[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
STATE PERSPECTIVES: QUESTIONS CONCERNING EPA'S PROPOSED CLEAN POWER
PLAN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 9, 2014
__________
Serial No. 113-172
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
93-745 PDF WASHINGTON : 2015
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing
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 FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado PETER WELCH, Vermont
MIKE POMPEO, Kansas BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
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
RALPH M. HALL, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois PAUL TONKO, New York
JOSEPH R. PITTS, Pennsylvania JOHN A. YARMUTH, Kentucky
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas GENE GREEN, Texas
ROBERT E. LATTA, Ohio 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 HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex 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........................................... 3
Hon. Jerry McNerney, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 104
Witnesses
Kenneth W. Anderson, Jr., Commissioner, Public Utility Commission
of Texas....................................................... 7
Prepared statement........................................... 10
Tom W. Easterly, Commissioner, Indiana Department of
Environmental Management....................................... 25
Prepared statement........................................... 27
Henry R. Darwin, Director, Arizona Department of Environmental
Quality........................................................ 31
Prepared statement........................................... 34
Kelly Speakes-Backman, Commissioner, Maryland Public Service
Commission..................................................... 37
Prepared statement........................................... 39
David W. Danner, Chairman, Washington Utilities and
Transportation Commission...................................... 48
Prepared statement........................................... 51
Travis Kavulla, Commissioner, Montana Public Service Commission.. 56
Prepared statement........................................... 59
Submitted Material
Petitioners' motion filed September 3, 2014, State of West
Virginia v. United States Environmental Protection Agency,
submitted by Mr. McKinley \*\
U.S. Energy Information Administration tables, submitted by Mr.
Whitfield...................................................... 106
Statement of the National Association of Home Builders, submitted
by Mr. Whitfield............................................... 111
Subcommittee memorandum.......................................... 114
Letter of August 19, 2014, from the State of Mississippi
Department of Environmental Quality to the U.S. Environmental
Protection Agency.............................................. 120
----------
\*\ The information has been retained in committee files and is
also available at http://docs.house.gov/meetings/IF/IF03/
20140909/102623/HHRG-113-IF03-20140909-SD010.pdf
STATE PERSPECTIVES: QUESTIONS CONCERNING EPA'S PROPOSED CLEAN POWER
PLAN
----------
TUESDAY, SEPTEMBER 9, 2014
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123, Rayburn House Office Building, Hon. Ed Whitfield
(chairman of the subcommittee) presiding.
Present: Representatives Whitfield, Hall, Shimkus, Terry,
Latta, Olsonm McKinley, Gardner, Kinzinger, Griffith, Barton,
Upton (ex oficio), McNerney, Tonko, Yarmuth, Green, Capps,
Barrow, Castor, and Waxman (ex oficio).
Staff Present: Nick Abraham, Legislative Clerk; Gary
Andres, Staff Director; Charlotte Baker, Deputy Communications
Director; Sean Bonyun, Communications Director; Leighton Brown,
Press Assistant; Allison Busbee, Policy Coordinator, Energy and
Power; Patrick Currier, Counsel, Energy and Power; Tom
Hassenboehler, Chief Counsel, Energy and Power; Brandon Mooney,
Professional Staff Member; Mary Neumayr, Senior Energy Counsel;
Chris Sarley, Policy Coordinator, Environment and Economy;
Peter Spencer, Professional Staff, Oversight; Jean Woodrow,
Director, Information Technology; Phil Barnett, Minority Staff
Director; Alison Cassady, Minority Senior Professional Staff
Member; Caitlin Haberman, Minority Policy Analyst; and
Alexandra Teitz, Minority Chief Counsel for Energy and
Environment.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. I would like to call the hearing to order
this morning and certainly want to welcome our witnesses, and I
will be introducing each one of you after our opening
statements.
And at this time, I would like to recognize myself 5
minutes for an opening statement.
This morning's hearing focuses on EPA's proposed Clean
Power Plan which would impose Federal limits on carbon
emissions from each state's electricity system. This is our
third hearing on the subject, and the previous two hearings
left many questions unanswered about EPA's legal authority to
impose this sweeping global warming agenda under a rarely used
provision in the Clean Air Act, about the feasibility of
implementing EPA's unprecedented and highly complicated scheme,
and about the potential adverse impacts on electricity costs,
reliability, and economic growth.
Recently, the President has been criticized by a lot of
people for being indecisive relating to ISIS, immigration
reform, Ukraine, national security, and other issues. The one
issue where he has not been criticized for being indecisive has
been addressing climate change. He has made it very clear that
he thinks it is the number one issue facing mankind today.
Those of us who disagree with him on this issue do not deny
climate change. We simply suggest that his priorities are
wrong, and after having spent the last month back in our
districts, I think it was reinforced to many of us that there
are many significant issues more important to American people
as well as the world today than climate change. For example, if
you went to Liberia where they had the Ebola outbreak, I don't
think they would say climate change is the most important
issue. Clean water, healthcare access, jobs, economic growth,
all of those things are vitally important to not only the
American people but people throughout the world.
Now, the end of this month the United Nations is going to
have their climate change policy. There have been all sorts of
news stories recently about heads of states will not be
attending from China, from India, from Germany, and many
countries like Australia have recently abolished their carbon
tax policies in that country. So, it is not about denying
climate change. It is about the priorities that at this
particular time in our history.
Now, the President is being more aggressive through EPA
than any recent memory of EPA actions. There has been a
plethora of regulations coming out that has been pretty
damaging to our economy, and many people are of the firm belief
that our economy is still sputtering because this
administration has created so much uncertainty and obstacles to
economic growth.
And as you know, we are one of the few countries in the
world where you cannot even build a new coal powered plant
because it is so costly and the technology is not available to
meet the stringent standards and emissions standards set by
EPA.
Even in Europe, which is viewed as most--they have more
renewable energy produced from electricity than any other area
of the world, they are building coal plants because the natural
gas prices coming from Russia are so high that they have that
flexibility. We don't have that flexibility in America because
of this Administration.
And so now, today, we are going to be addressing the
federalization of the electric generating system by this EPA
setting standards for emissions for every state in the country
of CO2, and yet, we don't--America, we don't have to
take a back seat to anyone on being concerned about our
environment. Our CO2 emissions are the lowest they
have been in 20 years.
And so, as Congress, we have the responsibility and we are
delighted to have you here today because you represent the
states, and some of you are fully supportive of the Obama
Administration's policies and some of you are not, but we want
to know what you think. This is a complex rule. It is not going
to be easy to deal with, and it is going to bring forth a lot
of unanswered questions, and it definitely is having an impact
on economic growth.
So we look forward to your testimony. I will tell you that
in Kentucky, our environmental protection state group has been
trying to cooperate with the Obama Administration and EPA, and
our Democratic attorney general who is running for governor
sued him just a couple of weeks ago because he is so upset
about it.
So it is one thing for the President to want to be a world
leader in addressing climate change, but why should America be
pushed out further than any other country in the world, and
that is what we want to try to address today, and we look
forward to your testimony.
At this time, I would like to recognize the gentleman from
California, Mr. McNerney, for his 5-minute opening statement.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
This morning's hearing focuses on EPA's proposed Clean
Power Plan, which would impose federal limits on carbon dioxide
emissions from each state's electricity system. This is our
third hearing on the subject and the previous two hearings left
a great many questions unanswered--about EPA's legal authority
to impose this sweeping global warming agenda under a rarely-
used provision in the Clean Air Act, about the feasibility of
implementing EPA's unprecedented and highly complicated scheme,
and about the potential adverse impacts on electricity costs,
reliability and economic growth.
The last hearing focused on FERC, and I must say that I was
disturbed to learn the extent that FERC was being bypassed by
EPA in its attempt to consolidate control over the manner in
which electricity is generated and consumed in the United
States. Today, we will hear from the states, whose primary role
in overseeing the electric sector for their citizens is also
being jeopardized by EPA's proposed rule.
It is important to remember that EPA has no energy policy-
setting authority or expertise. These responsibilities reside
primarily with the states or other federal agencies, and EPA's
role historically has been confined to regulating emissions
from electric generating units. Never before has the agency
sought to set standards that extend to nearly every aspect of
electricity generation, distribution, and use. And never before
has EPA--or any other federal agency--proposed to exert
ultimate authority--including enforcement authority--over state
decision-making in the electric sector. But EPA is doing so now
with the Clean Power Plan. And aside from the fundamental legal
issues, there is a long list of concerns about the workability
of this scheme.
EPA has tried to spin its proposal as a helpful list of
sensible steps for states to take--what it calls ``building
blocks.'' To the extent that some of these policies make
economic sense, states should be free to take those actions in
the interest of their citizens. But they shouldn't be compelled
to undertake actions and measures that may impose increased
costs and other harms. Make no mistake: the Clean Power Plan is
coercive--either a state comes up with a plan that meets with
EPA's approval, or EPA will impose its own Federal
Implementation Plan.
And I must add that the provisions in the Clean Power Plan
affecting coal-fired generation are especially destructive when
viewed in the context of all the other regulations targeting
this energy source. EPA's latest proposed rule adds to the
cumulative burden that is making it nearly impossible to keep
coal in the energy mix. Indeed, we are already seeing coal-
fired capacity being retired at an alarming rate--much faster
than EPA's projections--and this raises serious concerns about
electric reliability, not to mention all of the jobs that
depend on coal. The President's direct assault on coal is also
a likely contributor to rising residential electricity prices
that the Energy Information Administration recently reported.
EPA also likes to tout its proposed rule as being
`flexible' but it would actually undercut each state's
flexibility to respond to changing circumstances because after
an implementation plan is approved by the EPA, a state will
have ceded authority over its energy sector to the federal
government. For example, if a state legislature decides that
its renewable portfolio standard (RPS) is problematic, that
legislature would be prevented from amending it without first
obtaining EPA permission. If the State amends or freezes it
without permission it may be subject to EPA enforcement or
subject to a private party lawsuit. As it is, states are
constantly considering modifications to their energy policies
to better meet consumer needs, but under EPA's proposal each
state will be stuck with a rigid federal plan and won't be able
to easily adapt to changing circumstances.
Unlike EPA, state-level officials are the ones who are held
accountable to their consumers and businesses, and bear the
responsibility of keeping electricity affordable and reliable.
They have to deal with all the implementation challenges,
including resolving the conflicts between the Clean Power Plan
and their own state laws and regulations. That is why their
views on the Clean Power Plan are so vitally important and why
this hearing is critical to gathering the perspective necessary
to understand the challenges confronting the states.
OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McNerney. Thank you, Mr. Chairman.
I thank the panelists for coming today. I know it is a lot
of work to prepare and coming out here, so I thank you for that
effort.
As the chairman said, this is our third meeting on the
EPA's Clean Power Plan but it is our first opportunity to hear
directly from state officials who will be responsible for
helping to implement the plan.
Let me start off by saying that it is getting more and more
difficult to deny climate change. Climate change is already
here. You can see it if you watch changing weather patterns
here in the United States and around the globe. We need to face
up to this problem and start taking the steps necessary to keep
this phenomenon from becoming a global catastrophe.
Moreover, the steps to curb carbon emissions will have many
beneficial effects, including economic and public health. We
have the opportunity now for the United States to be the leader
in the carbon pollution reduction. The Clean Air Act clearly
gives the EPA administrator the authority to put in place
measures to reduce carbon dioxide production, and this
authority has been upheld in the courts. This administration
has the responsibility and the duty to take action.
This being the case, what would be the best way to go about
reducing carbon emissions? The electric power generation sector
is the biggest source of CO2 emissions, and it makes
sense to have fossil fuel plants operating as efficiently as
possible. Coal-fired power plants have the highest
CO2 emissions per kilowatt hour energy produced, so
they should be cleaned up and incentives should be given to
other sources when possible. Unfortunately, this committee has
not fully gotten behind carbon capture and sequestration. In
fact, this committee has done quite a bit to prevent carbon
capture and sequestration which limits the options for coal-
fired power plants.
We should also encourage as much input from the states and
from industry as possible to make sure that no region is
unfairly impacted and to encourage each state, to the extent
practical, to utilize any renewable sources that are available
in their region.
In addition, states need flexibility to meet these goals,
taking into account local resources and existing power
infrastructure and to foster regional cooperation. The EPA has
done these things, and its Clean Power Plan will accomplish
each of these goals: flexibility, regional and state focus, and
reduction in pollution, energy efficiency.
Looking to the future, as our country incorporates cleaner
energy sources such as natural gas and develops more renewable
energy sources, we must ensure that our electric infrastructure
is able to meet those changes. Working to protect reliability
for consumers will come from creating a more effective electric
grid, identifying ways to be more efficient, instituting demand
response programs, improving transmission and distribution
systems, and other technological innovations will all help to
modernize the grid and create one that is more resilient. This
is a critical issue that we need to address moving forward.
I look forward to hearing from our witnesses and appreciate
them taking the time again to be with the committee this
morning, and I would like to recognize my colleague from Texas,
Mr. Green.
Mr. Green. I would like to thank Congressman McNerney for
recognizing me, and thank the chair and ranking member for
holding the hearing today.
I want to thank our public utility commissioners for coming
and testifying today. I specifically want to acknowledge our
Texas public utility Commissioner Kenneth Anderson. By way of
background, Commissioner Anderson attended Georgetown
University just down the road before he came to his senses and
went back home to SMU to have his--to get his law degree. He
served the State of Texas in many capacities, and I would like
to thank him for his thoughtful work he has done over the
years.
Recently, finalizing the existing source performance
standard created a proposal that would help states meet the
requirements of the rule. The proposal suggests four blocks
that address power plant efficiency, fuel switching, and
renewable and electric energy efficiency.
It is no secret that Texas is leading the nation in many of
these areas. Thanks to the Permian Basin and Eagle Ford Shale,
we have been the leader in fuel switching. If Texas were its
own country, and we once were, it would be the third largest
gas producer in the world. Texas has more than 14,000 megawatts
of wind power. Solar power will grow from 200 megawatts to
1,100 megawatts by 2017, making Texas the number 1 state in
solar growth.
Texas has solar companies competing directly in the
wholesale market. Houston and Texas cities are leading the
Nation in commercial efficiency, electric energy efficiency;
however, EPA's plan has required Texas to do twice as much. The
rule has raised some questions for both state and Federal
agencies, and we need to get the answers, and I appreciate the
hearing today, and again, thank our panel, and I yield back my
time.
Mr. Whitfield. Thank you very much, and at this time I
would like to recognize the gentleman from Texas, Mr. Barton,
for 5 minutes.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman.
I too want to welcome PUC Commissioner Kenneth Anderson to
us. We have an all star panel of local and state officials
here. This could be one of the better hearings on this subject
because we are going to hear directly from those that are
closest to the issue and the implementation of this proposed
regulation if it is to be implemented.
As Congressman Green pointed out, Commissioner Anderson has
a diverse background and a very experienced background in
various regulatory issues in Texas. He has been appointed at
local level by the Dallas County Commissioner's Court, and he
has been appointed to various positions of authority by
Governor Bill Clements, Governor George Bush, and of course
now, Governor Rick Perry. We are very glad to get his
expertise, as Congressman Green pointed out. If this regulation
is implemented, Texas will bear a disproportionate share of the
cost, 25 percent of the entire country's reductions has to be
in Texas, and as Gene pointed out, we are leading the Nation in
job growth and economic growth and leading the Nation in energy
and production, so this is an important issue for every, every
Texan.
In terms of the broader perspective, as Chairman Whitfield
pointed out in his town hall meeting, I have had numerous town
hall meetings and chamber of commerce meetings, in various home
builders, real estate meetings in my district this past month.
Global warming did come up, climate change did come up, but in
every instance, it was in the negative sense of, why is EPA
trying to regulate navigable water streams? Why is EPA trying
to do things that make it very difficult for us to do business?
It is a fact that climate change is happening, but all you
have to do is go to any natural history museum and see that the
climate has always been changing. It is debatable what causes
it, but it is a fact that it is happening. People like myself
and the chairman would say, we should try to make our energy
sector more efficient, we should try to make our industrial
sector more efficient. To the extent you do that, and you put
cost in the equation, you will have less energy consumed to get
more output, and if in fact man is partially responsible for
the change in the climate, you are going to get that benefit,
but to focus on climate change as the dominant factor is self-
defeating.
You ask somebody in India or Africa, are you not going to
put in a power plant because of the CO2 emissions,
they will laugh at you, as they should. Would we not have built
the transcontinental railroad in the 1850s and 1860s because we
were worried about climate change? Or the interstate highway
system in the 1950s and 1960s because we were worried about
climate change? It is an issue, but it should not be the
dominant issue.
So, Mr. Chairman, today's hearing is going to be very
interesting because, as I said at the beginning, this is an
opportunity for the members of this subcommittee to hear
directly from the regulators and the implementers that are most
responsible for implementing these regulations if in fact they
do become permanent.
With that, I yield back.
Mr. Whitfield. Thank you, Mr. Barton.
And Mr. Waxman wants to give an opening statement, and he
is testifying over on the Senate side, and when he comes over,
we will take the appropriate step to allow him to do that at
that time.
So at this time, we would like for--I am going to introduce
each of you individually as your time comes to give your 5-
minute opening statement. And once again, I really appreciate
all of you being here. You-all are out there on the frontline,
so we know that you will provide some insights to all of us
that will be helpful.
And so, Mr. Anderson, you will be the first one to give an
opening statement, and he has already been introduced, but he
is the commissioner of the public utility in Texas, and Mr.
Anderson, you will be recognized for 5 minutes.
I would remind all of you that on the table there is the
little light system, and green means go and red means stop, so
you are each recognized for 5 minutes, and Mr. Anderson, thank
you for being here, and you may proceed.
STATEMENTS OF KENNETH W. ANDERSON, JR., COMMISSIONER, PUBLIC
UTILITY COMMISSION OF TEXAS; TOM W. EASTERLY, COMMISSIONER,
INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT; HENRY R.
DARWIN, DIRECTOR, ARIZONA DEPARTMENT OF ENVIRONMENTAL QUALITY;
KELLY SPEAKES-BACKMAN, COMMISSIONER, MARYLAND PUBLIC SERVICE
COMMISSION; DAVID W. DANNER, CHAIRMAN, WASHINGTON UTILITIES AND
TRANSPORTATION COMMISSION; AND TRAVIS KAVULLA, COMMISSIONER,
MONTANA PUBLIC SERVICE COMMISSION
STATEMENT OF KENNETH W. ANDERSON
Mr. Anderson. Thank you, Mr. Chairman, and members of the
subcommittee. I appreciate the opportunity to appear before you
today to discuss the proposed rule. A couple of important
points that I want to make at the beginning.
First, I am not really here to debate carbon or climate
change. It is really my focus both today and as a member of the
commission, is to address how the EPA has chosen to address the
issue of carbon, and I actually want to give them credit for
recognizing, at least in my experience the first time, that the
states are different and are in different positions.
Nevertheless, the more than 600-page proposal, in addition
to all the supporting data, is complex and it raises a number
of complex issues and questions and problems. An introductory
point is the ERCOT which is our grid operator in Texas, the
PECT, the commission, and the stakeholders in Texas are
studying the rule, analyzing the data, and attempting to
formulate their comments, but because of the complexity of the
rule, we are still in the early stages, and in fact ERCOT, last
month we asked ERCOT to do an in-depth analysis of the
potential impacts under various scenarios of the proposed rule.
They are not going to have that study done until late this
year, December, and so it is going to make informed comments,
definitively informed comments a difficult proposition.
And so it bears keeping in mind that my remarks today,
which will be focused on Texas, remain necessarily qualified in
that they reflect only a preliminary assessment, of the
proposed Clean Power Plan.
Let me give you a little background for those who don't
know. We are a little different in Texas, of course, we are
always proud of that, we are the only state in the union that
has parts of its state in all three grids, the western
interconnect, the eastern interconnect, and ERCOT. With respect
to ERCOT, our grid, it covers three quarters of the state and
about 85 percent of the electricity consumed. Because it is an
intrastate grid and it is not synchronically connected to other
grids, we are proud that ERCOT is non-FERC jurisdiction.
The PECT regulates both the wholesale as well as retail
service within ERCOT. It is an island which also implicates
reliability. We are disproportionately affected by the proposed
rule. If we read the proposal the right way or correctly, we
could be responsible for as much as 25 percent of the reduction
nationwide while we only produce about 11 percent of the energy
in this country.
One of the reasons that the rule is going to be a problem
is that it gives us no credit for the substantial investment in
renewables. It has been principally wind, but it is not just
the actual wind itself but in the infrastructure necessary to
transmit that wind into the load serving areas of the state. We
just recently completed a $6.9 billion, 3,600-mile transmission
project in order to bring wind from West Texas into the load
serving vicinity centers of the state.
In addition, our market, as the chairman indicated
regarding the proposed blocks, that are proposed by the EPA,
block 1, for example, the improvement in efficiencies of coal-
fired power plants, most of those efficiencies have already
been achieved in ERCOT. The reason is our wholesale market in
ERCOT is very competitive and has been ruthless, frankly, in
squeezing out efficiencies in power plants. If power plants are
not operating at their most efficient, they are forced out of
the market.
We in fact, over the last decade or more than a decade,
have caused the retirement of over 13,000 megawatts of old, old
units, mostly the old steam units, but the fact of the matter
is those were dirty inefficient plants, and the ERCOT market
basically made them uneconomical.
The remaining building blocks 2 and 3, the 70 percent
utilization rate for compliance cycles as well as a block 3
which would basically require us to increase our renewables by
another 150 percent, so that would take our installed capacity
from what will be in a couple of years, we expect 15 to--
between 15- and 18,000 megawatts of wind, and it is a little
unclear how much solar we will have, but we are seeing it--we
are seeing the development of utility scale solar. We will see
that grow between 25- and 30,000 megawatts. The problem is that
during parts of the seasons in Texas, our load is as low as
25,000 megawatts.
We have a very peaky system. In the summer it can be as
high as 68,000. In the evenings, in the fall and spring as
low--below 25,000.
Here is our dilemma. You could have a situation result
where for hours in the evenings during the spring and fall,
which is when wind in Texas, West Texas wind is blowing at its
strongest, would literally--you will not only back off all your
gas plants but you could very well back off the nuclear plants.
If they can't back off, and frankly, they are not designed to
ramp.
Mr. Whitfield. Mr. Anderson, excuse me, our lights are not
working, but I have let you go about a minute and 40 seconds
over, but----
Mr. Anderson. I apologize. I look forward to answering any
questions.
Mr. Whitfield. Yes. Well, thank you. It is a complicated
issue, and it is hard to cover all the issues in 5 minutes, but
we will be asking you some questions also, and we have your
testimony.
[The prepared statement of Mr. Anderson follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. So our next witness is Mr. Tom Easterly, who
is the commissioner for the Indiana Department of Environmental
management, and Mr. Easterly, thank you very much for being
with us, and we look forward to your testimony, and you are
recognized for 5 minutes.
STATEMENT OF TOM W. EASTERLY
Mr. Easterly. Thank you, Chairman Whitfield and Ranking
Member Rush, sort of, and members of the committee.
Good morning. My name is Thomas Easterly. I am the
commissioner of the Indiana Department of Environmental
Management, also known as IDEM, and I also bring you greetings
from Governor Pence of Indiana, and I appreciate the
opportunity to share with you Indiana's current perspective on
the Environmental Protection Agency's proposed 111(d)
regulations for fossil fueled electric generation units.
Indiana will be significantly impacted by EPA's proposed
111(d) regulations because we are the most manufacturing
intensive state, that means manufacturing as a percent of our
GDP, and more than 80 percent of our electricity is currently
produced by coal. We have a 300-year supply of that coal in our
state. 28,000 Hoosiers are employed in the coal industry, and
as Governor Pence has frequently stated, Hoosiers know that
coal means jobs and coal means low-cost energy.
We recognize that we need all forms of energy to power our
economy and the Pence administration is working toward an
updated energy plan for the state that will continue to foster
greater use of renewables and other energy sources, but at the
same time we know that coal is crucial for Hoosier energy
resources and should continue to be promoted.
My mission at IDEM is to protect Hoosiers in our
environment. In examining how the proposed 111(d) regulations
further our mission, I have come to the conclusion that this
proposal will cause significant harm to Hoosiers and actually
to most residents of the U.S. without providing any measurable
offsetting benefits.
For these reasons, I requested that EPA withdraw this
proposal. Instead, EPA and the Obama Administration should work
with states to produce an energy policy that both provides for
reliable and affordable energy, as well as a healthy
environment. This necessarily requires a balanced regulation
that allows the use of all of our fuels in the most efficient
manner.
In the long run, a program focusing on the most efficient
use of all of our sources of energy, including coal, nuclear,
natural gas, wind, solar, and others will promote economic
prosperity by keeping energy affordable and reliable.
The most ironic impact of the proposed regulations is that
they are likely to increase the worldwide greenhouse gas
emissions by decreasing international competitiveness of U.S.
businesses through the increased energy cost. We are very
sensitive to this issue in Indiana. Competitive businesses have
been investing at cost-effective energy savings activities for
decades.
Under this proposal, the total cost of the products
produced in the U.S. will need to increase, eroding our
international competitiveness and resulting in the loss of
manufacturing jobs in Indiana and the Nation.
When these businesses close, our U.S. emissions will
decrease but worldwide greenhouse gas emissions will increase
as our businesses move to areas with less efficient and more
carbon intensive energy supplies.
In addition, U.S. EPA predicts that this proposal will
increase the cost of natural gas and the per kilowatt hour cost
of residential electricity by around 10 percent in the next 6
years. In Indiana, our state utility forecasting group has
already predicted a 30 percent increase in Indiana electrical
cost from other recent EPA regulations, not including this one,
and that group is presently studying the expected impact of
this rule on top of the other ones on our energy rates, but it
will no doubt find that our rates will increase.
Increases in energy costs hit the poor, elderly, and most
vulnerable in our society first. I worked for a utility and
every year, unfortunately, people died because they lost their
electricity and they did not get it reconnected and they could
not survive. At a time when Indiana is doing all that it can to
grow its economy and create jobs, the EPA's proposal creates a
very real possibility that increased energy costs will slow our
economic progress and raise people's utility bills.
In Indiana, we are obviously concerned about the economic
impact of EPA's proposed rules on businesses and consumers, but
we also have more technical questions. We want to make sure
that the rule does not result in unintended consequences such
as reduced reliability, which would be brownouts, or worse than
that, blackouts, or not having all of the necessary
infrastructure in place to convert from coal to natural gas.
The fact that this misguided policy will harm Hoosiers and
other people in our country while actually increasing the
worldwide level of the very emissions it is designed to
decrease, compels Governor Pence and me to oppose the proposed
regulations.
Thank you for the opportunity to share our views, and
welcome your question.
Mr. Whitfield. Thank you very much, Commissioner Easterly.
[The prepared statement of Mr. Easterly follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. And Mr. Darwin, before I call on you, Mr.
Waxman has arrived, and he has another commitment as well, so
at this time I am going to introduce him, recognize him for his
5-minute opening statement.
Mr. Waxman. Thank you very much, Mr. Chairman.
I apologize to interrupt the flow of the witnesses, but I
was delayed at another hearing on the Senate side, and now I
have to go to another hearing of our committee on the House
side.
In June, Administrator McCarthy issued a tremendously
important proposal to limit carbon pollution from power plants,
and we are going to hear today and are already hearing from
some of the state officials who will be responsible for
developing and implementing the state plans to control this
pollution. Climate change is not a simple problem, but there
are some basic facts that we have to keep in mind to help us
how to figure to move forward.
One, climate change from carbon pollution is real. It is
harming us now. It is going to get worse. How much worse
depends on us. Two, controlling carbon pollution is not without
costs, but the benefits of action far outweigh those costs. I
think America would be better off if we cut our carbon
pollution. Three, there is no single action that will fix the
problem. We have to tackle it on multiple fronts. Even within
the power sector there are many different ways to meet our
energy needs with far less carbon pollution.
Every day Americans are dealing with the impacts of climate
change from carbon pollution, and you need look no further than
the state of California. Last year was the driest year that
California has ever seen. The current drought threatens water
supplies for drinking water and irrigation of valuable crops.
Wild fires because of the hotter and drier climate, more
frequent and more intense. In the midwest, toxic algae blooms
are threatening our drinking water, All along the eastern Gulf
Coast, climate change is fueling more extreme weather and
dangerous storms, and climate-driven sea level rises
threatening extensive coastal infrastructure.
These are just a few of the growing costs of carbon
pollution. We know we must act, and EPA's Clean Power Plan
tackles the largest single source of carbon pollution in
America today. Substantially cutting carbon pollution from
these uncontrolled power plants isn't all we have to do to
fight climate change, but it is absolutely critical.
Cutting carbon pollution from power plants is also a good
investment. Unchecked climate change will be hugely expensive.
But there are a lot of low cost measures we can take right now.
I look forward to hearing from Washington and Maryland
representatives today, two states that have already cut their
power plant carbon pollution. They found, through actual
experience in renewable energy that they have had a big
economic benefit for their states. EPA's analysis supporting
the Clean Power Plan show that the benefits of the proposal far
outweigh the cost by at least 6 to 1 and possibly by as much as
12 to 1.
We know there is no silver bullet for cutting carbon
pollution. Many types of action will be needed. EPA's Clean
Power Plan recognizes this fact as well. It establishes the
goal and leaves it to the states and affected industries to
figure out how to get there in all the ways that work best for
their particular circumstances.
I will close with one final point. Just saying no isn't an
option here. We must cut carbon pollution, and we can do so
cost effectively. Those who have concerns with EPA's Clean
Power Plan have the responsibility not just to critique but to
propose alternative ways to achieve the goal. If you don't like
the Clean Power Plan, what is your plan? We have a profound
moral responsibility to leave our children and grandchildren an
inhabitable planet, and the Clean Power Plan is a critical step
to protect their future.
Thank you, Mr. Chairman. Yield back the balance of my time,
and my apologies to the witnesses. I will try to get back here
later, but I am probably going to be required in the other
committee for the balance of the time, but I will try to be
back and forth. I have suggested cloning but nobody likes the
idea of having two of me. One is enough. Thank you, Mr.
Chairman.
Mr. Shimkus. I second that.
Mr. Whitfield. We will miss you, Mr. Waxman.
Mr. Waxman. I will come back.
Mr. Whitfield. At this time, I would like to recognize Mr.
Henry Darwin, who is the director of the Arizona department of
environmental quality. Thank you for being with us, and you are
recognized for 5 minutes.
STATEMENT OF HENRY R. DARWIN
Mr. Darwin. Mr. Chairman, members of the committee, I
greatly appreciate the opportunity to offer testimony today.
I must first caveat my remarks by saying that as an
environmental lawyer with almost 20 years experience, I do not
believe the Clean Air Act provides EPA with the authority to
regulate greenhouse gasses as it proposes to do in this Clean
Power Plan. With that said, I believe it is in the best
interest of Arizona to work with EPA to develop a final rule
that results in energy reliability, achievable goals, and
adequate flexibility.
The 6th largest state in the country, Arizona encompasses
some of most geologically diverse regions in the Nation, from
our desert floors to high plateaus, to pine forested
mountainous regions. As one might expect, these differences
result in diverse climates that have quite different energy
demands. For example, the mountainous regions of our state
often experience sub-zero temperatures in the winter; whereas,
the summertime highs at the desert floors have been known to
reach temperatures of 120 degrees.
As you can imagine, electricity plays a crucial role in the
protection of public health in Arizona, whether it be through
heating and cooling or the delivery of Colorado river water to
the central portions of our state. About 5 million people
representing 80 percent of Arizona's population live in the
desert lowlands. During the hot summer months, electricity
consumption peaks as needs for cooling residences, schools,
hospitals, and other work places increase.
The Central Arizona Project is a 336-mile long system of
aqueducts, tunnels, pumps, and pipelines that deliver Arizona's
share of the Colorado River to central Arizona, including
Phoenix and Tucson. It is both the single largest resource of
renewable water supplies in Arizona and the largest consumer of
power from the Navajo generating station located on tribal
land.
When our energy production is not sufficient during peak
use, Arizona will also import electricity from out of state to
meet energy demands. In its proposed Clean Power Plan, EPA uses
a nationwide set of assumptions to develop two emissions
reduction goals for each state, an interim goal that is to be
achieved between 2020 and 2029, and a final goal reached by
2030.
In the supporting documentation, EPA maintains that each
state's goals will preserve grid reliability and achievability
without great difficulty through flexible compliance options
that the rules offer.
Despite EPA's efforts, the Clean Power Plan still presents
three challenges for Arizona. Compared to baseline levels in
2012, Arizona must achieve almost 52 percent reduction in
emissions intensity by 2030. This is the second most stringent
reduction target in the country.
To comply with the interim goal by 2020, more than 75
percent of Arizona's total reductions must occur by 2020. The
energy needed to deliver Colorado River water to central
Arizona is generated on the Navajo reservation where there is
currently no proposed rule or goals.
One of my department's stated goals is to support
environmentally responsible economic growth. In our experience,
this is best achieved through collaboration. We believe that
building partnerships with those who have diverse perspectives
is the key to finding creative solutions. We believe that we
can work with EPA to adjust the program so that Arizona can
overcome its challenges and make significant emission reduction
contributions without sacrificing Arizona's economic wellbeing.
To that end, we have chosen a path different from other
states. Where some are chosen to immediately issue legal
challenges to EPA's proposal, Arizona is acting to collaborate
with those stakeholders in Arizona who will be most impacted by
the rule, our governor's energy office, the state public
utility commission, and EPA to find an outcome that is workable
for the state's current future energy needs.
EPA's proposed goals for Arizona were based upon an
assumption that all out of our existing coal power generation
could be immediately transferred to existing natural gas power
plants by 2020. Many of these existing natural gas power plants
are only used in the summer during peak energy demand and
remain idle during winter months when energy demand is low.
Arizona has already reached out to EPA to explain how energy
flows into and out of Arizona, and that is most appropriate to
consider peak demand when determining when an existing facility
is truly under-utilized. After all, electricity generated at a
facility in the winter cannot offset the need for electricity
during peak demands experienced in the middle of the summer.
By our calculations, switching from coal to natural gas by
2020 is the only building block available to Arizona for
meeting EPA's proposed goals. As we explained to EPA, this
implementation issue is at odds with their stated intent that
states be provided flexibility amongst the building blocks in
achieving the goals.
Furthermore, committing to achieve over 75 percent of the
second most stringent final goal by--in the Nation by 2020
would be putting Arizona's energy reliability and public health
at risk, which EPA also clearly does not intend by its proposed
rule.
To their credit, EPA has listened to our concerns and has
suggested appropriate data-driven analyses could result in
adjustments to the Clean Power Plan. On August 22nd, we
provided EPA with a technical demonstration that EPA's goals do
not provide sufficient flexibility. My staff has informed me
that EPA is looking at the data and is planning to discuss the
problem later this week. It is also my understanding that EPA
will soon propose a rule for power plants located on tribal
land.
Because our energy needs are so intertwined, Arizona and
the Navajo Nation have a great interest in working together to
develop a multi-jurisdictional plan that will work for both
areas. We look forward to their proposal.
In the end, should EPA choose not to make adjustments to
the final rule based upon our real implementation concerns,
litigation remains an option for Arizona. In the meantime, we
are hopeful that through collaboration, EPA and Arizona can
develop a solution that is environmental responsible,
economically sustainable, and provides energy reliability so
that we can prevent expensive and time-consuming legal
challenges.
Thank you for this opportunity to provide testimony. I am
happy to answer questions you might have.
Mr. Whitfield. Thanks, Mr. Darwin, very much.
[The prepared statement of Mr. Darwin follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. And at this time I would like to recognize
Kelly Speakes-Backman who is a commissioner with the Maryland
Public Service Commission.
Thank you very much for being with us today, and we look
forward to your testimony.
You are recognized for 5 minutes.
STATEMENT OF KELLY SPEAKES-BACKMAN
Ms. Speakes-Backman. Thank you, sir, I will start my own
stopwatch, so I can be sure----
Mr. Whitfield. Be sure and turn your microphone on now.
Ms. Speakes-Backman. I think it is on now. Thank you.
Well, thank you Chairman Whitfield and other members of the
committee for this opportunity to provide comments today on
EPA's proposed Clean Power Plan.
I am speaking today in the context of my role as the
commissioner of the Maryland Public Service Commission and also
one of nine states that participates in the regional greenhouse
gas initiative.
Maryland welcomes the release of the Clean Power Plan which
seeks to reduce carbon dioxide emissions from power plants
under section 111(d) of the Clean Air Act. If there is one
message I can leave with you today it is that it is possible to
achieve pollution reductions while supporting economic goals.
These two objectives are not mutually exclusive.
RGGI states have been collaboratively operating market
mechanisms for 6 years which has supported the reduction of
carbon pollution and maintained grid reliability with a
positive impact to rate payers and overall our economies. Our
perspective is that EPA's proposed plan presents an opportunity
to take an important step in the development of an advanced
energy infrastructure that delivers cleaner air, smarter energy
use, and local jobs.
EPA conducted an unprecedented amount of outreach to states
and other key stakeholders during the development of this
proposed rule. As a result, the proposal recognizes the
diversity of initiatives and programs that states are already
pursuing to reduce carbon pollution and increase the
efficiencies of both energy use and production.
EPA has also recognized the importance of grid greater
reliability which is a priority and legal obligation for my
states and for my fellow colleagues up here on this table
today, and for all other states for this matter. In our view,
EPA has constructed a proposed rule which provides the
flexibility for states to devise plans which suit state-
specific reliability requirements and resources.
This proposed rule also provides the ability for states to
work together as regions which more closely aligns to the
nature of our electricity grid.
But perhaps most important in regards to reliability is the
gradual transition that is presented in this plan. The interim
compliance goals start in 2020, and the compliance with each
state rate is not mandated until 2030. That gives us 16 years
in a long term compliance timeframe to allow markets to adjust
to the known and measurable forthcoming requirements which
serves to minimize potential reliability impacts.
Our nine states represent 16 percent of the U.S. economy
and comprise a total gross domestic product of 2.4 trillion
U.S. dollars. Since 2005, we have experienced a 40 percent
reduction specific to power sector carbon dioxide pollution
even as our regional economy has grown by 7 percent.
Of course, these significant reductions are due to a
combination of factors, including market forces such as the
increasing abundance of natural gas in our region and the
overall economy, the RGGI programs and other state policies and
programs that we have put in place. We held our 25th auction
last week, and with this latest auction, each state will
reinvest its share of $87.8 million in revenues in accordance
with our own state-specific energy programs.
Through 2013, RGGI states have invested more than $950
million in proceeds and energy efficiency clean and renewable
energy, energy programs that have helped low income consumers,
and in Maryland, we have invested more than $230 million of
that through last year.
As to the Clean Power Plan, EPA has allowed groups of
states to implement a regional emission budget using the most
cost-effective measures available, and these cost-effective
measures are available to a larger geographical boundary than
just our individual state. That will allow also for potential
emission increases in some specific locations that are
required, that have more energy efficiency resources available.
Even as we formulate our comments for October, Maryland is
still reviewing and analyzing the plan. We think the basic
structure of this rule is sound. We will have many technical
suggestions and questions for EPA on the proposed rate
methodology, the translation of rate targets to a single
regional mass target, and rule enforceability. These comments
will basically be posed in three general areas.
First, is the plan designed to recognize states for early
action whether through energy efficiency programs, renewable
energy programs, or other strategic energy initiatives?
Second, the RGGI experience demonstrates that cost-
effective reductions are possible even beyond what is proposed
by the EPA. We will explore those questions and find out and
ask questions that ask certainly are there more opportunities
for even greater reductions in a cost-effective manner.
And third, does the plan provide for transparent,
verifiable, equitable, and enforceable emissions reduction
carbon target for all states?
We look forward to working with EPA on these, and other
states on these questions. We think the proposed plan is
workable, and we think the EPA should be commended for
developing a proposed rule that recognizes the diversity among
states, provides a flexible approach to compliance, and
considers the sometimes competing but not necessarily exclusive
objectives of reliability, affordability, environmental
soundness, and economic growth. Thank you.
Mr. Whitfield. Thank you very much.
[The prepared statement of Ms. Speakes-Backman follows:
]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. At this time I recognize the Honorable David
Danner who is the chairman of the Washington Utilities and
Transportation Commission, and Mr. Danner, thanks for being
with us. You are recognized for 5 minutes.
STATEMENT OF DAVID W. DANNER
Mr. Danner. Thank you, Chairman Whitfield and Mr.
McNernery, and members of the committee. I appreciate the
opportunity to share a perspective from the Pacific Northwest
on the Environmental Protection Agency's Clean Power Plan. I
wanted to make three points this morning.
First, that carbon pollution is affecting Washington's
environment and its economy today. We must address this
pressing problem now.
Second, EPA, to its credit, has used existing law to
develop a proposal that I believe creates an effective
structure and workable structure for achieving significant
carbon reductions in the energy sector.
Third, Washington has already taken significant steps to
address carbon pollution in its own laws and policies, and
based on this history, we are confident that states can achieve
significant carbon reductions under EPA's approach without
compromising reliability or imposing undue costs on consumers,
and I would like to address each of those points in turn.
First, in Washington state, we are already seeing firsthand
the effects of carbon pollution. Ocean acidification is
severely affecting our shell fish industry. Pine bark beetle
populations are booming and they are devastating large tracts
of forest land in northeast Washington. Large forest fires have
increased from an average of 6 per year in the 1970s to 21 per
year in the last decade, and the cost of fighting these fires
are expected to rise 50 percent higher than current
expenditures by the 2020s. With increased temperatures, we can
expect other impacts in the years to come. Rising sea levels,
reductions in summer streams flows which affect urban water
supplies, farm irrigation in summertime, hydro-power
production.
Second, we have been eager for strong federal action to
address carbon pollution for quite some time and now we have
it. Using section 111(d) of the Clean Air Act, EPA has proposed
an effective structure for achieving significant reductions in
the energy sector. The key to EPA's proposed rule is the
flexibility it gives to states in developing plans to reduce
power plant carbon emissions. I am very concerned about the
environmental consequences of carbon pollution, but as an
economic and safety regulator, I must also be confident that
the final rule does not compromise electric system reliability
or impose undue costs on consumers.
EPA undertook considerable outreach to the states, and it
is clear to me they listened to, heard, and understood the
concerns of regulators about reliability and cost. Moreover,
keep in mind that at this point EPA has given us a proposal,
not a finished product, and they have requested that states and
other stakeholders give this proposal a hard look and provide
comments and recommendations.
My agency is in the process of reviewing those proposed
rules, consulting with our regulated utilities, and other
stakeholders to ensure that we can achieve emissions reductions
EPA has proposed, and at this point, we are cautiously that
we--excuse me. We are consciously optimistic that we can.
Third, we can do this without hurting the economy. I have
heard the arguments of reducing carbon pollutions would
adversely affect the Nation's economy, but our experience in
Washington is different. Washington has already taken action in
its own laws.
In 2011, then Governor Christine Gregoire signed
legislation to put in effect an agreement under which TransAlta
Corporation can close its 1,300-megawatt Centralia coal plant
by 2025. This agreement allows an orderly transition over time
that avoided immediate layoffs and disruption of the economy.
We also, our voters, by initiative in 2006, approved a
requirement that electric utilities pursue all cost-effective
conservation and by 2020 meet at least 15 percent of their load
with non-hydro renewable energy such as wind, solar, and
geothermal.
In the last biennium, the states investor-owned utilities
have saved nearly a million megawatt hours of electricity,
enough to power all the residents of Tacoma, Washington for a
year. And our state RPS, our Renewable Portfolio Standards,
also has seen significant results. The IOUs have acquired
enough clean electricity to power 183,000 homes.
So, of course, when we approved that initiative, people
said, well, it is going to affect the economy. Well, here is
what we see. The costs of complying with the act resulted in
impacts to consumers of about 1 percent or about a little more
than $1 a month, and that is half of the lowest estimates put
forward by the initiatives opponents and in return, renewable
energy developers have invested more than $8 billion in
Washington, creating some 3,800 jobs. The conservation
standard, too, is providing dramatic results. By definition,
cost-effective conservation is less costly than any other
energy resource, and conservation reduces consumers' bills.
The energy conservation standards in Washington created
thousands of jobs. The Washington employment security
department data for 2011 listed more than 37,000 jobs involved
with increasing energy efficiency, 96 percent of those in the
private sector. Based on Washington's experience, I believe the
proposed rule, when finalized and implemented, will further
investment nationwide in low carbon resources and energy
efficiency, and this greater investment in turn will spur
technological advances and further lower costs to consumers.
Washington does have a relatively small carbon footprint
compared to other states, but that doesn't mean that EPA let us
off easily. They assigned Washington the highest percentage
reduction targets of any state, 72 percent, and we agree the
proposed rule is complex. We are still taking a hard look at
the numbers, but we believe the structure is sound.
EPA does not ignore the complexities in the energy sector.
It has given states broad discretion in achieving the targets.
It encourages states to work regionally, and Washington is
ready and willing to engage with others in the northwest by
identifying the best strategies for reducing carbon pollution.
Thank you for the opportunity to testify before you, and I
welcome any questions.
Mr. Whitfield. Thank you very much, Mr. Danner.
[The prepared statement of Mr. Danner follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. At this time, I would like to recognize the
gentleman from Montana, Travis Kavulla, who is a commissioner
with the Montana Public Service Commission.
And Mr. Kavulla, you are recognized for 5 minutes. Thanks
for being with us.
STATEMENT OF TRAVIS KAVULLA
Mr. Kavulla. Thank you, Mr. Chairman, and Mr. McNerney, and
committee members. It is great to be with you here today. I am
going to leave aside the topics as well with climate change,
which is real and the legal authority of the environmental----
Mr. Whitfield. Mr. Kavulla, is your microphone on?
Mr. Kavulla. I believe it is, Mr. Chairman. Perhaps I will
just pull it closer. I also leave aside the question of legal
authority of the EPA to do to this, which is best addressed by
the courts.
Instead, I want to focus squarely on specifics of the EPA's
proposed rulemaking where the rubber hits the road, in other
words, between the EPA's assumption of what the power industry
is capable of where that coincides with the reality of on-the-
ground examples, and let me first begin with the comment on
reliability.
No reliability analysis of the EPA's proposed best system
of emission reduction has been conducted for the western
interconnection which encompasses 11 states spanning from
California to Montana. Transmission planners of the Western
Electricity Coordinating Council, which under FERC and NERC is
responsible for adopting and enforcing reliability standards
for this large slice of the continent, have told state
regulators that they cannot accomplish such an analysis by the
October comment deadline, so propositions that this rule
results in a reliable grid or propositions to the contrary are
simply speculation at this point. There is no time before the
October comment deadline to say whether or not it is reliable.
As to the specifics of how state goals for carbon reduction
are established by the EPA, as the subcommittee is aware, the
EPA's proposed regulation sets forth individual state mandates
based on what the EPA assumes are feasible accomplishments in
four areas. Efficiency improvements at power plants, the
increased operation of existing natural gas combined cycle
plants that displace coal, the construction of renewable energy
generators, and increased energy efficiency on the part of
consumers.
These four building blocks, as the EPA calls them, are in
general already being used by states to varying degrees for a
variety of purposes, including carbon reduction. Yet, the EPA
essentially ignores the details of a state situation and
instead applies a cookie cutter formula that uses sweeping
regional or national assumptions about the degree to which each
individual building block is achievable.
Let me share with you a few examples. First, as
Commissioner Anderson pointed out, the EPA assumes carbon
emitting power plants that are subject to the rule would be
able to achieve a 6 percent efficiency improvement. In other
words, that 6 percent less fuel would need to be burned to
obtain the same amount of electricity. This assumption is
applied uniformly across the country, regardless of whether a
given power plant has or has not made these upgrades already.
Ironically, the many power plants that have already made
such upgrades are penalized by the proposed rule because it is
assumed that a further 6 percent reduction can be made against
the 2012 baseline data the EPA uses.
Montana's 2,100-megawatt Colstrip facility, the second
largest in the American west, has made the efficiency
improvements that the EPA contemplates, obtaining 4 to 5
percent efficiency upgrades out of a total 6 percent the EPA
speculates is possible and yet it receives no credit for these
efficiency upgrades.
Another example in a similar vein is the Big Stone power
plant in South Dakota which also serves my constituents in
Montana. Big Stone is in the process of upgrading its air
quality control system at a cost of nearly $400 million. In
order to control the emissions that cause haze, however, 8
megawatts of the plant's production will have to be dedicated
to running the pollution control equipment causing carbon
emissions to increase. In other words, to comply with one EPA
rule endangers Big Stone's ability to obtain the efficiency
upgrades that are assumed possible by this proposed EPA rule.
The second building block of the EPA simply adds error upon
error. The EPA assumes that this facility, Big Stone, could be
substantially replaced with natural gas-fired electricity
generated at the Deer Creek generating station hundreds of
miles away. There is one obvious problem with this. The plants
are owned by different people, they didn't participate in the
same markets together, and there are no existing transmission
rights that tie the two plants together and to consumers who
consume power from those power plants.
Second, as a practical matter, the reduction that EPA
assumes relative to Big Stone would result in the plant
operating at 23 percent of its capacity. Its minimum run level
is 40 percent. This is a point where engineering simply runs up
against the reality of the EPA's proposal.
Finally, the EPA assumes that renewable energy can be
increased in order to reduce the operation of coal-fired energy
in an offsetting manner. Coal plants are not engineered or
designed to cycle in this way to integrate renewable energy.
Moreover, long distance transmission lines, such as the one
that runs from the Colstrip plant in Montana to points hundreds
of miles west and supplies energy to states like Washington is
dependent on the physical inertia that is put onto the grid by
the operation of these large prime movers.
The reliability coordinator in the west has suggested that
the past de-rating of this transmission grid would result from
the absence of that inertia. I leave you with one final
thought. The much heralded flexibility that the proposed EPA
rule provides to states is a meaningless concept if the
underlying goal, a number which is inflexible, has been
calculated using generic assumptions that are misleading or
false when applied to the facts of a specific state in the
specific part of the transmission grid.
I am happy to take questions.
Mr. Whitfield. Mr. Kavulla, thanks for your testimony.
[The prepared statement of Mr. Kavulla follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Whitfield. And thank all of you for your testimony, and
as I said, for being with us today.
At this time I would like to recognize myself for 5 minutes
of questions.
One of the common things that we have heard from EPA when
they have come to talk about this rule is the flexibility given
to States.
And both Ms. Speakes-Backman and Mr. Danner stress that as
well.
But listening to the other four of you, Mr. Darwin, you
specifically said you don't have a lot of flexibility when you
have one option. And that is one of the things that really
concerns us, is that it is easy to say you have flexibility.
But when the reality is you only have one or two options, then
that is not flexibility.
Do you agree with that assessment, Mr. Anderson, or do you
think that the State of Texas is given sufficient flexibility
to deal with this issue?
Mr. Anderson. Well, to the extent that we have to use the
building blocks themselves--and there is some question about
that--the fact of the matter is that use of any--of block 1, 2
and 3 will work cross-purposes.
Mr. Whitfield. Will work cross-purposes.
Mr. Anderson. Will work at cross-purposes. An example--and
Travis actually gave a good example. But for example, in Texas,
if in fact, in the evenings, whether it is summer or fall, you
are supposed to use more renewables out of block 3, then that
will cause co-plants to have to either be turned off or back
down.
Mr. Whitfield. So these four building blocks, whether it
sounds perfectly fine, there is a lot of inconsistencies about
it and, if you take one action, you may be detrimental in
another way. And I think most of you would agree with that.
Mr. Anderson. You can actually cause more pollution.
Mr. Whitfield. Now, let me ask you this, how did EPA--we
have heard a lot about that they have discussed this in great
detail with the States.
How did they determine the final goal for each State? Can
someone explain that to me? How was that determined? Does
anyone know?
Mr. Kavulla. Sure. I believe I can take this. I am sure
Commissioner Speakes-Backman can speak to it as well. They
established the, ``best system of emission reduction,'' or
BSER, which uses the four building blocks. Within those
building blocks, there are certain assumptions of what each
State, a region, or a nation is capable of. For instance, it is
assumed that every State in the Union is capable of a 1.5
percent annual, cumulative energy efficiency savings resulting
in a little north, I think, of a 10 percent energy efficiency
goal altogether. That is a national assumption. That is
applied----
Mr. Whitfield. So would I be wrong if I said these are
assumptions that EPA has made?
Mr. Kavulla. They are the assumptions and they are the
predicate of the actual State number, although a State can
choose to comply.
Mr. Whitfield. And these States are really diverse. I mean,
Kentucky and California have almost nothing in common. I mean,
we have very diverse States.
So here they are, federalizing the electricity system based
on assumptions. Now, someone made the comment there has not
really been a reliability study in their area. Who stated that?
Mr. Kavulla. Is that the case that reliability is key?
Mr. Kavulla. That is correct, Mr. Whitfield. The Western
Electricity Coordinating Council has told State regulators that
it has not able to conduct a reliability analysis of the
building blocks taken at face value.
Mr. Whitfield. Do the rest of you feel like that the
reliability issue has been adequately addressed? FERC told us
that EPA really did not work with them closely on reliability
issue relating to this rule.
Ms. Speakes-Backman. Mr. Whitfield, I would love to respond
to that. The Organization of PJM States, Inc., or OPSI has made
a formal request of our own ISO. I think part of that is to do
with----
Mr. Whitfield. But has the ISO completed the study?
Ms. Speakes-Backman. They have not yet completed the study.
Mr. Whitfield. Have not completed the study. OK.
Let me ask you this, how many of you feel like you can give
an adequate response with a comment by the October deadline set
by EPA?
Ms. Speakes-Backman: I feel----
Mr. Whitfield. Do you feel like you have adequate time to
meet this?
Mr. Anderson. That will be impossible in the case of Texas.
Mr. Whitfield. Impossible for Texas.
Mr. Easterly. We won't be complete.
Mr. Whitfield. You won't be complete in Indiana.
Mr. Darwin. Well, we are planning on submitting our
comments by October 16th.
Mr. Whitfield. You are planning to do it. OK.
Ms. Speakes-Backman.
Ms. Speakes-Backman. We are shooting for October 15th, sir.
Mr. Whitfield. Mr. Danner.
Mr. Danner. Yes. We are going to file our comments and----
Mr. Whitfield. Mr. Kavulla.
Mr. Kavulla. We will be able to submit comments. We will
not be able to make conclusions about the reliability
implications.
Mr. Whitfield. OK. And I would assume that all of you would
welcome a delay. I mean, they just issued this 600 rather
complicated complex rule in July, and they want these comments
by October. Would most of you support a request for an
extension for time to give a comment.
If you would--if you don't want any more time, raise your
hand.
[Nonverbal responses by Texas, Indiana, Arizona and
Montana.]
Mr. Whitfield. OK. You don't want any more time.
OK. My time is expired. I wish I had more time.
But, Mr. McNerney, I recognize you for 5 minutes.
Mr. McNerney. Speaking of running out of time, Mr.
Chairman.
I thought your testimony was good. There was a lot of
variety, a lot of variance in what you are saying.
Ms. Speakes-Backman and Mr. Danner both testified that the
proposed plan has flexibility--sufficient flexibility and
either causes no harm to the local economy or actually improves
the local economy. Would you affirm that that is essentially
what you said?
Ms. Speakes-Backman. Yes, sir. That is exactly what--I can
only speak for myself.
Mr. McNerney. Right.
Ms. Speakes-Backman. But as I heard Chairman Danner, he is
also saying the same.
But not only have we not done detriment, but we also did a
review of our RGGI program, and the residential commercial and
industrial impacts for the RGGI region were all less than 1
percent impact on retail rates. And for Maryland, specifically,
it was a positive impact.
Mr. McNerney. Mr. Danner.
Mr. Danner. Yes. And I would agree that we see benefits.
We are going to file comments--we do have some technical
considerations. In fact, some of the things that he identified
are things that we see as technical considerations. And EPA has
asked for those comments, and EPA is going to consider those
comments. So we don't have a finished proposal here.
But that said, yes, we see benefits that are coming from
this proposal. And remember, too, that there are costs to the
economy of taking no actions. So a delay is not something we
would want.
Mr. McNerney. Now, would you expand on how Washington State
was able to accomplish this, despite the opponent's contending
that the prices would skyrocket under your plan.
Mr. Danner. Well, it was the voters. The voters actually
by initiative approved a renewable portfolio standard and a
conservation standard. And now that we have implemented the
renewable portfolio standard, we see that the cost impacts on
consumers are very modest and the conservation standard we see
that they are actually getting savings.
And with regard to the shut down of the coal plant, it is
something, if you do an orderly transition----
Mr. McNerney. Right.
Mr. Danner. [continuing]. Then, basically, you are able to
plan for it. In fact, transmission planners work on a 10-year
planning horizon for the most part; and 2030 is 16 years away.
Plants close with some regularity. They close because of
commercial decisions and planned outages and unplanned outages,
and transmission planners have to respond to that on an ongoing
basis. So we see that these are technical issues we can raise,
but we need to push ahead.
Mr. McNerney. Thank you. Mr. Darwin, one of the things you
said, I believe, is that--I believe you said it--was that
initially there wasn't much--that you had a feeling that EPA
wasn't really giving you the flexibility or listening to your
inputs, but in the last few months, that they were actually
listening to your inputs and you feel like they are going to
move forward with some of your comments. Is that correct?
Mr. Darwin. That is correct. Some of the assumptions they
made in their plan simply don't work for Arizona. And when we
have explained to EPA why they don't work, they seem to be
listening. The fact of the matter is, is that they have assumed
that we don't use all of our natural gas capacity when you have
taken an annual average. Well, what that fails to recognize is
the fact that during our peak summer months, we are nearing our
capacity.
Mr. McNerney. Right.
Mr. Darwin. So that is something that they just simply
didn't take into consideration when making their assumption. So
we are hoping that, given that and the deadline that they have
set for us by 2020, which we have to obtain 75 percent of our
goal by 2020, that given those two assumptions, that those two
factors, that they would give us and others in our similar
circumstance some relief in that area. And they have given us
some indication that they will.
Mr. McNerney. Good. I am glad to hear that.
One of the problems I heard from some of the panelists is
that prior reductions aren't being taken into consideration. I
think Mr. Anderson mentioned that and Mr. Kavulla mentioned
that, and so I think that is something we need to take up with
the EPA. How do we fairly take into consideration prior
achievements in terms of the energy efficiency and the
intensity of carbon reduction per kilowatt hour. So that is
something we should take up with the EPA. Thank you for your
testimony on that.
Flexibility and time. I mean, I think with the timeline
that goes out to 2030, that you should have enough time to make
an early transition, if this is required. Is that not--is that
not reasonable, Mr. Kavulla? Is that time frame still too
short?
Mr. Kavulla. It is because there are two goals. There is
2020 interim goals, and then there is 2030 goals. For instance,
by the 2020 deadline, it is assumed that this natural gas
dispatch will have replaced a substantial amount of coal
generation for States with underutilized natural gas generators
that run only for peak demands for air-conditioning. The
assumption that those would run for 70 percent may have
transmission implications that are even less than the 10-year
planning horizon that transmission planners typically
undertake. As well, transmission planners would often take 20
years for major redesigns of this grid.
Mr. McNerney. So there should be some more flexibility in
terms of the 2020 time frame. Would that be something that
would help this----
Mr. Kavulla. Absolutely.
Mr. McNerney. OK. Thank you.
Mr. Whitfield. Thank you, Mr. McNerney.
So our stenographer, I would just ask that when I asked the
question what States needed additional time, the four that
needed additional time were Texas, Indiana, Arizona, and
Montana. The two that did not need additional time were
Maryland and Washington. And as I said, I needed more time,
too, but that is oK.
At this time, I would like to recognize the gentleman from
Texas, Mr. Barton, for 5 minutes.
Mr. Barton. Thank you. This is just out of curiosity. It is
not my main line of questioning. But, Mr. Anderson, what
percent of Texas electricity is generated by hydro?
Mr. Anderson. It is a fraction.
Mr. Barton. Is it 1 percent?
Mr. Anderson. I am not even sure it is 1 percent.
Mr. Barton. OK.
The gentleman from Washington State, what percent of your
State's electricity is generated by hydro?
Mr. Danner. Well, it depends on the year. Sometimes we have
high flows. Sometimes we have low flows. But it is basically
around 60 to 70 percent.
Mr. Barton. Sixty to 70 percent. I just thought we would
put that in the record. Since they said they weren't going to
be impacted in Washington by the----
Mr. Danner. So may I comment on that, Representative
Barton? I----
Mr. Barton. Well, I asked the question--if you comment very
briefly----
Mr. Danner. OK.
Mr. Barton. [continuing]. Because that is not my main line.
Mr. Danner. Well, I want to say that every State's target
is also different. And EPA recognized that we were a high hydro
State, and that is why we have the highest percentage reduction
requirement of 72 percent.
Mr. Barton. Well, bless their hearts.
Mr. Anderson, how much input did EPA ask from the PUC
before they issued their proposed regulation?
Mr. Anderson. I actually looked into that, and the answer
is none.
Mr. Barton. None?
Mr. Anderson. Nor did they recount to ERCOT, our grid
operator.
Mr. Barton. Zip? Nada.
Mr. Kavulla. There was no contact, no questions.
Mr. Barton. Largest energy producing State in the country,
and they asked for no input. What about ERCOT? You said none
for them.
Mr. Anderson. No. I asked that question before coming up.
Mr. Barton. All right. What about TCEQ.
Mr. Anderson. There may have been conversations. I don't
know.
Mr. Barton. But it's safe to say it's minimal? I mean, none
is none, but----
Mr. Anderson. That has been our experience.
Mr. Barton. OK. Now, since it has been released, the
gentleman from Arizona said that they have gone back to EPA,
and they seem to be listening.
What is your perception of how well EPA is listening to
Texas these days?
Mr. Anderson. Well, from the proposal itself, I would say
not very. But to be honest, we haven't reached----
Mr. Barton. We want you to be honest.
Mr. Anderson. We have not reached out to EPA yet, because,
frankly, we are still trying to digest the rule. Now, we may
try to file some comments by October 16. My point was that we
won't have good, steady data relating to costs or reliability
until the end of the year.
Mr. Barton. But just to be clear on the record, the State
that has got to reduce over--get over 25 percent of the total
reductions wasn't asked or apparently given an opportunity to
have any input before they put out their regulation.
Mr. Anderson. Well, we did file--the EPA asked earlier this
year for comments. And the TCEQ, our environmental agency in
Texas, as well as the PUC, filed joint comments, laying out--
laying out areas that we thought the EPA----
Mr. Barton. Now, is that before or after they released
their proposal.
Mr. Anderson. That was before they released the rule.
Mr. Barton. So they had some inquiry.
The gentleman from Montana, I thought your testimony was
extremely illuminating and fact based, very practical.
What has been EPA's response, if any, to the realities of
your testimony when you go to them? Do they say, Yes, you are
right about that? We need to include it. Or do they just yawn,
or have you even attempted to interact with them?
Mr. Kavulla. Well, Mr. Barton, they have been open to
listening and having meetings, but their proposal itself exists
in written form and, of course, they don't make any commitments
to you about the--what you counter propose to them until you
actually see the proposed regulation or, next year, the final
regulation. So simply put, I don't know.
I will give you an example. I have been able to arrange a
Webinar for the EPA to explain its modeling software, which as
I described in my written testimony, does not include a
transmission reliability analysis. And after a week or two
delay, they were able to set it up for us. So I am grateful to
them for that.
Mr. Barton. OK. This is kind of a generic question. But
most of the EPA health-based standards, there is a standard
parts per million or some metric standard. Is there such a
standard in this regulation for CO2?
Mr. Easterly. No. That is one of the challenges with the
CO2 issue; there is not clear goals. So the goals
are to reduce this and reduce that. But overall, how we are
going to reduce our greenhouse gas emissions across the
country, there is not a plan for the----
Mr. Barton. There is not even the facade of an attempt to
say, this is what we think the health standards should be,
which is the entire purpose of the Clean Air Act. And in this
case, it is, again, nada, zip, nothing.
Mr. Easterly. That is correct. That was in some of our
comments on----
Mr. Barton. With that, Mr. Chairman, I yield back.
Mr. Whitfield. The gentleman's time has expired.
At this time, I recognize the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
And, Mr. Anderson, just--before EPA released the--they did
ask generally for comments. Is that true?
Mr. Anderson. Yes, they did.
Mr. Green. But they didn't contact our State agency, for
example, or ERCOT or the Public Utility Commission or--but
generally, they did----
Mr. Anderson. They didn't----
Mr. Green. [continuing]. Before the release of the rule?
Mr. Anderson. They didn't reach out to the staffs to ask
about how the grid worked in Texas, for example.
Mr. Green. Yes. Well, obviously, we need to work with EPA
on that because I know their issue is not reliability, but it
is our issue. And we will make sure about that.
In your testimony, you said Texas receives no credit for
previous renewable investments. That is a concern I voiced
repeatedly two to three times, Texas will lead the Nation in
nonhydro-renewable energy power. And that is what worries me.
Our energy power, what we used to get out at the Highland Lakes
in the Austin area, the droughts reduced all that.
So what challenges does Texas renewable energy market face
in the next decade that would prohibit growth as envisioned by
the EPA?
Mr. Anderson. Really, I don't see a lot of challenges,
other than the production tax credit. But we are still going to
see renewable development, I think, in Texas. The--I was
actually trying to be kind when I said we didn't get any
benefit. Actually, we are being penalized because they are
asking us to effectively double down on----
Mr. Green. Well, and that is what I said earlier, and that
is our problem. We are not getting credit for what we have
already done. And we are going to continue to do it, but the
problem is this new rule makes it so much more difficult. And
maybe sitting down with Texas, which I would like them to do
and work it out.
Your testimony doesn't mention building block 4, energy
efficiency and demand-side response. Can you quickly share your
comments or thoughts about that----
Mr. Anderson. We will have--well, our--we do have an energy
efficiency program, and we were one of the earliest to
implement it actually in the 1990s.
But our energy efficiency standard in Texas is a little
different from most States. It is focused on peak saving in the
summer.
Mr. Green. Yes.
Mr. Anderson. Because, again, in the summers we--it is hot.
Mr. Green. And it is also based on the number of kilowatt
hours----
Mr. Anderson. Yes.
Mr. Green. [continuing]. And not a percentage.
Mr. Anderson. And it is--it is based on kilowatt hours and
a percent of the peak in August in effect.
Mr. Green. Which is----
Mr. Anderson. We would have to redesign the program
entirely. And it is not clear, frankly, what we can obtain in a
redesign.
Mr. Green. Well, I am pleased to read your comments that,
in August, Texas regulators prepare a plan to address EPA's
ESPS rule. And but because the rollout of the carbon issue was
just a disaster for the business community and the folks that I
represent in the Houston area, because EPA was having to issue
permits that they don't do. And we are still working through
that backlog, but I am glad the legislature decided this last
session to do better.
Could you further elaborate on those comments? Why would
Texas--what should Texas do to prepare?
Mr. Anderson. Well, in terms of the compliance, one of the
problems, if the rule is adopted in the form that it is
proposed or substantially in the form that it is proposed, is
the 2020 interim target. I would just point out that whether it
is to build a new combined cycle plant or to build transmission
to integrate the renewables that would have to be integrated,
you just can't get there.
We build transmission faster than about anywhere in the
country, but it's still 5 or 6 years from inception to it being
energized. A combined cycle power plant takes anywhere from--
and this is not counting permitting--it takes anywhere from
20--from 24 months to 36 months.
Mr. Green. OK. I am concerned about the timeline, and that
is where you ended there, the implementation timeline. And I
know the Texas delegation wants to make sure that we get credit
for that investment, but we also have time to build in. And
that is all I ever ask EPA, if this is going to be the
standard, to give us time to either capitalize it or get there,
whether it is a private business or a government agency like
you have.
What about the EPA's time frame concerns you the most?
Mr. Anderson. Again, the actual infrastructure that has to
go in.
Mr. Green. Yes.
Mr. Anderson. It--they are basically asking the country as
a whole, and certainly Texas, to redesign--redesign a system
that evolved over 100 years and do it in 14 years or so.
Mr. Green. Well----
Mr. Anderson. That is a pretty short time frame.
Mr. Green. And I am out of time, but I appreciate that
because--give us some time, and we will do it. But and that is
true with the public sector and the private sector. If it is
going to make us have cleaner air, we want to do it. But you
can't do it in a short time. You have to give us some
flexibility to grow into it.
Mr. Whitfield. The gentleman's time has expired.
At this time, I recognize the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
It is great to have you all here, and I know some of you
were commenting on the purpose of the hearing. But I want to
put things also in perspective. I think Joe Barton raised it.
Mr. Easterly, you mentioned commissioners--you mentioned
that we don't really know what the health goal is because we
don't CO2 parts per million effect on human health.
We do know what the goal of--and that is to kill coal and
coal generation in this country. I mean, and I go back to the
president of the San Francisco Chronicle editorial board, which
he said we are going to make it so expensive that they are
going to have to leave the business. So that is the goal.
This is also an example of regulators legislating. And I
know my colleague, Mr. Waxman is here--who was here in 1992,
carbon dioxide, this debate was part of the legislative record
and was rejected under the Clean Air Act, the whole debate.
Legislators, the elected representatives of this Nation,
rejected that we should regulate carbon dioxide in the Clean
Air Act. Hence, now we moved because of a lawsuit to the
Supreme Court, which then empowered the EPA to make a, quote-
unquote, ``endangerment finding''--a fraudulent endangerment
finding on the health and human impact where they did a global
health and human impact, but not this CO2 parts per
million as you mentioned or as Joe mentioned and you kind of
alluded to.
So that is why we are here, because we have got regulators
legislating that is going to impact the whole country.
Mr. Danner, you make a great statement about Washington
State. Please send our regards to your Governor, good friend,
served on this committee. But you made an argument in response
to how your State as respond. And good for you.
But using a regulatory agency to enforce rules and
regulations not passed by the Congress of the United States and
place that on the backs of individual States is really part of
this national debate of who is really running our national
government? Is it legislators with signed pieces of legislation
by the President to make laws and then regulators enforcing the
law? Or are we allowing the course and the regulators to now be
the legislative branch and the law enforcers of our country?
And so this is a bigger battle. This is example A of an
excessive, large Federal bureaucracy that is out of control.
And I use this all the time, as a former teacher, understanding
the separation of powers. This is a perfect example of how we
have lost the ability on separation of powers.
Mr. Danner, my understanding is that Washington State
currently imports power from other States, including coal-fired
generation. How much power do you import?
Mr. Danner. Well, our--we are part of the Bonneville Power
System, so the public utilities in Washington State, which are
about half the utilities, get power from Bonneville. For the
most part, that--most of it is inside Washington.
Mr. Shimkus. Right.
Mr. Danner. But there are dams and other facilities
outside. Our investor-owned utilities also have facilities in
and out of the State. About 30 percent comes from coal plants
in Montana.
Mr. Shimkus. So let me ask. Just let me focus on the coal.
So if these coal power plants shut down, what happens to rates
in Washington State?
Mr. Danner. Actually, we go through an integrated resource
planning process every 2 years where we look out----
Mr. Shimkus. So unchanged?
Mr. Danner. [continuing]. Into the future.
Mr. Shimkus. Unchanged, if these power plants shut down?
Mr. Danner. Well, the impact on rates right now if these
power plants shut down. We are seeing that there will be rate
impacts, but it will probably be--it is unclear yet. We are
still going through the process----
Mr. Shimkus. OK. Let me go to----
Mr. Danner. No, no. Let me--let me----
Mr. Shimkus. But I need to go to Mr. Kavulla. I will come
back, but I am running out of time.
Mr. Kavulla, same kind of question, what do you--how would
you comment if your power plants have to shut down based upon
these----
Mr. Kavulla. So one of the odd things about this, Mr.
Shimkus, is that this very large facility I was referring to,
the 2,100 megawatt coal strip facility, is mainly dedicated to
providing power to out-of-State utilities. I don't know what
the bill impact on their utilities would be. It would be
substantial for Montana's share of that. Our regulated utility
has a lot of undepreciated accounts associated with that coal
plant.
Mr. Shimkus. And, Mr. Danner, if you were not shutting down
your only coal-fire power plant, could you comply with these
regs, even--that the EPA has passed upon you?
Mr. Danner. No. We could not.
Mr. Shimkus. OK.
And Mr. Kavulla, how do you envision EPA enforcing the
building block--we were talking about building block number 4--
relating to increased energy efficiency. You quote in the
previous testimony, ``There would be thousands of consumers
performing small discrete actions.'' What do you mean by that?
Mr. Kavulla. I just mean that energy efficiency is
something that happens when someone plugs in a light bulb,
replaces their refrigerator. If a State plan includes the
compliance target for energy efficiency, it may be difficult to
both verify and then enforce compliance if those targets fall
short. Unless there is a point of compliance, like a particular
utility, it could be difficult. In my experience of measuring
and evaluating the robust energy efficiency programs that
Montana already has in place, the reports to measure and verify
the savings run into the hundreds, almost a thousand pages. It
is very--it is not like plugging on something to a power plant
to measure a reduction in emissions. It is a much more
difficult measurement task.
Mr. Whitfield. The gentleman's time has expired.
At this time, I recognize the gentleman from California,
Mr. Waxman, for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
Today we woke up to see the Washington Post in this town,
announced on the front page, ``CO2 rising at much
faster rate report finds.'' Scientists have found that levels
of carbon pollution in the atmosphere surged last year due to
both rising emissions and the diminishing ability of oceans to
absorb extra carbon dioxide. This development threatens to
further speed up the already alarming rate of warming the
planet.
Do any of you here today disagree that we must cut our
emissions of carbon pollution to try to slow climate change?
Seeing none, I am pleased to see that State officials
aren't wasting our time trying to deny the science.
Unfortunately, my colleagues do that instead of you.
Some States have not only recognized the danger of climate
change, but also led the way in doing something about it,
including my own State of California, Washington, the
Northeastern States in the Regional Greenhouse Gas Initiative,
and others. So I am pleased to have two of these States here
represented, Maryland and Washington.
These States have already acted to reduce carbon pollution
from power plants. EPA has used your achievements to inform the
Clean Power Plan, and you can help address some of the fears
and concerns that we are hearing from other States.
Commissioner Speakes-Backman, you testify with the
authority of experience. Can States cut carbon pollution
without economic harm? In fact, could we actually see economic
benefits from the Clean Power Plan?
Ms. Speakes-Backman. Thank you for the question, Mr.
Waxman. Absolutely. We found, in our experience, that we have
reduced carbon pollution in our region by 40 percent, while our
economy has grown by 7 percent. That has meant a $1.6 billion
in net economic gain for our region from 2005 to 2012.
Mr. Waxman. Well, let me ask you, is this something that
can be done only by States with very clean power generation
portfolios, or can States who rely heavily on coal also cut
carbon pollution?
Ms. Speakes-Backman. In fact, Maryland is one such example
that was a majority coal when we began this--when we began this
work on energy efficiency, renewable energy, and participation
in the RGGI States. We were 56 percent coal, and we have gone
to 44 percent. Our renewables, natural gas and energy
efficiency has also decreased our carbon footprint.
Mr. Waxman. Some States support cutting carbon pollution,
but argue that their particular targets will be too hard to
achieve. Every State still has the opportunity to comment on
the proposal. But Washington's situation can be informative
here.
Chairman Danner, you have the highest proposed target of
any State, a 72 percent reduction in carbon pollution. Is this
doable, and if so, how?
Mr. Danner. Well, yes, it is doable. We are still looking
at the numbers. We have questions. We have technical questions,
but we think we can.
Mr. Waxman. And you will have a conservation standard,
renewable portfolio standard?
Mr. Danner. Yes, we do.
Mr. Waxman. Are these measures that you are adopting, can
they be adopted by other States as well?
Mr. Danner. Yes, they can.
Mr. Waxman. Another complaint we hear is that we don't know
precisely how the Clean Power Plan will be implemented and thus
we don't know if there may be reliability problems. My
understanding is that many States have urged EPA to give them
wide latitude to design their own programs.
Does anyone on the panel want EPA to reduce the
flexibilities for State compliance in the final rule? I assume
nobody wants that.
So let's be fair. You can't demand freedom to design your
own program while criticizing EPA for not spelling out
precisely how the carbon reductions will be made.
We have also heard today that it isn't clear how States
should handle power markets that cross state borders. Well, one
way the Clean Power Plan addresses this is to allow States to
form regional programs and give them extra time to do so. This
and many other concerns we have heard today would not arise
under a national market-based program adopted by Congress. But
in the absence of such a program, I commend EPA for using its
existing authority under the law, as upheld by the U.S. Supreme
Court to propose an effective, reasonable, and flexible
approach to cutting carbon pollution.
That is the end of my comments and questions, Mr. Chairman.
I yield back my time.
Mr. Whitfield. Thank you, Mr. Waxman.
At this time, I recognize the gentleman from Nebraska, Mr.
Terry, for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman.
And I do think it is appropriate to question the
practicality of the rule without being accused of being a
denier.
Let me just start with Mr. Easterly and Mr. Darwin. I am
curious, on one of the four buckets or categories is the making
fossil fuel plants more efficient. In your jurisdiction,
Commissioners, what is the percentage or rate or measurability
of the inefficiency of the plants that are currently running?
My--I am being sarcastic. The reality is I don't understand
this bucket because I would think that all plants are trying to
run as efficiently as possible. So how do they make those
gains? Mr. Easterly.
Mr. Easterly. We are concerned about that. The power
plants, there are constraints under the Clean Air Act about
when you can make an efficiency improvement and not be subject
to other additional requirements. But they have had, for a long
time, an incentive to produce the power with the least amount
of energy necessary.
Now, this rule goes on an output basis, which is good from
a science standpoint, but it penalizes people, as we heard for
the Regional Haze Rule and for, in our case, the Clean Air
Mercury Rule. Additional emission controls that people have to
put on the power plants will reduce their net output. And if
you do carbon sequestration, that reduces your net output by 20
to 25 percent. So there are substantial practical problems with
how you actually increase thermal efficiency of a plant.
And the other one I think you have heard in the testimony
is, as you let the plant cycle up and down, they are less
efficient. They are most efficient running at a fixed rate, and
that is how you get your highest thermal efficiency. So we are
very concerned that this is not achievable.
Mr. Terry. Mr. Darwin.
Mr. Darwin. I think what Commissioner Easterly said was
completely accurate, and it would apply in Arizona as well.
Mr. Terry. All right. Then this question is for
Commissioner Speakes-Backman and for Commissioner Kavulla. So,
in your respective opinions, has the EPA done a sufficient
analysis of natural gas infrastructure to assume that existing
natural gas plants can be run at a 70 percent capacity factor,
question number one, and did the EPA reach out to your State to
determine whether sufficient natural gas infrastructure is
available to meet the demand for natural gas electric
generation?
Commissioner Speakes-Backman.
Ms. Speakes-Backman. Thank you, sir, for the question. I
think the 70 percent capacity factor is part of that. The
building block is a question actually that we do have on it
from a technical basis.
Mr. Terry. OK.
Ms. Speakes-Backman. So I think it is a fair question. I am
ultimately saying that I agree with the fact that the rule is
sound, that the structure of it is sound, but there are
questions still that we have on a technical basis, including
the natural gas capacity factor of 70 percent----
Mr. Terry. OK.
Ms. Speakes-Backman. [continuing]. And the ability to get
natural gas into the Northeastern and Mid-Atlantic region.
Mr. Terry. I appreciate that. Commissioner Kavulla.
Mr. Kavulla. I am happy to say I agree with the
Commissioner.
Mr. Terry. All right.
Mr. Kavulla. I think this is a big technical question, and
it rises to the level of probably being in the top 5 or 10
problems outstanding with the rule.
To answer you directly, no. It is my understanding that the
EPA has not conducted either an electric transmission or a gas
transmission reliability analysis of its best system of
emission reduction.
Mr. Terry. All right.
Ms. Speakes-Backman. Sir, I would just like to add to that.
Although I am not sure if they did their own reliability study,
I do know that the Organization of PJM States are working to
get a modeling done on reliability and cost impacts.
Mr. Terry. All right.
Ms. Speakes-Backman. I think that is part of working
together on this rule that is so important.
Mr. Terry. And determining what the State's infrastructure
is for natural gas is part of that, I would assume?
Ms. Speakes-Backman. Absolutely.
Mr. Terry. Mr. Kavulla, yes? You are nodding yes.
Mr. Kavulla. Yes.
Mr. Terry. I will answer for you.
Then, in my last 60 seconds, how will wind and other
renewable generation be treated with regards to out-of-state
sale of electricity? Under the proposed rules, States using the
renewable energy will get the credit, but not the States
generating it. Can credit be given using renewable energy
certificates? And to the same two speakers. Commissioner
Speakes-Backman.
Ms. Speakes-Backman. Well, sir, I think your questions are
brilliant. It is one that we have as well, as to who gets the
credit.
Mr. Terry. Yes.
Ms. Speakes-Backman. Is it the generating facility or is it
the facility with the demand--or the state of the demand? I
think it is an excellent question, one that we still have
outstanding.
Mr. Terry. OK.
Mr. Kavulla. I agree with the commissioner. This is a major
ambiguity and even a point of self-contradiction in the
proposal. I will say, as I put forward in my written testimony,
that a State like Montana is assessed with all of the penalty
associated with carbon from emitting generators that export to
other States. I would hope that we would get the credit from
renewable generators that are intended to offset or green the
portfolio in our State.
Mr. Terry. All right. Thank you. My time is up.
Mr. Whitfield. At this time, I recognize the gentle lady
from California, Mrs. Capps, for 5 minutes.
Mrs. Capps. Thank you, Mr. Chairman, for holding this
hearing and to our witnesses for your testimony, each of you.
You know, it is no secret that carbon emissions from the
power sector are causing our planet's climate to change in an
unprecedented rate. We know the communities across the country
are already experiencing the impacts of climate change. My
State of California, our farmers and ranchers and businesses,
are suffering due to the severe drought, and consumers are now
paying higher prices for food.
Even if you attribute some of this to cyclical changes, you
can't deny that communities across the country are facing
damaged infrastructure and erosion from extreme weather of all
kinds and sea level rise. These impacts have very real costs
for consumers and our economy as well.
Mr. Danner, would you elaborate on this, please. How is
climate change impacting our public infrastructure and who
ultimately pays for these costs?
Mr. Danner. Well, I think that you mentioned some of them.
And I mentioned them in my earlier testimony. Sea level rise is
something that is going to affect us. We are going to have to
relocate businesses and homes that are located on shorelines.
We are going to have to harden our seawalls and our shipping
facilities.
I mentioned before that the pine bark beetle infestation is
growing because we have longer summers now and that we don't
have the winter die-off of the insects. And this is going to
effect our lumber industry. We are having more forest fires.
That affects not only the lumber industry but the recreation
industry. And so we are going to be seeing more of this.
Our shellfish industry is actually under a severe attack
right now----
Mrs. Capps. Yes.
Mr. Danner. [continuing]. Because of ocean acidification,
the shells won't form in the young oysters. And, of course, the
ski resorts. It is going to have an impact on urban water
system. It is going to have a supply on salmon. It is going to
have a supply on fishers, and so--and irrigators. So there are
going to be a lot of impacts down the road, and some of them
have started already.
Mrs. Capps. Thank you.
And, Ms. Kelly Speakes-Backman, climate change is making,
as we just heard some of them, and creating significant costs
for consumers and our Nation's infrastructure. The American
people are frustrated--many of my constituents are--by the lack
of action in Congress to address these issues because they
understand that these costs will only increase in the future if
we don't take action now to combat climate change.
How do you view the long-term costs--and I am speaking now
long-term costs of climate change compared to those existing
under carbon reduction plans, such as the Regional Greenhouse
Gas Initiative?
Ms. Speakes-Backman. Thank you for the question.
We look at not only the direct energy cost, but we look at,
when we are analyzing the costs and benefits of energy, some of
the external issues, such as the diminished spending that
residents are taking because they are taking on energy
efficiency programs.
And we use these energy efficiency programs within the
Maryland Public Service Commission by making sure that they are
cost effective. So we have a very rigorous analysis, a
recorder, of what is a cost-effective energy efficiency
program. And we have thereby done--we have thereby decreased
the impact to consumers by 1.5 percent in Maryland with respect
to the RGGI programs.
Mrs. Capps. So regulating carbon pollution now not only
helps avert some high cost of climate change. It also creates
direct benefits for consumers.
Would you go on to say--briefly, so I can ask others as
well--what benefits have consumers in Maryland seen from your
efforts to reduce carbon?
Ms. Speakes-Backman. Well, I am going to have to look up my
notes because we have quite a few to list out. And I believe I
have them in my written comments.
In Maryland, we invested $230 million up through last year.
And the reinvestment of the auction proceeds from RGGI have
helped more than 104,000 low-income Maryland families pay their
energy bills. It has helped energy efficiency upgrades of 4,320
low-income apartments alone. And that is not to mention 3,100
families and 106 businesses in Maryland to install solar, wind,
and geothermal systems.
Mrs. Capps. So, Mr. Danner, just nod or say yes or no in
answering. You have seen similar benefits in Washington? And
then a follow up to both of you. Do you think consumers will
continue to see these benefits under EPA's Clean Power Plan?
Mr. Danner. Yes and yes.
Mrs. Capps. Yes and yes.
Ms. Speakes-Backman. Yes and yes. And, in fact, Regional
Greenhouse Gas Initiative, we just initiated some changes to
our program which will--what we think these changes will do are
they will project--they are projected to add an additional $8
billion into our gross regional product.
Mrs. Capps. Thank you very much. I yield back.
Mr. Whitfield. The gentlelady's time has expired.
At this time, I recognize the gentleman from Ohio, Mr.
Latta, for 5 minutes.
Mr. Latta. Well, thank you very much, Mr. Chairman, and
thanks very much for holding this hearing. It is another good
hearing. Thanks very much to all of our witnesses for being
here.
It is kind of interesting because, when I look around this
committee room with the members and the States that they
represent, the national manufacturers, I was looking at the
States with the highest and lowest shares of manufacturing
employment, many are represented in this room. Indiana being--
being number one. Michigan being at four. And I hate to admit
it, after saying that, since I border both those States, that
Ohio is number seven.
But it also points out the fact that there is another CNBC
report that came out, the top four States in 2009 and 2013 for
manufacturing job creation: Michigan, Texas, Indiana, and Ohio.
And when the testimony was given by Mr. Easterly talking
about your co-usage in the State, I know that I had a report
done several years ago that you are still at over 80 percent
coal--Ohio is over 70 percent--and what would do to our
manufacturing base in our respective States. Because, again,
bordering both Michigan and Ohio, I know--because I am out in
my district all the time and going through manufacturing
plants, I have got people working in both those States and visa
versa. So we want to make sure that people are out there
working and that they are employed.
And if I could, just run down the line with everyone, just
ask questions real quick and try to get responses because I
would like to ask several questions to everyone. And this is
for all--for everyone, that the EPA's proposed Clean Power Plan
rule assumes the rule would be finalized by June 2015 and
States will file their initial compliance plans by 2016.
And starting with Mr. Kavulla, if I could with you--and we
will just go right down--would development of the State
implementation plan require time and significant coordination
among different State agencies? And if yes, which agencies?
Mr. Kavulla. Certainly, it would require coordination
between the Public Service Commission, the Department of
Environmental Quality, the self-governing electric
cooperatives, and public power entities of the State of
Montana, possibly the Governor's Office, the Department of
Commerce, the utilities themselves, which are not agencies. And
then if there was to be a multistate plan, since we do have
these large exporting generators possibly with the Washington
Utilities Transportation Commission, the Oregon Public
Utilities Commission, the Idaho Public Utility Commission, a
variety of others, perhaps as many as a dozen or two dozen.
Mr. Latta. Thank you.
Mr. Danner. Yes. Thank you.
We are already meeting with our State Department of
Commerce and our Department of Ecology. So interagency
coordination is already underway, and we are working with our
regulated utilities and other stakeholders.
Ms. Speakes-Backman. We are also currently working with our
Department of Environment. We also coordinate certain energy
issues with the Maryland Energy Administration, which is our
energy office. We also need coordination with other States
because we will be participating. As EPA has recognized RGGI as
a compliance mechanism, we will be coordinating with eight
other States in Maryland.
In addition, we will be coordinating with our ISO and our
fellow States within the PJM Region to understand what this
means for our reliability and our cost structures.
Mr. Latta. Thank you.
Mr. Darwin. I think, in Arizona, it is much of the same.
The only thing I would add--and this is not unique to Arizona--
is that we will have to go before our State legislature as
well. And that is, at times, a time-consuming process on
educating them on the issues and making--helping them make an
informed decision. And having to develop a plan so quickly puts
us in a very difficult situation of having to get the decisions
from them on such a time frame.
Mr. Latta. Thank you.
Mr. Easterly. We both need to coordinate with our utility
regulators, our utility consumer counselors, our MISO, our
Midwest States ISO. And we have this group called the
Midcontinent States Energy & Environment Regulators to try and
figure this out for all of us. But we have an 18-month
rulemaking process. You usually get 3 years to develop a plan.
We can't do it in a year.
Mr. Anderson. Whatever is ultimately adopted is likely to
require a change in law with Texas State law. Our legislature
only meets every other year in odd number years. This next
year, it meets in January until the end of May. The rule
doesn't come out until afterwards. The next time they meet
won't be until 2017. It will make coming up with a plan and
actually get the authority to implement it a challenge. And
then we have the same problems with respect to the 2020
deadline of actually doing anything meaningfully in order to
get to the first threshold.
Mr. Latta. Thank you very much, Mr. Chairman.
My time has expired, and I yield back.
Mr. Whitfield. The chair at this time recognizes Mr. Tonko
of New York for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
Chairman Danner, Commissioner Anderson has raised an issue
that I have heard raised many times in the context of debates
about carbon pollution and how the problem should be addressed,
if it is to be addressed at all, and that is fairness. I think
carbon pollution must be addressed for the reasons you have
stated in your testimony. The social, the environmental, and
the financial consequences are severe already and will become
worse if we don't act now.
Commissioner Anderson points out correctly that Texas, like
a number of States throughout the country, has taken steps to
diversify energy resources, improve efficiency, and lower
carbon emissions. Your State is one. New York is another.
Some States, however, have done very little. With this
rule, EPA has proposed steps that require all States to take
action, as we have heard here. Something that I believe is not
only fair, but long overdue. But the rule doesn't offer a lot
of credit to the States that have already taken action.
My question is, should this proposal be revised to require
more reductions of the States that have historically done
little and be a bit more lenient in the targets for States that
have already been doing their part to address this national and
global problem?
Mr. Danner. Thank you for the question. I--yes. We are--in
our comments, we will be making the case that we think that
we--that States that have been early adopters whose citizens
have already paid for some of this energy efficiency and
renewable energy should be getting credit for it in the
standard that EPA sets.
Mr. Tonka. And, Commissioner Speakes-Backman and
Commissioner Anderson, would you also like to comment, please?
Ms. Speakes-Backman. Yes, sir. I agree that we will be
making comments, not only on whether or not we agree with the
specific baseline of 2012, but is a single year the proper
analysis? Perhaps 2012, if some of us recall in the Northeast
and the Mid-Atlantic States, perhaps 2012 as a specifically
stormy year due to extreme storms was not perhaps the best--it
was an anomaly. And so we are going to ask those sorts of
questions.
But we are also going to ask questions around whether early
actions are being properly credited.
Mr. Tonka. Commissioner Anderson. Thank you.
Mr. Anderson. Well, it is probably surprisingly, but I
agree with my colleagues. I believe that the early adopting
States----
Mr. Tonka. Thank you. I recognize----
Mr. Anderson. [continuing]. Not get credit.
Mr. Tonka. OK. Thank you.
And I recognize that we have a variety of views about EPA's
proposal being represented on our panel here today. EPA took
considerable time in developing this proposal, and I understand
the Agency did conduct extensive outreach and sought input from
many of the industry, the regulatory community, and in
different regions and States.
I would like each of you to comment about that process
itself. If you weren't contacted by EPA, did you make an effort
to reach out to EPA? Any of you that----
Mr. Anderson. We did in response to solicitation generally.
In Texas, our environmental agency, as well as the commission,
we filed joint--last spring, joint early comments.
Mr. Tonka. Anyone else? Any of the other States?
Mr. Easterly. EPA certainly spent time with, I would say,
all of the State environment regulators. But at the end of the
day, they didn't take all of our advice. I think that is a fair
way to put it.
Mr. Tonka. OK. So you were--there was an interaction,
though?
Mr. Easterly. Yes, there was.
Mr. Tonka. And the same is true with Commissioner Darwin?
Mr. Darwin. Yes. We met with EPA and our Corporation
Commission met with EPA prior to the proposal.
Mr. Tonka. Do your organizations believe that some action
at the national level is needed to address carbon emissions or
not?
Mr. Danner. Yes.
Ms. Speakes-Backman. Yes.
Mr. Easterly. I still believe we need a plan. We are doing
scatter-shot actions that don't fit together to achieve any
particular goal and is putting certain, in our case
manufacturing, at risk without a plan to actually make a
difference across the country.
Mr. Tonka. So is that an answer--to have a carbon emission
plan, should there be a national plan?
Mr. Easterly. There needs to be a plan. As people have
said, the CO2 continues to increase a couple of
parts per million a year. This rule, for all of its pain, will
cut that by less than 1 year's increase. So it is really not
going to make a big difference until we figure out how we are
going to get our arms around the whole issue.
Mr. Tonka. So you are saying yes to a national plan that
really reduces carbon emission tremendously?
Mr. Easterly. And we have to say what that plan is and the
costs----
Mr. Terry. OK.
Mr. Easterly. [continuing]. And benefits of that compared
to not doing it.
Mr. Tonka. OK. So, in other words, a proposal--a national
proposal to reduce carbon emissions would be acceptable to your
organizations?
Ms. Speakes-Backman. Yes, sir.
Mr. Danner. Yes----
Mr. Kavulla. I am not--I am not sure what that is without
knowing the details, Mr. Tonka.
Mr. Tonka. Well, a national plan is a national plan to
reduce carbon emission. The concept, is that something that is
worthy and required----
Mr. Kavulla. I mean, the----
Mr. Tonka. [continuing]. At a national level.
Mr. Kavulla. The present national plan attempts to address
an intractable problem of geopolitics with a goal that, even if
realized, would result in miniscule reductions and no real
benefit.
Mr. Tonka. That is this plan. But, ultimately, should there
be a national plan to reduce carbon emission?
Mr. Kavulla. It is a real problem, and it needs to be
addressed either national or international treaty level.
Mr. Tonka. Thank you, everyone.
Mr. Kavulla. To make----
Mr. Whitfield. The gentleman's time is expired.
At this time, I recognize the gentleman from Texas, Mr.
Olson, for 5 minutes.
Mr. Olson. I thank the chair.
And welcome to our witnesses. A special Texas howdy to
Commissioner Anderson.
Following the example of Chairman Emeritus Dingle, my
question would be yes-or-no questions on basic issues.
So, first of all, yes or no. And I will start with you,
Commissioner Anderson. Do you believe that this rule as
currently written is workable for Texas, yes or no?
Mr. Anderson. No.
Mr. Olson. No.
Commissioner Easterly from Indiana, yes or no?
Mr. Easterly. We haven't found a way to meet it yet.
Mr. Olson. Director Darwin from Arizona, yes or no?
Mr. Darwin. No.
Mr. Olson. Commissioner Speakes-Backman, Maryland?
Ms. Speakes-Backman. Yes.
Mr. Olson. Yes.
Chairman Danner, Washington?
Mr. Danner. Yes.
Mr. Olson. And Commissioner Kavulla----
Mr. Kavulla. No.
Mr. Olson. [continuing]. Montana? No.
OK. Next round of questions. Two of you said yes, Maryland
and Washington.
But Commissioner Speakes-Backman and Chairman Danner, do
you recognize why these four States--Texas, Arizona, Indiana,
and Montana--might not agree with you a little bit different?
Understand why they are opposed?
Mr. Danner. Yes. I understand. But they are raising
technical issues that I think are similar to some of the issues
that we have, but these are issues that we are going to put in
our comments. And we don't see them as any reason to delay
consideration of this proposed rule, which is, at this point,
just a proposed rule.
Ms. Speakes-Backman. I would agree with that. I think I
have agreed with some of my colleagues up here at the table on
some of the specific technical issues that they have asked,
especially the Honorable Kavulla. That was fun.
But I also think that there is a big difference between the
four building blocks that they have laid out in terms of how to
meet this specific goal and the structure of the plan and the
mechanism of compliance. And I think that mechanism of
compliance and how they set this out is structurally sound.
Mr. Olson. OK. So it sounds like you understand their
rationale why this program doesn't work for these new rules,
maybe unworkable, again, for Texas, Arizona, Indiana, and
Montana. For Maryland and Washington State, all go forward?
Mr. Danner. Well, I am not going to speak whether it is
workable for them or not.
Mr. Olson. OK.
Mr. Danner. I know they are making a case that it is not,
but I have to look into it more.
Mr. Olson. OK. That is what I was trying to understand.
Another question, starting again with you, Commissioner
Anderson: Do you agree that this rule will add to the
reliability challenges facing the grid in Texas?
Mr. Anderson. It has potential, particularly, if we utilize
the expansion of renewables, just because of the tremendous
variables that occur. And, in fact, it will require more gas to
back that renewable up, which will in turn increase the amount
of carbon emissions.
Mr. Olson. Mr. Easterly, Indiana's perspective?
Mr. Easterly. Yes. We are going to lose an amount of
generation that we don't have a way to replace.
Mr. Olson. Director Darwin, Arizona?
Mr. Darwin. It is not my area of expertise, but from what I
have been told, if the rule is finalized as proposed, it would
create reliability concerns.
Mr. Olson. And Commissioner Speakes-Backman, Maryland?
Ms. Speakes-Backman. I belive that we are already facing
reliability and resilience issues related to climate change and
related to other external threats and forces that we need to
pay very close attention to. And utility regulators, economic
regulators are well suited to work on those issues.
Mr. Olson. And Chairman Danner, Washington State.
Mr. Danner. I think I already answered the question.
Mr. Olson. I thought so.
Commissioner Kavulla, Montana?
Mr. Kavulla. Simply put, no reliability analysis has been
conducted for the western interconnection by the appropriate
bodies, so I am unable to reach any conclusions for a variety
of----
Mr. Olson. Yes. And your testimony said you cannot state
studies of that because it hasn't been addressed. Isn't that a
real big problem?
Mr. Kavulla. My speculation----
Mr. Olson. [continuing]. If you set a goal for 2015, a
major problem, huh?
Mr. Kavulla. My speculation would be that it would, but I
am not a transmission engineer and no study has been performed,
sir.
Mr. Olson. I am not one either, so thank you for your
answer.
One final yes-no question, again, with you Commissioner
Anderson. In the mercury rule, EPA included a reliability valve
to pause the rule's implementation if the grid is threatened.
Should they consider that system now for this rule, this new
rule, yes or no?
Yes or no?
Mr. Anderson. Yes, they should.
Mr. Olson. Mr. Easterly, Chairman?
Mr. Easterly. Yes.
Mr. Olson. Dr. Darwin?
Mr. Darwin. Yes.
Mr. Olson. Commissioner Speakes-Backman?
Ms. Speakes-Backman. I think it is worthy of consideration.
Mr. Olson. There we got another yes. Chairman Danner?
Mr. Danner. I actually think they already have some
processes where they can review decisions they have made and
make alterations, but I think it is something that should be
looked at.
Mr. Olson. Thank you. And my final question again, this one
for Mr. Anderson, my home commissioner.
As you know, Texas has made huge changes to our grid. Coal
plants have been closed and the existing ones are among the
most efficient in the country. We built the most winded America
and the power lines to move it. We have increased our use of
natural gas, and last Friday, regarding CO2
emissions, I helped break ground on the project in my home
district called ``The Petra Nova Project.'' It is a project
from NRG where they are going to get--they are actually going
to tap into a power plant there, capture CO2, 90
percent captured, put down a pipeline, goes 80 miles downstream
and being used to produce more oil, and that is what is
happening there in Texas.
So my question is, and this is about carbon, CO2
emissions. You mentioned ERCOT, as a really efficient market
you said the words ruthless, and our generators have risen to
the challenge. If EPA said to the state of Texas, good work,
now go reinvent your fleet again?
Mr. Anderson. I would just point out that--and this is in a
study that was released by the Energy Information Agency this
month that between 2000 and 2011, Texas had the largest
reduction in CO2 emissions in the country by metric
ton, over 9 percent, and actually accounted for, during that
same time period, of over 13 percent of the Nation's reduction
in CO2, all while the economy grew by over a third
in Texas.
So it is--I go back to, it is not like we are not doing
anything. It is not like Texas has buried its head in the sand.
We have made enormous investments in order to get more
efficient, and the EPA now is asking us to double down.
Mr. Olson. It is not just CO2. It is----
Mr. Whitfield. The gentleman's time is expired.
Mr. Olson. Ozone--I am sorry, Mr. Chairman, a couple of
points. Ozone, sulphur dioxide and nitrous dioxide as well. We
reduced those emissions dramatically, half the national
average, double the national average.
I yield back. Thank you.
Mr. Whitfield. At this time I recognize my colleague from
Kentucky Mr. Yarmuth for 5 minutes.
Mr. Yarmuth. Thank you very much, Mr. Chairman. I thank all
the witnesses for a very interesting discussion.
You know, Mr. Shimkus took us back down memory lane to talk
about what happened back in 1992 and so forth in the Congress
and also subsequently in the courts, but he stopped before 2009
when we actually debated this very subject in the context of
the Waxman-Markey legislation.
And I raise that because at the time, with many of us from
states that derive most of their energy from coal, Kentucky
derives 92 percent of its energy from coal, we are very
concerned to make sure that any proposal that dealt with carbon
emissions did so in a way that didn't affect our consumers and
our businesses and our economy, and we worked very diligently
to shape that proposal in a way that I think accomplished that.
Of course, it passed the House, was killed by the
Republicans in the Senate, which is why we are here now, why
EPA had to act without congressional activity and when I was
considering that bill in 2009, what I was saying to my
constituents was I wasn't sure we could trust EPA to be
particularly sensitive to Kentucky's situation and Indiana's
situation and Illinois and so forth, so I thought it was better
to work through the legislative system, but what I have
actually gleaned from the testimony today is that EPA actually
has been pretty responsive to the individual needs of states.
Mr. Kavulla, you said they have. Mr. Darwin, you said they
had, and I know that was the case in Kentucky because Kentucky
submitted a plan for reducing carbon emissions in our state and
as a way of encouraging EPA to provide flexibility and show how
we could do it, and I think our officials in Kentucky are
relatively satisfied that they do have the flexibility to
create a plan that will accomplish both significant reductions
of carbon emissions without--and not hurt our economy.
And I was interested to hear Mr. Danner talk about job
creation. I think you said about 3,000 jobs attributable to
this program in Washington?
Mr. Danner. To renewables, and to conservation is more like
37-and-a-half thousand.
Mr. Yarmuth. That is great. And I am not sure, Commissioner
Speakes-Backman, that you mentioned employment estimates if
there are any. I know you talked about economic impact, but you
have any measure of job creation?
Ms. Speakes-Backman. Yes, sir. In our region, we have
16,000 job years.
Mr. Yarmuth. Sixteen. Which is interesting to me because
again, back in 2009, I was talking about--to our state
officials and our energy cabinet then, they were neutral on the
legislation. They did not take a position on Waxman-Markey. But
they said they thought that if it were passed, that it would
mean tens of thousands of new jobs in Kentucky.
So I think what your experiences have shown and what at
least our states' estimates were is that we can do this without
not just not hurting the economy, we can actually stimulate the
economy.
And this goes to something that I am very much interested
in, and that is, we have had a discussion just in the last few
minutes about, you know, the impact on overall carbon emissions
and whether this is just a drop in the bucket throughout our
country and the world.
But is there anybody who doubts that if we were to--if we
do something significant in this area, whether it be something
like a cap and trade under Waxman-Markey or the EPA proposal,
whatever it ends up, the rule, whatever it ends up being, that
this will set off a new era of innovation and experimentation
that will ramp up at a much faster rate the reductions that we
can achieve? Mr. Danner, you look like you are poised to
answer.
Mr. Danner. Yes. I mean, we have already seen that, too,
because all this investment has led to innovation, and you are
seeing more distributed generation, more rooftop solar. The
price of solar has come way down. The price of wind has come
way down, and we are seeing that the conservation is even going
down, so we are seeing it over and over and over again.
Mr. Yarmuth. Ms. Speakes-Backman.
Ms. Speakes-Backman. I would just agree with Mr. Danner in
that we have seen new technologies, we have seen new
applications, not even just by the end user but from our
utilities themselves. They are looking at new ways to increase
efficiency on their distribution grid.
Mr. Yarmuth. OK, well once again I appreciate all of your
input and your work. Thank you for your service.
And I yield back, Mr. Chairman.
Mr. Whitfield. Thank you very much. At this time I would
like to recognize the gentleman from West Virginia, Mr.
McKinley for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman, and thank you to the
panel for your patience in dealing with all this today.
What I would like to do is ask unanimous consent that this,
for the record, Mr. Chairman, this is a petitioner's motion to
set a consolidated briefing schedule and expedite consideration
of the lawsuit dealing with this measure.
Mr. Whitfield. Without objection. \*\
---------------------------------------------------------------------------
\*\ The information has been retained in committee files and is
also available at http://docs.house.gov/meetings/IF/IF03/20140909/
102623/HHRG-113-IF03-20140909-SD010.pdf
---------------------------------------------------------------------------
Mr. McKinley. Thank you.
Mr. Chairman and for the rest of you, it is--what I have
heard here not only on this rule, this proposed rule but so
many other rules that we have had before us in this committee,
shows the big divide in America over this, and I am--not only
on this one but the rational consolidation of this and the
implementation of it, but all these rules that the EPA is
proposing.
I thought when the President ran that he was saying he
wanted to unify this country, that there wasn't going to be a
red state and a blue state but we were just going to be an
American state and we were all going to work together, but yet
I see one rule after another dividing us, and I don't see
anything coming from this rule that unifies us.
It just causes more division, and quite frankly, I think it
is policies like this that are thrown out that maybe are ill-
conceived, maybe there is shortcomings with it, that long term,
maybe there is some advantage to it, but it feeds into that,
that attitude of America, of the dysfunction in Congress and
distrust of government. It fuels that, and I have got--I would
love to see how can we work together rather than proposing
these things that we know are contradictory.
But there is a phrase that Speaker Boehner uses often
from--he is quoting--paraphrasing a fellow by the name of
Maxwell who says, ``He who thinks he leads but has no followers
is merely a man taking a walk,'' and I think that is a little
bit of what is going on now because the rest of the country or
the rest of the world doesn't seem to be following our lead. If
we want to address this, that is fine, that is a noble thing,
but the rest of the world is saying we are not buy into this.
When China is saying they are going to increase their
CO2 emission by 60 percent, in India by 50 percent,
in Germany, switching over from nuclear to coal, 22 power
plants, the rest of the world is out there, and then you have
to couple that with the fact that, the sheer numbers. I must be
missing something as an engineer in Congress because I know
that if we totally stopped the burning of coal all across
America, not just cut down the CO2, just stop
burning coal, stopped it totally, the total CO2
emission around the world, manmade CO2,
anthropogenic, would only decrease by \2/10\ths of 1 percent.
Now you are saying on this, what this President is doing in
this proposed rule, he says I want to reduce it by another 30
percent. 30 percent of \2/10\ths is \6/100\ths of 1 percent,
and we are trying to say that is a measurable benefit to our--
the world and our economy by reducing it by \6/100\ths of 1
percent? All I can think is--so, I really want to get back to
you from Montana because you talked in the morning another
direction with this.
I was listening to Barton talk about 10 percent of the
power in America comes from Texas. Well, West Virginia is not
far behind. We are 5 percent of all the power in America comes
from West Virginia, 97 percent of that is produced by coal.
We export 56 percent of the power that we create in West
Virginia. I don't know how we are going to comply without
someone getting hurt. Some jobs are going to be lost in West
Virginia when 97 percent is produced by coal.
So my question to you, Mr. Commissioners, what picture do
you--what would you suggest will look like West Virginia if we
have to embark on this and reduce our CO2 emissions
in West Virginia by 30 percent?
Mr. Kavulla. I have not studied----
Mr. McKinley. Or 20 percent, whatever that final number is?
Mr. Kavulla. Right. I mean, the job implications for
producing states like yours and mine are no doubt significant.
Mr. McKinley. Are we doing to lose jobs?
Mr. Kavulla. Well, certainly, if it resulted----
Mr. McKinley. I would be----
Mr. Kavulla. [continuing]. In a coal plant closure,
absolutely.
Mr. McKinley. Is it--can you think--is it really measurable
around the world? I want to work on climate change. I
acknowledge there is climate change. I just want make sure we
are following the right plan and quit just making a simplistic
approach at attacking coal as the simple answer to this,
because if it is only we are going to reduce 6/100ths of 1
percent of the emissions of the globe, I don't know that that
is worth the risk that we are putting to our economy,
especially here in the United States, and more provincially, in
West Virginia, the First District of West Virginia.
Mr. Kavulla. I agree with you, Mr. Congressman. I don't
know if the energy efficiency jobs, the renewable jobs would be
nearly enough to offset what we would lose in terms of
producing jobs, and I don't know about the second tier, third
tier effects on things like manufacturing that rely on that
energy production. I just don't know.
Mr. McKinley. I have run over my time, but thank you, Mr.
Chairman, for----
Mr. Whitfield. The gentleman's time is expired.
At this time I recognize the gentlelady from Florida, Ms.
Castor for 5 minutes.
Ms. Castor. Thank you, Mr. Chairman, and thank you to all
the witnesses for being here today.
About 3 weeks ago, a number of the top climate scientists
in Florida sat down with our Governor Rick Scott and urged him
and state leaders in Florida to take action to reduce carbon
pollution. They said if we do not, we are going to face some
very serious costs and consequences. They pointed out the
potential consequences to our tourism industry, to our barrier
islands and our beaches from the rising sea levels, danger to
our drinking water supplies from saltwater intrusion.
Remember, Florida is a fragile peninsula, to our local
infrastructure, the pipes, the water pipes, wastewater pipes
that cost our local governments quite a lot to maintain, from
sea level rising and flooding. So the scientist said we can't
wait, we have to act now. Unfortunately, Governor Scott
shrugged off their advice. This seems particularly unwise for a
state like mine that has such great vulnerabilities.
I want to know, Commissioner Speakes-Backman, how difficult
will it be for a state to achieve goals under the Clean Power
Plan if a state resists, if it delays, if it ignores carbon
pollution reduction? It seems like it could end up costing the
citizens of my state a whole lot of money.
Ms. Speakes-Backman. There is absolutely a cost to
inaction, and that is measured through a number of different
areas. There are environmental causes, there are public health
problems that arise. There are also costs to consumers on the
loss of energy and electricity in their systems, the loss of
water.
We are in the midst right now of evaluating and giving a
dollar value to that, those losses. What does it cost a
customer to be out for 4 days, 5 days, 10 days because of a
major storm? We have worked through these issues in
practicality, unfortunately, and so this is something that I
think is absolutely important for us to consider when we are
looking at what the cost is.
Ms. Castor. And another reason for Florida and other states
not to delay is that I think the Clean Power Plan is likely to
create jobs, particularly in clean energy and energy efficiency
technologies. I see a great benefit to my local economies. We
are the sunshine state and yet we produce less solar power and
have less jobs in renewable energy than Georgia and New Jersey
and other states. That seems backwards to me.
And energy efficiency under the Clean Power Plan is one of
the important building blocks. Chairman Danner, you have
discussed all of the great work in Washington state. Could you
talk a little bit more about how long your state has been at it
to improve energy efficiency and reduce demand, and even though
you have made good progress, can you do more?
Mr. Danner. Thank you. We have been at it for--well, the
voter initiative was in 2006, and so we have had measures
before that, but 2006 is when we really got going, and I think
that our compliance with the Clean Power Plan is going to be so
much easier because we got a headstart, that we were able to
work ahead, and it just--it is part of our culture in
Washington state now.
And the job numbers that I talked about earlier, we got a
headstart on that, too. We are really seeing the benefits. But
we do have more to do. The test for conservation is we want it
to be cost-effective and so the fact that our--we have a hydro-
program so our energy costs are actually lower in Washington,
we have less room. In some of the states that have higher costs
of power, there is a lot more room for cost-effective
conservation.
Ms. Castor. And the best thing about energy efficiency, and
Commissioner Speakes-Backman, you talked about this in Maryland
and with the RGGI plan, is that it can be a win-win situation
for states and consumers, you can actually put money back into
the pocket of consumers.
One of the issues is that in many states, the business
model for electricity is backwards now. It does not reflect the
challenges that we face in the reduction of carbon pollution,
and somehow many other states are going to have to realize
their model is upside down. They have got to incentivize
conservation and energy efficiency rather than the sale of the
kilowatt hour; isn't that correct?
Ms. Speakes-Backman. It is the least cost resource that we
have, to turn things off and to use energy more efficiently, so
absolutely I would agree with you 100 percent.
Maryland itself is on a path to decrease its energy use per
capita by 15 percent by 2015, and the RGGI states themselves,
we will reduce carbon. We are on a trajectory, because of the
2014 changes that we have made in our program, we are on a
trajectory to reduce our carbon from power plants by 50 percent
by 2020. So, it is possible, and we are reinvesting those
dollars that are--those revenues that are being generated back
into an energy system which is making it a positive for our
states.
Ms. Castor. Thank you very much.
Mr. Whitfield. The gentlelady's time is expired.
At this time I recognize the gentleman from Virginia, Mr.
Griffith for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman.
I do appreciate that and appreciate the witnesses being
here.
I will tell you that I share some of the concerns that
Representative McKinley raised in his questions about the cost
of jobs and the indirect jobs related to the manufacturing
facilities whose electric prices go up, but the manufacturers,
whether they are in this country, or in another country will
figure out a way to get their energy at a reliable, reasonable
cost.
Mr. Easterly, I noted that in your testimony you indicated
that there were real concerns in Indiana, and I share those
concerns representing southwest Virginia, that it is not the
wealthy, it is not the big manufacturers who will pay first as
the electric prices go up after wave after wave of new
regulations have been applied to them by this EPA, but that the
poor, the elderly, and most vulnerable in our society, I am
looking at your comments here that are written, will be the
ones that will pay first and that they are going to end up
having their utility bills raised.
And then I think in your oral comments you made some
reference to concerns about people having their power turned
off because they couldn't pay their bill, and then the costs
that might be associated with that when they don't have the
best of health or otherwise. Could you expand on that, when
there are concerns and these rates go up?
Mr. Easterly. Every winter at least--actually, I know it
happens more than just in Indiana. There are people that didn't
get their electricity reconnected the summer before and they--
some of them die. And similarly in the summer, I remember in
Illinois in the late 1990s, and the heat wave, 700 people died
because of heat. We know as a society what to do. Air-
conditioning is absolutely available and power is available,
but it is an economic issue.
Mr. Griffith. It becomes an economic issue, and you know
what is really sad about this is that when we first started
discussing this when I was first elected, Lisa Jackson, who was
then head of the EPA, came in and I said to her when you made a
health determination that CO2 was dangerous to
health, and she talked about how the temperatures would go up
and that would cause problems, I said, did you ever think about
the people who won't be able to afford to heat their homes in a
cold winter? And she said, well, we have programs to take care
of that.
In my area, and I have talked to a number of people about
it, typically, particularly in a cold winter, that money starts
running out around the end of February, first part of March.
Has that been your experience as well?
Mr. Easterly. As I understand it, but I don't actually run
that program.
Mr. Griffith. I understand, but you--anecdotally, you have
heard of that happening. That creates some concern for me as
well.
When we add these new regulations, you also referenced in
your next paragraph another thing that I have been concerned
about. The possibility as we lose more facilities that are
generating electricity, particularly with the new rules coming
on that are putting a lot of pressure on the coal-fired power
plants, that there is a real possibility or you indicate there
might be reliability issues, and in parenthesis you said
brownouts.
I am concerned about rolling brownouts. Do you have that
concern as well?
Mr. Easterly. Yes, we have that concern. I think you heard
it from most of the interconnects here.
Mr. Griffith. I have. And it raises another issue that has
come up this year in my district and in other parts of
Virginia. There are two different companies trying to build gas
pipelines, and of course, the communities are concerned, and
sometimes I think the EPA thinks that these pipelines can just
pop up without any trouble.
Of course, you have got do go through all kinds of
regulations, both EPA regulations, local regulations, state
regulations, and so forth to build a new gas pipeline in the
area, and I am wondering if any of you-all have experienced
that in your state?
I guess Texas has got plenty of pipelines, but are you
experiencing difficulties where even where people want to use
the natural gas, there is difficulty in putting the pipeline
in, or in relationship to manufacturers, we have noticed that
sometimes the manufacturers want the natural gas but they are
not on the short list to get a natural gas pipeline put in. If
each of you could answer that, starting with you, Mr. Anderson?
Mr. Anderson. We really don't have a shortage of gas
infrastructure in our state or electric infrastructure as a
general rule.
Mr. Griffith. All right. Mr. Easterly.
Mr. Easterly. We are an importer, and we do not have enough
for this plan and I want--I will just give me a second. When I
worked for a utility, and before that a steel company, we were
working on this millennium pipeline to bring gas to New
England. It can't cross the Hudson River. For decades that
pipeline project has been going forward and not made the impact
that it needs.
Mr. Griffith. So it took decades to try to get that done
and it hasn't been able to make the impact, but the EPA is
requesting that the states have their plans ready by next year
sometime; isn't that correct?
Mr. Easterly. That is correct.
Mr. Griffith. And if it is going to take decades to put the
pipeline in to do what the EPA is asking you, if one of your
options is to go to natural gas, that is not going to work, is
it?
Mr. Easterly. It is going to be difficult.
Mr. Griffith. It is going to be difficult. I will tell you
we have the same problem with some of the new technologies like
chemical looping where it is not going to be ready in time to
meet the EPA standards.
Mr. Chairman, if we could get a quick yes or no from each
of the remaining.
I am out of time, and I apologize that I took too long.
Mr. Darwin. Yes, it would create a problem, and it is
important to note that in states like Arizona, we have to
achieve so much of our goal by 2020. We have to reach 75
percent of our goal by 2020, and that means we have to rely
upon the assumptions that are behind building block 2, which is
about converting from coal generation to natural gas
generation, so infrastructure is absolutely a need, and
assuming that we can have that infrastructure in place by 2020
just isn't a fair assumption.
Mr. Griffith. All right. Ms. Speakes-Backman, have you-all
had any problems in Maryland. I know you are a much smaller
state than Arizona and Texas and some of the others?
Ms. Speakes-Backman. At this time we have had no problem
with natural gas.
Mr. Griffith. Yes, ma'am.
Mr. Danner. Yes. We are looking at there will be some
natural gas expansion, but we are on track.
Mr. Griffith. On the long track or on the right track?
Mr. Danner. Well, it is a modest expansion, so it is--and
then we have some LNG and CNG facilities that are coming on,
and we are just seeing that is going on fine.
Mr. Griffith. All right.
Mr. Kavulla. Infrastructure is always a problem, electric
transmission or natural gas anything.
Mr. Griffith. And it is hard to justify seeing these
regulations that require plans by next year and major
compliance by 2020.
Mr. Chairman, I yield back. Thanks for your patience.
Mr. Whitfield. The gentleman yields back, and that
concludes today's hearing.
Everyone has had the opportunity to ask questions, and I
want to once again thank the members of the panel for taking
time from your very busy schedules to come and visit with us,
and we appreciated your perspectives and look forward to
working with you as we move forward on this rather complicated
issue that the country is going to be trying to undertake.
And without objection, I want to enter into the record,
number 1, the hearing memo for today which we normally don't do
but because it has the interim and the final goals for each
state on its emissions prepared by EPA, we want to put that in.
And second of all, I have a September 2nd, 2014, EIA report
entitled ``Residential Electricity Prices are Rising,'' and it
goes through the various regions of the country, and I might
say that in New England the rates went up the most in the first
half of 2014 by 11.8 percent, and then we have the EIA state-
by-state average retail electricity prices for June for each
region, and I would like to enter this into the record. And
then the record, we will keep it open for 10 days for any
additional materials.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. But once again, I thank all of you, and we
look forward to working with you, and that will conclude
today's hearing.
[Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
Every state has its unique electricity needs. In Michigan
we have significant electricity demand from our extensive
manufacturing sector as well as that from other businesses and
consumers. And we have very cold winters where electric
reliability can literally be a matter of life and death. Other
states also have particular circumstances that their own state
governments are best equipped to address. I am especially
troubled by the prospect of a federal takeover of state
electricity planning that is embodied in EPA's proposed Clean
Power Plan, and it is critically important for this
subcommittee to hear from state-level officials to more fully
understand the implications of EPA's plan.
Since its enactment in 1970, the Clean Air Act has balanced
the state and federal role. In fact, the statute contains a
Congressional finding that air pollution prevention and control
is the primary responsibility of state and local governments.
Under the Clean Air Act, EPA focused on regulating smokestack
emissions from electric power plants, while most other energy
planning decisions were left to the states.
For nearly 45 years, this balance has worked relatively
well. We have seen dramatic improvements in air quality while
keeping electricity affordable and reliable. But now, EPA's
Clean Power Plan is threatening this balance by shifting nearly
all authority to EPA. If this proposed rule becomes final, it
will be bureaucrats in Washington who will be micromanaging
electricity production and use in each state.
For the first time, EPA would have substantial control over
how electricity is generated, transmitted, and consumed. No
longer would states have the last word on items such as the
best mix of coal, natural gas, nuclear, and renewables to meet
electricity needs. Instead, each state would have to submit to
EPA a plan to bring its electricity system into compliance with
the new federal requirements. And if EPA rejects a state's
plan, it will impose its own plan, the details of which the
agency has not yet revealed. And all of these new burdens will
be placed upon states at a time when they face many other
economic challenges and budgetary constraints.
It is difficult to imagine this new level of federal
control as anything other than bad news for affordable
electricity prices and jobs. And it may be even worse news for
electric reliability, a subject that is the primary
jurisdiction of agencies other than EPA, as FERC recently
confirmed at our last hearing.
For manufacturers, affordable energy is vital to remaining
globally competitive. We are currently seeing the tremendous
benefits of affordable domestic natural gas for our
manufacturers. But high electricity costs and uncertain
supplies could negate the natural gas advantage.
EPA's regulatory scheme can harm future economic prospects
in many ways. Manufacturers deciding whether to locate a new
facility in the U.S. or abroad will take into account the fact
that most of America's global competitors are not burdening
their electric systems with any overreach like the Clean Power
Plan. The plan's impacts on states' individual competitiveness,
and their ability to lure new jobs and development, will also
likely complicate how much states can band together to
effectively ration their energy use to meet the plan's goals.
We have been down this road before with the recent health
law. And one clear lesson from all of the health law's
unpleasant surprises is that policymakers should look before
they leap. That is why we need to hear directly from state-
level energy officials about the proposed Clean Power Plan.
These are the people in the best position to anticipate the
potential problems implementing this radical agenda, and I am
pleased that we have a variety of state perspectives
represented here today.
----------
[GRAPHIC] [TIFF OMITTED]
[all]