[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 

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                    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. \*\
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    \*\ 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
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    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.
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