, Commerce, 
Manufacturing, and Trade; Mary Neumayr, Senior Energy Counsel; 
Andrew Powaleny, Deputy Press Secretary; Chris Sarley, Policy 
Coordinator, Environment and Economy; Lyn Walker, Coordinator, 
Admin/Human Resources; Jeff Baran, Democratic Senior Counsel; 
Phil Barnett, Democratic Staff Director; Greg Dotson, 
Democratic Staff Director, Energy and Environment; Caitlin 
Haberman, Democratic Policy Analyst; and Alexandra Teitz, 
Democratic Senior Counsel, Environment and Economy.

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

    Mr. Whitfield. Good morning, and I would like to call this 
hearing to order this morning. I will recognize myself for an 
opening statement.
    Anyone who focuses on energy issues, I believe, has been 
amazed at recent discoveries of resources that make it possible 
for America to be energy independent, both generating 
electricity and producing fuel for transportation purposes. 
Certainly, supply and demand affects price and if we can 
control price, we can be more competitive in the global 
marketplace, strengthen our economy, and create jobs. That is 
certainly a goal to which we all aspire.
    Now, we have had several hearings about supply in this 
subcommittee, and today, we are going to focus on demand, and 
specifically, energy efficiency. In fact, today's hearing is 
entitled ``American Energy Security and Innovation: An 
Assessment of Private-Sector Successes and Opportunities in 
Energy Efficient Technologies.'' Just as we have been 
successful in finding additional resources for energy 
production, we have also made great strides in energy 
efficiency, and we can do even more.
    History teaches us that nothing is more efficient than the 
free market. The only thing you need to spur than improve 
energy efficiency is profit-seeking companies responding 
rationally to high energy bills. Any company that doesn't use 
energy as wisely as possible will lose ground to a competitor 
that does. This is why free economies are the most efficient 
and have the lowest energy inputs per units of gross domestic 
product when you contrast that particularly with centrally-
planned economies, which are certainly not as efficient.
    We all understand that government has a very important role 
to play and has contributed much in this area, such as 
utilizing the latest advances to improve efficiency in federal 
buildings, and in conducting energy efficiency research. And 
all of us are fans of the energy savings performance contract 
program over at DOE, and it continues to do a great job, and we 
look forward to making sure that it continues to make that kind 
of contribution.
    We have a great panel of witnesses today. We have three 
panels, and on the first panel, we are very fortunate to have 
two United States senators. We have Senator Lisa Murkowski of 
Alaska, who has been a leader in the energy sector. Senator, we 
really appreciate your taking time to be with us today. And 
Senator Shaheen of New Hampshire was given a speaking 
engagement this morning, and she is on her way, and it is not 
seldom that we have two senators over here, so we are always 
going to pay particular attention to what they say, because as 
they say, the House and the Senate need to work closely 
together on all these issues. So we are excited about the 
witnesses this morning, and I will introduce the three panels 
as we come to them.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    Energy prices are a function of supply and demand, and high 
prices are a clear sign that supply is struggling to keep up 
with demand. That is why expanding domestic energy supplies is 
a big part of the solution to the nation's energy challenges 
and one that this subcommittee will continue to address. But 
this morning's hearing will focus on the demand side of the 
energy equation, and specifically private sector efforts to 
develop and utilize innovative technologies and processes to 
reduce waste and cut costs.
    History teaches us that nothing is more efficient than the 
free market. The only thing you need to spur innovations that 
improve energy efficiency is profit-seeking companies 
responding rationally to high energy bills. Any company that 
doesn't use energy as wisely as possible will lose ground to a 
competitor that does. This is why free economies are the most 
efficient and have the lowest energy inputs per unit of gross 
domestic product. Contrast that with centrally planned 
economies which are among the least efficient.
    These private sector innovations can take the form of 
energy efficient technologies like combined heat and power 
systems. They can also take the form of novel instruments like 
energy savings performance contracts. We will discuss both 
kinds of innovations today.
    The benefits of energy efficiency are something that both 
Republicans and Democrats can agree upon. They are also 
something that both the House and the Senate can agree upon, 
which is why I am pleased that Senators Lisa Murkowski and 
Jeanne Shaheen are joining us to discuss energy efficiency 
efforts underway in the Senate. Those of us in the House are 
always ready to learn from the world's greatest deliberative 
body.
    Some make the mistake of thinking that efficiency only 
happens as a result of federal regulations or other mandates. 
But the stories we will hear from our private sector witnesses 
demonstrate otherwise. Utilities, manufacturers, commercial 
property owners and others are continually developing clever 
new ways to save on their energy costs, and are not waiting for 
orders from Washington DC.
    In fact, government policy can sometimes get in the way of 
energy efficiency. For example, a provision included in the 
Energy Independence and Security Act of 2007 mandates the 
elimination of all fossil fuel-generated energy use in new and 
modified federal buildings by the year 2030. This federal 
mandate potentially restricts the adoption of high-efficiency 
technologies such as natural gas combined heat and power and 
waste heat recovery systems in federal facilities. We need to 
reconsider any and all federal impediments to energy 
efficiency.
    On the other hand, there is a constructive role for the 
government to play, such as utilizing the latest advances to 
improve efficiency in federal buildings, and in conducting 
energy efficiency research. We need to steer government efforts 
in a positive direction.
    Necessity is the mother of invention, and the necessity 
brought on by expensive energy, tight budgets, and the 
pressures of global competition has fostered some great private 
sector advances in efficiency. I look forward to learning more 
about these exciting developments and yield back the balance of 
my time.

    Mr. Whitfield. And with that, Mr. Rush, I would recognize 
you for an 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, for holding 
today's hearing on the successes and opportunities in energy 
efficiency technology. It is my sincere hope that after hearing 
from today's panel of witnesses, members on both sides of the 
aisle will be able to come together and move their country's 
energy policy forward by working to enact common sense energy 
efficiency legislation.
    Mr. Chairman, I remain optimistic that this subcommittee 
may return to the days of enacting bipartisan and comprehensive 
energy policy like we did most recently in '05 and '07. I 
believe that the area of energy efficiency may, in fact, be the 
opportunity for us to do so.
    The story of energy efficiency is one that is filled with 
success stories that I really hope propel our Nation forward by 
making us more independent and more secure, while also reducing 
the cost of energy, both in our pocketbooks and its impact on 
the environment. According to a recent ACCC study, U.S. energy 
consumption in 2010 was less than half of what it would have 
been without the energy efficiency improvements made since 
1970.
    Mr. Chairman, while today's hearing focuses on the progress 
made in the private sector, let us not forget that it was the 
leadership of State and Federal Government activities that 
paved the way for many of these energy efficiency successes. 
DOE rulemaking spurred dozens of national efficiency standards 
for appliances and equipment since 1987. ACCC--EEE, rather, 
found that these existing standards will provide net savings of 
$1.1 trillion through 2035, while also reducing carbon 
pollution by the equivalent amount of taking approximately 118 
coal-fired power plants offline by that same year. In fact, in 
2010, overall U.S. energy use was 7 percent less than it would 
have been without these extending--existing, rather, standards.
    However, Mr. Chairman, it is important to note that the 
ACEEE also found, and I quote, ``The prospect for future 
improvements is large.'' In fact, the report estimates that 
additional energy efficiency efforts could reduce U.S. energy 
use by 42 to 59 percent over current projections, which will 
create over one million jobs and increase U.S. GDP by $100 to 
$200 million by the year 2050.
    So, Mr. Chairman, it is important that the Federal 
Government does not abdicate its responsibility, its leadership 
role, of promoting, of encouraging, of enticing interested 
stakeholders to continue with the progress that has already 
been made in energy efficiency technologies so that we may keep 
moving forward, moving our Nation forward. We have a rich and 
strong legacy to stand on, Mr. Chairman, and let us not abandon 
the work that has already been done. Energy efficiency has been 
the low-hanging fruit that may, indeed, as I said earlier, 
bring both sides together in a legislative manner while also 
making our Nation safer, more secure, and more attentive to the 
impacts of climate change.
    Mr. Chairman, I look forward to hearing from these 
outstanding members of the other body, our Nation's leaders, 
and I look forward to this hearing. And with that, I yield back 
the balance of my time.
    [The prepared statement of Mr. Rush follows:]

                Prepared statement of Hon. Bobby L. Rush

    Thank you, Mr. Chairman, for holding today's hearing on the 
successes and opportunities in energy efficient technologies.
    Mr. Chairman, it is my sincere hope that after hearing from 
today's panel of witnesses, members from both sides of the 
aisle will be able to come together and move the country's 
energy policy forward by working to enact commonsense energy 
efficiency legislation.
    I remain optimistic that this subcommittee may return to 
the days of enacting bipartisan and comprehensive energy 
policy, like we did most recently in 2005 and 2007, and I 
believe the area of energy efficiency may, in fact, provide us 
with an opportunity to do so.
    Mr. Chairman, the story of energy efficiency is one that is 
filled with success stories that have really helped propel our 
country forward by making us more independent and secure, while 
also reducing the cost of energy, both in our pocketbooks and 
its impact to our environment.
    According to a recent American Council for an Energy-
Efficient Economy (ACEEE) study, U.S. energy consumption in 
2010 was less than half of what it would have been without the 
energy efficiency improvements made since 1970.
    Mr. Chairman, while today's hearing focuses on the progress 
made in the private sector let us not forget that it was the 
leadership of state and federal government that paved the way 
for many of these energy efficiency successes.
    Department of Energy (DOE) rulemakings spurred dozens of 
national energy efficiency standards for appliances and 
equipment since 1987.
    ACEEE found that these existing standards will provide net 
savings of $1.1 trillion through 2035, while also reducing 
carbon pollution by the equivalent amount of taking 
approximately 118 coal-fired power plants offline by that same 
year.
    In fact, in 2010, overall U.S. electricity use was 7% lower 
than it would have been without these existing standards.
    However, Mr. Chairman, it is important to note that the 
ACEEE study also found that ``the prospect for future 
improvements is large.''
    In fact, the report estimates that additional energy 
efficiency efforts could reduce U.S. energy use by 42-59% over 
current projections, which would create over a million jobs and 
increase U.S. GDP by $100-200 billion by the year 2050.
    So, Mr. Chairman, it is important that the federal 
government does not abdicate its leadership role or 
responsibility of promoting, encouraging, and enticing 
interested stakeholders to continue with the progress that has 
already been made in energy efficiency technologies so that we 
keep moving the nation forward.
    Energy efficiency has proven to be the low-hanging fruit 
that may indeed bring both sides together, legislatively, while 
also making our country safer, more secure, and more attentive 
to the impacts of climate change.
    So I look forward to hearing from today's panel of expert 
witnesses on the successes and opportunities in energy 
efficiency technologies, and with that I yield back the balance 
of my time.

    Mr. Whitfield. Well thank you, Mr. Rush.
    At this time, I recognize the chairman of the full 
committee, Mr. Upton, for a 5-minute opening statement.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well thank you, Mr. Chairman. I want to thank 
both of our senators for being here. Thanks for crossing the 
Capitol this morning to provide your perspective on energy 
efficiency innovation. Energy efficiency is not only a 
bipartisan issue, but as your presence here today demonstrates, 
there is bicameral interest as well.
    You know, for an economy to thrive, it does need energy. In 
fact, increased energy consumption is often a harbinger of 
economic growth, a very good thing by any measure. When we talk 
about energy efficiency, I believe our goal is to maintain and 
enhance our economic growth by finding ways to maximize the 
ways that we use energy, to get the most bang for the buck. 
Energy efficiency measures are some of the simplest and most 
affordable ways to address U.S. energy demand. The U.S. has 
steadily improved its energy productivity as a result of 
advances in technology driven by private sector innovation. 
Reducing waste and consuming less energy are common sense 
strategies to cut costs, which is why the industrial and 
manufacturing sectors have undertaken significant efforts to 
improve efficiency and reap the resulting economic benefits. 
But significant energy efficiency opportunities remain, and we 
will hear about some of those opportunities, as well as the 
challenges, from our distinguished panelists today.
    We have got to remember that as the sequester takes center 
stage this week, that the Federal Government is the Nation's 
largest user of energy, and sensibly utilizing energy-saving 
techniques can significantly reduce the amount of taxpayer 
dollars spent on federal energy costs.
    So on behalf of all of our colleagues, I welcome both of 
you here, and yield the balance of my time to Mr. Gardner.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    I want to welcome Senator Murkowski and Senator Shaheen--
thank you for crossing the Capitol this morning to provide your 
perspectives on energy efficiency innovation. Energy efficiency 
is not only a bipartisan issue, but as your presence here today 
demonstrates, there is bicameral interest as well.
    For an economy to thrive, it needs energy. In fact, 
increased energy consumption is often a harbinger of economic 
growth--a very good thing by any measure. When we talk about 
energy efficiency, I believe our goal is to maintain and 
enhance our economic growth by finding ways to maximize the 
ways we use energy--to get the most bang for the buck. Energy 
efficiency measures are some of the simplest and most 
affordable ways to address U.S. energy demand. The U.S. has 
steadily improved its energy productivity as a result of 
advances in technology driven by private sector innovation. 
Reducing waste and consuming less energy are commonsense 
strategies to cut costs, which is why the industrial and 
manufacturing sectors have undertaken significant efforts to 
improve efficiency and reap the resulting economic benefits.
    But significant energy efficiency opportunities remain, and 
we will hear about some of those opportunities--as well as the 
challenges--from our distinguished panelists today. We must 
also remember, as the sequester takes center stage this week, 
that the federal government is the nation's largest user of 
energy, and sensibly utilizing energy savings techniques can 
significantly reduce the amount of taxpayer dollars spent on 
federal energy costs.
    On behalf of all my colleagues on the Energy and Commerce 
Committee, I want to again thank Senators Murkowski and 
Shaheen--and all of our panelists--for taking the time to be 
with us today, and we look forward to working together on these 
issues in the 113th Congress.

    Mr. Gardner. Thank you, Mr. Chairman, and thank you, 
Chairman Whitfield and Ranking Member Rush, thank you for 
holding this hearing today. Over the past 2 years, I have 
become increasingly more interested in this topic of energy 
efficiency, and look forward to hearing our witness's testimony 
this morning.
    There is a lot more that the Federal Government in 
particular could be doing to become more energy efficient, 
since we truly are the largest energy consumer in the Nation. 
That is why I have partnered with Mr. Welch of Vermont, who 
also serves on this committee, to form a caucus solely focused 
on advancing energy efficiency in a way that helps the 
environment and the taxpayer. Our caucus focuses on performance 
contracting, whether they be energy savings performance 
contracts, or utility energy service contracts. ESPCs and UESCs 
allow private companies to perform energy upgrades by taking on 
all the risks associated with those improvements. The company 
only gets paid when the monetary savings materialize. They are 
a win-win for government and the taxpayer, creating private 
sector jobs along the way.
    I truly believe that energy efficiency is an issue that 
Republicans and Democrats can come together on, as we have done 
in Colorado. And during times when this city can seem so 
partisan to the rest of the country, I think we should jump at 
this opportunity to do so. I will point out, however, that 
there is one minor impediment to moving forward with ESPCs, and 
in the way that many of us in this room would like to do so. 
While OMB does not score ESPCs, CBO does. Even though it saves 
money, it has no appropriated dollars with it. It is 
unfortunately restricting our ability to utilize a tool that 
makes complete sense during an economic downturn, and during a 
time when the Federal Government is trying to find a way to 
save money.
    I look forward to working with everyone on this issue, and 
the others in this room as we discuss what we can do to 
encourage energy efficiency here in Congress.
    Thank you, Mr. Chairman. I yield the remainder of my time.
    Mr. Whitfield. Well thank you, Mr. Gardner, and at this 
time, I recognize the ranking member of the full committee, the 
gentleman from California, Mr. Waxman, for 5 minutes.

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

    Mr. Waxman. Thank you, Mr. Chairman.
    At its heart, energy efficiency is about reducing waste. 
Doing more with less. This frees up energy supplies, saves 
money, and reduces dangerous carbon pollution.
    Energy efficiency is good for consumers, good for business, 
good for our economy and job creation, and good for fighting 
dangerous climate change.
    A recent report from the International Energy Agency 
highlights the critical role of energy efficiency in slowing 
dangerous climate change. IEA concluded that if the world does 
not take action to reduce carbon pollution by 2017, then the 
energy infrastructure existing at that time will make it 
impossible to limit warming to 2 degrees Celsius. In other 
words, we have just 4 years to take serious actions to reduce 
carbon pollution, or we will be locked into a path forward that 
will lead to devastating climate change. But if we invest now 
in energy efficiency, we can give ourselves more time.
    According to the IEA, the rapid deployment of energy 
efficiency measures would give the world at least 5 additional 
years to develop long-term solutions. IEA also found that there 
are huge efficiency opportunities available. Cost effective 
energy efficiency measures using technology available today 
could reduce expected future energy use by over 40 percent. 
These measures, of course, would save consumers and businesses 
over $11 trillion through 2050. Two-thirds of the potential 
energy efficiency savings remain untapped.
    Existing efficiency standards will provide net savings of 
over $1 trillion through 2035, while reducing annual carbon 
emissions by 470 million metric tons. That is equivalent to the 
annual emissions from over 100 coal-fired power plants. Without 
these existing standards, a typical household's electricity use 
would be about 35 percent higher.
    Buildings account for about 40 percent of our total energy 
consumption, and there is a lot we can do to make them more 
efficient. Tools for improving efficiency include building 
efficiency codes, performance goals, information disclosure, 
technical support, innovative financing approaches, and 
reduction of market barriers.
    We are going to hear today from two very distinguished 
members of the Senate. Senator Shaheen worked together with 
Senator Portman on a bipartisan bill that includes many good 
ideas. Senator Murkowski in the last Congress worked with 
Senator Bingaman on a package of consensus energy efficiency 
standards. We should build on both of these bipartisan efforts.
    We need to be ambitious. Study after study has identified a 
myriad of ways we could save energy, save money, and reduce 
dangerous carbon pollution.
    I look forward to hearing the testimony from our two 
senators and other witnesses today, and working on a bipartisan 
basis to do something that I think is in the best interest of 
the American people. Yield back the balance of my time.
    [The prepared statement of Mr. Waxman follows:]

               Prepared statement of Hon. Henry A. Waxman

    At its heart, energy efficiency is about reducing waste. 
Doing more with less. This frees up energy supplies, saves 
money, and reduces dangerous carbon pollution.
    Energy efficiency is good for consumers, good for 
businesses, good for our economy and job creation, and good for 
fighting dangerous climate change.
    A recent report from the International Energy Agency (IEA) 
highlights the critical role of energy efficiency in slowing 
dangerous climate change. IEA concluded that if the world does 
not take action to reduce carbon pollution by 2017, then the 
energy infrastructure existing at that time will make it 
impossible to limit warming to 2 degrees Celsius. In other 
words, we have just four years to take serious actions to 
reduce carbon pollution, or we will be locked into a path 
forward that will lead to devastating climate change. But if we 
invest now in energy efficiency, we can give ourselves more 
time.
    According to the IEA, the rapid deployment of energy 
efficiency measures would give the world at least five 
additional years to develop long-term solutions. IEA also found 
that there are huge efficiency opportunities available. Cost 
effective energy efficiency measures using technology available 
today could reduce expected future energy use by over 40%. 
These measures, of course, would save consumers and businesses 
over $11 trillion through 2050. Two-thirds of the potential 
energy efficiency savings remain untapped.
    Existing efficiency standards will provide net savings of 
over $1 trillion through 2035 while reducing annual carbon 
emissions by 470 million metric tons. That's equivalent to the 
annual emissions from over 100 coal-fired power plants. Without 
these existing standards, the typical household's electricity 
use would be about 35% higher.
    Buildings account for about 40% of our total energy 
consumption, and there is a lot we could do to make them more 
efficient. Tools for improving energy efficiency include 
building efficiency codes, performance goals, information 
disclosure, technical support, innovative financing approaches, 
and reduction of market barriers.
    We are going to hear today from two very distinguished 
members of the Senate. Senator Shaheen worked together with 
Senator Portman on a bipartisan bill that includes many good 
ideas. Senator Murkowski in the last Congress worked with 
Senator Bingaman on a package of consensus energy efficiency 
standards. We should build on both of these bipartisan efforts.
    We need to be ambitious. Study after study has identified a 
myriad of ways we could save energy, save money, and reduce 
dangerous carbon pollution.
    I look forward to hearing the testimony from our two 
Senators and our other witnesses today, and working on a 
bipartisan basis to do something that I think is in the best 
interest of the American people.

    Mr. Whitfield. Thank you, Mr. Waxman, and that concludes 
the opening statements, so it is my pleasure now to introduce 
our first panel of witnesses. They have already been 
introduced, but I will do it again. We have Senator Lisa 
Murkowski, a U.S. Senator from Alaska, who is the ranking 
member of the Senate Energy and Natural Resources Committee, 
and we have the Honorable Jeanne Shaheen, U.S. Senator from New 
Hampshire, and as has already been stated, both of you all have 
worked on these issues and in a very bipartisan way, and so we 
welcome you to this committee. It is my understanding that when 
you finish your opening statements, that you both have some 
other responsibilities, so we will not be asking you any 
questions, but do look forward to your testimony, and Senator 
Murkowski, I will start with you and recognize you for 5 
minutes.

STATEMENTS OF HON. LISA MURKOWSKI, A UNITED STATES SENATOR FROM 
THE STATE OF ALASKA, RANKING MEMBER, SENATE ENERGY AND NATURAL 
 RESOURCES COMMITTEE; AND HON. JEANNE SHAHEEN, A UNITED STATES 
            SENATOR FROM THE STATE OF NEW HAMPSHIRE

                STATEMENT OF HON. LISA MURKOWSKI

    Senator Murkowski. Thank you, Mr. Chairman, Ranking Member 
Rush, Mr. Waxman, Mr. Upton, thank you for the opportunity to 
be here this morning to focus on an energy efficiency 
specifically. I don't know how you do this, but the fact that 
you actually have your cups this morning that talk about energy 
efficiency--I don't know if you do this for every hearing over 
here, but kudos to the committee here for being on subject.
    You note in your introduction of me that as the ranking 
member on the Energy Committee, I would obviously have an 
interest in this, but coming from the State of Alaska, as I do, 
where in some of our remote, rural communities, Alaskan 
families are spending up to 47 percent of the family's budget 
on energy. There is every reason to be efficient. There is 
every reason to squeeze everything that you can out of the 
energy that comes our way, so I have taken a very keen interest 
in it, and as a consumer of energy, as we all are, we should 
all be focused on energy and what we can do to make a 
difference.
    Before I get into the specifics of energy efficiency, I 
want to offer some context for it in the position of a broader, 
more comprehensive look at energy policy. I brought with me 
today one of the Hill's best sellers, this is Energy 20/20, a 
brilliant piece of 115 pages focusing on all things energy. And 
it is not very often around here that we actually see 200 
recommendations on energy policy come out, a focus on energy as 
the bigger picture in terms of what we can do to strengthen our 
economy. I would commend it to you. It is available on my Web 
site. But let me give you the Reader's Digest condensed 
version. It starts with a simple premise that energy is good. 
You can distill it in a bumper sticker, but it--think about it. 
It provides the basis for modern society. It allows us to lead 
happy and productive lives. It allows us to produce food, to 
manufacture, to communicate, to move. It is all good.
    And to give you five easy principles when we talk about 
energy, we should strive to make energy abundant, affordable, 
clean, diverse, and secure. And to accomplish all this, again, 
I outline about 200 different recommendations, but as we think 
about energy policy here in this Congress and how to move 
forward in an area that really can help us be more efficient in 
our use, just think of it in context of these five attributes 
as a way to evaluate legislative actions that affect energy. 
And I would hope that taken together, we can agree that these 
are the attributes that should allow our policies to advance.
    Now, as your focus on American energy security and 
innovation reminds us, energy--efficiency is more than just 
driving energy consumption down. As I say in the blueprint 
here, using energy more efficiently is akin to developing more 
fuel. It also encompasses the more efficient production of 
energy.
    Now, we must do more. We must do more to discourage the 
inefficiencies that I think we see oftentimes with regulation 
and how that is introduced into our energy supply chain. Our 
aim with energy efficiency policies should be to require less 
energy per unit of gross domestic product, and it is worth 
emphasizing that what we want is a rising GDP here as a measure 
of increasing prosperity.
    To underscore for the discussion of efficiency, we must 
never lose sight of the fact that we want our Nation--in fact, 
we want the world to be more prosperous, and we know prosperity 
is an aid to peace and human development, and energy is an aid 
to prosperity, so the title for the hearing today reminds us 
that we must see efficiency within the context of energy 
security and innovation.
    I am honored to be here with Senator Shaheen, who has been 
a leader on efficiency during her tenure on the Energy 
Committee with me. She continues to work with Senator Rob 
Portman on their version of a comprehensive energy efficiency 
bill. It was, and it thankfully remains, a bipartisan effort to 
make progress in an area where you all have pointed out, 
agreement is imminently possible, and I think that we saw this 
as the last Congress waned down. We managed to pass an 
efficiency bill, the American Energy Manufacturing Technical 
Corrections Act. There were only two Members of Congress that 
voted against that, so again, when you think about those things 
that we can do together, we should be looking to efficiency.
    So where do we go on efficiency this year as we look at 
ways to boost the efficiency of everything that we are doing, 
whether it is from the buildings here, our vehicles, our 
appliance, everything? The bill that Senator Shaheen and 
Senator Portman will offer, I think provides a promising path 
that is worthy of our consideration. You will see, complements 
of their work with reports from private sector associations 
like the Business Roundtable, the National Association of 
Manufacturers, the Alliance to Save Energy, we must continue to 
encourage outside stakeholders to reach these voluntary 
consensus agreements so that efficiency does not become 
synonymous with this top down approach of mandates that are 
issued by the Federal Government. I think given the constraints 
on federal finances that has been mentioned and the failure of 
mandates to deliver on certain promised results, those of us in 
the Federal Government should also put our own House in order. 
And as a start, I am going to be calling upon the GAO to review 
current funding and past performance of residential, 
commercial, and industrial energy efficiency programs within 
DOE, and then propose new authorization levels based on this 
review.
    Now finally, you have appropriately called attention with 
this hearing to private sector successes and opportunities, and 
as private--as President Reagan's Administration reminded us 
more than 25 years ago, the greatest gains in energy efficiency 
come from the private sector in a growing economy. So here, the 
government's priority should be the removal of barriers that 
stand in the way of their investments and the economic growth 
that make them possible.
    Again, I thank you for the opportunity to come over. I 
think it is important that we share our ideas between the two 
Houses, certainly amongst members and our parties, and I 
welcome the opportunity for future dialogue on energy 
efficiency and all things energy.
    Thank you for the opportunity to be here this morning.
    [The prepared statement of Ms. Murkowski follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.001
    
    [GRAPHIC] [TIFF OMITTED] 79891.002
    
    Mr. Whitfield. Well Senator Murkowski, thanks so much for 
your testimony and your continued leadership, and welcome, 
Senator Shaheen. We--at this time, I would like to recognize 
you for 5 minutes for your opening statement.

                STATEMENT OF HON. JEANNE SHAHEEN

    Senator Shaheen. Thank you very much, Mr. Chairman, Ranking 
Member Rush, and the members of the committee. Thank you for 
holding this very important hearing today. I am especially 
pleased to be joined by Congressman Waxman, the ranking member 
of the full committee, and I was pleased to see Chairman Upton 
here as well.
    I share the views, I think, of all of you that we have just 
heard from that energy efficiency is a win-win-win. We can save 
energy, save pollution, we can protect our national security, 
and we can also create jobs. And so it is a great place to 
start, and it has bipartisan support.
    I am also pleased to be joining my former ranking member. I 
served for 4 years on the Energy Committee with Senator 
Murkowski, and I know what great leadership she has provided on 
this issue, as well as so many other energy issues. She pointed 
out that with the assistance of this committee, last session we 
passed the American Energy Manufacturing Technical Corrections 
Act, which is a mouthful, but it included many energy 
efficiency provisions, including several from the Shaheen-
Portman legislation that really helped to lay a foundation, I 
think, for further discussion about energy efficiency.
    I want to talk a little bit about the legislation that 
Senator Portman and I have introduced, but I want to begin by 
putting it in a little bit of context, as Senator Murkowski 
did. I think all of us would agree that we need a comprehensive 
national energy policy. We remain overly dependent on foreign 
oil. We remain reliant on an outdated energy infrastructure 
that harms American businesses and gives our overseas 
competitors an advantage. I think we have to utilize a wide 
range of energy sources, including natural gas, oil, nuclear, 
and renewables, like wind, biomass, and solar to address our 
future energy needs, and that this gives us an energy future 
that is more stable and gives us a stronger economy.
    As you all will highlight in today's hearing, we can't just 
talk about the supply side of energy; we also have to talk 
about how we consume energy once we have it. Efficiency, as we 
all know, is the cheapest, fastest way to deal with our energy 
needs and our economy's energy independence.
    I wanted to start with a couple of examples that I think 
are important as we think about the successes we can achieve 
through energy efficiency. One of the most well-known is the 
recent makeover of the Empire State Building, which reduced 
energy costs by $4.4 million a year. It created 252 jobs, and 
it is estimated to have saved 4,000 metric tons of carbon 
emissions. They did things like install 6,500 new windows, a 
chiller plant retrofit, new building controls, and a web-based 
tenant energy management system.
    I had the opportunity not too long ago to visit a New 
Hampshire company called High Liner Foods, which is in 
Portsmouth, on the seacoast of New Hampshire. It is an energy-
intensive seafood processing plant that requires a tremendous 
amount of energy to operate. At one point, the 180,000 square 
foot facility consumed roughly 2 megawatts of power at any 
given time during normal operations. So next to the cost of 
personnel and fish, their biggest cost was energy. But by 
installing efficient lighting, new boilers, and various demand 
response techniques, the company has made great strides in 
reducing its energy consumption, which allows them to expand 
their business footprint in the State, and be more cost 
effective in their production.
    We can also benefit from those companies that are producing 
energy efficiency technologies. We have a company in New 
Hampshire called Warner Power that has made the first 
breakthrough in transformers in over 100 years. It is called 
the hexaformer, and if we look at the--where we lose power, 
about 5 percent of all electricity generated in the United 
States is lost through inefficiencies in transformers. So with 
wide scale use of this transformer, the company estimates that 
1.5 percent of all transformer energy losses could be 
eliminated, saving the country 60 terawatts of electricity per 
year. Now, you all may know more about terawatts than I do, but 
I translate that into five times New Hampshire's annual 
electricity consumption, so significant savings.
    As Senator Murkowski pointed out, energy efficiency enjoys 
diverse support among industry advocates. Because too much of 
our debate around energy has been fossil fuels versus 
alternatives. It has been about whether we benefit in the 
Northeast versus who benefits in the South or the West or 
Alaska, and everybody benefits from energy efficiency. It is 
one of the great places where we can really come to some common 
agreement.
    Senator Portman and I have done that over the last couple 
of years. We introduced legislation last year. As I pointed 
out, some of those provisions were signed into law as part of 
the Act. Those provisions required federal--the DOE to utilize 
advanced metering tools, the Department of Energy to study and 
better understand the barriers to the deployment of industrial 
energy efficiency. And we are reintroducing the legislation 
this year. It will include provisions around buildings that are 
voluntary, not mandatory, but critical because it will provide 
incentives, and as we all know, buildings use about 40 percent 
of our energy each year. It will assist the manufacturing 
sector, which consumes more energy than any other sector of the 
U.S. economy, and it will require the Federal Government, as 
you all pointed out, the single largest energy user, to adopt 
more efficient building standards, smart metering technology, 
and Congressman Gardner, I certainly agree. We need to do more 
to make sure that people can take advantage of performance 
contracting. The bill will have a real measurable benefit to 
our economy and our environment. A study by the American 
Council for an Energy-Efficient Economy found that last year's 
version of the bill would have saved consumers $4 billion by 
2020, and helped businesses add 80,000 jobs to the economy. It 
would also cut carbon dioxide emissions by the equivalent of 
taking five million cars off the road. And in the process, it 
would nothave increased the deficit of this country at all.
    We passed in the committee last session the Shaheen-Portman 
legislation with broad bipartisan support. We had more than 200 
endorsements from a wide range of businesses, environmental 
groups, think tanks, and trade associations, from the U.S. 
Chamber of Commerce to the National Association of 
Manufacturers, and the Natural Resources Defense Council, not 
usually a coalition that comes together around legislation. 
These are the kinds of nontraditional alliances that allowed us 
to make progress. I think we have the opportunity working 
together, both in a bipartisan way and a bicameral way, to 
build on the success of the last session, and to do something 
significant around energy efficiency.
    I thank this committee very much for the opportunity to be 
here, and for the work that you are doing, and look forward to 
partnering with you.
    [The prepared statement of Ms. Shaheen follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.003
    
    [GRAPHIC] [TIFF OMITTED] 79891.004
    
    [GRAPHIC] [TIFF OMITTED] 79891.005
    
    [GRAPHIC] [TIFF OMITTED] 79891.006
    
    Mr. Whitfield. Well Senator Shaheen, thanks very much, and 
once again, I want to thank both of you for coming over. We 
look forward to continuing a dialogue and working with members 
of the Senate in coming up with some solutions to these 
problems, and we look forward to working with you in the 
future. So thank you very much, and good luck in getting back 
over to the Senate.
    Senator Murkowski. That is the hardest part of our job.
    Mr. Whitfield. At this time, I would like to call up the 
witness on the second panel, and that is the Honorable Dr. 
Kathleen Hogan, who is the Deputy Assistant Secretary for 
Energy Efficiency, the Office of Energy Efficiency and 
Renewable Energy, at the Department of Energy. So Dr. Hogan, if 
you would please step forward?
    Dr. Hogan, welcome. Thanks so much for taking time to join 
us this morning. Before I introduce you, I just want to make 
one comment. You know, we have these hearings and we really 
value the testimony that is provided to the committee, and we 
do have a rule that we try to follow, being able to receive the 
testimony 2 days prior to the hearing, and unfortunately, we 
received yours last night around 7:00 p.m. I know that you have 
a very busy schedule, but I hope that in the future if you all 
testify here, that you might be able to get here a few days 
early on this testimony so we have an opportunity to really 
look at it.
    But thank you for being with us today. We do look forward 
to your testimony and your expertise, and I will recognize you 
for 5 minutes for your opening statement.

    STATEMENT OF HON. DR. KATHLEEN HOGAN, DEPUTY ASSISTANT 
 SECRETARY FOR ENERGY EFFICIENCY, OFFICE OF ENERGY EFFICIENCY 
        AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY

    Dr. Hogan. Thank you, Chairman Whitfield, Ranking Member 
Rush, and members of the subcommittee for inviting me to 
testify today on behalf of the Department of Energy. As noted 
by many that have spoken already, energy efficiency is a large, 
untapped resource in the United States. It offers important 
benefits for the country, improved competitiveness, billions in 
consumer savings: growth in domestic jobs, greater reliability 
of our energy systems, and reduced reliance on foreign oil, as 
well as environmental benefits.
    This year's State of the Union address included a goal to 
cut energy wasted by our homes and businesses by half over the 
next 20 years, and to double our energy productivity. The 
Department of Energy's energy efficiency portfolio is making 
important contributions towards these goals, including helping 
to ensure the long-term competitiveness of the United States, 
though much more needs to be done. We can start by looking at 
our homes and buildings. They consume about 40 percent of U.S. 
energy at a cost of about $400 billion a year, and there are 
many savings opportunities. DOE R&D has advanced new 
technologies, lighting, heating and cooling systems, windows 
that offer significant savings. Our work with leading home 
builders offers new homes with 50 percent savings over typical 
homes, as well as good indoor air quality and durability. We 
are working with organizations, and a number of them, on home 
upgrade programs to address the large number of existing homes, 
most built before modern codes, and these programs offer 
savings of 15 to 30 percent. We have recently reached the major 
milestone of weatherizing more than a million low income homes 
since 2009, helping these families save hundreds of dollars 
each year. We have also partnered with over 100 commercial, 
industrial, and public sector organizations representing 
billions of building square feet, and $2 billion in financing. 
They have taken the President's Better Buildings Challenge, 
with a goal of saving 20 percent or more on their energy bills 
by 2020, and then showcasing for others how to do it. Our 
minimum energy conservation standards that we implement now 
span more than 60 categories of appliances and equipment, and 
are currently saving consumers and businesses tens of billions 
of dollars each year. And as we have heard a lot of discussion 
this morning, as the Nation's single largest user of energy, 
the Federal Government does continue to lead by example. We 
have reached large energy savings, water savings, and renewable 
energy goals, and are on target to meet the President's 
challenge to implement $2 billion in performance-based 
contracts by December 2013, investments, as we have heard, that 
will reduce our energy use at no cost to the taxpayer.
    Turning to manufacturing, we are working on next generation 
technologies, processes, and materials that offer substantial 
improvements in efficiency, and which will position U.S. 
competitively for the future. In the State of the Union 
address, President Obama called for a network of manufacturing 
institutes that would help address cross-cutting challenges and 
help accelerate progress across the country. DOE is a partner 
in these efforts, for example, through a new pilot effort on 
additive manufacturing in Youngstown, Ohio, and we have 
recently announced a new energy innovation hub on critical 
materials at Ames Laboratory to develop solutions to domestic 
shortages of rare earth materials and other materials critical 
to U.S. energy security. We also have a strong track record 
with combined heat and power, which now has new market 
opportunities with lower cost natural gas, and we are 
supporting the President's goal of 40 new gigawatts by 2020.
    Finally, DOE manages a diverse transportation research 
portfolio that spans many technologies and addresses light duty 
passenger cars to heavy duty trucks. Building on past DOE 
research successes, the President has launched the EV 
Everywhere Grand Challenge to spur American innovation and to 
make electric vehicles more affordable and convenient to own 
and drive than today's gasoline-powered vehicles within the 
next 10 years. Electric vehicles do offer the potential for $1 
a gallon gasoline equivalent, as well as a number of consumer 
conveniences, and the U.S. needs to continue to lead in this 
marketplace.
    So we are pleased to be part of meeting these challenges 
and contributing to a more secure, resilient, and competitive 
energy economy. We look forward to see what more we can do 
together with you, and thank you again for the opportunity to 
be here today. I am happy to answer any questions.
    [The prepared statement of Dr. Hogan follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.007
    
    [GRAPHIC] [TIFF OMITTED] 79891.008
    
    [GRAPHIC] [TIFF OMITTED] 79891.009
    
    [GRAPHIC] [TIFF OMITTED] 79891.010
    
    [GRAPHIC] [TIFF OMITTED] 79891.011
    
    [GRAPHIC] [TIFF OMITTED] 79891.012
    
    [GRAPHIC] [TIFF OMITTED] 79891.013
    
    Mr. Whitfield. Well, Dr. Hogan, thanks so much for your 
comments. We appreciate, as I said, your being here, and I will 
recognize myself for 5 minutes of questions.
    I know you have a large portfolio of responsibilities, and 
certainly one of them does relate to the energy savings 
performance contracts. Would I be accurate in saying that part 
of your responsibility is working with other agencies of the 
Federal Government to encourage them to identify ways to be 
more efficient in their areas of responsibility? And do you 
know how many existing energy savings performance contracts are 
active at this time?
    Dr. Hogan. So you are accurate in saying that my portfolio 
includes the Federal Energy Management Program that does work 
with the other agencies to help them achieve a variety of 
energy, water, and renewable energy targets, and to help them 
with energy savings performance contracts. Currently, there are 
over 250--perhaps 270, 280 performance contracts in place, 
driving investment of more than $2.5 billion in building 
improvements.
    Mr. Whitfield. Right, and my understanding, the private 
companies that get these contracts, they provide the financing 
for this and the government simply pays it back over time with 
a nominal interest charge. Is that correct?
    Dr. Hogan. Energy savings, yes. So there is a sort of 
shared savings mechanism.
    Mr. Whitfield. And generally, how long do these contracts--
what is the repayment terms on the contract, the length of 
time?
    Dr. Hogan. They can vary based on what is necessary so that 
it works for the performance contracting firm. It can be 10, 
15, 20 years.
    Mr. Whitfield. Well, recently I attended a luncheon, and 
there were a large number of company representatives there, and 
all of them were uniformly excited about this program and very 
optimistic and positive about it. And I left that luncheon 
excited myself, because they were talking about all the great 
accomplishments they had made. And then, really to my surprise, 
about 3 days later, a group of employees at a federal 
installation came into my office, and they were complaining 
about a contract that had been completed on their installation 
and they were talking specifically about some sensor detectors 
that did not work right and some impact that it had on boilers, 
and it ended up costing a lot more money. And they had to bring 
people in on overtime to take care of these problems, and they 
ended up even disconnecting some of the systems. And we all 
know that you can find something that didn't work correctly, 
but generally speaking, what sort of oversight do you have to 
ensure that at least those experiences are minimal?
    Dr. Hogan. So I have the Federal Energy Management Program 
under my purview, and we do work with all the federal agencies 
around best practices to be following up with their energy 
service contracts. There are best practices for how to do 
evaluation, measurement, and verification on what is being 
achieved with these contracts, and we are happy to work with 
any sort of issues that address and help those agencies work 
them through so that we are getting the bang for the buck that 
ESPCs have to offer.
    Mr. Whitfield. So they can always come back to you all and 
say hey, we have got--this is really not working the way it is 
supposed to be working.
    Dr. Hogan. Absolutely.
    Mr. Whitfield. OK. Well, I have no further questions at 
this time. Mr. Rush, I will recognize you for 5 minutes of 
questioning.
    Mr. Rush. I want to thank you, Mr. Chairman, and Secretary 
Hogan, it is certainly a pleasure to have you before the 
committee again here. I am proud of the many accomplishments 
that you have made and that your agency--the Department has 
made.
    I want to just focus on an area that centers on low income 
households. It has been well-established that low income 
households pay a disproportionate amount of their paychecks on 
energy bills, and many urban constituents, those who live in my 
district, the First Congressional District of Chicago--
Illinois, rather, live in older homes and older buildings that 
are less energy efficient, and therefore, they are more 
expensive in the summer to cool and in the winter to heat. This 
leads to higher energy bills, and so my question to you is of 
the many programs that President Obama has implemented, many of 
his proposals on energy efficiency, I would like to know which 
ones do you think that are most important, that will have the 
most impact on our urban and low income communities? And so 
which one of the programs do you think that would happen?
    Dr. Hogan. Well certainly the weatherization assistance 
program has had a large impact in lowering the energy bills of 
low income households. That is a several-decade old program at 
this point that has weatherized six million or so homes over 
this period of time, a million or so since the Recovery Act was 
put into place, and it is helping these households at this 
point save billions of dollars. We are doing a lot with that 
program to try and expand its use so it can be more effective 
in multi-family housing and engage with the owners of those 
buildings that need different mechanisms with which to engage 
with the Federal Government. So that has just been a very 
powerful program that way.
    Mr. Rush. And the public housing-owned apartments, rental 
units, do you have any segmentation of the energy costs and are 
they--especially in newer public housing developments, are they 
meeting energy standards--our higher energy standards? Are you 
monitoring those, and what is going to be effective of those 
rental units and public housing?
    Dr. Hogan. Yes, so newer buildings certainly are meeting 
higher efficiency levels than the vast number of the older 
buildings that are out there, and we continue to work with HUD 
around standards for federally-owned buildings, and work to 
continue to engage with building owners of tenant-occupied 
space.
    Mr. Rush. I have--I think that in order to have a more 
vibrant and effective energy policy and energy culture more 
into the future, it is important that we frame--it is important 
that we introduce--it is important that we teach young people, 
even in the early grades of grammar school or grade school, the 
importance of energy. Do you see that as being a part of what 
you have done and what you plan to do in the future in terms of 
working with the school systems across the Nation?
    Dr. Hogan. Yes. We have done a number of educational 
initiatives with students in schools around energy challenges 
and other means so that we can educate people about energy in 
the school, energy at home, and create such a culture. I am 
happy to engage with you more on those topics.
    Mr. Rush. Well, I would like to work with your office to 
identify the different types of programs and incentives that 
exist for lower income constituents.
    Mr. Whitfield. Gentleman's time is expired.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Illinois, Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. I am going--I will be 
real brief.
    The original mission of the Department of Energy was to 
decrease our reliance on imported crude oil. The mission 
statement that I pulled up recently has changed a little bit. 
There are reports today that we have actually imported more 
crude oil from Saudi Arabia over the last month than we have in 
the last previous years. So put me down as a skeptic about the 
benefits of parts of the Department of Energy.
    Having said that, Mr. Chairman, I would like to put into 
the record a press release from the National--from the Consumer 
Electronics Association and National Cable and 
Telecommunications Association--announced today these 
companies, Comcast, DirecTV, DISH, Time Warner Cable, Cox, 
Verizon, Charter, AT&T, Cablevision, Bright House Networks, and 
CenturyLink, and Manufacturers Cisco, Motorola, and EcoStar 
Technologies, and Aris, they have come to an agreement to 
obviously establish set box--set top boxes that have--are 
energy efficient, use the same technology as some of the 
electronics, you know, the sleeping modes and stuff. This is an 
example of the industry doing it without government assistance 
or help. I also believe in the consumers, and I am also 
concerned that if we push environmental standards and rules and 
regs on the individual homeowners, that folks in the poorer 
regions of this country can't afford the more expensive homes 
that require new technology, versus homes that they want to 
purchase and live in.
    So with that, Mr. Chairman----
    Mr. Whitfield. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Shimkus. And I yield back my time.
    Mr. Whitfield. Gentleman yields back his time.
    I recognize the gentleman from California, Mr. Waxman, for 
5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Dr. Hogan, I want to ask you some questions about the 
national energy efficiency standards for appliances and 
equipment, but before I turn to that, I want to briefly discuss 
a DOE rulemaking under Section 433 of the Energy Independence 
and Security Act. Section 433 requires new and substantially 
rebuilt federal buildings to meet strong efficiency performance 
standards to reduce the use of energy generated from fossil 
fuels. DOE issued a proposed rule in 2010, but it lacks 
sufficient detail for stakeholders to evaluate how the 
standards would operate in practice.
    Last summer, Senator Bingaman and I wrote to Secretary Chu 
requesting DOE to issue a supplemental notice of proposed 
rulemaking to address issues raised by stakeholders and allow 
for additional public comment. Your response indicated 
willingness to issue such a proposal, but we have been waiting 
since last August.
    Dr. Hogan, is DOE committed to issuing a supplemental 
proposal for implementing Section 433, and if so, by when?
    Dr. Hogan. I am happy to be here to be able to relay that, 
indeed, we are committed to issuing a supplemental proposed 
rule. We actually do have that supplemental proposed rule at 
this point with the Office of Management Budget under review, 
which is part of our process before it can be shared with 
stakeholders. So if you rolled back the clock just a few weeks, 
if you looked at the OMB system, it would have shown that there 
was a final rule under review and now it will show that there 
is a proposed rule under review.
    I think also in the letter that we sent to you, we 
indicated that we did understand some of the issues that were 
being raised, both by federal agencies and stakeholders, and 
things that needed to be reconsidered, such as using renewable 
energy credits potentially to meet some of the requirements, 
how to define a retrofit or renovation, as well as how to deal 
with CHP and those are the types of issues that we will be 
addressing in this supplemental notice.
    Mr. Waxman. Will this proposal address the concerns 
stakeholders have raised regarding how to define major 
renovation that potential use of energy credits for compliance 
and clarifying the treatment of combined heat and power?
    Dr. Hogan. Yes.
    Mr. Waxman. Section 433 was intended to reduce carbon 
pollution by promoting energy efficiency and renewable energy 
in government buildings in a common sense and reasonable 
manner. For example, it directs the Secretary to consider 
whether there are significant opportunities for substantial 
improvements in energy efficiency in determining whether a 
renovation is major and subject to the standards. Dr. Hogan, 
will you commit to work closely with the stakeholders 
throughout the rulemaking process to ensure that the rule is 
practical, reasonable, and effective?
    Dr. Hogan. Absolutely we will make that commitment.
    Mr. Waxman. Thank you. Dr. Hogan, in your testimony you 
referenced the tremendous effectiveness of energy efficiency 
standards for appliances and equipment. Could you please 
elaborate on that?
    Dr. Hogan. Sure. So the Department of Energy implements an 
appliance standards program. We implement them under 
congressional authorization to do so. I think there is always 
an interesting conversation around these standards. One of the 
ways to look at it is we are typically given authority to 
implement these standards when different states are taking 
different approaches, which creates a patchwork effect across 
the country that is very difficult for manufacturers to deal 
with. That is typically when they go to the Congress and ask 
for the Department to have such authorities.
    Mr. Waxman. Dr. Hogan, as I understand, the Department 
implements minimum energy conservation standards for more than 
60 categories of appliances and equipment. As a result of these 
standards implemented since 1987, energy users are estimated to 
have saved tens of billions of dollars on their utility bills 
in 2010. Is that right?
    Dr. Hogan. That is right. These standards that create a 
minimum level for the products that can be sold in this country 
are saving tens of billions of dollars.
    Mr. Waxman. I understand there are at least five proposed 
or final efficiency standards that have been sitting at OMB for 
over a year, and I understand that DOE has missed the 
rulemaking deadlines for another four standards that have not 
yet gone to OMB. I assume this is correct? Am I right?
    Dr. Hogan. That is in the ballpark, yes.
    Mr. Waxman. Well, it makes no sense. These standards save 
money, strengthen our economy, and reduce pollution. I urge the 
Administration to move forward and get them finalized.
    Thank you so much for your----
    Dr. Hogan. Thank you.
    Mr. Waxman [continuing]. Participation in the hearing. 
Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you, Mr. Waxman.
    I might just say that in the spirit of all of the above 
energy policy, many of us would like to get rid of Section 433, 
because it certainly discriminates against area of energy 
supply.
    At this time, I would like to recognize the gentleman from 
Louisiana, the vice chairman, Mr. Scalise, for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I appreciate you 
being with us, Ms. Hogan, and you know, as the chairman 
referenced, Section 433--and I think the ranking member of the 
full committee just was talking about that, too, and the 
rulemaking process. Can you tell me what kind of concerns you 
all have heard about these supplemental rules being developed?
    Dr. Hogan. What we hear is stakeholders are looking for a 
fair amount of flexibility in the implementation of the 
standards. So some of the questions that have been raised are 
around the definition of a major renovation, so what actually 
triggers these significant savings requirements, whether or not 
you can use renewable energy credits to meet some of these 
savings targets, and how it is that CHP would be counted. Those 
are the types of issues that we think we can address through a 
notice of proposed rule and effectively engage stakeholders in 
getting to resolution.
    Mr. Scalise. And it is something that concerns a lot of us, 
you know, just that section in general, you know, and I think 
we will be looking at it some more.
    The Federal Government is the largest user of electricity 
and fuel in the country, so I would like to know what steps you 
are taking to actually go throughout federal agencies and 
achieve real efficiencies and savings in the Federal 
Government.
    Dr. Hogan. So the Federal Government currently is subject 
to a number of savings targets, either through congressional 
action or through executive orders.
    Mr. Scalise. Which ones are actually saving taxpayers 
money? I am not talking about objectives and goals down the 
road years from now. How are you saving the tax--I mean, when 
we came in 2 years ago into the Majority, we said we need to 
start controlling spending, because 40 cents of every dollar is 
borrowed money, and we started with ourselves. We actually cut 
our own budgets here in the House. We cut the budgets for 
congressional offices, because we felt like you have to put 
your money where your mouth is. So, you know, as you all are 
going around telling everybody else to change their lifestyles, 
what kind of things are you doing within the Federal Government 
to save taxpayers money in terms of----
    Dr. Hogan. Sure. So take energy, the energy intensity of 
the Federal Government has been reduced by approximately 15 
percent over the last 10 years or more. Also on water savings, 
we are meeting significant savings targets there as well. Both 
of those lead to substantial dollar savings across the federal 
fleet.
    Mr. Scalise. I think a lot of us would say if you just, you 
know, turned out all the lights over at, you know, some of 
these agencies that are putting radical regulations in place 
that are costing us jobs and making families have to pay more 
for food and for electricity and for gasoline, you would 
probably not only become more efficient, you would help 
families and get this economy moving again.
    I just throw one suggestion out there as we are talking 
about efficiency, you know, the President today and every day 
for the last couple of days has sequesters going around. He has 
been flying around on Air Force One all around the country, 
trying to scare people about the effects, many of which are not 
even accurate on this sequester. I think you could probably be 
a lot more efficient, you might want to call the White House to 
tell him, just park Air Force One. I mapped it out. It is only 
less than 2 miles for the President just to drive right down 
here to the Capitol and sit down and let us work this thing out 
instead of flying all around the country, tens of thousands of 
miles, and using who knows how much fuel. You know, just park 
Air Force One and go the maybe 2 miles down here and just sit 
around a table and figure this thing out. But that might be a 
way to save a lot of energy. I am not sure if you want to pass 
that on to the White House. It might be a good idea.
    With that, I yield back the balance of my time, Mr. 
Chairman.
    Mr. Whitfield. Thank you, Mr. Scalise.
    At this time, I recognize the gentleman from California, 
Mr. McNerney, for 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman, and I appreciate 
your opinion on that, Mr. Scalise.
    I thank you, Dr. Hogan, for coming and testifying today, 
and for your hard work in the Department. I just have a 
question about rate of return. What--do you have sort of an 
average rate of return a household might experience by 
investing in energy efficiency technology? How many years would 
it take back--to pay back a $5,000 investment in new windows or 
something like that, if it is just taking out of energy 
savings?
    Dr. Hogan. Yes, so every home can be a little bit 
different, but I think there is a fair number of improvements 
somebody in their home can make that can have a payback of 3, 
4, 5, 6, 7 years.
    Mr. McNerney. So--and that is not including federal 
subsidies, or is that including?
    Dr. Hogan. That would be without any type of subsidies. 
That would just be based on doing insulation, windows, a more 
efficient furnace, et cetera.
    Mr. McNerney. So the homes in lower income areas are going 
to be less efficient than the new homes in the more affluent 
areas, so they would have quicker rate of return, perhaps, than 
the newer homes, so federal help in that would be very 
effective in terms of reducing energy use and saving people 
money?
    Dr. Hogan. Yes, I think people use incentives for any 
number of reasons. One is to help buy down the cost of these 
improvements, but also, as we know from utility programs around 
the country, you use some incentives just to even get people's 
attention, just to help get those improvements moving.
    Mr. McNerney. Thank you. I was very thrilled to hear you 
talk about water savings. You know, I am from California and we 
have water wars out there, and water savings is a double win, 
because you are not only saving water, but you are saving 
energy because so much energy is needed to produce and deliver 
water. Are there significant programs in place to incentivize 
western users, particularly in southern California, to save 
water?
    Dr. Hogan. We can look into that and get back. Certainly 
not at the federal level, but there is certainly the issues 
with water in California are being addressed by a number of the 
California agencies, and I know they are trying to put programs 
in place very similar to what the energy utilities have been 
doing for years.
    Mr. McNerney. OK, one more area of questioning. Again, I 
was thrilled to hear you talk about electric vehicles, but I 
have heard some concern about companies installing equipment 
that might service all kinds of vehicles. Are you working with 
companies to address potential concerns of these businesses for 
installing stations that can accommodate all vehicles? What is 
the plan in terms of getting this out there in the business 
world?
    Dr. Hogan. Yes, so we are trying to engage with 
organizations of all kinds around building out the right 
infrastructure around alternative vehicles. We have a Clean 
Cities Program that works with cities around, you know, helping 
them plan for the right infrastructure and build it out based 
on sort of what makes sense in their regions, and want to be 
doing this in as an efficient and effective a way as possible.
    Mr. McNerney. So we are moving forward aggressively in 
that?
    Dr. Hogan. Yes.
    Mr. McNerney. And I think the new automobile efficiency 
standards are going to go a long ways in terms of getting us to 
use less fuel, and I applaud your efforts on that.
    Dr. Hogan. Thank you.
    Mr. McNerney. Thank you. With that, I yield back, Mr. 
Chairman.
    Mr. Whitfield. Thank you very much.
    At this time, I recognize the gentleman from Texas, Dr. 
Burgess, for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman. I appreciate you 
having the hearing, appreciate the opportunity to hear from the 
Department of Energy.
    Let me just say for the record, I am a big believer in 
energy efficiency. I do think that is the low-hanging fruit. I 
think that is the common ground that where certainly we can 
meet on many of these issues. Every July, I do an energy 
efficiency summit in the district back home in Texas. We have 
had speakers as diversified as David Porter for the Texas 
Railroad Commission to James Woolsey, the former Director of 
the CIA. I have tried to construct things in my life around 
energy efficiency, the home we live in, the hybrid car that I 
drive. So I am a believer in energy efficiency. I made those 
decisions based upon what was right for me and my family, not 
based on anything that the Federal Government told me to do.
    But since you are here, let me ask you a question. The 
number one question everyone in my district is asking is why 
are gas prices so high right now? Gasoline prices.
    Dr. Hogan. I guess it is based on the cost of production 
and the cost of moving it through our systems.
    Mr. Burgess. Well, if you are in the Department of Energy, 
presumably you have these discussions, correct?
    Dr. Hogan. The Department of Energy does have discussions 
about what we can do in the short term and in the long term to 
address gas prices. I think in the short term what we can do is 
really give people tips about how to use the gasoline that they 
are using as efficiently as possible, and then in the longer 
term, we can clearly be figuring out how to increase low-cost 
supply, as well as use alternative fuel vehicles and further 
development in that space.
    Mr. Burgess. Well, it is of concern that here we are in 
February, and back home in Texas right before I came up here, I 
filled up the hybrid with gasoline that cost $3.70 a gallon in 
Texas in February. That means in New York, after Memorial Day, 
they will be closing in on $5 a gallon gasoline. So I think 
this is a matter of some importance, and since the Department 
of Energy is involved in this, and this may have a direct 
effect on our economy generally. No one can forget that just 
before the meltdown that occurred in 2008, our gasoline prices 
and diesel prices were sky high, and they certainly had an 
effect on the economy, so I would think this would be something 
that you would be discussing internally and maybe even some 
interagency discussions. Do you ever pick up the phone and call 
the people at the Commodities Futures Trading Commission?
    Dr. Hogan. We do engage in conversations across the Federal 
Government, and we, of course, are very concerned about these 
prices and are doing what we can do at this point, yes.
    Mr. Burgess. What does Mr. Ginsler at CFTC tell you that he 
is doing that may dovetail with what you are doing with the 
energy efficiency in the Department of Energy?
    Dr. Hogan. We can give you a more detailed explanation, if 
you would like, on what the Federal Government is doing in 
this----
    Mr. Burgess. I would appreciate that very much, and again, 
I think that would be of general interest to people who are 
maybe watching this on C-SPAN.
    Now, in answer to--or actually, Mr. Waxman made a point 
about that he wanted to see things that were common sense 
directions and applied in a reasonable manner, and I think he 
was talking about the Federal Energy Management Program. So you 
have the jurisdiction of federal buildings under your control, 
the energy efficiency of federal buildings? Is that correct?
    Dr. Hogan. That is correct.
    Mr. Burgess. Is this building under your control?
    Dr. Hogan. I believe this is under the Office of the 
Architect of the Capitol.
    Mr. Burgess. But you know, I will just say from my 
observation, having been in the congressional office buildings 
now for a few years, since 2007, 2008. Someone came in and 
changed all my light bulbs to CFLs. Nobody told me they were 
going to do it. Nobody warned me not to break one over my head 
one night, but there I was. I had CFLs in all the offices. 
Well, that is great. We are perhaps saving some energy by doing 
that, but no one has ever done, as far as I can tell, an energy 
audit of the Rayburn Building and discussed the effect of 
having single-pane glass on all of the windows. I have an 
office that faces west. In the summertime, it gets beastly hot. 
Is this something that your office might be interested in?
    Dr. Hogan. We are happy to have a conversation about how to 
do an audit of the Capitol buildings----
    Mr. Burgess. Well, I am just shocked that the architect of 
the Capitol has not reached to you, as part of your mission is 
for the energy efficiency of federal buildings, and this is a 
big federal building that consumes a lot of energy. You changed 
all the light bulbs, but maybe there were other things you 
should have been looking at as well.
    Dr. Hogan. Well I think if we engage the Office of the 
Architect, we will see that they are doing a lot more around 
the Capitol buildings, and probably just started with, as we 
were saying, the low-hanging fruit, and certainly doing those 
audits is a cornerstone of what we are doing across the entire 
federal family.
    Mr. Burgess. So can I assume that there are conversations 
between your office and the Office of the Architect of the 
Capitol as far as the energy efficiency of--the energy 
consumption of federal buildings, at least on the House side?
    Dr. Hogan. We have been engaged with the Office of the 
Architect in their plans, yes.
    Mr. Whitfield. Gentleman's time is expired.
    Mr. Burgess. Well, Mr. Chairman, maybe if you could share 
some of that information with our office as well. We would 
appreciate that.
    Mr. Whitfield. OK.
    Mr. Burgess. Thank you, and I will yield back.
    Mr. Whitfield. At this time, I recognize the gentleman from 
New York, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Dr. Hogan, welcome, and I have a couple of questions about 
combined heat and power, and the President's 2012 Executive 
Order on industrial energy efficiency.
    What role do you see for the--is the federal procurement 
going to play in achieving the President's goals of deploying 
more combined heat and power systems?
    Dr. Hogan. So certainly as the largest energy user and as a 
big procurer of equipment, the Federal Government has a big 
role to play, and we are currently trying to put together a 
broader strategy on what that role could look like. Though what 
we are doing in the immediate term is exploring extending a 
pilot program that we have underway in the ESPC space. We have 
been standing up a pilot program called ENABLE to allow the 
ESCOs to engage in the smaller buildings that are within the 
federal family that typically get overlooked, and we are 
looking to expand that ENABLE pilot to encourage combined heat 
and power or allow investments in a performance contracting 
way.
    Mr. Tonko. Thank you, and as part of the effort to identify 
policy or regulatory barriers to investing in CHP, the 
Executive Order states that federal agencies will convene 
stakeholders to solicit their ideas and input. Is DOE involved 
in that list of agencies?
    Dr. Hogan. Yes, if I am thinking about the same. So the 
Executive Order encouraged us to go out and engage any number 
of stakeholders around how to advance CHP. We are having a set 
of regional dialogues on this topic, the next one in a couple 
of weeks in Baltimore, around the things that we can do, and 
then we are also engaging in a report to Congress that was part 
of the energy bill passed this past December to do a much more 
detailed analysis around the barriers in the way of CHP and the 
things we can do to remove them.
    Mr. Tonko. I know that back in--I think it was '98, a 
roadmap was developed to take the--to double CHP from, what was 
it, 46 gigawatts to 92, in that neighborhood----
    Dr. Hogan. Yes.
    Mr. Tonko [continuing]. And they somewhat met that goal, 
that target deadline. Where do you believe the best 
opportunities exist today for deployment of CHP?
    Dr. Hogan. I think we are at a very interesting point right 
now for CHP in that there are many, many, many opportunities, 
from large heat process type industries to smaller industries 
and into the residential and commercial sectors. I think you 
will hear from another panel member today on this topic, but I 
think also as we look at the post-Sandy period of time, there 
is a lot more interest in things that offer enhanced energy 
security linked to stave off the aftermath of these storms.
    Mr. Tonko. And in the midst of all of that, do you see a 
particular industrial sector that might be targeted for best 
retrofitting to CHP?
    Dr. Hogan. So the industrial sectors that make the greatest 
sense are ones that have some amount of heat load, so again, 
that can be pretty broad.
    Mr. Tonko. In the efforts of the State of the Union for the 
race to the top for energy efficiency, how is that going to be 
developed? I am asking that from my perspective in the State of 
New York, which has been rather aggressive about doing energy 
efficiency. Do we get impacted for being a progressive State in 
regard to a baseline that might be well in advance of other 
States? How would we fare in that whole race to the top?
    Dr. Hogan. So we will be happy to engage stakeholders in a 
conversation about how this program will be designed. At this 
point, the next point when there will be more information about 
this program will be in the rollout of the President's budget, 
and then after that we will be happy to engage with you more 
directly.
    Mr. Tonko. I would just indicate a concern there that if 
you have done great work, you ought to be rewarded for that and 
continue to do more, and the consumers should not be held back 
or impacted--negatively impacted because of it.
    I am just about out of time. I was going to go into 
weatherization, but then let me just make a pitch for 
weatherization activities. Even though the stimulus did a great 
deal of investment to the good, I believe there is a lot of 
unfinished business and would strongly encourage that 
opportunity. Thank you very much.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Nebraska, Mr. Terry, for 5 minutes.
    Mr. Terry. Thank you, Mr. Chairman, and thank you for being 
here today.
    What is the biggest barrier to an increased use of the 
energy savings performance contracts by the Federal Government? 
The barriers that are of concern?
    Dr. Hogan. I think one of the barriers is really just 
getting over the hurdle of having many different agencies go 
down this path. It takes a fair amount of knowledge to go and 
do that, and that is what the Federal Energy Management Program 
is set up to do. But just because we offer those services 
doesn't mean people necessarily want them. And again, it is 
just because everybody is doing so much in their day-to-day 
jobs. And I think that is one of the barriers that the 
President's Performance Contracting Challenge is really helping 
overcome. Challenging the agencies to commit to $2 billion with 
energy savings performance contracting means each agency has 
its own goal and each agency is working through a set of 
projects to meet those goals. So I think we will have largely 
addressed that particular barrier by December 2013.
    Mr. Terry. All right. On weatherization, you may have read 
some stories from my district where there were several million 
dollars issued for weatherization in the city, and it was 
something like 14 or 15 homes that were actually provided the 
services. But yet, the money is gone. And so weatherization, at 
least in our area, is not a program that is held in high 
esteem. It is an example of the waste and fraud.
    So could you point out the internal DOE structure to 
oversee the weatherization program and to ensure that 80 
percent of it, the dollars that are provided, aren't being used 
for administrative purposes?
    Dr. Hogan. Sure. First let me say that issues with 
weatherization really were the exception and not the rule, and 
there is a very comprehensive set of quality assurance 
procedures in place, on top of the fact that only a certain 
portion of the dollars can be used for administrative purposes.
    Mr. Terry. And what percentage is that?
    Dr. Hogan. I think it is about 20 percent.
    Mr. Terry. Twenty percent is allowed for administrative 
purposes----
    Dr. Hogan. In all.
    Mr. Terry [continuing]. And then the rest has to----
    Dr. Hogan. Be put to work to improve low-income family 
homes. So yes.
    Mr. Terry. And so when--how would--there were several 
stories in our local paper outing this scam. Do those rise up 
to--in DOE, do people catch those so you can begin an 
investigation, and how is an investigation into that type of 
waste and fraud--well, what triggers an investigation? Can you 
investigate that?
    Dr. Hogan. Absolutely we can investigate that. Any time we 
hear of an issue, it is investigated and we do everything in 
our power to correct it and recoup any dollars that may have 
been misused.
    Mr. Terry. Will you check for me and get back to me with 
what you have done on the Omaha situation with the waste and 
fraud in that program?
    Dr. Hogan. We would be happy to do that.
    Mr. Terry. Thank you. Yield back.
    Mr. Whitfield. Thank you, Mr. Terry.
    At this time, I recognize the gentlelady from California, 
Ms. Matsui, for 5 minutes.
    Ms. Matsui. Thank you very much, Mr. Chairman. Thank you, 
Dr. Hogan, for being here.
    Energy efficiency is a key component for shifting our 
Nation towards a clean energy economy. We have made great 
progress in changing the way we use and conserve energy, but we 
need to do much more. I believe one area where we can make a 
significant impact is by providing sound financing mechanisms 
to individuals eager to make energy efficiency upgrades to 
their home. In fact, last fall in my district of Sacramento, we 
launched a revamped public-private partnership born out of the 
Recovery Act funds to encourage residential energy upgrades.
    The demand for residential energy retrofits is strong. 
Property Assessed Clean Energy, or PACE programs, are one 
approach to financing home retrofits. With PACE, homeowners can 
finance energy efficiency improvements without an upfront cost 
through a voluntary assessment on their property. 
Unfortunately, PACE programs have faced some major hurdles.
    Dr. Hogan, does DOE support innovative financing mechanisms 
that would help homeowners make these important upgrades?
    Dr. Hogan. Yes, through our work at the Department of 
Energy, we are very supportive of innovative financing 
mechanisms and doing everything that we can to help pull out 
the lessons learned and share them with others, as well as 
working to help States and local governments continue to 
leverage and improve the effectiveness of the revolving loan 
funds that they were able to stand up with Recovery Act 
dollars.
    Ms. Matsui. OK, now is there a way to get PACE programs 
back on track through administrative means? Are you or the 
White House still engaging FHFA to restore this program?
    Dr. Hogan. I think what we have all heard from FHA is FHA 
would like more data to better understand how these loans 
perform, and so the Department of Energy is actively engaged in 
working with others to try and pull together the type of data 
that the finance industry needs to understand this loan 
performance.
    Ms. Matsui. So you are looking at probably similar 
approaches to facilitate this growing demand?
    Dr. Hogan. Exactly.
    Ms. Matsui. OK, great.
    Dr. Hogan, some have suggested that we don't need 
government policies to boost energy efficiency. They say that 
if customers really wanted energy efficiency, the market will 
supply it. But my understanding is that there are a lot of 
market failures in this area. The classic example is the 
situation where the landlord has no incentive to weatherize an 
apartment because a tenant pays the utility bills. Dr. Hogan, 
could you please discuss some of the market failures that allow 
energy waste to persist, even when it could be cost effective 
to deploy efficiency measures, and are these market failures 
significant?
    Dr. Hogan. I think we can see from the opportunity that we 
all talk about over and over with energy efficiency that there 
is a list of market barriers that hinder people from making 
what might be the economically rational choice, and that can 
just be that some of the more efficient products do cost a 
little bit more up front, even if they have a very attractive 
payback associated with them. And some of it is just hard to 
get the information so that you know what that payback would 
look like. So those are the types of things around which 
policies can be very helpful in helping people get these 
savings.
    Ms. Matsui. Could you explain further on that what the 
policies might be?
    Dr. Hogan. Better information and clearly, the reason we do 
appliance standards as well is because we can help consumers 
get the savings that are there from the more efficient products 
whenever there is a cost effective opportunity to do so.
    Ms. Matsui. OK. I just also want to follow up on what my 
colleague from New York has talked about, about the race to the 
top for efficiency. You know, California has been involved in 
this a long time, since the '70s with the grandfather of energy 
efficiency, Art Rosenfeld, and so we don't want to be, in a 
sense, starting from baseline, which is artificial in a sense, 
so we would love to have that discussion with you.
    I have no further questions, so I yield the balance of my 
time.
    Mr. Whitfield. Thank you very much. At this time, I 
recognize the gentleman from Louisiana, Dr. Cassidy, for 5 
minutes.
    Mr. Cassidy. I am going to defer to my gentleman--my 
colleague from Texas for a turn, please.
    Mr. Whitfield. Gentleman from Texas is recognized.
    Mr. Olson. I than the chair, and good morning, Dr. Hogan. 
Welcome. I appreciate your time and expertise.
    One of the instances where energy is lost, regardless of 
the initial source, is in transmission. The wires we use are 
largely copper. They lose significant amounts of energy as they 
travel from place to place. Many people may not realize this 
because Texas is the number one producer of oil and gas, but we 
are the number one producer of wind in America. The problem 
with our wind is it is generated in the panhandle in western 
Texas. We need it in eastern Texas, Houston, Dallas, Ft. Worth, 
San Antonio, Austin--in some cases, 700 miles away. But 
University of Houston is trying to change that. Having recently 
been named a Tier I research university and being led by an 
innovative and hands-on chancellor, Dr. Randy Coture, U of H 
has created an energy research park. One project that they are 
doing at the University of Houston energy research park is 
working on superconducting wires that are up to 20 percent more 
efficient than current wires. This is not just an academic 
project. U of H intends to prove this works by rewiring their 
main campus with these superconducting wires. In true Texas 
tradition, they are going all in, putting their future--and 
more importantly, the future of over 300,000 students--on the 
line. Are you aware of this project being developed at the 
University of Houston energy research park?
    Dr. Hogan. I personally am not, but it certainly does sound 
very exciting.
    Mr. Olson. Well since you are not familiar with it, I would 
like to offer you a chance to come down and see it. I mean, if 
you have got some time, we go right here to Reagan 
International Airport, have a direct shot on United Airlines to 
Intercontinental Airport down in Houston. I would love to take 
you down there and see the energy research park.
    Dr. Hogan. We would be very interested.
    Mr. Olson. Earlier today I had a meeting with the people 
from ABS, which is the American Bureau of Shipping. One energy 
efficiency they are looking at is natural gas, in fact, liquid 
natural gas for transports of maritime vehicles. In fact, 
Nasco, the shipbuilder, is actually building their first 
project where one of the big ships will be powered by LNG, 
going to the Caribbean area and that part of the country. What 
do you think about that issue for energy efficiency, natural 
gas as opposed to traditional fossil fuels?
    Dr. Hogan. Certainly we can have a conversation about that 
as well.
    Mr. Olson. OK. Well one further question for you, ma'am. I 
mean, again, our biggest challenge right now--one thing we have 
in west Texas as well, getting to the Defense Department, they 
are being very innovative with their energy resources, their 
needs. Fort Bliss in El Paso, the largest base--the largest 
geographic base in America, is actually doing great things with 
solar because they have the sun out there. In fact, they are 
hoping to be actually a net exporter some time, getting energy 
off the base and helping local communities. I mean, that is one 
example of what the Federal Government can do, but again, my 
biggest concern, what I am hearing from back home, is let the 
market decide what the technology is. Don't enforce some sort 
of technology from--so I ask your assistance going forward. 
Listen to the market and help us get this superconducting 
technology going on. Come on down and see it. I would really 
appreciate it.
    Dr. Hogan. Terrific.
    Mr. Olson. Thank you. Yield back the balance of my time.
    Mr. Whitfield. At this time, I recognize the gentlelady 
from Florida, Ms. Castor, for 5 minutes.
    Ms. Castor. Thank you, Mr. Chairman, and welcome. Secretary 
Hogan. Thank you for meeting with me a couple of months ago to 
advise on all the great things that are going on with energy 
efficiency. I think there is so much more to do all across the 
country for families and businesses, so I encourage you to keep 
at it, and we can unleash the powers of American ingenuity and 
really empower families and businesses, and save money at the 
same time.
    I also wanted to thank you for your attention to the 
historic investments under weatherization. Under the Recovery 
Act, I think you said we were able to weatherize one million 
homes. And let me tell you what that means in my area, in the 
Tampa Bay area in Florida. That means that thousands of the 
folks that I represent are saving money on their energy bills, 
while at the same time, we created a lot of jobs. We created a 
lot of jobs in a time when the unemployment rate was really 
hurting families, and the legacy it has left is very important. 
Now our community colleges, with that investment, have ongoing 
weatherization training initiatives. They are still creating 
jobs, even though the money, the investments from the Recovery 
Act have tapered off. For families that struggle to get by, if 
they are able to save a few hundred dollars or a thousand 
dollars a year on their electric bill, that is very meaningful 
to them. That means they can do better at the grocery store, 
they can do better with other bills that come in. So thank you 
for your attention to that.
    Is all of the investments under the Recovery Act for 
weatherization, is that all invested now, or are States across 
the country still rolling out any of those monies?
    Dr. Hogan. The vast majority of the Recovery Act dollars 
for weatherization is now spent, so yes, it is----
    Ms. Castor. And what is the status of ongoing 
weatherization efforts?
    Dr. Hogan. That is a good question. Right now, given the 
continuing resolution that we are now under, we are working 
hard to give the States the information they need to go into 
their next program. It is a little bit complicated because of 
the continuing resolution which continues the weatherization 
budget at a level well below where it had been historically----
    Ms. Castor. It is just such a huge payback for the federal 
dollars that we can invest back home in our local communities 
that save our constituents money, so that money comes back to 
them, then we create jobs, and we are still kind of stuck at 
this 7.9 unemployment rate, and it is just difficult to watch 
the Congress self-inflict a wound and set us back at a time 
when the economy is getting better and I see great improvements 
and people are hiring.
    So we--that is our responsibility here, and I encourage my 
colleagues to think about that as these indiscriminate across-
the-board cuts--this is an area that we should continue to 
invest in, because it has paid such great dividends across the 
country.
    And for my colleagues that worry about gas prices, I have 
to say, we are fortunate to be living through a time when we 
have made such progress in fuel economy for our vehicles. You 
know, I have a member of the family that bought--is leasing one 
of those electric vehicles. Since October, he has not visited a 
gas station. He has not purchased gas. I know my friends from 
Louisiana and the gas producing areas, they probably don't like 
that, but you know how much money that is saving and how much 
that is saving families across the country? This is remarkable 
progress. It is saving consumers money. If you can buy a fuel-
efficient vehicle, on average, that means that $1,700 back in 
the pocket of consumers where they can spend it on their 
families or their small businesses. It helps with climate 
change because the carbon dioxide from burning gasoline and 
diesel contributes to the--to global warming and changes in the 
climate. It is reducing our oil dependence costs. Dependence on 
oil makes us vulnerable to oil market manipulation and price 
shocks. It increases energy sustainability. Oil is a non-
renewable resource, and we cannot sustain our current rate of 
use indefinitely. So using it wisely and conserving is, 
frankly, just smart.
    Looking ahead, what are the challenges you see with fuel 
economy and lengthening the life of the batteries of these 
vehicles, and what are you optimistic about?
    Dr. Hogan. I think we are very optimistic about what we can 
do across a whole set of vehicle technologies. Certainly I 
already spoke to the new research effort around electric 
vehicles and what we can do there to make them much more cost 
competitive over the next 10 years, as well as convenient from 
the standpoint of the consumer, and then, of course, make 
available something along the lines of a dollar per gallon 
gasoline through electricity.
    I think we are also interested in what we can do with 
advanced combustion. We are doing a lot more there as well, and 
we think we will be very well-positioned to be working with 
U.S. auto manufacturers to meet the CAFE AE1 standards as they 
continue to ramp up in the coming years.
    Mr. Whitfield. The gentlelady's time is expired.
    At this time, I recognize the gentleman from Louisiana--oh, 
Mr. McKinley from West Virginia for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman, and thank you for 
your patience, Dr. Hogan.
    Let us just start by saying I am very supportive of all the 
initiatives on energy efficiency, and as one of just two 
engineers in Congress, it is a delight to be able to try to 
work and improve that a little further.
    But I have got two questions for you. The GAO came out 2 
years ago with a report that said there are 11 agencies 
handling green buildings or 11 agencies offering 94 separate 
initiatives, and they said that--by their own report, they are 
saying that we can benefit with more collaboration. Can you 
share with us briefly what you have accomplished over the last 
2 years in either combining them, because with budget 
constraints right now, wouldn't it make more sense instead of 
having 11 agencies handling green buildings to just a handful 
or fewer? Have you accomplished any of that?
    Dr. Hogan. Yes, we are doing a lot of coordination across 
the federal agencies----
    Mr. McKinley. Different than what you were prior to 2 years 
ago?
    Dr. Hogan. We are. I think we are getting more and more 
efficient as we go forward. I would also say, just going back 
to that GAO study, when you just count things it makes it look 
like there may be more duplication overlap than there may 
actually be, because I oversee the Federal Energy Management 
Program, which has an important role in engaging with each of 
the agencies with their senior sustainability officials around 
their work.
    Mr. McKinley. Could you get back to me, please, with some 
of the--what you have done to help consolidate, so that we can 
use the money--instead of doing it administratively, wouldn't 
it make more sense if we could pass that on to the consumers in 
some fashion by reducing those costs at the Federal Government 
level?
    The second issue I have is a bit of a paradox. Someone at 
my former firm--we designed a lot of schools and a lot of 
public buildings, and we knew that often what the cost was for 
operation of an older building, because they didn't meet all 
the new standards, the air quality and/or air quality 
standards. There was a cost that you can assume in the 
operation, but now under the new standards, new buildings are 
typically--for operational costs are increasing in costs 
primarily because of the standards that are set for fresh air 
to come into a classroom where you have to have four to twelve 
air changes per minute--per hour, as compared to where it had 
been before where we had--maybe sometimes where you had an 
individual unit, they would close the damper and there was no 
fresh air coming into Johnny's classroom. So now we are 
introducing that. So we have a paradox. We are trying to 
improve our air quality and efficiency, but we are increasing 
costs to the consumer. How do you--how are you dealing with 
that?
    Dr. Hogan. We certainly understand that issue and we are 
working to make sure that we are looking holistically at the 
costs for these buildings. Certainly we want to be promoting 
technology that meets our national objectives, but in a way 
that also keeps the costs in a good space for the people that 
have to pay those bills, and really offer the savings that are 
there to be gotten. So we are looking at the O&M costs.
    Mr. McKinley. You do recognize, then, that the new 
standards--and I subscribe to them. I am in agreement with them 
because they are improving our indoor air quality, but they are 
raising the cost of operation.
    Dr. Hogan. When you need mechanical ventilation there is a 
cost there, but I think when you look across everything that is 
going on in these buildings, you see that that can be done in a 
very low cost way. So you are delivering a much more lowe-cost 
building for people to be living in.
    Mr. McKinley. Do you see--with these standards, do you 
accept--I guess I am building back off that same premise, 
because I am glad we are providing fresher air into that, but 
do you acknowledge that perhaps the old buildings--in some of 
these buildings, the indoor air quality wasn't as good as it is 
today by what we are doing, by bringing in fresh air?
    Dr. Hogan. I think that is a complicated question that 
requires a longer conversation.
    Mr. McKinley. Stop by. I am over in Cannon. Let us see if 
we can't follow up with that, because I think we have a dilemma 
here in Congress about indoor air quality versus outdoor air 
quality, and I would like to make sure we have a good 
discussion about that so when those asthma attacks that people 
refer to often perhaps are being caused by our indoor air 
quality and the fact that we are not adhering to the various 
codes and standards that have been set forth. So if you could 
please stop, I would like to do that very much.
    Thank you very much. I yield back my time.
    Mr. Whitfield. Gentleman's time is expired.
    Mr. Griffith, do you have any questions? Mr. Gardner? Dr. 
Cassidy? Dr. Cassidy is recognized for 5 minutes.
    Mr. Cassidy. Good afternoon.
    Young families want the most square footage they can get in 
the place with the best school district. For them to invest in 
energy saving things which have only a payoff over 10 years 
really defeats that purpose, and so the way they are trying to 
scrape money together, how can I get the best square footage in 
the best school district if I invest $3,000 in which the payoff 
is only over 10 years, that is that many fewer square feet I 
can purchase. Does that make sense? You look quizzical, so I am 
not sure I am being clear.
    Dr. Hogan. I understand what you are saying.
    Mr. Cassidy. So really if we are talking about market 
mechanisms, it seems like much of what we discuss almost is by 
fiat, almost by definition, because really under the current 
way we finance mortgages, that family, again, has to make that 
tradeoff, less square footage or not as good a school district 
in order to have some of these things which we all agree would 
be wise for energy efficiency. Again, does that make sense?
    Dr. Hogan. Yes, I think the way we have been looking at 
some of these home purchases is through the total cost of 
ownership, so if you look at the cost of a mortgage plus the 
cost of the energy bill----
    Mr. Cassidy. Now that, though, right now--we have 
investigated this. The cost of energy bill is not currently 
used by mortgage underwriters in terms of discerning someone's 
ability to get a mortgage. So when you look at it, is that 
really impacting that young family with three kids trying to 
get the better home sort of thing?
    Dr. Hogan. Yes, there is an issue as to where that young 
family is and how large a mortgage they can get and whether 
they are at that maximum level of a mortgage. But I think what 
we have seen in recent years is that hasn't been the biggest 
barrier.
    Mr. Cassidy. Now, I will tell you, when I saw--this came to 
mind last year because of Senators Isaacson and Bennet put 
forward their SAVE Act, we have been thinking the same concept, 
but when I spoke to bankers, they really do not include the 
energy cost in a mortgage, or somebody's suitability. Frankly, 
we can't talk about market mechanisms until we address this if 
we are thinking of that young family. Would you concede that, 
and if so, how do we proceed?
    Dr. Hogan. Well I think we can proceed in a number of ways. 
One is let us continue to have the conversation on the role of 
energy bills, because certainly a lower energy bill does give a 
household more money to spend----
    Mr. Cassidy. But again, if the payoff is 10 years for that 
energy saving intervention, really, that family doesn't look at 
that 10-year savings. Does that make sense?
    Dr. Hogan. You mean because it is----
    Mr. Cassidy. They are on a cash flow basis. It is not as if 
they have got a lot of money in the bank that they can invest 
and see the payoff over 10 years. They are just now meeting 
their bills, and anything that pays off over 10 years is 
probably not uppermost in their mind.
    Dr. Hogan. There is the standpoint from the family. There 
is the standpoint from the banker, right, but from the 
standpoint of the family, if you have a more efficient home and 
you had to pay a little bit extra and it is rolled into your 
mortgage, as an example----
    Mr. Cassidy. Yes, but that doesn't occur right now.
    Dr. Hogan. But it can. Those mortgages are available. 
Energy efficient mortgages are available. Part of it is an 
access and awareness issue as opposed to----
    Mr. Cassidy. I would love to see that, because when I spoke 
to the bankers--we had some people come in because we were 
pursuing this--and the bankers said listen, we have a 
proprietary mechanism by which we determine if somebody is 
eligible--it is proprietary to our bank, not industry-wide, and 
we do not include this and we are not quite sure how.
    Dr. Hogan. OK.
    Mr. Cassidy. So if you have those, we would love it if you 
could see that.
    Do you have awareness of Isaacson and Bennet's SAVE Act?
    Dr. Hogan. I do.
    Mr. Cassidy. What are your thoughts about that?
    Dr. Hogan. I think in general we are very supportive of the 
goals of the proposals that can help motivate home 
improvements.
    Mr. Cassidy. So let me just switch subjects. When I speak 
to home builders, they look at the regulations put out by DOE 
and they feel that sometimes something that is proscribed for 
one place wouldn't apply in another. And little things, for 
example, in my State, in Louisiana, if you plant an oak tree on 
the west or south side, frankly, you will get a heck of a lot 
of benefit, but there is no kind of calculation in terms of 
that, in terms of the overall cost efficiency of a home. Their 
suggestion was that you bring in stakeholders coming up with 
metrics so that someone could pick and choose, saying listen, 
insulation really works well here. It is worth bang for the 
buck, and this other intervention cost me a heck of a lot of 
money, but I am not going to get a payoff for 20 years. 
Probably I will have sold the home by then. Any possibility of 
that sort of thing?
    Dr. Hogan. I think there is a robust conversation ongoing 
through the codes organizations about a more performance-based 
path to get to an outcome in the least costly way. I think 
people are always interested----
    Mr. Cassidy. So they feel as if your DOE regulations, 
though, are not outcomes based but rather they are sort of you 
put in this amount of foam and this amount of this, and their 
criticism--and I have learned to say what I have been told, not 
what I know, so Dr. Hogan, you may say oh my gosh, you are 
totally wrong on this, but their criticism is that your 
standards are less performance-based and more ``you shall put 
in 6 inches of foam'' sort of thing.
    Dr. Hogan. And both pathways are there. There are 
performance-based provisions in the codes. I wouldn't quite 
call them our codes. These are codes that are created by model 
code authorities and the Department of Energy's role has been 
to do an energy savings determination relative to those codes 
to show that they do offer meaningful savings over the prior 
code, so they are a stakeholder-driven process to which the 
Department of Energy will also bring technical information to 
the table for consideration, which is why there is an ongoing 
venue through which we can have all of these conversations.
    Mr. Cassidy. Thank you. Thank you, and I yield back.
    Mr. Whitfield. Gentleman's time is expired.
    At this time, I am going to recognize the gentleman from 
New Hampshire as a valuable member of the Energy and Commerce 
Committee. He doesn't happen to serve on the Energy and Power 
Subcommittee, and so he has waited patiently until the end, and 
now he is recognized for 5 minutes for questions.
    Mr. Welch. Mr. Chairman, I thank you very much, Mr. Ranking 
Member. By the way, having this hearing on efficiency this 
early in our congressional term is tremendous, so I want to 
thank you and I think all of do.
    In listening to this and talking to my colleagues, a couple 
of things. Number one, there does seem to be strong bipartisan 
cooperation and leadership on efficiency, and then second, 
there is really three questions that this committee has got to 
sort through, I think. Number one, what can the government do 
on its own. Congressman Gardner and I are really focused on 
these energy saving performance contracts, and I want to come 
back to this, but that is completely within the ability of 
government on its own to do useful things to save the taxpayer 
money, and also make a contribution to cleaning up our 
environment.
    Second, there is a question of what can private citizens 
and companies do on their own? And I know Congressman Burgess 
has been very much--on his own personal situation, very much 
focused on energy efficiency and has some skepticism about 
steps that government takes that are either unnecessary or get 
in the way. Those are fair questions, and I hope our committee 
will ask those so that it ends up that we do is helpful and 
doesn't get in the way of what private sector folks can do on 
their own.
    But then third, there are areas where it is possible for 
the private sector and the public sector to cooperate and then 
leverage the partnership to be successful. Congressman McKinley 
and I are working on efforts to try to provide incentives to 
homeowners to be able to do things that otherwise they would 
not be able to do.
    So this is really just a plea to some extent to our 
committee that even though there will be a lot of legitimate 
questions raised on a practical level about what is the 
government role, what is the private role, what is the 
partnership role, I hope we will sort through those questions 
to have as the outcome, Mr. Chairman, productive steps that 
will allow the taxpayer and a company and the individual to 
save money. And this initial hearing is really helping us on 
our way.
    I do want to talk to you about the energy saving 
performance contracts that I mentioned Mr. Gardner and I are 
really quite focused on. The President had a goal of $2 
billion. I mean, what is better than being able to get a 
company to sign up and be paid essentially by sharing in the 
savings? How is that coming along, and is it possible, if this 
is successful, that reports I hear, that there could be up to 
$20 billion in savings that we could expand this effort?
    Dr. Hogan. Yes, so this was announced a little over a year 
ago, $2 billion, and then each agency took on a goal that adds 
up to that $2 billion, and the agencies are moving forward to 
put those projects in place and sitting here today, we are on 
track to meet that $2 billion savings goal by December 2013, 
which indeed is very exciting, and I think that will allow the 
agencies to step back and work with the White House to 
hopefully come up with a phase two to this effort, but it is 
probably a little premature to say what that would look like.
    Mr. Welch. And how about the utility performance contracts, 
the private sector efforts by our utility companies?
    Dr. Hogan. So this challenge by the President included both 
ESCOs as well as the utility energy savings contracts, and 
those are in this mix as well.
    Mr. Welch. OK. Dr. Cassidy has left, but I was listening 
very carefully to his concern about performance-based approach. 
Vermont does have--I think we are the only State that has an 
energy savings utility, and it is because there has been a 
sense in Vermont that the best--the cheapest electricity and 
the--is the unit of electricity that we don't utilize. But the 
performance-based approach does seem to make an awful lot of 
sense to the Vermont electricity efficiency utility. How about 
to you?
    Dr. Hogan. So I think performance-based approaches really 
do make sense for all the reasons that people were raising 
earlier. You are not trying to pick a technology, you are 
trying to get to an outcome. So I think conceptually it really 
does make sense.
    I think the flip side of it is when builders are building a 
home, a lot of them say we just want to know what to do in this 
region that is going to meet that performance-based approach. 
They don't want to be doing detailed----
    Mr. Welch. So you would be glad to work with the committee 
or folks like Dr. Cassidy to focus on that performance-based 
outcome?
    Dr. Hogan. Yes.
    Mr. Welch. OK, thank you.
    Thank you very much, Mr. Chairman. I yield back.
    Mr. Whitfield. Peter, I knew you were from Vermont. I am 
sorry, I said New Hampshire.
    Mr. Welch. Well, that is OK, but----
    Mr. Whitfield. We are glad you are here.
    Mr. Welch. Thank you. It is good to be here.
    Mr. Whitfield. Well, that concludes the testimony of Mrs. 
Hogan and questions for her, so Dr. Hogan, thank you so much 
for being with us today. We look forward to working with you as 
we continue forward.
    At this time, I would like to call up the third and final 
panel. On the third panel, we have Mr. Kevin Kosisko, who is 
Vice President Service, North America ABB, and he is testifying 
on behalf of the National Electrical Manufacturers Association 
and the Industry Energy Efficiency Coalition. We have Ms. 
Britta MacIntosh, who is Vice President of Business 
Development, NORESCO, who is testifying on behalf of the 
Federal Performance Contracting Coalition. We have Mr. James 
Crouse, Executive Vice President of Sales and Marketing, 
Capstone Turbine Corporation, who is testifying on behalf of 
the U.S. Combined Heat and Power Association. We have Ms. Ellen 
Burt, Senior VP and Chief Customer Officer, Pacific Gas and 
Electric Company. We have Mr. Neal Elliott, Associate Director 
for Research, American Council for Energy Efficient Economy, 
and we have Mr. Ted Gayer, Co-Director, Economic Studies and 
Joseph Pechman Senior Fellow at the Brookings Institution.
    So I would like to welcome all of the members of this 
panel. Thank you for your patience, and thanks for agreeing to 
join us today to give us your views, thoughts, and expertise on 
this important subject. As you know, each one of you will be 
given 5 minutes for your opening statement, and I would remind 
you to just be sure that your microphone is on. You will notice 
a couple of boxes on the table in which--when it is green, it 
means talk. When it is red, it means stop, but we frequently go 
over, so--but anyway, welcome and we will begin with you, Mr. 
Kosisko.
    Mr. Kosisko. Kosisko.
    Mr. Whitfield. Kosisko. We will begin with you, and you are 
recognized for 5 minutes.

 STATEMENTS OF KEVIN C. KOSISKO, VICE PRESIDENT SERVICE, NORTH 
     AMERICA, ABB, INC., ON BEHALF OF NATIONAL ELECTRICAL 
  MANUFACTURERS ASSOCIATION AND INDUSTRIAL ENERGY EFFICIENCY 
     COALITION; BRITTA MACINTOSH, VICE PRESIDENT, BUSINESS 
    DEVELOPMENT, NORESCO, ON BEHALF OF FEDERAL PERFORMANCE 
 CONTRACTING COALITION; JAMES CROUSE, EXECUTIVE VICE PRESIDENT 
OF SALES AND MARKETING, CAPSTONE TURBINE CORPORATION, ON BEHALF 
  OF U.S. COMBINED HEAT AND POWER ASSOCIATION; HELEN A. BURT, 
 SENIOR VICE PRESIDENT AND CHIEF CUSTOMER OFFICER, PACIFIC GAS 
 AND ELECTRIC COMPANY; R. NEAL ELLIOTT, ASSOCIATE DIRECTOR OF 
RESEARCH, AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY; AND 
TED GAYER, CO-DIRECTOR, ECONOMIC STUDIES AND JOSEPH A. PECHMAN 
             SENIOR FELLOW, THE BROOKINGS INSTITUTE

                 STATEMENT OF KEVIN C. KOSISKO

    Mr. Kosisko. Chairman Whitfield, Ranking Member Rush, and 
members of the subcommittee. Thank you for allowing me to 
testify on the successes and opportunities for energy 
efficiency in the industrial sector.
    I am Kevin Kosisko, Vice President of Services for ABB in 
North America. I oversee services for asset management, process 
safety and industrial energy efficiency, as well as maintenance 
operations for ABB in the U.S., Canada and Mexico.
    By way of background, ABB is a Fortune 500 producer of 
power and automation products and services. We employ 147,000 
people in over 100 countries, providing energy efficient 
solutions for our industrial, utility, and government 
customers.
    I am honored to be here representing the National 
Electrical Manufacturers Association (NEMA) and the Industrial 
Energy Efficiency Coalition (IEEC).
    NEMA is the trade association of electrical equipment and 
medical imaging manufacturers. Its member companies produce 
everything from power transmission and distribution equipment 
to lighting systems, factory automation and controls and 
medical diagnostic imaging systems.
    The IEEC is a coalition of six of the largest global 
industrial automation and control system companies. Those 
companies are Eaton Corporation, GE, Rockwell Automation, 
Schneider Electric, and Siemens, in addition to ABB. We are 
technology providers that industry uses to make their processes 
more energy efficient, reduce costs and increase 
competitiveness.
    ABB and IEEC believe that energy efficiency is the 
cheapest, cleanest alternative fuel. It drives competition and 
industrial success, and the good news is that there are proven, 
available technologies that are already having an impact. My 
written statement offers examples of energy efficiency 
successes and case studies from each member of the IEEC. Yet 
together, our examples barely touch the breadth of current 
deployments and future possibilities.
    A recent survey of manufacturing executives demonstrates 
their understanding of the importance of energy efficiency and 
the impediments to its use. Executives report basing their 
energy efficiency investment decisions on cost benefit analyses 
and the price of energy far more than other considerations. 
Regulatory compliance was a distant third. Yet fewer than 40 
percent of those surveyed had invested in efficiency in the 
past 3 years. In the U.S., the situation is even starker with 
only 21 percent having invested in equipment to improve energy 
use in the last 3 years. The majority of those were in highly 
energy-intensive manufacturing industries such as mining, 
metals, chemical production, and petroleum refining. This gap 
between awareness and action was attributed to three key 
factors. Nearly half of the respondents cited the lack of clear 
business case as a reason for inaction. Twenty-eight percent 
identified inadequate funding or financing as a critical 
barrier, and a lack of adequate information on efficiency 
options was reported as the third greatest obstacle by 27 
percent of those executives surveyed.
    These responses point to the need for further education, 
benchmarking, and identification of available technologies and/
or application, and to the importance of access to funding or 
financing to enable investments.
    Encouraging the efficiency enhancements needed to ensure 
our competitiveness will require both industry's and 
government's involvement. We must supply the missing 
information and provide the necessary funding. At ABB and the 
IEEC, we are striving to do just that. We work continually to 
educate manufacturers on available technologies and industrial 
best practices. We train engineers, assessors, and finance 
teams to provide accurate, reliable energy audits, and 
estimates on return on investment. We provide directly or 
assist in securing necessary financing, and we invest in 
ongoing research and development to continue innovation.
    In the areas of industrial energy efficiency, government 
has historically focused on reducing consumption in energy-
intensive industries. While these industries represent a major 
portion of potential energy savings, the public sector has the 
ability to expand the visibility of conservation opportunities 
to industrial players both large and small. Hearings like this, 
well-informed Department of Energy and Environmental Protection 
Agency activities, and federal support for research, audit, and 
deployment programs all raise awareness of the availability and 
value of energy saving technologies. This is particularly true 
for the small and mid-sized companies with less knowledge of or 
expertise in newer efficiency tools. Tax policies and other 
incentives can encourage investment. Advanced systems that 
deploy networks of sensors, controls, and automation to achieve 
significant energy savings can benefit from incentives to 
provide a faster rate of return.
    Government is unique in its ability to support basic 
science and energy research, and State governments have the 
principle role in setting the grid investment policies and 
utility rate structures that enable deployment of critical line 
loss reduction, power quality management, and grid reliability 
technologies like Volt/VAr optimization.
    There is no doubt of the ability of the U.S. industry to 
compete and succeed. America's competitive edge is the high 
level of productivity of our workers and the technologies and 
processes we deploy to secure greater output from fewer 
resources, including energy. At ABB, at NEMA, and at the IEEC, 
we work daily to support that effort.
    Mr. Chairman, thank you for the opportunity to testify. I 
would ask that a copy of our latest energy efficiency white 
paper be included in the record, and I am happy to answer any 
questions the committee might have.
    [The prepared statement of Mr. Kosisko follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.014
    
    [GRAPHIC] [TIFF OMITTED] 79891.015
    
    [GRAPHIC] [TIFF OMITTED] 79891.016
    
    [GRAPHIC] [TIFF OMITTED] 79891.017
    
    [GRAPHIC] [TIFF OMITTED] 79891.018
    
    [GRAPHIC] [TIFF OMITTED] 79891.019
    
    [GRAPHIC] [TIFF OMITTED] 79891.020
    
    [GRAPHIC] [TIFF OMITTED] 79891.021
    
    [GRAPHIC] [TIFF OMITTED] 79891.022
    
    [GRAPHIC] [TIFF OMITTED] 79891.023
    
    [GRAPHIC] [TIFF OMITTED] 79891.024
    
    [GRAPHIC] [TIFF OMITTED] 79891.025
    
    [GRAPHIC] [TIFF OMITTED] 79891.134
    
    [GRAPHIC] [TIFF OMITTED] 79891.135
    
    [GRAPHIC] [TIFF OMITTED] 79891.136
    
    [GRAPHIC] [TIFF OMITTED] 79891.137
    
    [GRAPHIC] [TIFF OMITTED] 79891.138
    
    [GRAPHIC] [TIFF OMITTED] 79891.139
    
    [GRAPHIC] [TIFF OMITTED] 79891.140
    
    [GRAPHIC] [TIFF OMITTED] 79891.141
    
    [GRAPHIC] [TIFF OMITTED] 79891.142
    
    [GRAPHIC] [TIFF OMITTED] 79891.143
    
    [GRAPHIC] [TIFF OMITTED] 79891.144
    
    [GRAPHIC] [TIFF OMITTED] 79891.145
    
    [GRAPHIC] [TIFF OMITTED] 79891.146
    
    [GRAPHIC] [TIFF OMITTED] 79891.147
    
    [GRAPHIC] [TIFF OMITTED] 79891.148
    
    [GRAPHIC] [TIFF OMITTED] 79891.149
    
    [GRAPHIC] [TIFF OMITTED] 79891.150
    
    [GRAPHIC] [TIFF OMITTED] 79891.151
    
    [GRAPHIC] [TIFF OMITTED] 79891.152
    
    [GRAPHIC] [TIFF OMITTED] 79891.153
    
    [GRAPHIC] [TIFF OMITTED] 79891.154
    
    [GRAPHIC] [TIFF OMITTED] 79891.155
    
    [GRAPHIC] [TIFF OMITTED] 79891.156
    
    [GRAPHIC] [TIFF OMITTED] 79891.157
    
    [GRAPHIC] [TIFF OMITTED] 79891.158
    
    [GRAPHIC] [TIFF OMITTED] 79891.159
    
    [GRAPHIC] [TIFF OMITTED] 79891.160
    
    [GRAPHIC] [TIFF OMITTED] 79891.161
    
    [GRAPHIC] [TIFF OMITTED] 79891.162
    
    Mr. Whitfield. Thank you. It will be included in the 
record.
    Ms. MacIntosh, you are recognized for 5 minutes.

                 STATEMENT OF BRITTA MACINTOSH

    Ms. MacIntosh. Good afternoon, Chairman Whitfield and 
members of the subcommittee.
    Mr. Whitfield. Is your microphone on?
    Ms. MacIntosh. Yes, sir. Can you hear me now?
    I am Britta MacIntosh, Vice President of Business 
Development for NORESCO, one of the largest energy service 
companies in the United States. NORESCO is part of UTC Climate, 
Controls and Security Systems, a unit of United Technologies 
Corporation, a leading provider to the aerospace and building 
systems industry worldwide. Thank you for the opportunity to 
appear to you--before you today on behalf of the Federal 
Performance Contracting Coalition.
    The FPCC is a coalition of energy services companies that, 
like NORESCO, implement projects that reduce federal spending 
on energy and maintenance using private sector funding. Our 
work is conducted using energy savings performance contracts, 
or ESPCs----
    Mr. Rush. Would you please speak into the mike?
    Ms. MacIntosh. Our work is conducted using energy savings 
performance contracts, or ESPCs. Since the 1990s, ESPC projects 
have reduced waste in federal utility bills. Across the 
industry, more than 570 comprehensive energy projects have been 
implemented by 25 federal agencies, creating $13 billion in 
guaranteed energy cost savings, and eliminating over 32 
trillion BTUs of annual energy demand. By using performance-
based contracting to upgrade facility infrastructure, we 
deliver energy and maintenance savings to government and 
private sector entities. Performance-based contracting means 
our company's compensation is tied to the realization of 
savings for the projects we install. In other words, if we 
don't perform, we don't get paid. At NORESCO, our projects have 
delivered more than $3 billion in facility improvements at more 
than 2,000 sites.
    An ESPC redirects inefficient spending on energy into 
needed infrastructure improvements that conserve energy and 
dollars. Under an ESPC, energy services companies engineer and 
install upgrades for outdated and inefficient equipment 
financed by the energy services company and at no upfront cost 
to the government. An agency will repay the government over 
time--the company over time with funds saved on utility costs. 
The projected energy savings are guaranteed upfront by the 
company and are measured and verified during the contract 
period. At no time does the government pay more than it would 
have paid for utilities, had it not entered into an ESPC.
    In 2010, for example, NORESCO, working together with the 
architect for the Capitol, modernized the heating, cooling, 
water, temperature control, and lighting systems here in the 
Rayburn Building, and then also in the other House office 
buildings. This project has cut Congress's energy and water 
bills by more than $3.2 million annually.
    The Federal Government is the Nation's largest energy 
consumer, costing taxpayers over $7 billion annually. An 
aggressive government-wide effort to eliminate energy waste in 
buildings could easily cut that number by 20 percent or more.
    Despite the opportunity to better steward the taxpayer's 
investments in public facilities, several difficult obstacles 
stand in the way. I would like to talk about three of those.
    First, there is a lack of compliance with existing 
congressional mandates. In 2010, Congress directed agencies to 
audit their facilities to identify energy and water projects 
that would pay for themselves within 10 years or less. 
Currently, it is not clear where agencies stand on this audit 
process, because those comprehensive reports requested by 
Congress have not yet been delivered. Even less clear is where 
agencies stand on implementing the energy savings measures 
these audits have also identified. This information is critical 
to understanding how much taxpayer money is being wasted 
through inaction and inattention.
    Second, there is a lack of an apples to apples comparison 
between the use of appropriations and private sector investment 
to provide agencies and Congress with the information needed to 
make good decisions. Oak Ridge National Laboratory has outlined 
in multiple studies that facilities which use appropriated 
funds to replace outdated equipment failed to properly budget 
for the ongoing maintenance of the new equipment. ESPCs require 
the provision of ongoing maintenance and savings verification 
to ensure that long-term persistence of savings and proper 
operation of the equipment is achieved. In 2007, Congress also 
directed agencies to implement a uniform approach to 
maintenance and savings verification to ensure that the 
government realizes the promised savings from any efficiency 
upgrades, although most agencies have appeared to ignore this 
direction for appropriated projects. We recommend that you ask 
how agencies--that you ask agencies how and when this simple 
requirement will be implemented for all efficiency projects, 
regardless of how they are funded.
    Third, the current approval process for ESPC contracts is 
excessive, with multiple redundant layers of review in many 
agencies. Officials with limited knowledge of the facility, 
project, or recommended technologies are often required to 
review and sign off on projects before they can proceed. 
Congress should push agencies to streamline their review 
process, allowing more projects to begin generating savings 
more quickly.
    In order to confirm that we are making true progress toward 
meeting our Nation's energy and efficiency goals, Congress 
needs to complete--needs complete information about available 
energy savings opportunities at our agency's facilities, each 
agency's plans for implementation, and full transparency and 
accountability on all spending related to efficiency projects. 
We recommend that you take appropriate steps to ensure that 
prior congressional direction on these items is acted upon.
    Thank you again for your time and attention. I will be glad 
to answer any questions that you have.
    [The prepared statement of Ms. MacIntosh follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.026
    
    [GRAPHIC] [TIFF OMITTED] 79891.027
    
    [GRAPHIC] [TIFF OMITTED] 79891.028
    
    [GRAPHIC] [TIFF OMITTED] 79891.029
    
    [GRAPHIC] [TIFF OMITTED] 79891.030
    
    Mr. Whitfield. Thank you, Ms. MacIntosh.
    Mr. Crouse, you are recognized for 5 minutes.

                   STATEMENT OF JAMES CROUSE

    Mr. Crouse. Can you hear me?
    Thank you. Chairman Whitfield, Ranking Member Rush, and 
distinguished members of the committee, my name is Jim Crouse 
and I am the Executive Vice President of Sales and Marketing 
for Capstone Turbine Corporation.
    Capstone is the world's leading producer of low emission 
microturbine systems. A microturbine is a small, fuel-flexible, 
typically sized 1 megawatt and below, and can be best described 
as a jet engine in a filing cabinet sized box. Other forms of 
combined heat and power, or CHP, we are able to provide either 
base load or backup power to deficiencies exponentially greater 
than the grid.
    I am delighted to be here today to testify on behalf of the 
U.S. Combined Heat and Power Association. USCHPA is a non-
profit trade association formed in 1999 to promote deployment 
of CHP systems in the United States through education and 
advocacy.
    I am going to speak today about the opportunity for natural 
gas-fired CHP and the barriers to greater deployment of CHP 
that policy makers can address.
    Currently, there are 82 gigawatts, or about 7 percent of 
all U.S. generating capacity produced by CHP systems. The 
technical potential for additional CHP from existing sites in 
the U.S. is approximately 130 gigawatts, or 12 percent of the 
U.S. generation capacity. This is readily available capacity, 
provided policies are established to support further CHP 
deployment. Access to low cost U.S. natural gas resources makes 
supporting CHP a no-brainer, and is an easy route to lower 
emissions across the United States.
    Microturbines and other CHP systems are used by customers 
throughout the world in a variety of applications. Just to name 
a few examples, they can be used in onshore and offshore oil 
and gas sites, like the many transmission sites in Mr. 
McKinley's district, offshore platform in Mr. Scalise's 
district, military applications like the one at MacDill Air 
Force Base, offices like our government office project in Mr. 
Olsen's district, multi-unit residential buildings, hospitals, 
like the VA hospital in Mr. Dingell's district, schools and 
universities like--school in Ms. Capps's district, factories 
like American River Packaging in Ms. Matsui's district, hotels 
and other commercial sites like Proctor's theater in Mr. 
Tonko's district, and wastewater treatment plants, like the 
plants in Mr. Griffith's district and Ms. McMorris Rodgers's 
district.
    As referenced in my prepared remarks, CHP generally and 
Capstone specifically offers customers reliable off grid power 
that as witnessed during Superstorm Sandy provides critical 
power and thermal energy to hospitals, nursing homes, shelters, 
and data centers.
    Despite these opportunities, our company and the CHP 
industry continue to encounter numerous regulatory economic 
barriers that prevent greater deployment. There are pragmatic, 
cost effective solutions that policy makers can champion to 
mitigate these issues.
    To begin, we would like to see greater top level leadership 
from the government. While the recent Executive Order calling 
for 40 gigawatts of new CHP is helpful, we would be better 
served if the government were to lead by example through 
increased procurement of CHP to meet federal energy efficiency 
goals. Additionally, as the EPA implements Boiler MACT, CHP 
should be strongly encouraged as a compliance strategy for 
those currently burning coal or oil. As part of this process, 
facility managers faced with compliance can seek site-specific 
technical and cost information from the DOE's clean energy 
assistance centers. Similarly, we hope States will look to 
EPA's guidance on output-based emission regulations, which 
unlike input based standards, recognize both efficiency and 
pollution prevention benefits of CHP. Output-based standards 
encourage cost effective long-term pollution prevention through 
efficiency. Likewise, we were glad to hear FERC proposed 
reforms to small generator air connections. Interconnection 
continues to be a barrier, but we continue to work with our 
friends in the utility industry to demonstrate the benefits 
that CHP provides for the grid and for consumers as a clean, 
reliable, distributor resource. In addition, both States and 
utilities should include CHP in their energy planning policies. 
The CHP industry is eager to be an active stakeholder and 
support a fair, interconnected standards in CHP rates.
    Finally, we note that there are several technologies that 
currently benefit from government support through various 
levels of an investment tax credit. We believe the lack of 
parity in support levels for decentralized and renewable energy 
technologies blur the marketplace. We support parity in the 
treatment of various types of clean energy sources, and would 
encourage a focus on performance-based measures to best spur 
market competition.
    To wrap up, let me highlight again the opportunity exists 
today to generate clean, reliable power through CHP systems at 
existing industrial commercial sites across the United States 
using U.S. natural gas. We appreciate your help in overcoming 
these barriers that exist to greater deployment of our 
innovative U.S.-made technology.
    Thank you for the opportunity to testify at today's 
hearing, and I look forward to answering any questions you may 
have.
    [The prepared statement of Mr. Crouse follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.031
    
    [GRAPHIC] [TIFF OMITTED] 79891.032
    
    [GRAPHIC] [TIFF OMITTED] 79891.033
    
    [GRAPHIC] [TIFF OMITTED] 79891.034
    
    [GRAPHIC] [TIFF OMITTED] 79891.035
    
    [GRAPHIC] [TIFF OMITTED] 79891.036
    
    [GRAPHIC] [TIFF OMITTED] 79891.037
    
    [GRAPHIC] [TIFF OMITTED] 79891.038
    
    [GRAPHIC] [TIFF OMITTED] 79891.039
    
    [GRAPHIC] [TIFF OMITTED] 79891.040
    
    Mr. Whitfield. Thank you, Mr. Crouse.
    Ms. Burt, you are recognized for 5 minutes.

                   STATEMENT OF HELEN A. BURT

    Ms. Burt. Thank you. Good afternoon, Chairman Whitfield, 
Ranking Member Rush. Let me begin by thanking you and members 
of the committee for this opportunity to testify today. I am 
Helen Burt, Chief Customer Officer for Pacific Gas and Electric 
Company.
    PG&E is one of America's largest combined gas and electric 
utilities. We serve about 15 million people in northern and 
central California, and over the last 30-plus years, together 
with the State of California, we have helped customers achieve 
extraordinary benefits when it comes to energy productivity.
    For us, these efforts are about being smarter when it comes 
to using energy. They are not about making do with less. They 
are about doing more with the energy we consume, helping 
customers get the most value of their energy dollars. Working 
as partners, utilities and our State policy makers have been 
able to support and encourage innovation and adoption of new 
technologies, and we have developed the most successful 
customer energy efficiency programs in the country.
    Sometimes we are working with the end use customers like 
homeowners or small business owners. Other times we are moving 
further up the value chain, working directly with 
manufacturers, distributors, retailers, and contractors. The 
point is, we take a comprehensive approach and the results 
reflect that.
    If you look just at PG&E since our programs began some 30-
odd years ago, the customer savings have been more than $20 
billion. We have also avoided the need to build more than 25 
power plants, saving all our customers money and providing 
tremendous environmental benefits.
    What is remarkable is that the potential gains look even 
greater today, thanks to the growing intersection between IT 
and energy. Technologies like SmartMeters are creating huge new 
opportunities. By enabling two-way communications on the grid, 
they are opening the door for wider adoption of advanced 
technologies like electric vehicles, smart thermostats, and 
other energy management tools. But most significantly, they are 
giving people more control over their energy bills. PG&E 
customers can now get near real time information on their 
energy usage. Last year, we were able to create an online tool 
called the Green Button, which allows them to download that 
data. They can then use various apps to help them understand 
and then come up with options to achieve savings.
    As significant as the potential is to achieve further 
gains, we need the right policies. These include constructive 
tax policies, support for research, development, and 
deployment, supportive regulatory and rate structures, codes 
and standards, and programs that empower consumers and help 
companies share best practices. As you and others in Congress 
consider ways to help drive further progress, I would to 
highlight several areas where our experience shows you can have 
the greatest impact.
    One is encouraging regulatory approaches that incent 
utilities to pursue efficiency. Many utilities still face 
strong disincentives, changing this one key to success. At 
PG&E, we now treat energy efficiency projects as a resource, 
just like we do new traditional generation facilities.
    Another area is improving regulatory consistency. Programs 
work best when everyone can operate from a consistent set of 
policies that they can count on for longer periods of time. 
That way, they can make multi-year commitments to support 
commercialization and deployment efforts.
    We also recommend encouraging consistent and clear methods 
for measuring and verifying the results of energy efficiency 
projects.
    A third area is encouraging public-private cooperation 
between utilities and government. For example, PG&E manages 
energy efficiency turnkey projects for federal customers 
through our Utility Energy Services Contracts Program. One 
effort now underway at the NASA Ames Research Center is 
expected to save more than $1.5 million annually in water and 
energy costs. Nationally, UESC projects are saving taxpayers 
roughly $400 million a year. We should continue to encourage 
these efforts.
    Finally, a fourth area is building codes and appliance 
standards. These provide a foundation for other energy 
efficiency efforts, and drive new technologies, programs, and 
practices.
    Our hope is to work collaboratively with many members of 
this committee, who are already exchanging good policy ideas 
around energy productivity. New ideas and approaches will 
evolve just as quickly as the technology around us. As PG&E in 
California has demonstrated, energy efficiency can save money, 
spur innovation, provide consumers with more choices, and make 
our economy more productive and benefit the environment.
    Thank you again for this opportunity. I look forward to 
answering your questions.
    [The prepared statement of Ms. Burt follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.041
    
    [GRAPHIC] [TIFF OMITTED] 79891.042
    
    [GRAPHIC] [TIFF OMITTED] 79891.043
    
    [GRAPHIC] [TIFF OMITTED] 79891.044
    
    [GRAPHIC] [TIFF OMITTED] 79891.045
    
    [GRAPHIC] [TIFF OMITTED] 79891.046
    
    [GRAPHIC] [TIFF OMITTED] 79891.047
    
    [GRAPHIC] [TIFF OMITTED] 79891.048
    
    [GRAPHIC] [TIFF OMITTED] 79891.049
    
    [GRAPHIC] [TIFF OMITTED] 79891.050
    
    [GRAPHIC] [TIFF OMITTED] 79891.051
    
    Mr. Whitfield. Thank you.
    Mr. Elliott, you are recognized for 5 minutes.

                  STATEMENT OF R. NEAL ELLIOTT

    Mr. Elliott. Thank you, Chairman Whitfield, Ranking Member 
Rush, members of the committee. I appreciate the opportunity to 
speak today. My name is Neal Elliott. I am the Associate 
Director for Research at the American Council for an Energy 
Efficient Economy, frequently called ACEEE. We are a private, 
nonprofit, nonmember research institute based here in 
Washington, D.C.
    As Ranking Member Rush said in his opening remarks, ACEEE 
has looked at the impact of energy efficiency on the U.S. 
economy and found it to be a significant contributor to 
economic growth over the last 40 years. In particular, I would 
note that as has been noted by many of the witnesses so far 
today, energy efficiency represents the least cost energy 
resource in the U.S. economy, and a recent analysis suggests 
that in 2010 it contributed about half as much as all of the 
conventional resources to the U.S. economy.
    I mentioned in my written testimony five areas that we 
think the committee should consider for action in the coming 
Congress, and wanted to focus three of those in my oral 
remarks.
    The first, which is has come up several times, is appliance 
standards, and I wanted to mention that since 1987, with the 
passage of the EPCA, Energy Policy Conservation Act, energy 
standards have saved 3.4 quads of energy and that the standards 
that are in place today are projected to save $1.1 trillion 
through 2035.
    We have many other standards that are currently in 
development, and I wanted to bring to the attention of the 
committee that one of the important ways that these are being 
developed now is through a negotiated process in which the 
energy efficiency advocates, people--stakeholders such as PG&E 
and other utilities, and the manufacturers come together to 
develop consensus proposal. The Energy Policy Act of 2005 
enabled DOE to accept those consensus standards directly into 
rule and we have begun to see that move forward in the process. 
There are a number of negotiations that are currently underway. 
In the past, these negotiations have been enacted as part of 
the federal energy legislation, and we hope the committee will 
consider several of the provisions that are currently under 
development, as they look at legislation. This is a very 
efficient and effective way to bring consensus between the 
manufacturers and stakeholders, and move the market forward 
together.
    Second issue I wanted to raise to the committee is building 
codes. As has been noted, buildings consume approximately 40 
percent of the energy in the U.S. economy, and codes represent 
the easiest and most cost effective way for consumers to 
benefit from energy efficiency. It is important that we 
continue to revise and look at best practices that exist in 
terms of building codes, but it is also equally important that 
we focus on the implementation of the building codes in the 
marketplace. A building code on the books means nothing if the 
builders out there in the market are actually not implementing 
it, and we would encourage DOE to work with State and local 
governments to build the capacity, both within the enforcement 
side of this, but also work with the contracting community and 
building community out there to implement the codes so that the 
energy efficiency benefits are available to all customers.
    Finally, the last area I wanted to speak about is 
manufacturing. U.S. manufacturing sector is poised for a major 
expansion and reinvestment, and until recently, has not 
received a lot of attention at the federal level. In 
particular, we would recommend three things the Department 
should--the committee should consider.
    First, we think it is important that the DOE's 
manufacturing program be reenergized. There has been a lack of 
leadership for over a decade there, and we think there is some 
opportunities for it to move forward. Specifically, we would 
recommend that the Department be directed to establish an 
industrial steering committee to ensure a strong working 
relationship exists between manufacturers, the Department, and 
other stakeholders, and that that partnership should work to 
leverage private sector funding. In the past, this program R&D 
area has been among the most successful R&D efforts in the 
entire Federal Government, and was able to leverage $3 in 
private sector funding for every $1 that was spent by the 
Federal Government.
    Second, we think it is important to maintain a balance 
between your term R&D, long-term R&D, and deployment, and all 
of these need to be targeted in cooperation with the 
manufacturers so that we receive maximum efficiency.
    Finally, I wanted to mention the idea of smart 
manufacturing. This is--as we look, we have already mentioned 
intelligence in the marketplace. We think manufacturing will 
benefit from that and encourage you to direct the Department to 
initiate a smart manufacturing program to explore those 
resources.
    Thank you for the opportunity to present, and I look 
forward to questions. Thank you.
    [The prepared statement of Mr. Elliott follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.052
    
    [GRAPHIC] [TIFF OMITTED] 79891.053
    
    [GRAPHIC] [TIFF OMITTED] 79891.054
    
    [GRAPHIC] [TIFF OMITTED] 79891.055
    
    [GRAPHIC] [TIFF OMITTED] 79891.056
    
    [GRAPHIC] [TIFF OMITTED] 79891.057
    
    [GRAPHIC] [TIFF OMITTED] 79891.058
    
    [GRAPHIC] [TIFF OMITTED] 79891.059
    
    [GRAPHIC] [TIFF OMITTED] 79891.060
    
    [GRAPHIC] [TIFF OMITTED] 79891.061
    
    [GRAPHIC] [TIFF OMITTED] 79891.062
    
    [GRAPHIC] [TIFF OMITTED] 79891.063
    
    [GRAPHIC] [TIFF OMITTED] 79891.064
    
    [GRAPHIC] [TIFF OMITTED] 79891.065
    
    [GRAPHIC] [TIFF OMITTED] 79891.066
    
    Mr. Whitfield. Well thank you, Mr. Elliott, and Mr. Gayer 
of the Brookings Institution, you are recognized for 5 minutes.

                     STATEMENT OF TED GAYER

    Mr. Gayer. Great, thank you. Chairman Whitfield, Ranking 
Member Rush, and members of the subcommittee, thank you very 
much for the opportunity to appear here today. My comments will 
cover the market incentives for energy efficiency innovation, 
the most cost effective means of reducing pollution stemming 
from energy use, and the limitations and problems associated 
with government energy efficiency mandates.
    First on market incentives. I believe that market prices 
are good at conveying information about the strength of 
consumer demand for a good, and the scarcity of supply for that 
good, allowing for a balancing of buyers and seller's interest. 
In the market for appliances, prices reflect how consumers 
value features such as energy efficiency and convenience. If 
the price of energy increases, consumers are willing to pay 
more for more efficient appliances, providing a clear incentive 
to suppliers to respond. The importance of energy prices for 
the bottom line of consumers and businesses provides a strong 
incentive for producers to provide the innovative energy 
efficient products we see arriving on the market today, and 
these market incentives account for the preponderance of energy 
efficiency gains that have been mentioned in this hearing 
today.
    In addition to providing incentives for energy efficiency, 
another important benefit of the market process is that 
consumers with different preferences can find products that 
best suit their needs. It is important to remember that there 
is no uniformly right amount of energy efficiency for any given 
product. However, market prices can provide misleading signals, 
to the extent that they do not account for the pollution costs 
stemming from energy use. In other words, the price that shows 
up on one's electric bill accounts for the private cost of 
energy, but it does not include any environmental--additional 
environmental damages that impact others due to one's energy 
use. Economists refer to these latter costs as ``negative 
externalities.'' The best approach to addressing this problem 
is for the government to price these costs directly. Consumers 
and businesses would then face the full cost of energy use and 
markets would respond through some combination of new 
technologies, alternative fuels, and conservation.
    There are a number of reasons why this market-oriented 
approach of setting a price on pollution is more cost-effective 
than regulations such as energy efficiency mandates. First, the 
one-size-fits-all energy efficiency mandates ignore the 
substantial diversity of preferences, financial resources, and 
personal situations that consumers and businesses must align in 
order to make their decisions. Second, energy efficiency 
mandates do not promote conservation. For example, an energy 
efficiency standard for air conditioners increases the 
incentive to run the air conditioners longer. Third, energy 
efficiency standards must squeeze energy reductions out of new 
products only, and can even create incentives for consumers and 
businesses to retain older, and thus less energy-efficient, 
products.
    In recent work I did with Kip Viscusi of Vanderbilt 
University, we examined a number of recent government 
regulations that mandate energy efficiency standards for 
vehicles and appliances. Despite the fact that these 
regulations frequently are touted as pollution-reducing 
initiatives, by the agencies' own estimates, they confirm that 
the environmental benefits tend to be quite small and are often 
outweighed by the costs that they estimate.
    In order to justify these regulations, the agencies assert 
that consumers and firms are making incorrect purchase choices 
and that they therefore benefit if product choices are 
restricted to those that meet the agencies' mandated standards. 
Dismissing consumer preferences outright in this way is a 
significant departure from the well-established principles for 
conducting cost-benefit analyses, both in the economics 
literature, and I would add, by the Administration's Office of 
Management and Budget.
    By claiming regulatory benefits from the correction of so-
called ``consumer irrationality,'' agencies are shifting 
regulatory priorities from the important goal of reducing the 
harm individuals impose on others, through pollution, towards 
the nebulous and unsupported goal of reducing harm individuals 
cause to themselves by purchasing purportedly uneconomic 
products. This shift from environmental protection to consumer 
protection results in a host of costly regulations that are far 
less effective than a government policy that simply sets a 
price on pollution. It is important to emphasize that these 
costs are real and that they harm economic well-being. Raising 
the costs of consumer products and products used by businesses 
through government mandates does not lead to economic growth or 
job creation. It also establishes a dangerous precedent: If 
agencies can justify regulations on the unsubstantiated premise 
that consumers and businesses, but not the regulators, are 
irrational, then they can justify the expansive use of 
regulatory powers to control and constrain virtually all 
choices consumers and businesses make.
    To summarize, I believe that markets generally work well to 
provide incentives for energy efficiency and to satisfy 
consumers' diverse tastes. To the extent that prices fail to 
incorporate the environmental cost of energy use, the most 
sensible government response is to price the pollution costs 
directly, and then allow consumers and businesses to respond to 
the higher prices. Regulations and mandates are inferior 
policies, but still may be better than doing nothing if the 
benefits exceed the costs. Unfortunately, by the agencies' own 
estimates, many of these mandates lead to minimal environmental 
benefits that are far less than the costs that they estimate 
themselves. In an effort to justify these regulations, the 
agencies have deviated from well-established economic 
principles by asserting that consumers and businesses benefit 
from government mandates that restrict choice. The evidence for 
this view, I believe, is weak, and assuming that citizens are 
not capable of making sensible decisions that affect their own 
pocketbooks is not the right way to advance the important goal 
of enhancing the quality of our environment.
    Thank you very much.
    [The prepared statement of Mr. Gayer follows:]
    [GRAPHIC] [TIFF OMITTED] 79891.067
    
    [GRAPHIC] [TIFF OMITTED] 79891.068
    
    [GRAPHIC] [TIFF OMITTED] 79891.069
    
    [GRAPHIC] [TIFF OMITTED] 79891.070
    
    [GRAPHIC] [TIFF OMITTED] 79891.163
    
    [GRAPHIC] [TIFF OMITTED] 79891.164
    
    [GRAPHIC] [TIFF OMITTED] 79891.165
    
    [GRAPHIC] [TIFF OMITTED] 79891.166
    
    [GRAPHIC] [TIFF OMITTED] 79891.167
    
    [GRAPHIC] [TIFF OMITTED] 79891.168
    
    [GRAPHIC] [TIFF OMITTED] 79891.169
    
    [GRAPHIC] [TIFF OMITTED] 79891.170
    
    [GRAPHIC] [TIFF OMITTED] 79891.171
    
    [GRAPHIC] [TIFF OMITTED] 79891.172
    
    [GRAPHIC] [TIFF OMITTED] 79891.173
    
    [GRAPHIC] [TIFF OMITTED] 79891.174
    
    [GRAPHIC] [TIFF OMITTED] 79891.175
    
    [GRAPHIC] [TIFF OMITTED] 79891.176
    
    [GRAPHIC] [TIFF OMITTED] 79891.177
    
    [GRAPHIC] [TIFF OMITTED] 79891.178
    
    [GRAPHIC] [TIFF OMITTED] 79891.179
    
    [GRAPHIC] [TIFF OMITTED] 79891.180
    
    [GRAPHIC] [TIFF OMITTED] 79891.181
    
    [GRAPHIC] [TIFF OMITTED] 79891.182
    
    [GRAPHIC] [TIFF OMITTED] 79891.183
    
    [GRAPHIC] [TIFF OMITTED] 79891.184
    
    [GRAPHIC] [TIFF OMITTED] 79891.185
    
    [GRAPHIC] [TIFF OMITTED] 79891.186
    
    [GRAPHIC] [TIFF OMITTED] 79891.187
    
    [GRAPHIC] [TIFF OMITTED] 79891.188
    
    [GRAPHIC] [TIFF OMITTED] 79891.189
    
    [GRAPHIC] [TIFF OMITTED] 79891.190
    
    [GRAPHIC] [TIFF OMITTED] 79891.191
    
    [GRAPHIC] [TIFF OMITTED] 79891.192
    
    [GRAPHIC] [TIFF OMITTED] 79891.193
    
    [GRAPHIC] [TIFF OMITTED] 79891.194
    
    [GRAPHIC] [TIFF OMITTED] 79891.195
    
    [GRAPHIC] [TIFF OMITTED] 79891.196
    
    [GRAPHIC] [TIFF OMITTED] 79891.197
    
    [GRAPHIC] [TIFF OMITTED] 79891.198
    
    [GRAPHIC] [TIFF OMITTED] 79891.199
    
    [GRAPHIC] [TIFF OMITTED] 79891.200
    
    [GRAPHIC] [TIFF OMITTED] 79891.201
    
    [GRAPHIC] [TIFF OMITTED] 79891.202
    
    [GRAPHIC] [TIFF OMITTED] 79891.203
    
    [GRAPHIC] [TIFF OMITTED] 79891.204
    
    [GRAPHIC] [TIFF OMITTED] 79891.205
    
    [GRAPHIC] [TIFF OMITTED] 79891.206
    
    [GRAPHIC] [TIFF OMITTED] 79891.207
    
    [GRAPHIC] [TIFF OMITTED] 79891.208
    
    Mr. Whitfield. Thank you, Mr. Gayer, and thank all of your 
for your testimony, and once again for being here with us 
today.
    Ms. Burt, I want to ask you a question to start off with. I 
notice in your testimony you were talking about the per capita 
use of energy in California has been flat since 1970, so we are 
talking about 30 or 40 years. You are talking about the new 
technologies that have been launched. You talked about the new 
policies of the government and working with the utilities. You 
talked about $20 billion in savings. You talked about the lack 
of necessity to build 25 new generating plants. With all of 
those efficiencies and everything else, why is it that the 
California electricity rates are among the highest in the 
country, with the exclusion of Alaska or Hawaii? You all have 
been so productive in so many ways. Why is it that electricity 
rates are so high out there?
    Ms. Burt. Well thank you, Mr. Chairman, for the question 
and for the opportunity.
    California electric rates are high, and matter of fact, 
they are within the top 25 across the country of major 
utilities. The bills of Californians, however, are among the 
lowest, and so I think you have to look at both of those in 
collaboration.
    Mr. Whitfield. How is that possible? How does that work?
    Ms. Burt. Well, energy rates in California are higher the 
more you use. It is an inclining tier structure and it is 
designed that way to encourage energy efficiency. The lower 
rates, though, however, are very comparable to other parts of 
the United States. And so when we talk about rates, that is one 
slice of it, but we actually work with our customers to lower 
their bills, and that is really what they are about. You know, 
again, we serve about 15 million Californians across northern 
and central California, and we have a wide variety of customer 
groups.
    Mr. Whitfield. What would you say the average per kilowatt 
hour is for industrial use in California?
    Ms. Burt. You know, Mr. Chairman, I don't have that with me 
directly but I can certainly get back to you with that 
information.
    Mr. Whitfield. I am assuming that it--I mean, I am not 
complaining about it or anything, but I am assuming it must be 
much higher, because if you have residential use really cutting 
down on their consumption, and then that is low as the average 
utility bill in America, that must mean the industrial use must 
be a lot more expensive.
    Ms. Burt. Thank you, Mr. Chairman, let me clarify a little 
bit more. We actually have energy efficiency programs that span 
across all of our customers. So within our energy users that 
are high industrial customers are refineries, and we have many 
in California. We have oil producers in California, we have 
food processors within our service territory. We have programs 
that work directly with each of those types of businesses to 
lower their energy costs----
    Mr. Whitfield. But even though the individual bills may be 
low, why is it that the production is so high, the cost?
    Ms. Burt. Well again, the energy policies across California 
are designed to encourage conservation, encourage energy 
efficiency. On the industrial side, however, again, what the 
industrial customer--and frankly, what our commercial customers 
and residential customers care about are the size of their 
monthly bills. And the size of their monthly bills are among 
the lowest in the Nation.
    Mr. Whitfield. The size of your----
    Ms. Burt. Of their monthly bills, so their usage is----
    Mr. Whitfield. And we are talking about who and here now, 
residential users?
    Ms. Burt. Mr. Chairman, actually all of our customers. The 
size of their monthly bills are among the lowest----
    Mr. Whitfield. Are among the lowest in the country?
    Ms. Burt. Yes, among the lowest in the country. They 
certainly aren't the lowest, but they are among the lowest.
    Mr. Whitfield. Mr. Crouse, let me ask you a question. The 
Section 433 prohibits the use of fossil fuels in new or 
modified federal buildings by the year 2030 or so. Now you were 
testifying on behalf of the Combined Heat and Power 
Association. Wouldn't a prohibition such as that make it more 
difficult on the adoption of high efficiency technologies, such 
as combined heat and power for federal buildings?
    Mr. Crouse. Well, I think it certainly could. One of the 
opportunities, though, is to look at biogas or other means of 
destructing organic waste to use, then, the fuel or the natural 
gas, the methane that comes off of the anaerobic digesters, or 
in some cases, gas that would come from other processes on 
those bases. The other, you know, option would be for us to 
look at using natural gas as a fuel, as a transition fuel, and 
look down the road at possibly using those new fuels that come 
online and the new products that would become available in that 
timeframe, to use them, including some of the new biofuels that 
are looking at being generated from algae and from other 
sources.
    Mr. Whitfield. OK. Mr. Kosisko, my time is running out, but 
I did pay attention to what you did with Archema down in my 
district. That $300,000 annual savings was quite impressive, 
and I want to thank you for mentioning that.
    At this time, I recognize the gentleman from Illinois, Mr. 
Rush, for 5 minutes.
    Mr. Rush. Ms. Burt, you talked in your testimony about 
PG&E's comprehensive approach to energy efficiency. You 
included different strata of individuals and demographic groups 
in your statement. The question that I have is do some of these 
outreach programs that you discussed, have you engaged young 
people, young students in some of this outreach and could you 
speak to the educational activities and initiatives that you 
have with the youngest of our citizens?
    Ms. Burt. Thank you, Mr. Rush. Yes, absolutely, Congressman 
Rush, we--our programs do contain a very large component of 
education, both--primarily in the post-high school area. In 
fact, we have three education centers across our service 
territory, one in Stockton, one in San Francisco, and one in 
the East Bay area that are really focused on training and 
developing even job skills within energy efficiency. We have 
got the oldest existing training facility in Stockton that has 
been in place since 1978, and I believe we have trained 
something in the neighborhood of over 91,000 people to really 
go out and be productive in the jobs arena around really being 
energy auditors, installing weatherization, all of the 
different phases of energy efficiency within those three 
centers. So we have a pretty broad record on that.
    Mr. Rush. So you create some jobs with these programs? I am 
trying to focus on young, even younger than high school. It 
seems the earlier we include energy efficiency and an 
understanding of the energy demand, energy sector, the energy 
issues, including costs, but also efficiencies, the earlier we 
include that in the education of our younger children, the more 
we change the culture. I think we will have some tremendous 
benefits. Do you engage, say, even at the grade school level?
    Ms. Burt. Yes, Congressman Rush, we do. We have several 
programs. One of them is our Solar Schools Program where we 
really engage elementary age students around energy in 
totality. So renewable resources, the value of solar--we 
actually install solar panels on schools and use them in 
demonstration--classroom demonstration pieces. We have a number 
of other classroom demonstrations, both around energy 
efficiency and energy in general within the school systems that 
are used throughout our service territory.
    Mr. Rush. In your opinion, how is the Federal Government 
faring in these areas? Are there some things that we are 
doing--are we doing enough as a Federal Government to raise the 
level of consciousness of our grade school-level students, high 
school-level students? Are we doing enough as a Federal 
Government?
    Ms. Burt. Thank you. That is a wonderful point. I think all 
of us can do more to engage the next generation around energy, 
and not just energy production, but using energy efficiency as 
a source of production. And I think learning what new 
technology--and again, the combining of really this new--the 
new IT and smart grid with what energy efficiency can do is 
going to be an amazing future for that generation. I think the 
Federal Government can do more. I think we can all do more to 
encourage education.
    Mr. Rush. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Gentleman yields back.
    At this time, I recognize the gentleman from Texas, Dr. 
Burgess, for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman. I appreciate the 
recognition.
    Ms. MacIntosh, let me ask you. You heard the testimony of 
Dr. Hogan and the first panel. Do you work with the--with their 
office, the Department of Energy Efficiency and Renewable 
Energy?
    Ms. MacIntosh. We do. All of the member companies of the 
Federal Performance Contracting Coalition work hand-in-hand 
with the Department of Energy. They oversee the indefinite 
delivery and definite quantity contracts that we all operate 
under to implement energy savings performance contracting for 
the Federal Government.
    Mr. Burgess. Now you referenced that there, in fact, was a 
congressional mandate that required some of this performance 
standards. Do you recall when that congressional mandate was 
passed? In your written testimony, you referenced 1986 and said 
implementation was occurring in the '90s. So--and this is a 
well-established pattern, is that correct?
    Ms. MacIntosh. Correct.
    Mr. Burgess. This is not something that is new that should 
be----
    Ms. MacIntosh. Performance contracting? Oh, no.
    Dr. Burgess [continuing]. A surprise to----
    Ms. MacIntosh. It should not be a surprise to anyone.
    Dr. Burgess [continuing]. Dr. Hogan? Well----
    Mr. Whitfield. Ms. MacIntosh, would you mind using Mr. 
Crouse's microphone, because we--and----
    Ms. MacIntosh. Is this a little better?
    Mr. Whitfield. Yes, that is better.
    Mr. Burgess. Whoa, super. And you know, I was making the 
point--and not just an academic one--in Congress, we get 
criticized for passing mandates and then not living under them 
ourselves. I referenced how in my own personal life I have made 
energy efficiency decisions that were based upon what I would 
consider would be the correct market signals. And yet, we have 
a great big glorious federal building here, the Rayburn 
Building. I am fortunate enough to have an office here. Yes, 
indeed, they did change all the lighting around back in 2007 or 
2008, but when I look at the biggest source of energy loss, it 
has got to those single pane windows that are in existence in 
the Rayburn Building, in the Cannon Building, in the Longworth 
Building. I don't get to go over on the Senate side, but I 
suspect you have got the same thing over there. So did you do 
an audit for the Department of Energy on, say, the Rayburn 
Building, like we have mandated that other industries do on 
their structures?
    Ms. MacIntosh. Yes, that is correct, and that was done in 
the 2008-2009 timeframe. A comprehensive audit was performed 
for all of the House office buildings. The same was also done 
for the Senate office buildings.
    Mr. Burgess. Yes, we will ignore the Senate for right now, 
since they are ignoring us. Would it be fair to say that--I 
mean, lighting, yes, it is a significant expense. To me, it 
would have made more sense--I mean, had I been doing this in my 
private life and I wanted to change all my lighting, I would 
have waited until a bulb burned out and then replaced it with 
an LED or a CFL, if that was my inclination. To go in and 
change all the lights around--basically during a congressional 
recess, I mean, that was a pretty expensive undertaking. I have 
got no idea what happened to the old light bulbs. I hope they 
gave them to another country so that they could use them. But 
it almost seems like that was the obvious--the low-hanging 
fruit in this endeavor, but if you really want to look at where 
the energy efficiency exists in an older building like Rayburn 
or Cannon or Longworth, it is going to be in the window 
treatments, not in the lighting structures.
    Ms. MacIntosh. Mr. Terry, the beauty of the energy saving 
performance contracts--excuse me, Mr. Burgess--it was the 
direct line of sight. The beauty of the energy savings 
performance contracting program is that you are supposed to 
look at things from a holistic standpoint. So energy savings 
were generated from lighting, certainly, but that was really 
only one of the many measures that were implemented. The real 
meat of an ESPC, typically, is in the places you don't see. It 
is in the chiller plant, it is in the boiler plant, it is in 
the direct digital control systems of a facility that measure 
and monitor and modulate temperature, for example. All of those 
systems, including water systems as well, were addressed in all 
of these buildings. You know, that audit that was performed at 
the time is also intended to be a very comprehensive menu of 
opportunities that we could implement to generate savings.
    Mr. Burgess. Yes, we are going to run out of time. You 
notice the chairman has a very quick gavel----
    Ms. MacIntosh. Certainly.
    Dr. Burgess [continuing]. When it comes to me, but could 
you perhaps supply my office with that audit and perhaps 
provide us a little direction as to what has been implemented 
and what has been--what is waiting? Because again, I would like 
to give people some reassurance that we are living under the 
same rules that we are making for other people----
    Ms. MacIntosh. Agreed.
    Dr. Burgess [continuing]. And that the smart thing to do is 
to respond to appropriate market signals and not the 
congressional mandates.
    Thank you, Mr. Chairman, for your indulgence. I am going to 
yield back the final 2 seconds.
    Mr. Whitfield. You are welcome, Dr. Burgess. I gave you an 
extra 50 seconds the last time, so--at this time, I recognize 
the gentleman from California, Mr. McNerney, for 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman. I want to welcome 
you to Washington, Ms. Burt, for your testimony here this 
morning. I had the privilege of visiting a PG&E training 
facility in Stockton, and with Chris Foster--it was about a 
year ago, and it is certainly state-of-the-art. It is very 
impressive. Do you think that that facility and facilities like 
that are producing enough trained workers, or is there an 
additional need for additional facilities to meet the market 
demand right now?
    Ms. Burt. Thank you. Thank you very much, and it is a 
delight to be here, Congressman. We are certainly happy to be 
here from California.
    That facility in particularly and the other two, the sister 
facilities that we have, the facility in San Ramon, which 
really trains and really does a lot of research and work around 
the food industry and emerging technology, and then the one in 
San Francisco, which is really focused on architects and 
building and really design. I will tell you, they are kept 
consistently busy. And as you mentioned, the one in Stockton 
has actually been in existence since 1978, and we have produced 
91,000 trained workers. Our own workforce, we have about 700 
people directly working for--on my team that do energy 
efficiency, and then we hire in our communities another 2,000 
practitioners within weatherization, and these are contractors 
and we train them. We also trained a number of contractors in 
the most recent funding, the ARA funding that was available. So 
I must say that we don't find lack of need for training. There 
always seems to be--I looked at the Pacific Energy Center just 
the other day, and I think there were 950 separate classes that 
were being offered. And I know last year in that facility 
alone, we trained--and that, I think, is the smallest of our 
facilities--we trained about 8,000 workers.
    So it is certainly an area as energy efficiency becomes 
more a part of the solution nationally that we should look at, 
you know, and I think if we can get to the point where energy 
efficiency is considered in other places as it is in California 
as a part of the generation mix, just as a generation plant 
would be, then I think we may need to look at more training 
facilities.
    Mr. McNerney. Thank you. How do you see the EV market 
affecting PG&E's business plan over the next decade?
    Ms. Burt. Well, thank you again. We are very excited about 
the electric vehicle market. It does have challenges with it 
because again, the distribution grid traditionally built across 
our service territory as well as others is in need of 
upgrading. We are in the midst of making our grid much smarter 
to really integrate electric vehicles and other renewable 
resources, but we are very excited about electric vehicles and 
what they offer, particularly for the environmental benefits 
and for our customers' benefits. We know that in our service 
territory--I will tell you, my customers and your constituents 
are very excited about using electric vehicles. So I think you 
can expect to see us do more on that.
    Mr. McNerney. Thank you.
    Mr. Gayer, would you say that big improvements in energy 
efficiency would have a stimulative impact on the national 
economy?
    Mr. Gayer. I think that market-driven improvements in 
energy efficiency are good for the well-being of the economy 
for sure. When you get to certain programs to stimulate, I 
think it is a little bit dicier as far as whether or not it is 
worth the cost. You would have to really see what is the labor 
being employed and what would they have been doing otherwise. 
In a time of great unemployment, I think there is much more 
evidence that there is such a case, but if you are talking 
about the long sweep of history, I think the evidence is 
weaker. But certainly, energy innovation and energy efficiency 
innovation is good for the economy.
    Mr. McNerney. Thank you.
    Mr. Elliott, is there anything that you would--that would 
give us a better return on investment than energy efficiency in 
terms of energy investments?
    Mr. Elliott. Congressman, at this point I think energy 
efficiency represents one of the best investments that is 
available in the marketplace. We are in an environment right 
now, in spite of the current low natural gas prices, where many 
of the other energy sources are increasing in cost, as has 
already been noted in the case of gasoline pricing right now, 
and investment in energy efficiency represents an opportunity 
to improve the U.S. GDP by reducing outflow of funds to foreign 
countries. There is also the issue that investment in energy 
efficiency makes other technologies equally accessible. For 
example, investments in energy efficiency can enhance the cost 
effectiveness of renewable energy by reducing the amount of 
energy that is required.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you.
    At this time, I recognize the gentleman from Ohio, Mr. 
Latta, for 5 minutes.
    Mr. Latta. Thank you, Mr. Chairman, and thank you very much 
to our panel for being with us today.
    If I could, Mr. Gayer, if I could start with you. I 
apologize for my voice. It is allergy season. But I found your 
testimony interesting, because you kind of hit home to my 
district. I represent 60,000 manufacturing jobs in northwest, 
west central Ohio that we--some of our companies are very 
large, some are very small. We have a great need for base load 
capacity out there, and I go through factories, I mean, 
literally all the time. And probably in the last, I am going to 
say 5 months, I have been through about 150 facilities in my 
district. And I find it interesting in your testimony what you 
are talking about, because I hear this from my folks back home 
all the time, you know. They see these mandates coming down 
from Washington, and again, they are in a global--most of these 
people are on a global marketplace and they are out there very 
concerned about making sure that they can produce a product 
that is competitive, that--not only in this country, but around 
the world.
    But in your testimony, I found it interesting. You were 
talking about that--you said there were a number of reasons why 
the market warranted an approach of setting a price of 
pollution as cost effective, and then regulations such as 
energy efficiency mandates, and you say that the one-size-fits-
all energy efficiency mandates ignore the substantial diversity 
of preferences, financial resources, and personal situations. 
And I tell you, that hits home to my district. If I can just 
ask you, then, you know, when you talk about that, you said 
that--you testified that the energy efficiency standards could 
actually reverse some of the energy savings resulting in 
negligible environmental benefits. Could you expand on that?
    Mr. Gayer. Yes, sure. First, I think it is important in all 
these questions to distinguish between--a lot of people are 
talking about innovation and energy efficiency, and I think 
that is a good thing, and when it is driven by the market, it 
is accounting for their preferences and the diversity of taste 
and financial circumstances. The problem comes when you have an 
agency that essentially uses certain--imposes mandates and 
essentially is asserting that certain preferences are in some 
sense invalid.
    Mr. Latta. Could you give me a couple of examples of----
    Mr. Gayer. Well, I mean, it is a very simple thing. The way 
you do it is these net present value calculations. You look 
at--the agency will say well, we think for this appliance fuel 
costs are going to be this in the future. We think the 
appliance will last this long. We think you are going to use it 
this many times, and we kind of figure out is the higher cost 
today worth it for you to get the savings later, but it is not 
accounting for other characteristics of convenience and feature 
and your particular circumstance. And this happens, I think, 
most egregiously when it comes to commercial products. I mean, 
you have companies that--as I think you are alluding to, that 
are very narrow profit margins, they are in very competitive 
industries. Fuel costs might be a huge part of their operating 
costs, and essentially they are being told you are not doing a 
good job, considering the tradeoffs here, and I think my 
response to the presumption is they probably are doing a pretty 
good job of considering the tradeoffs, because they have 
circumstances that can't be measured from the regulator's 
perspective. And so the presumption should be that they 
actually know what they are talking about. Again, there are 
plenty of incentives for energy efficiency for that firm, and I 
think that is good, but we don't want--I don't think we should 
just mandate that--ignore their other preferences, and I think 
that is what the market is good at accommodating.
    My bigger point is a lot of the tech supporting these rules 
are written from the angle that they are helping the 
environment, but what I have just described is really consumer 
protection. It is not environmental protection, it is saying 
that you are making a mistake by buying an uneconomic product. 
We, the regulator, are going to correct that. I don't think 
there is evidence that there is a need for consumer protection, 
but my point is that is a very different thing than designing a 
regulation to say hey, we have got to worry about pollution. 
You have your circumstances, but you are not considering that 
you are emitting pollution. Let us address the pollution, and 
you wind up with very different regulations.
    Mr. Latta. Let me follow up for just a second where you 
were talking about consumers. You know, what is best for the 
consumers out there, then, the energy efficiency improvements 
for market forces, or energy efficiency from the regulators?
    Mr. Gayer. Oh, well certainly the former, because the 
former actually considers they get to consider the other 
tradeoffs and the other characteristics that either drive their 
consumer preferences, or in the case of businesses, buying 
these products, their bottom line. Essentially that is the 
premise, is I get--I am better at spending money that affects 
my bottom line than somebody else is, and the presumption 
should be that. Again, if you are trying to adjust 
environmental externalities, which I alluded to, I won't 
consider that in my consumption decision, and that is, I think, 
a strong role for the regulator there. But there needs to be a 
distinction between are we trying to protect the environment or 
are we really just consumer protection?
    Mr. Latta. All right. I think that, you know, again when I 
am going through my facilities back home that the folks back 
there, you know, they are worried about that bottom like, and 
you know, they all want to make sure that there is clean air 
and clean water. And at the same time, they want to make sure 
they are providing the jobs out there for the people in the 
communities, because that is absolutely central.
    Mr. Chairman, with that, I thank you for your indulgence 
and I yield back.
    Mr. Whitfield. Thank you.
    At this time, I recognize the gentleman from California, 
Mr. Waxman, for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Energy efficiency standards set a minimum floor for the 
efficiency of appliances and other products. Over the last 25 
years, these standards have played a key role in improving the 
efficiency of the appliances we all have in our homes. They 
save consumers billions of dollars every year by lowering 
utility bills, but some economists argue that energy efficiency 
standards are a bad idea. They say that the costs of the 
standards outweigh the benefits, and that they reduce consumer 
choices. They also argue that any cost effective efficiency 
measures would be taken anyway, even without the standards, and 
Mr. Gayer made these arguments today.
    Dr. Elliott, what do you think? Do the costs of these 
standards outweigh the benefits, or do consumers come out 
ahead?
    Mr. Elliott. Congressman, I want to say that I am--in our 
view and based on our research, consumers do come out ahead, 
and I think we can get some very good examples on this. Perhaps 
one of the longest regulated products in the marketplace is the 
refrigerator today. My wife and I had the opportunity to 
replace one recently, and the number of choices that we had in 
buying this one compared to the one we bought 25 years ago, the 
amenity values, the cost, the--were all substantial.
    Mr. Waxman. Let me ask you this. Do the standards reduce or 
increase consumer choice?
    Mr. Elliott. I think our experience, at least looking at 
things like lighting products, looking at things like 
automobiles, looking at things like refrigerators, washing 
machines, they have increased our consumer choice. We have more 
options, we have more amenities. Part of this is a simple fact 
that we have stimulated the manufacturers to redesign products 
which they have no motivation otherwise to redesign.
    Mr. Waxman. You, in your testimony, talked about huge 
savings for major efficiency improvements. Would we have seen 
benefits in the absence of efficiency standards, or are there 
market barriers that would have prevented cost effective 
efficiency improvements from being made? You talked about an 
incentive for manufacturers. Are there barriers to them or they 
just don't think about it because they don't have to?
    Mr. Elliott. I mean, I think it is a complex issue, and as 
with most things, you know, these are not simple decisions. A 
lot of this comes down to information and we talk about in an 
economic environment where we have perfect information. 
Consumers don't have perfect information. They have lack of 
information. They are not given or don't have access or the 
time--we call that transaction cost--to be able to make the 
choices that may----
    Mr. Waxman. Well how about the choices that manufacturers 
make? Are there barriers to them making efficiency choices?
    Mr. Elliott. Absolutely. Part of it is there is no change 
in the marketplace. In the case of a manufacturer, if we have a 
static situation in the marketplace and there is no dynamic 
there, they are not going to necessarily innovate. And so the 
opportunity, I think, is standards allow them to innovate and 
we have seen over the last 25 years in the manufacturer's 
products that are regulated by standards coming to understand, 
and in many cases, they have been beneficial to the 
marketplace.
    Mr. Waxman. All right, thank you.
    Ms. Burt, PG&E has a lot of on-the-ground experience 
implementing programs to incentivize energy efficiency. Do 
consumers take every cost effective energy efficiency measure 
on their own, or are supporting policies necessary?
    Ms. Burt. Thank you, Congressman. We would agree that 
supporting policies are necessary and, in fact, we do make 
many, many, many of our programs available directly to the 
consumer. We also give them a lot of information. But that 
simply alone doesn't do the trick. We also have incentives to 
manufacturers, so for example, the manufacturer that is 
manufacturing a refrigerator, you know, our goal in California, 
as you probably know, is to work collaboratively with 
manufacturers across the country----
    Mr. Waxman. And you have done that very well. I am sort of 
moving forward because I only have a limited time, but I wanted 
to ask you, first of all, you testified PG&E efficiency 
programs result in energy savings that saved your customers $20 
billion and avoided the need to build 25 large power plants. 
These efficiency initiatives are cheaper than building new 
power plants, aren't they?
    Ms. Burt. Yes, sir, they are, and----
    Mr. Waxman. And what is PG&E's experience with appliance 
efficiency standards and State building codes? Are these 
onerous government mandates or are they cost effective ways to 
drive energy efficiency improvements?
    Ms. Burt. Well, thank you. Our view of codes and standards 
is they are part of the portfolio of energy efficiency. We work 
on codes and standards. We work upstream with manufacturers. We 
work with cities. We work with governments to create incentives 
before the standards are set. So it is not as though the 
standard is set first, you know. Our view of the world is let 
us incent the more energy efficient refrigerator, more energy 
efficient televisions, and then let the standard evolve as the 
market pulls. And that has really been very effective in 
California, as you know.
    Mr. Waxman. Well, I commend you for what you have done in 
California. Thank you very much.
    Mr. Whitfield. Gentleman's time is expired.
    I recognize the gentleman from Texas, Mr. Olson, for 5 
minutes.
    Mr. Olson. I thank the chairman and welcome the witnesses. 
You start here in the morning, now it is the afternoon. So 
thank you for your time, your expertise, and most importantly, 
your persistence.
    Mr. Kosisko, I would like to thank you for helping me to 
tour ABB's facility in Houston last year. In your testimony, 
you mentioned barriers to investment in industrial efficiency, 
lack of a clear business case, inadequate funds for financing, 
and a general lack of information. Could you expand on what 
NEMA and IEEC are doing? Is there a particular success story 
that stands out to you?
    Mr. Kosisko. Thank you, Congressman, for the question.
    NEMA, IEEC, and ABB are all working within the industry to 
increase awareness, which I think is one of the key impediments 
to adopting energy efficiency technologies into the industrial 
space. Let me give you an example. If you look at a typical 
industrial motor, for instance, that industrial motor, over its 
life cycle, 2 percent of its total cost to operate is the 
initial purchase price of that motor. Ninety-seven percent of 
the cost is the energy utilized over its lifetime, but yet, 
there are decisions made on a daily basis by various industrial 
customers on the initial procurement price of that motor, and I 
think it is widely made because of the lack of understanding 
and general information available. NEMA and IEEC within ABB, we 
do a lot to promote awareness and improve visibility of the 
types of products and systems and services that will help in 
industrial energy efficiency.
    Another example, we have a show each year, Automation and 
Power World, that we sponsor at ABB where we bring in over 
2,000 industrial users into a conference. We have over 400 
seminars. A good portion of those seminars are focused on 
energy efficiency and the types of products, systems, and 
services and other methods that could be used within the 
industrial environment to reduce energy consumption and make 
industry more competitive here in the United States.
    Mr. Olson. Now I am questioning--being from Texas, one 
thing I worry about is our grid reliability. Our State, our 
margin for excess capacity is very slim now, and that is 
largely because of overregulation by the Obama Administration, 
our vast growing population, and conflicting federal agency 
laws that force a power provider to choose between one agency 
and another in direct conflict. I used the last Congress to 
this Congress to adjust that factor, but I am intrigued by the 
Volt/VAr grid optimization technology you have. Can you tell me 
how that would work to improve the efficiency of the electric 
grid and improve grid reliability?
    Mr. Kosisko. We have several technologies that help 
actually improve the efficiency of transmission and 
distribution of power and grid reliability. One of the most 
predominant is our high voltage direct current technology and 
the transmission of energy. This allows for much lower losses 
in the transmission of high voltage across longer distances, 
and helps us to better connect the grid, whether it is with 
traditional power sources or whether it is with alternative 
power sources and renewable power sources. So that is just one 
example. It typically reduces losses by about 10 percent, which 
certainly is a terrific improvement when you look at the amount 
of energy that gets transmitted across those lines.
    We also provide software that helps manufacturers and grid 
and utilities to better manage the grid, improve its 
reliability, improve demand response so at peak seasons or at 
peak times during the day, we could better produce energy in a 
more effective way with lower cost fuels and better fuels. Just 
a few examples. So we have several technologies in that space.
    Mr. Olson. Thank you.
    My final question is to you, Mr. Crouse. In your oral 
testimony, you mentioned the Federal Government picking winners 
and losers in the energy sector, largely through the RFS, 
renewable fuel standards, as a challenge to combined heat and 
power. I am also aware of a company back home called TAS, which 
faces similar challenges. They are trying to do a waste heat to 
power model of operations. Can you briefly describe the 
differences between combined heat to power, waste heat to 
power, and microturbines?
    Mr. Crouse. Certainly, I will try. Thank you for the 
question, Congressman.
    You know, waste heat to power is typically taking an 
existing thermal energy store--source and using it in a device 
to generate additional electricity or make useful, you know, 
products or energy out of it. Microturbines and other CHP 
generation technologies are very similar in how our products 
are applied. We install the generator, and then the thermal 
energy is used typically with inside the facility of the host 
client to increase the overall efficiency of the plant. So we 
are able to use the electrical energy and the thermal energy to 
make hot water steam, chilled water. You know, one of the 
challenges we faced is the evaluation is far more complex for 
CHP than it is for changing light bulbs or putting in high 
efficiency motors or VFDs, so the challenge is customers tend 
to shy away from more complex transactions and/or payback 
scenarios than the simpler ones. That is one of the uphill 
battles that we have.
    Mr. Olson. Thanks. I am out of time. I yield back.
    Mr. Whitfield. Gentleman's time is expired.
    At this time, I recognize the gentleman from New York, Mr. 
Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    First, an observation. I have heard so many comments here 
today about--from the panel about what the market rule, what 
the private sector--the agents have changed and that things 
will happen, and I find it interesting. There was a great call 
for policies, for standards, for regulation, for incentives, 
for codes, for implementation of those items above, and calling 
for investments and R&D appeal. So I think it is a very telling 
statement here today.
    I would first go to Ms. MacIntosh, please. You state in 
your testimony that the barriers to increase usage of an ESPC 
are difficult to quantify. I would ask, what role do energy 
prices play in a decision to use an energy savings performance 
contract?
    Ms. MacIntosh. That is a very good question. Energy prices 
obviously dictate the breadth with which we can apply an energy 
savings performance contract to a facility, because all of the 
project implementation costs and care and feeding of an ESPC 
are covered by the energy savings and the energy cost savings 
that are generated by those improvements. The areas where you 
have high energy rates are obviously going to have an easier 
time of doing a performance contract than areas where energy 
rates are more competitive.
    Mr. Tonko. And then how are the changes in energy prices in 
the term of a contract addressed? How do those changes get 
incorporated into the contract?
    Ms. MacIntosh. What we do in the course of developing an 
energy savings performance contract is a lot of historical 
analysis of how energy rates have changed for that particular 
customer over time, and then we utilize a lot of sources 
through Department of Energy, through NIS, and other areas on 
what forward projections are supposed to be, and then we look 
to put together a conservative value on what we believe the 
energy prices are going to be, a floor, if you will, to utilize 
throughout the term of the contract.
    Mr. Tonko. Back in my New York State days working with 
energy policy and implementation, we held a hearing with data 
centers. Do you see the application with data centers being a 
real thing?
    Ms. MacIntosh. We are just starting to see that as a real 
possibility in energy savings performance contracting because 
of their high energy draw, and there is an awful lot of 
technology advancement that is happening in the IT and data 
center arena. So it certainly is an opportunity for us to 
incorporate ESPC in that market.
    Mr. Tonko. Thank you.
    Mr. Crouse, the barriers to expanded deployment of CHP may 
be many, but finding the upfront capital, I have to believe, is 
a big thing, the capital investment. Have the energy savings 
performance contracts been used much by the private sector to 
install CHP?
    Mr. Crouse. Certainly. We have customers that use the 
energy savings model in the private sector as well as in the 
government sector to deploy our technology and other CHP 
technologies.
    Mr. Tonko. And where in our industrial applications do you 
see some of the best opportunities?
    Mr. Crouse. You know, I think you need a customer that is 
using thermal energy--hot water, steam are the easiest sort of 
customers. Food processing, cheese, you know, customers in the 
plastics business are natural targets for us. So those are on 
the industrial side some of the low-hanging fruit, if you will.
    Mr. Tonko. And Mr. Elliott, I assume some of the resistance 
to new product efficiency standards is the cost to 
manufacturers of altering their product design and 
manufacturing process. What is the experience that you have 
with the product vendors, in terms of perhaps incorporating the 
message for efficiency of--efficiency standards?
    Mr. Elliott. There absolutely is a significant transaction 
cost for a manufacturer when they do reengineer their products 
or reengineer their products to incorporate energy efficiency. 
That said, that also gives them the opportunity to revise their 
manufacturing processes. For example, in the electric motor 
industry when we saw motor standards come in, we saw a 
consolidation of motor designs by the manufacturers and 
implementation of flexible manufacturing. So this actually 
allowed them to produce a higher quality product that was 
accepted by the marketplace as a--on the basis of its 
performance. So yes, there was cost occurred--incurred by the 
manufacturers, but what it did was really allow them, in the 
case of the motors, not only produce a product that met the 
customers' needs better, but also allowed them to compete 
globally against many of the low-cost producers who were not 
being able to produce a product of similar performance.
    Mr. Tonko. Thank you.
    Ms. Burt, just a comment to your earlier statement. 
Consumers don't pay rates, they pay bills, so I appreciated the 
statement that was being given.
    With that, Mr. Chair, I will yield back.
    Mr. Whitfield. Gentleman's time is expired.
    At this time, I recognize the gentleman from Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I will follow up on 
some comments that were made earlier, and maybe in the previous 
panel for some of it. I would like to say--I am going to ask 
you a question in a minute about that Christiansburg facility, 
but I do look forward to going up there and seeing it in action 
at some point in time, but I am going to get you to do a little 
science on it for me, Mr. Crouse.
    Before that, I would like to say to you, Mr. Kosisko, thank 
you so much for having a facility in the Ninth District of 
Virginia. It is doing great work there, and our biggest problem 
is is that because it abuts a mountain, we have got to find 
space to expand, and I hope that it will still be in the Ninth 
District of Virginia, but we don't have that many flat places. 
But anything I can do to help you all find facilities for the 
current facility or anything else you would like to move to my 
district, I am more than happy to do, and I appreciate all the 
work that you are doing.
    Ms. MacIntosh, I would like to get a copy of the inventory 
or survey of the buildings on at least the House side as well. 
I love the windows, but I agree with Dr. Burgess, there has got 
to be something we can do a little more efficient than the 
current windows that we have. I will confess that I like to 
open those windows from time to time, particularly when the 
weather is nice, and I would hate to lose that, but also, I 
understand that we have got to have some energy efficiency.
    That being said, going back to a previous panel, I would 
comment that I do worry a bit about not having buildings that 
breathe a little bit, because then the indoor air pollution 
does go up, as Mr. McKinley pointed out, and so that is 
something we do have to put in the overall equation.
    Mr. Crouse, coming back to you, I would ask so that you can 
explain it to me, because I am not an engineer. I was a lawyer 
before I came to Congress. You have got a 65 kilowatt 
microturbine installation in the town Christiansburg waste 
water treatment plant, and you indicated in answers to 
questioned earlier that a lot of those facilities where these 
are located, they use it onsite. I am trying to figure out--and 
they may not, but does Christiansburg use that energy onsite, 
or does it--do they wheel it off somewhere else?
    Mr. Crouse. Thank you for the question, Congressman. They 
certainly use it onsite. Waste water treatment plants are 
unique in that they do a lot of water pumping. They also use 
the thermal energy to heat the digesters, so especially in the 
winter months, you know, to keep the chemical composition, the 
temperature correct in the digester, they use the thermal 
energy from their CHP system, and then the electricity is 
just--reduces the amount of purchase power that they have from 
the utility, because typically they do not generate enough 
digester gas to supply all of their electrical requirements at 
a waste water treatment plant.
    Mr. Griffith. All right. Thank you very much.
    I should mention that ABB does a lot. When I toured their 
facility there in Bland, I did note that they pointed out a lot 
of things that they were doing to keep their energy costs under 
control and to be very efficient at that facility. I would also 
have to note that I went back for, I don't know, a second or 
third tour to the large Volvo facility in my district, and they 
are doing all kinds of things. They have got a couple of 
windmills, they have got solar panels. They have installed 
passive solar in a number of places where there--because they 
are skilled at doing a lot of these things, they have actually 
done a lot of it themselves. But the one that I found the most 
interesting that I think folks maybe want to pay attention to 
is that somebody on their team--they have suggestion boxes and 
give out rewards. Somebody on their team figured out that 
because they have 2,000-plus people who are captive in the 
factory, they all know where the drink machines are and where 
the snack machines are, and so they took the light bulbs out of 
them and they were really surprised at how much electricity 
they saved. So when we are talking about efficiencies, 
sometimes simple things work very well in that regard.
    Mr. Gayer, I have only got a minute left, but I was 
wondering if you could comment on refrigerators since that came 
up earlier, because one of the things I have noticed is, well, 
I think we all ought to have the most efficient equipment that 
we can have. If you have got a refrigerator that is struggling 
on, you might stay there if the cost is high to do something 
else, and a lot of the innovations I have seen have been 
technologically driven as opposed to energy efficiency, because 
I can't imagine that water and ice in the door as opposed to 
having to reach inside is a whole lot more efficient. Maybe it 
is. Can you expand on that and help me out?
    Mr. Gayer. Yes, a few things. One is I agree with Mr. 
Elliott, the choice has expanded over the last few decades in 
all appliances, but I think that is market driven and certainly 
not due to mandates, which by their nature, restrict choice. 
And you are exactly right, one of the reasons these don't work 
that effectively or cost effectively to reduce energy is 
because people sometimes hang on to their older products 
longer, especially if it is a big ticket item, and it is going 
to cost more money due to a different--a new regulation.
    Mr. Griffith. And do you have any data that would indicate 
how much the price of a--percentage-wise or otherwise that--how 
much the price of a refrigerator has been impacted by----
    Mr. Gayer. I don't have it with me. There is a--primarily 
in the vehicles, when one deals with vehicles too. There is 
always an impact whenever you raise CAFE AE1 standards, you 
have to worry about you get a slower turnover of the fleet and 
new vehicles tend to be more fuel efficient. I don't have the 
numbers offhand, though.
    Mr. Griffith. All right, thank you, sir.
    Mr. Whitfield. Gentleman's time is expired.
    At this time, I recognize the gentlelady from California, 
Ms. Capps, for 5 minutes.
    Mrs. Capps. I want to thank the chairman for calling 
today's hearing. Thank you to all of our witnesses for a long 
day of testimony.
    I think it is a great topic. Increasing energy efficiency 
is critical to our Nation's energy future, and as is clear from 
today's testimony, the private sector is doing a great job of 
innovating and bringing new energy efficient technologies to 
customers. But the federal policy, I believe, also plays a 
critical role in this process. Neither the Federal Government 
nor the private sector on its own does as good a job as we want 
to have done when they all work together. But working together, 
these public-private partnerships can lead to great 
advancements that create jobs and can save consumers money, but 
also spur innovation and benefit the environment. I see it 
every day back home in my district on the Central Coast of 
California. I represent two world-class research universities: 
Cal-Poly San Luis Obispo and the University of California at 
Santa Barbara. Research conducted at these public universities 
is frequently spun off into very successful local companies 
which I have visited, like Soraa and Transphorm, and many 
others. These companies continue to innovate and develop new 
technologies, and they are creating jobs at the same time, 
spurring economic growth.
    So my first question is to you, Mr. Crouse. Your company is 
similarly innovating and staying at the forefront of your 
industry. In your testimony, you mentioned federal R&D funding 
as an important contributor to your company's growth. Could you 
elaborate on that just for a minute, because I want to ask 
other questions, too, but how has Capstone benefitted from 
federal R&D funding?
    Mr. Crouse. Thank you. I will be as quick as I can.
    The--we have several programs currently that we are working 
towards efficiency and reliability, so through the DOE, we have 
a 250 and a 370 kilo microturbine that we are developing that 
will improve the electrical efficiency of our product and 
broaden the number of applications it can go into to get higher 
overall efficiencies. And then we are working on other fuel 
types, syn gas and other things. Some of our original 
technology was developed in cooperation with the public sector 
as well.
    Mrs. Capps. So you are a good example for the rest of us.
    My second question goes to you, Ms. Burt. Of course, these 
energy efficient technologies not only create jobs and support 
small businesses, but they also benefit consumers. I want to 
focus on this intersection between technology and energy and 
how it really makes a difference in the lives of the people, 
and that is actually the bottom line. Ms. Burt, we all know how 
these technologies can reduce energy use in our homes and 
businesses, and lower cost for consumers, but I am curious 
about the efficiency improvements being made to our energy 
infrastructure. For example, could you discuss what efficiency 
technologies PG&E is deploying on the infrastructure side and 
how this is going to benefit consumers in the long run?
    Ms. Burt. Thank you. That is a very good point. We are--
again, this is the intersection between technology and energy, 
and it is very evident in the smart grid that is being 
deployed. Within California and our distribution network, we 
are deploying a device called a FLISR, and that is not a very 
catchy name, but it stands for fault location isolation, and 
service restoration, and it literally takes any kind of 
interruption along the circuits that have the device from being 
a typical 1 to 2 hour outage to being less than 5 minutes. And 
as we deploy those, we have deployed--about 135 circuits are 
completely deployed to date. By the end of this year, we will 
have 400 circuits deployed, and I am really happy to say that 
in 2012, we had the highest reliability we have experienced in 
the history of our company. So we are quite pleased with how 
intelligence and energy efficiency works within the grid as 
well.
    Mrs. Capps. And when that disruption in service happens, 
you know, there is a ripple effect on how it impacts your 
customers.
    Finally, Ms. Burt, I want to touch on a key point that you 
made in your testimony about energy efficiency training. PG&E--
and I am thinking about the facilities I have in my district--
your Pacific Energy Center has been training students in energy 
efficiency for many years. I am curious about the demand for 
this kind of training. Have you seen enrollment in your 
training courses increasing in recent years? If so, why do you 
think that is? In other words, is this catching on?
    Ms. Burt. Thank you, Congresswoman. I do believe that we 
have seen enrollment increasing, particular with the ARRA 
funding and the weatherization and the cities and counties and 
the jobs that were created within the State of California. Our 
role in that--we weren't a part of the funding, but our role in 
that was to train and properly train----
    Mrs. Capps. Right.
    Ms. Burt [continuing]. The workforce. So we have seen a 
consistent increasing interest in these sorts of jobs, because 
they are very relevant.
    Mrs. Capps. And I saw this firsthand during the recession. 
The weatherization of older homes--what is it, any structure 
that is over 10 years old, maybe it is even less than that?
    Ms. Burt. Yes.
    Mr. Capps. Can benefit cost-wise, bottom line-wise, and 
then you can train unemployed people, give them a job. It is 
not very sophisticated in many ways, focusing on just older 
homes, putting in more efficient windows, window sills, the 
win-win with more people working, and the lower energy cost for 
maybe a couple living on a fixed income. It just--it does 
really--over the long haul really have an impact.
    Thank you very much for your time.
    Mr. Whitfield. The gentlelady's time is expired. At this 
time, I recognize the gentleman from Illinois, Mr. Kinzinger, 
for 5 minutes.
    Mr. Kinzinger. Thank you, Mr. Chairman, and thank you all 
for coming. I really appreciate it.
    As has been discussed today by our first few panels, 
improving energy efficiency in America will play a pivotal role 
in increasing U.S. energy productivity and making America more 
energy secure. The benefits from implementing energy saving 
techniques and technologies are felt by nearly every part of 
society through higher productivity, reduced energy costs, 
lessened environmental impacts, and a return of billions of 
dollars to our economy that was previously going to waste. As 
we move forward to promote adoption of energy saving 
technologies and improve awareness of their benefits, promoting 
the facts outside of the light of partisan politics will be 
crucial.
    Recently it was my honor to be nominated to serve as an 
honorary vice chair to the Alliance to Save Energy, a 
bipartisan group of members of Congress, corporate CEOs, and 
organizational leaders focused on promoting the benefits of 
energy saving technologies and encouraging their adoption. I am 
excited to be working with this diverse group, and believe it 
can serve as a model for problem solving across the partisan 
divides, which we kind of need nowadays.
    At this time, I ask unanimous consent that the Alliance 
Commission on National Energy Efficiency Policy Energy 2030 
Report be included for the record.
    Mr. Whitfield. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Kinzinger. The benefits of adopting energy efficient 
technologies are undeniable. Congress must work to educate 
consumers and businesses to these benefits, allowing for the 
private sector to move forward, upgrading our energy 
infrastructure.
    I want to commend private industry for taking the steps to 
ensure energy efficiency. I particularly want to thank the pay 
TV industry, which includes cable operators, Bell companies, 
satellite providers, and consumer electronics manufacturers for 
their agreement announced last year to make sure that 
consumers' set top boxes are even more energy efficient. This 
is a great precedent for the private sector, stepping up to the 
plate and doing the right thing without government mandates.
    Mr. Kosisko, in your testimony you mentioned a 2011 study 
by the Economist Business Intelligence Unit in which businesses 
were asked to identify the main barriers to investment and 
industrial energy efficiency. By far, the most popular response 
was a lack of clear cut financial case for the energy 
efficiency investments. How can government work with 
organizations and companies like yours to get out the facts and 
make the clear cut case for companies to make energy efficient 
upgrades?
    Mr. Kosisko. Thank you, Congressman. You know, as I 
mentioned before, I think that education, I think that 
promotion and creating visibility in the marketplace is going 
to be crucial to us moving forward. Certainly, you know, there 
is a competition for capital. When you look at private 
investment in industrial companies, they are going to make 
decisions based on how they can most effectively use the 
capital over the next 2 to 3 to 4 years. Some of these 
technologies have longer payback periods, so I think it is 
important that we provide the level of education so that they 
can make targeted decisions in certain technologies that will 
have shorter payback periods, produce results for them in a 
shorter timeframe, but also, I think that we need to look at 
what we can do in a smart way to promote them in using these 
technologies that may have longer payback periods, but will be 
crucial for us in maintaining our competitiveness from an 
industrial perspective in this global economy.
    Mr. Kinzinger. Well thank you, and I think even having 
these hearings is a good start.
    Ms. Burt, in your written testimony you commend the work 
and recommendations of the Alliance to Save Energy's Commission 
on National Energy Efficiency Policy, which issued a report, 
Energy 2030, highlighting several policies concerning existing 
technologies for policy makers to include to consider. Of those 
recommendations to increase energy productivity is for the 
government to lead by example. You also mentioned that Pacific 
Gas and Electric Company is currently completing a project for 
NASA Ames Research Center near Mountain View, California. This 
project encompasses more than 100 buildings and covers in 
excess of 2.5 million square feet, and allowed NASA to save 9 
gigawatt hours of electricity, 1.3 million therms of natural 
gas, and more than 15 million gallons of water annually. With 
results this substantial, could programs with similar amounts 
of savings be duplicated at other federal agencies? If so, what 
are the main challenges that we face in doing that?
    Ms. Burt. Yes, thank you, Congressman. They absolutely can 
be duplicated. In fact, we have three currently underway and 11 
that we are hoping to move forward with within our service 
territory. What are the main area of improvement is really in 
the contracting. What we have found is that as we work with 
NASA Ames, the VA, the IRS in Fresno, the FAA in another part 
of our service territory, it is a complete recontracting 
process. So if we could find some sort of simple 
standardization for these sorts of contracts for the utility 
services contracts, I think that would benefit both sides.
    Mr. Kinzinger. That sounds great, perfect time, too. I 
yield back.
    Mr. Whitfield. Thank you, Mr. Kinzinger.
    At this time, I recognize the gentleman from Illinois for 
an additional question.
    Mr. Rush. Ms. Burt, I do have one quick question. I am very 
impressed with what PG&E is doing in California, and are there 
similar programs that you are aware of in Illinois or Chicago, 
in terms of your training programs?
    Ms. Burt. Thank you, Congressman. I am just not that well-
versed in Illinois. I am very, very well-versed in California, 
but not in Illinois.
    Mr. Whitfield. Thank you all very much, and before we 
conclude, I am just asking unanimous consent that the following 
materials and statements be entered into the record from Arkema 
Corporation, the American Chemistry Council, the Alliance for 
Industrial Efficiency, Heat is Power Association, and Pew 
Charitable Trust.
    Without objection, I would enter these into the record.
    [The information appears at the conclusion of the hearing.]
    Mr. Whitfield. Thank you all once again for your time and 
traveling to come to Washington. We appreciate your testimony 
and we look forward to working with all of you, and hope the 
next time we have a hearing on efficiency, which we will soon, 
that we will have just as many people stay throughout the 
entire hearing.
    So thank you all very much, and with that, the hearing is 
adjourned and the record will be open for 10 days.
    [Whereupon, at 1:36 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

               Prepared statement of Hon. John D. Dingell

    Mr. Chairman, energy efficiency is one of the simpler ways 
for us to achieve energy independence and security. By making 
the vehicles, appliances, and buildings we use every day more 
efficient, we can get more bang for our energy buck.
    Recently, the cable industry announced new efficiency 
standards for the cable boxes we use to watch and record our 
favorite shows. These improvements will result in half of the 
energy currently consumed and estimates are that the new 
efficiencies will cut consumers' electricity bills by 
approximately $1.5 billion. To speed up efficiency improvements 
for existing boxes, the industry will release a software update 
that will immediately result in energy savings of 20 to 30 
percent on current devices.
    The cable industry is to be commended on this forward 
thinking to adopt practices that can take effect now and 
drastically improve efficiency moving forward. As our country 
looks to new sources of energy such as fossil, nuclear, and 
renewable, we must also look for the low-hanging fruit that 
help us address this issue.
    In addition to this innovative thinking by industry, I also 
believe that industry must continue to work with regulators 
because good energy policy and good economic policy go hand in 
hand. By collaborating with industry and consumer groups, the 
Federal government can develop standards that can be cost-
effective for both industry and consumers while maintaining our 
energy security.
    There was a time, not too long ago, when we could work on a 
bipartisan basis to develop ways for American companies to 
compete and innovate. The Energy Independence and Security Act 
of 2007 was probably the most recent example of that 
bipartisanship. It was signed into law by President Bush and 
supported by many members of this committee on both sides of 
the aisle including the chairmen of this subcommittee and of 
the full committee.
    We cannot pretend that industry does not have good 
intentions or that Federal regulations are the root of all 
economic problems. We must all work together if want to find 
the best solutions to invest in our future and secure our 
energy independence and security.
                              ----------                              

[GRAPHIC] [TIFF OMITTED] 79891.071

[GRAPHIC] [TIFF OMITTED] 79891.072

[GRAPHIC] [TIFF OMITTED] 79891.073

[GRAPHIC] [TIFF OMITTED] 79891.074

[GRAPHIC] [TIFF OMITTED] 79891.075

[GRAPHIC] [TIFF OMITTED] 79891.076

[GRAPHIC] [TIFF OMITTED] 79891.077

[GRAPHIC] [TIFF OMITTED] 79891.078

[GRAPHIC] [TIFF OMITTED] 79891.079

[GRAPHIC] [TIFF OMITTED] 79891.080

[GRAPHIC] [TIFF OMITTED] 79891.081

[GRAPHIC] [TIFF OMITTED] 79891.082

[GRAPHIC] [TIFF OMITTED] 79891.083

[GRAPHIC] [TIFF OMITTED] 79891.084

[GRAPHIC] [TIFF OMITTED] 79891.085

[GRAPHIC] [TIFF OMITTED] 79891.086

[GRAPHIC] [TIFF OMITTED] 79891.087

[GRAPHIC] [TIFF OMITTED] 79891.088

[GRAPHIC] [TIFF OMITTED] 79891.089

[GRAPHIC] [TIFF OMITTED] 79891.090

[GRAPHIC] [TIFF OMITTED] 79891.091

[GRAPHIC] [TIFF OMITTED] 79891.092

[GRAPHIC] [TIFF OMITTED] 79891.093

[GRAPHIC] [TIFF OMITTED] 79891.094

[GRAPHIC] [TIFF OMITTED] 79891.095

[GRAPHIC] [TIFF OMITTED] 79891.096

[GRAPHIC] [TIFF OMITTED] 79891.097

[GRAPHIC] [TIFF OMITTED] 79891.098

[GRAPHIC] [TIFF OMITTED] 79891.099

[GRAPHIC] [TIFF OMITTED] 79891.100

[GRAPHIC] [TIFF OMITTED] 79891.101

[GRAPHIC] [TIFF OMITTED] 79891.102

[GRAPHIC] [TIFF OMITTED] 79891.103

[GRAPHIC] [TIFF OMITTED] 79891.104

[GRAPHIC] [TIFF OMITTED] 79891.105

[GRAPHIC] [TIFF OMITTED] 79891.106

[GRAPHIC] [TIFF OMITTED] 79891.107

[GRAPHIC] [TIFF OMITTED] 79891.108

[GRAPHIC] [TIFF OMITTED] 79891.109

[GRAPHIC] [TIFF OMITTED] 79891.110

[GRAPHIC] [TIFF OMITTED] 79891.111

[GRAPHIC] [TIFF OMITTED] 79891.112

[GRAPHIC] [TIFF OMITTED] 79891.113

[GRAPHIC] [TIFF OMITTED] 79891.114

[GRAPHIC] [TIFF OMITTED] 79891.115

[GRAPHIC] [TIFF OMITTED] 79891.116

[GRAPHIC] [TIFF OMITTED] 79891.117

[GRAPHIC] [TIFF OMITTED] 79891.118

[GRAPHIC] [TIFF OMITTED] 79891.119

[GRAPHIC] [TIFF OMITTED] 79891.120

[GRAPHIC] [TIFF OMITTED] 79891.121

[GRAPHIC] [TIFF OMITTED] 79891.122

[GRAPHIC] [TIFF OMITTED] 79891.123

[GRAPHIC] [TIFF OMITTED] 79891.124

[GRAPHIC] [TIFF OMITTED] 79891.125

[GRAPHIC] [TIFF OMITTED] 79891.126

[GRAPHIC] [TIFF OMITTED] 79891.127

[GRAPHIC] [TIFF OMITTED] 79891.128

[GRAPHIC] [TIFF OMITTED] 79891.129

[GRAPHIC] [TIFF OMITTED] 79891.130

[GRAPHIC] [TIFF OMITTED] 79891.131

[GRAPHIC] [TIFF OMITTED] 79891.132

[GRAPHIC] [TIFF OMITTED] 79891.133

[GRAPHIC] [TIFF OMITTED] 79891.209

[GRAPHIC] [TIFF OMITTED] 79891.210

[GRAPHIC] [TIFF OMITTED] 79891.211

[GRAPHIC] [TIFF OMITTED] 79891.212

[GRAPHIC] [TIFF OMITTED] 79891.213

[GRAPHIC] [TIFF OMITTED] 79891.214

[GRAPHIC] [TIFF OMITTED] 79891.215

[GRAPHIC] [TIFF OMITTED] 79891.216

[GRAPHIC] [TIFF OMITTED] 79891.217

[GRAPHIC] [TIFF OMITTED] 79891.218

[GRAPHIC] [TIFF OMITTED] 79891.219

[GRAPHIC] [TIFF OMITTED] 79891.220

[GRAPHIC] [TIFF OMITTED] 79891.221

[GRAPHIC] [TIFF OMITTED] 79891.222

[GRAPHIC] [TIFF OMITTED] 79891.223

[GRAPHIC] [TIFF OMITTED] 79891.224

[GRAPHIC] [TIFF OMITTED] 79891.225

[GRAPHIC] [TIFF OMITTED] 79891.226

[GRAPHIC] [TIFF OMITTED] 79891.227

[GRAPHIC] [TIFF OMITTED] 79891.228

[GRAPHIC] [TIFF OMITTED] 79891.229

[GRAPHIC] [TIFF OMITTED] 79891.230

[GRAPHIC] [TIFF OMITTED] 79891.231

[GRAPHIC] [TIFF OMITTED] 79891.232

[GRAPHIC] [TIFF OMITTED] 79891.233


                                 

