[Senate Hearing 113-024]
[From the U.S. Government Publishing Office]
S. Hrg. 113-024
ENERGY EFFICIENCY AND HYDROPOWER BILLS
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
ON
S. 306 H.R. 267
S. 545 H.R. 678
S. 761
__________
APRIL 23, 2013
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Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
RON WYDEN, Oregon, Chairman
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
CHRISTOPHER A. COONS, Delaware ROB PORTMAN, Ohio
BRIAN SCHATZ, Hawaii JOHN HOEVEN, North Dakota
MARTIN HEINRICH, New Mexico
Joshua Sheinkman, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Hogan, Kathleen, Deputy Assistant Secretary for Energy
Efficiency, Office of Energy Efficiency and Renewable Energy,
Department of Energy........................................... 16
McMorris Rodgers, Hon. Cathy, U.S. Representative From Washington 4
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
Pimley, Lowell, Deputy Commissioner of Operations, Bureau of
Reclamation, Department of the Interior; Accompanied by Kerry
McCalman, Manager, Power Resources Office, Bureau of
Reclamation, Department of the Interior........................ 11
Wright, Jeff C., Director, Office of Energy Projects, Federal
Energy Regulatory Commission................................... 6
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 1
APPENDIXES
Appendix I
Responses to additional questions................................ 43
Appendix II
Additional material submitted for the record..................... 59
ENERGY EFFICIENCY AND
HYDROPOWER BILLS
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TUESDAY, APRIL 23, 2013
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:10 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden,
chairman, presiding.
OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON
The Chairman. The committee will come to order.
The purpose of today's hearing is to receive testimony on 5
bills pending before the committee. Four of the bills on the
committee's agenda promote hydropower. If I had to cut my
comments on these bills down to one phrase, that would be, as
Senator Murkowski and I have talked about often, ``hydro is
back.''
The fact that 4 of the first 5 energy bills considered by
the committee this year promote hydropower shows how important
this resource can be to a clean energy future. S. 545, the
Hydropower Improvement Act of 2013, has been introduced by the
ranking committee member, Senator Murkowski. S. 545 includes a
number of provisions that will make the Federal Energy
Regulatory Commission licensing process more efficient and at
the same time be extremely sensitive to environmental values. I
am pleased to be a cosponsor of S. 545.
In the last Congress, a hearing was held on similar
legislation, S. 629, and that bill was reported by this
committee. I believe S. 545 is a significant improvement from
its predecessor and an important step forward toward increasing
the contribution of renewable hydropower to the transition to a
lower carbon economy.
Also on the agenda is H.R. 267, the Hydropower Regulatory
Efficiency Act of 2013 sponsored by Representatives Cathy
McMorris Rodgers and Diana DeGette. H.R. 267 is very similar to
S. 545 and was passed by the House unanimously by a vote of 422
to nothing. When you just say those words, ``422 to nothing,''
you almost feel like a vote took place in an alternative galaxy
because it is hard to imagine anything passing 422 to nothing.
[Laughter.]
The Chairman. The other hydropower bill on the agenda is S.
306, the Small Conduit and Rural Jobs Act, introduced by
Senator Barrasso, a member of our committee. S. 306 expands and
simplifies the jurisdiction of the Bureau of Reclamation over
hydropower on existing pipelines, canals, and other small
conduits on Bureau facilities.
Also before the committee is H.R. 678 and that is a bill
sponsored by Representative Tipton. H.R. 678 is similar to S.
306. It was passed by the House earlier this month by a vote of
416 to 7 after a compromise was reached on language concerning
the application of the National Environmental Policy Act.
Finally, I am pleased to have before the committee S. 761,
the Energy Savings and Industrial Competitiveness Act,
introduced by our colleagues Senator Shaheen and Senator
Portman. This bill is very similar to S. 1000 as reported by
the committee in September 2011, with titles covering building
efficiency, commercial building efficiency finance, industrial
efficiency, and Federal agency energy efficiency.
The Energy Information Administration reports that the
building and industrial sectors of our economy currently
account for 72 percent of this country's energy usage. So
improving efficiency can play a major role in cutting costs for
our businesses and our consumers, making the economy more
competitive and reducing greenhouse gases and other emissions.
So we are looking forward to hearing from our witnesses
about these bills and how they will help contribute to a clean
energy future.
First, I want to recognize Senator Murkowski and tell her
what a pleasure it has been working with her on these hydro
issues especially. I think the two of us said some time ago
that these used to be the forgotten renewables, and you and I
are going to make sure that that is no longer the case. I just
appreciate our working on those issues.
[The prepared statement of Senator Wyden follows:]
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I am not big
into slogans other than my bumper sticker that is ``energy is
good.'' I think I am ready for another bumper sticker slogan
and that is ``hydro is back.'' I like that one. So I am all
over it and look forward to working with you on these
initiatives that I think are so important to us.
I have long been a hydropower proponent. I consider
hydropower to be our hardest working renewable resource, one
that often gets overlooked, as you have noted. But I do not
think that there is any question that our largest source of
renewable electricity is and must continue to be part of our
energy solution. So how do we make that happen?
I do think that what we are seeing today here in this
committee is just a perfect example of how we do move
hydropower through. We have got good, broad bipartisan and
bicameral support for the two hydropower measures that we have
before us today.
The Hydropower Improvement Act, which is my legislation to
advance conventional hydropower, has been cosponsored by you,
Mr. Chairman, which I appreciate, but also Senators Risch,
Senator Cantwell, Senator Udall, all members of the committee,
as well as Senators Begich, Bennet, Crapo, and Murray.
The companion bill, which Representative McMorris Rodgers
will speak to this morning, has already passed, and as you
note, Mr. Chairman, when you have a vote that is that
overwhelming, 422 to nothing, that gets your attention. It
certainly got our attention here on this side of the Congress,
and how we figure out ways to move it I think is going to be
important.
This legislation is supported by the National Hydropower
Association, American Rivers, a host of other organizations.
The other measures that you have mentioned, Mr. Chairman,
S. 306, sponsored by Senators Barrasso and Risch; H.R. 678 that
is sponsored by Representative Tipton--you already spoke to
that. But when we look to the support that we have from the
stakeholders for these various measures, we have got the
American Public Power Association, the Family Farm Alliance,
the Oregon Water Resources Congress, the Colorado River Energy
Distributors Association, I think all good measures of the
broad support that we have there.
As with hydropower, I continue to believe that efficiency
is part of the all-of-the-above energy plan. We need to be
doing more of it more often, and I credit the good work of
Senator Shaheen and Senator Portman in this area. Again, I
think when we are talking about efficiency, this is a bottom-
line issue, an area where it is really in our best interest to
find agreement, particularly as we deal with these very
difficult budgetary and fiscal constraints that we have. So the
work that Senators Portman and Shaheen have done with the
Energy Savings and Industrial Competitiveness Act is good.
Again, when you look to the supporters of this legislation,
some 200 different organizations, a wide range of efficiency
advocates and manufacturers, I know that both Senators have
been working very aggressively to garner that support, and I
think that that will hold them in good stead as we move this
legislation through.
Mr. Chairman, I am not sure which, whether it will be the
hydropower package or whether it will be the energy efficiency
package, but my prediction--and I usually do not make
predictions on legislation around this body, but that one of
these two measures will be signed by the President, and I would
like to be there with members of this committee as we recognize
the advancements that we are making in good areas as it relates
to efficiency and renewables with hydro. So I look forward to
that day, but it starts here.
The Chairman. Well said, Senator Murkowski, and I think you
and I are operating on the principle we are going to get both
of them signed.
Senator Murkowski. Absolutely.
The Chairman. Without turning this into a bouquet tossing
contest, Senator Portman is here and I just want to commend him
for the excellent work he has done. He and Senator Shaheen have
really been in the vanguard of looking to tap the potential of
energy efficiency, and we just look forward to working with you
and bulking up the energy efficiency cause to the greatest
extent we can and commend you for it.
Today we have the Honorable Cathy McMorris Rodgers who
comes from our part of the world, the Pacific Northwest. She is
the Republican architect of the bipartisan team that produced
these almost astounding votes in the House of Representatives
for important issues. Congresswoman, we welcome you today. We
will make your prepared remarks part of the record in their
entirety, and why do you not just go ahead with your comments?
Again, our commendations for the leadership.
STATEMENT OF HON. CATHY MCMORRIS RODGERS, U.S. REPRESENTATIVE
FROM WASHINGTON
Mrs. McMorris Rodgers. Thank you very much, Mr. Chairman. I
hope we can keep the momentum going in the Senate. I really
appreciate your leadership and thank you, Senator Wyden,
Senator Murkowski, for convening this hearing today to bring
attention to the important role that hydropower has played, but
also the potential that it has as a part of an energy package
moving forward.
I just wanted to make a brief statement.
I am eager to advance an all-of-the-above energy strategy
and, in doing so, have joined with my colleagues in a
bipartisan fashion in the House to make sure that our Nation's
largest, cleanest, most affordable, reliable, and renewable
energy source is included, and that is hydropower, and the
potential of hydropower is tremendous.
In my home State, Washington State, which I share with
Senator Cantwell, 75 percent of our electricity is coming from
clean, renewable energy. But that is not just the Pacific
Northwest, but the rest of the country can expand an energy
source that will not only lower energy cost, but create
thousands of jobs. We could double hydropower in this country
without building a new dam, simply by investing in new
technology. Only 3 percent of the dams actually produce
electricity, and we can create up to 700,000 jobs over the next
decade alone.
In central and eastern Washington, which I represent, the
Columbia and Snake River system through irrigation transformed
a dry, barren desert with lots of sagebrush into one of the
most productive agriculture regions in the world. The low cost
of hydropower brought tech companies like Google and Yahoo to
locate their data farms in central Washington and brought
manufacturing facilities like BMW to Moses Lake. Also, because
of advanced technology in new turbines and improved fish
ladders, we are seeing record salmon returns in the Pacific
Northwest.
Around 7 percent of our Nation's electricity and 75 percent
of our renewable energy comes from hydropower. Yet, the
regulatory approval process for hydropower development,
especially for smaller projects, can be unnecessarily slow,
costly, and cumbersome. That is why I joined with my friend,
Diana DeGette from Colorado, to introduce the Hydropower
Regulatory Efficiency Act, which you noted passed with a big
vote in the House earlier this year. Specifically, this bill is
going to streamline the permitting process for small hydropower
and conduit projects, reducing the burdens impeding development
and getting this low-cost power to communities faster. We need
to make the regulatory approval process for hydropower
development easier and less costly, and that is what this
legislation will do. I sometimes call it the 1040-EZ for
hydropower permitting.
By utilizing currently untapped resources, the United
States could double the amount of hydropower produced in this
country, and that I think is a tremendous asset that we have.
So from my perspective, I will do everything I can to help
unleash American ingenuity to increase hydropower production,
lower energy costs, and expand domestic energy production in an
affordable and cost-effective way.
I look forward to working with all of you in the Senate to
move this bill as quickly as possible to the floor and then to
the President's desk. Thank you again.
The Chairman. Congresswoman, thank you for an excellent
statement, and as a tax reformer, I love your analogy to the
1040-EZ of hydropower.
Let us see if any colleagues have questions. I do not. I
think you have said it all. Senator Murkowski, any colleagues
like to make comments?
Senator Murkowski. Do you think we can get 100 to nothing
on this side? If so, can you help us make that happen?
Mrs. McMorris Rodgers. With the Senators on this panel, I
have every confidence.
Senator Murkowski. OK. We will work with you on that. Thank
you.
The Chairman. Other Senators? Senator Cantwell.
Senator Cantwell. Mr. Chairman, I would just say that I so
appreciate the Congresswoman being here today to shed light on
how important this is to the House of Representatives and how
easy it is to get people's attention on this. Our former
colleague, Senator Craig, and I had worked on some reforms on
hydro relicensing which paid dividends in the end, and I think
that is what we are trying to do, to create the simplicity to
this process, get the questions answered but do so on the front
end instead of the back end in a legal process. So I so
appreciate your leadership on this issue in the House.
The Chairman. Senator Cantwell, as usual, is too logical
for Washington, DC. I thank you.
Any other Senator who would like to make a comment? OK.
Mrs. McMorris Rodgers. OK, thank you.
The Chairman. Senator Portman.
Senator Portman. Just really first to thank my former
colleague from the House for her leadership on so many issues,
including this one. We were just talking. We have not heard
much from our constituents on this, although on the Ohio River,
we have a number of locks and dams, as you know. In fact, we
have hydropower, and I think AMP is currently looking at about
6 additional hydropower facilities. I assume this would also
help on existing hydropower in places like Ohio.
Mrs. McMorris Rodgers. Yes.
Senator Portman. Thank you. I appreciate you coming today.
The Chairman. Congresswoman, thank you and we will excuse
you at this time.
Mrs. McMorris Rodgers. OK, thank you very much.
The Chairman. Now we have a panel of administration
witnesses: Mr. Jeff Wright, Director of the Office of Energy
Projects, the Federal Energy Regulatory Commission; Mr. Lowell
Pimley, Deputy Commissioner of Operations at the Bureau of
Reclamation at the Department of the Interior, and he is
accompanied by Mr. Kerry McCalman, Manager of Power Resources
at the Bureau of Reclamation. Dr. Kathleen Hogan, Deputy
Assistant Secretary for the Office of Energy Efficiency and
Renewable Energy at the Department of Energy.
So we welcome all of you, and let us begin with you, Mr.
Wright. We will make your prepared statement a part of the
record in its entirety, and if you could summarize your views
today, that would be very helpful.
STATEMENT OF JEFF C. WRIGHT, DIRECTOR, OFFICE OF ENERGY
PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION
Mr. Wright. Chairman Wyden, Ranking Member Murkowski, and
members of the committee, my name is Jeff Wright and I am the
Director of the Office of Energy Projects at the Federal Energy
Regulatory Commission. I appreciate the opportunity to appear
before you to discuss S. 545, the Hydropower Improvement Act of
2013, and H.R. 267, the Hydropower Regulatory Efficiency Act of
2013.
The commission regulates over 1,600 non-Federal hydropower
projects at over 2,500 dams pursuant to part 1 of the Federal
Power Act, or FPA. Together, these projects represent 54
gigawatts of hydropower capacity, more than half of all the
hydropower in the U.S. The FPA authorizes the commission to
issue licenses and exemptions for projects within its
jurisdiction. About 70 percent of the hydropower projects
regulated by the commission have an installed capacity
megawatts or less.
I will turn now to the draft legislation.
Section 5 of S. 545 and section 6 of H.R. 267 would require
the commission to investigate the feasibility of implementing a
2-year licensing process at existing non-power dams and for
closed loop pump storage projects.
I support the goal of an expedited licensing process. It is
commission staff's goal to act on all license applications as
quickly as possible, and the commission has established
processes that allow for great flexibility and efficiency. I am
not certain whether an additional licensing process is
necessary. We have been able to issue some licenses in a matter
of a few months where the project proponent had selected a site
wisely, stakeholders have agreed on information needs, and
State and Federal agencies performed their responsibilities
quickly. Moreover, the commission operates under significant
constraints imposed by the FPA and by other legislation
affecting the licensing process, the Clean Water Act, Coastal
Zone Management Act, Endangered Species Act, and the National
Historic Preservation Act among them. Without the ability to
waive sections of the FPA and other acts or to set enforceable
schedules in licensing proceedings, it is not clear that the
commission, under its existing authorities, can establish a
shortened process.
Section 6 of S. 545 and section 4 of H.R. 267 would
establish various measures to promote conduit hydropower
projects, which is consistent with commission policy and has
been a major focus of commission staff's efforts in the last
few years. These sections would amend section 30 of the FPA to
establish a procedure whereby qualified conduit projects with
an installed capacity of 5 megawatts or less would not be
required to be licensed.
I support this provision which would serve to increase the
amount of electric generation derived from conduits. This would
also allow the commission to grant conduit exemptions on
Federal lands and would permit the commission to issue conduit
exemptions for those projects with an installed capacity of up
to 40 megawatts for both non-municipal as well as municipal
applicants.
Section 7 of S. 545 and section 3 of H.R. 267 would amend
the Public Utility Regulatory Policies Act of 1978 to increase
the maximum capacity of a project which could be granted a
small hydropower exemption from 5,000 to 10,000 kilowatts. This
would promote development of small hydropower by allowing more
projects to qualify for this exemption, and I therefore support
this provision.
Section 8 of S. 545 and section 5 of H.R. 267 would amend
the FPA to authorize the commission to extend the term of a
preliminary permit issued under FPA section 5 once for up to 2
years. Commission staff has heard that developers are concerned
that the need for environmental studies can make it difficult
to complete a license application within the current maximum 3-
year term of a permit, with the result that a developer which
has invested substantial time and money studying a project may
face the possibility of losing its project, based on
competition from other entities, if it needs to seek a
subsequent permit. I therefore support the proposed FPA
amendment.
Section 9 of S. 545 and section 7 of H.R. 267 will require
the Department of Energy to study the flexibility and
reliability that pump storage facilities can provide any
opportunities and potential generation from conduits. While I
cannot speak for the Department of Energy, I support such
research.
In conclusion, there is a great deal of potential for the
development of additional hydropower projects throughout the
country, including small projects and marine and hydrokinetic
projects. Working within the authority given it by Congress,
the commission continues to adapt its existing flexible
procedures to facilitate the review and, where appropriate, the
approval of such projects. Commission staff remains committed
to exploring with all stakeholders every avenue for the
responsible development of our Nation's hydropower potential.
The legislation under consideration will assist in realizing
that potential.
That concludes my remarks. I would be pleased to answer any
questions you may have.
[The prepared statement of Mr. Wright follows:]
Prepared Statement of Jeff C. Wright, Director, Office of Energy
Projects, Federal Energy Regulatory Commission, on S. 545 and H.R. 267
Chairman Wyden, Ranking Member Murkowski, and Members of the
Committee: My name is Jeff Wright and I am the Director of the Office
of Energy Projects at the Federal Energy Regulatory Commission
(Commission or FERC). I appreciate the opportunity to appear before you
to discuss the following legislation: S. 545, ``Hydropower Improvement
Act of 2013'' and H.R. 267, ``Hydropower Regulatory Efficiency Act of
2013.'' As a member of the Commission's staff, the views I express in
this testimony are my own, and not those of the Commission or of any
individual Commissioner.
i. background
The Commission regulates over 1,600 hydropower projects at over
2,500 dams pursuant to Part I of the Federal Power Act (FPA). Together,
these projects represent 54 gigawatts of hydropower capacity, more than
half of all the hydropower in the United States. Hydropower is an
essential part of the Nation's energy mix and offers the benefits of an
emission-free, renewable, domestic energy source with public and
private capacity together totaling about seven percent of U.S.
electricity generation.
Under the FPA, non-federal hydropower projects must be licensed by
the Commission if they: (1) are located on a navigable waterway; (2)
occupy federal lands; (3) use surplus water from a federal dam; or (4)
are located on non-navigable waters over which Congress has
jurisdiction under the Commerce Clause, involve post-1935 construction,
and affect interstate or foreign commerce.
The FPA authorizes the Commission to issue either licenses or
exemptions for projects within its jurisdiction. Licenses are generally
issued for terms of between 30 and 50 years, are renewable, and carry
with them the right to exercise federal eminent domain to obtain
property necessary for the construction, operation, and maintenance of
a project. Exemptions are perpetual, and thus do not need to be
renewed, but do not permit the use of eminent domain.
Congress has established two types of exemptions. First, section 30
of the FPA allows the Commission to issue exemptions for projects that
use, for generation, the hydroelectric potential of manmade conduits
that are operated for the distribution of water for agricultural,
municipal, or industrial consumption, and not primarily for the
generation of electricity. Conduit projects must be located on non-
federal lands, and have a maximum capacity of 15 megawatts (40
megawatts if the exemptee is a state or local government entity).
Second, in section 405(d) of the Public Utility Regulatory Policies
Act, Congress authorized the Commission to grant exemptions for small
hydroelectric power projects having an installed capacity of 5,000
kilowatts or less. To qualify for this type of exemption, a project
must be located at an existing dam that does not require construction
or the enlargement of an impoundment, or must use the hydropower
potential of a natural water feature, such as a waterfall. Both types
of exemptions are subject to mandatory fish and wildlife conditions
provided by federal and state resource agencies.
The Commission has established three licensing processes, with the
intent of allowing parties to select the process that is best suited to
individual proceedings. The integrated licensing process (ILP)
frontloads issue identification and environmental study to the period
before an application is filed, and is thus well-suited to complex
cases with substantial issues. The alternative licensing process (ALP)
allows participants significant flexibility to tailor licensing
procedures in a manner that may work well for unique cases. The
traditional licensing process (TLP), in which environmental and other
work can occur after the application is filed, appears to work best for
less controversial matters. The TLP may be the process that is best-
suited for many simple cases involving exemptions or small, low impact
licenses. Commission staff has also developed a pilot licensing process
for marine and hydrokinetic projects in which, with the assistance of
federal and state resource agencies, a project can be licensed in as
little as six months.
It is extremely important to note that project developers and other
stakeholders, not the Commission, in most instances play the leading
role in determining project success and whether the regulatory process
will be short or long, simple or complex. The first key issue is site
selection and proposed project operation. For example, the processing
of applications tends to be expedited when applicants propose projects
that: (1) are located at an existing dam where hydropower facilities do
not currently exist, (2) would result in little change to water flow
and use, (3) are unlikely to affect threatened and endangered species
and are unlikely to need fish passage facilities, and (4) involve lands
and facilities that are already owned by the applicant. To the extent
that a proposed project, even one of small size, raises concerns about
water use and other environmental issues, it may be difficult for the
Commission to quickly process an application.
Another, and related, factor is the extent to which project
developers reach out to affected stakeholders. If a developer contacts
concerned citizens, local, state, and federal agencies, Indian tribes,
and environmental organizations, and works with them to develop
consensus as to what information is needed to understand the impacts of
a project and what environmental measures may be appropriate, and to
develop support for the project, the application and review process is
likely to be simpler and quicker. Where a project comes as a surprise
to affected entities or where a developer does not respond to expressed
concerns, the Commission's job becomes much more difficult.
A final, and again related, matter is the development of the full
record that the Commission needs to act on an application. A potential
applicant needs to work with Commission staff and with federal and
state resource agencies and other stakeholders to determine what
information is needed to support an application, and to provide the
Commission with a complete application. Where Commission staff or other
stakeholders must ask an applicant to provide information that is
missing from an application, the regulatory process slows down.
The other entities with roles in the licensing and exemption
process regarding small hydropower projects are also key to its
success. The quickest, most efficient process can be achieved only
where federal and state agencies, as well as other stakeholders, devote
the resources early on to help project review move ahead, and where
they display the flexibility to look at the merits of individual
projects and the willingness to shorten the process in appropriate
cases. Commission staff is dedicated to making the regulatory process
as short and cost-effective as possible. We can only do that where
applicants, resource agencies, and other stakeholders serve as willing
partners in the process.
ii. commission efforts regarding small and innovative projects
The majority of the hydropower projects regulated by the Commission
are small projects, with about 70 percent having an installed capacity
of 5 megawatts (MW) or less. In recent years, the Commission has seen a
greatly increased interest in small hydropower projects at existing
dams, in innovative marine and hydrokinetic projects, and in pumped
storage projects, particularly closed-loop pumped storage, which does
not involve regular water withdrawals from rivers or other water
sources. The Commission has responded by implementing a number of
measures to facilitate efficient review of project proposals. In 2007,
in order to provide personalized, responsive service to entities
seeking to develop small hydropower projects, Commission staff
established a dedicated phone line and email address for inquiries on
small hydropower, developed a brochure to provide guidance to potential
developers of small, low impact hydropower projects, and put these
resources and a list of frequently-asked questions on the Commission's
website.
In light of the continued growing interest in such development, the
Commission held a technical conference on December 2, 2009, at its
Washington, D.C. headquarters to explore issues related to licensing,
and exempting from licensing, small non-federal hydropower projects in
the U.S. The technical conference generated discussion on
recommendations that could improve the process for authorizing small
hydropower projects. In addition to insights received from the
panelists and attendees at the technical conference, written comments
were solicited and over 40 comment letters were received from industry
representatives; federal, state, and local agencies; private citizens;
and non-governmental organizations. At the Commission's April 15, 2010
meeting, staff reported on the conference and the comments received,
and presented an action plan to assist and expedite the review of small
hydropower proposals. The action plan adopted the following immediate
changes: (1) adding new web-based resources to the Commission's website
(www.ferc.gov) to make it easier for applicants to understand and
complete the licensing process; (2) updating or creating Memoranda of
Understanding (MOUs) with other agencies to improve coordination; (3)
continuing to maintain our small hydropower contact list on our web
site to answer applicant questions; and (4) educating potential small
hydropower developers through a new education and outreach program. The
Commission has, under its small hydro initiative, held numerous
outreach meetings with small hydropower developers and interested
stakeholders, and implemented web based tools, such as application
templates and application checklists, which potential applicants can
use to prepare their applications. The small hydro website further
contains guidance and sample letters that applicants can use to obtain
waivers from fish and wildlife agencies for part of the prefiling
consultation process. The Commission staff has also relaxed some of the
standards, under Section 4.39 of its regulations, for exhibits and
drawings for exemption applications. For those applicants that have
filed complete and adequate applications, and for which the Commission
has determined that impacts are minimal, the Commission has reduced the
public notice period from 60 days to 30 days and the reply period from
45 days to 15 days. A number of conduit and small hydro exemptions have
been approved in as short as two months and original licenses in as
short as 6 months from the date that an application has been deemed
complete.
Since the April 15, 2010 Commission meeting, we have updated our
MOU with the U.S. Army Corps of Engineers (March 2011) and entered into
an MOU with the U.S. Coast Guard (March 2013); launched a small hydro
program website (August 2010); participated in small hydro workshops
across the U.S.; conducted webinars on our small hydro website
(November 2010, December 2010, June 2011, and January 2012); and
updated our small hydro brochure. Upcoming outreach efforts will
include participating on a small hydro panel at the National Hydropower
Association's annual conference in Washington, D.C., working with the
state of Colorado on providing state guidance documents on our small
hydro licensing process; and updating our small hydro licensing web
site in response to user input. As a result of these efforts,
consultation has improved, applications are more complete, and
application processing times have been reduced. With this background, I
will turn to the draft legislation.
iii. hydropower improvement act of 2013 (s. 545) and hydropower
regulatory efficiency act of 2013 (h.r. 267)
The Hydropower Improvement Act of 2013 and the Hydropower
Regulatory Efficiency Act of 2013 have the commendable goal of
increasing hydropower production in the United States. I strongly
support this goal, and offer comments on specific sections of the draft
legislation.
A. Section 5 of S. 545 and Section 6 of H.R. 267
Section 5 of S. 545 and Section 6 of H.R. 267 would require the
Commission to investigate the feasibility of implementing a two-year
licensing process, in particular, with respect to hydropower
development at existing, non-powered dams, and for closed-loop pumped
storage projects.
I support the goal of an expedited licensing process. Indeed, as I
have discussed, it is Commission staff's goal to act on all license
applications as quickly as possible, and the Commission has established
processes that allow for great flexibility and efficiency. I am thus
not certain whether an additional licensing process is necessary.
During the last few years, we have been able to issue some licenses in
a matter of a few months, where the project proponent had selected a
site wisely, stakeholders had agreed on information needs, and state
and federal agencies performed their responsibilities quickly.
Moreover, the Commission operates under significant constraints imposed
by the FPA, and by other legislation affecting the licensing process--
the Clean Water Act, Coastal Zone Management Act, Endangered Species
Act, and National Historic Preservation Act among them. In the absence
of the ability to waive sections of the FPA and other acts, or to set
enforceable schedules in licensing proceedings, it is not clear that
the Commission, under its existing authorities, can mandate a shortened
process.
B. Section 6 of S. 545 and Section 4 of H.R. 267
Section 6 of S. 545 and Section 4 of H.R. 267 would establish
various measures to promote conduit hydropower projects. This goal is
consistent with Commission policy and has been a major focus of
Commission staff's effort in the last few years. These sections would
amend section 30 of the FPA to establish a procedure whereby conduit
projects with an installed capacity of 5 MW or less would not be
required to be licensed, provided the applicant makes a showing that
the project qualifies as a conduit project. These sections would also
allow the Commission to grant conduit exemptions on federal lands and
would permit the Commission to issue conduit exemptions for those
projects with an installed capacity of up to 40 MW. This proposed upper
limit would apply to non-municipal, as well as municipal applicants. I
support these provisions, which should serve to increase the amount of
electric generation derived from conduits.
C. Section 7 of S. 545 and Section 3 of H.R. 267
Section 7 of S. 545 and Section 3 of H.R. 267 would amend Section
405(d) of the Public Utility Regulatory Policies Act of 1978 to
increase the installed capacity of a project to which the Commission
could grant a small hydropower exemption from 5,000 to 10,000
kilowatts. This change would promote the development of small
hydropower at the nation's existing non-powered dams by allowing a
larger pool of small, low-impact projects to qualify for small
hydropower exemptions. Such exemptions are attractive to developers in
that the exemptions are perpetual, and thus the developer need not
expend the cost and effort to renew the authorization as is the case
with licenses. I, therefore, support this provision.
D. Section 8 of S. 545 and Section 5 of H.R. 267
Section 8 of S. 545 and Section 5 of H.R. 267 would amend the FPA
to authorize the Commission to extend the term of a preliminary permit
issued under FPA Section 5 once for up to two years. Preliminary
permits grant the permittee a ``first-to-file'' preference with respect
to license applications for projects being studied under a permit.
Commission staff has heard anecdotally that developers are concerned
that the need for environmental studies in some instances makes it
difficult to complete a license application within the current maximum
three-year term of a permit, with the result that a developer which has
invested substantial time and money studying a project may face the
possibility of losing its project based on competition from other
entities--particular those with statutorily-granted municipal
preference--if it needs to seek a subsequent permit. I therefore
support the proposed FPA amendment, which could ameliorate this
problem. It might be worth considering, as an alternative, authorizing
the Commission to issue permits for terms of up to five years, which
could avoid the need for developers to go through the process of
seeking an extension.
E. Section 9 of S. 545 and Section 7 of H.R. 267
Section 9 of S. 545 and Section 7 of H.R. 267 would require the
Department of Energy to study the flexibility and reliability that
pumped storage facilities can provide and the opportunities and
potential generation from conduits. While I cannot speak for the
Department of Energy, I support this research.
iv. conclusion
There is a great deal of potential for the development of
additional hydropower projects throughout the country, including small
projects and marine and hydrokinetic projects. Working within the
authority given it by Congress, the Commission continues to adapt its
existing, flexible procedures to facilitate the review and, where
appropriate, the approval of such projects. Commission staff remains
committed to exploring with project developers, its sister federal
agencies, Indian tribes, the states, local government, and other
stakeholders every avenue for the responsible development of our
nation's hydropower potential. The legislation under consideration
will, as I have testified, assist in realizing that potential.
This concludes my remarks. I would be pleased to answer any
questions you may have.
The Chairman. Mr. Wright, thank you.
We have an important vote in the Finance Committee right
now. We are fortunate to have Senator Franken to chair, and I
should be back quite shortly. Senator Murkowski, I believe,
will also be able to stay. So I apologize to my colleagues, and
I will be right back and thanks to Senator Franken.
Senator Franken [presiding]. I guess we will turn to Mr.
Pimley.
STATEMENT OF LOWELL PIMLEY, DEPUTY COMMISSIONER OF OPERATIONS,
BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR; ACCOMPANIED
BY KERRY MCCALMAN, MANAGER, POWER RESOURCES OFFICE, BUREAU OF
RECLAMATION, DEPARTMENT OF THE INTERIOR
Mr. Pimley. Thank you. Chairman Wyden, Senator Franken,
Ranking Member Murkowski, members of the committee, I am Lowell
Pimley. I am the Deputy Commissioner for Operations for the
Bureau of Reclamation. I am accompanied today by Kerry
McCalman, Reclamation's senior advisor for hydropower who may
help in responding to any technical questions the committee may
have today.
Thank you for the opportunity to testify on the two bills
before the committee today. My written statement on S. 306 and
H.R. 678 have been submitted for the record.
The Department has testified on a prior version of S. 306
and H.R. 678 and continues to support the goals of these bills
which aim to increase generation of hydropower in existing
canals and conduits. We believe these bills will provide
greater certainty and administrative streamlining of these
types of projects.
Both S. 306 and H.R. 678 will clarify that Reclamation is
responsible for authorizing conduit hydropower development on
all Reclamation facilities through the Lease of Power
Privilege, or LOPP, contracts. The Department supports this
jurisdictional clarification in the interest of expediting the
authorization process.
Section 2 of S. 306 and H.R. 678 would also require that
Reclamation offer preference in the award of LOPP's to
irrigation districts or water user associations with which
Reclamation has an exiting contract for operations and
maintenance. We agree with this concept. In September 2012, we
incorporated this approach into our revised Lease of Power
Privilege directive and standard.
Additionally section 2 of S. 306 would provide that NEPA
``shall not apply to small conduit hydropower development,
excluding siting of associated transmission on Federal lands.''
Reclamation's newly published Lease of Power Privilege
procedures allow for categorical exclusion under NEPA to be
applied to low-impact hydropower projects.
The Department understands the importance of timely
environmental review and believes development of low-impact
hydropower can be efficiently analyzed using these existing
review processes without unduly delaying project development.
H.R. 678, as amended by the House of Representatives,
directs Reclamation to apply its categorical exclusion process
under NEPA to small conduit hydropower development, excluding
siting of associated transmission facilities on Federal lands.
If enacted, Reclamation would interpret the House-passed
language as endorsing our current directive and standard to
potentially apply categorical exclusions, provided no
extraordinary circumstances exist, pursuant to NEPA.
Reclamation cannot guarantee categorical exclusions will apply
on every small hydropower project but will use the processes
outlined in our directive and standard to determine whether a
closer review under NEPA is warranted. That said, under our
current procedures, Reclamation anticipates that the majority
of hydropower development on Reclamation's facilities will
qualify for categorical exclusion.
Section 2 of S. 306 specifies that Reclamation's Power
Resources Office will be the lead office of small conduit
hydropower development. Given their project-specific knowledge,
Reclamation's regional or area offices are actually better
positioned to be the first point of contact for developers with
our Power Resources Office being called in as needed. For that
reason, the Department is pleased to support the House-amended
language in H.R. 678 specifying that the Power Resources Office
will be the lead office for small conduit hydropower policy and
procedure-setting activities.
Additionally, S. 306 and H.R. 678 would amend section 9(c)
of the Reclamation Project Act of 1939. Several of the
definitions in S. 306, as drafted, would affect other
authorities in the 1939 act, and we recommend technical
improvements which are detailed in my written testimony. The
Department appreciates and supports the language in H.R. 678,
as amended in the House, that reflects those technical
recommendations.
Finally, H.R. 678 provides that nothing in this subsection
shall alter or affect any existing preliminary permit, license,
or exemption issued by FERC under the Federal Power Act or any
project for which an application has been filed with FERC. This
language allows for existing and pending FERC licenses to
remain within FERC's licensing process. The Department welcomes
and supports this clarification.
Reclamation will continue to review and assess potential
new hydropower projects that provide a high economic return for
the Nation, are energy efficient, and can be accomplished in
accordance with protections for stakeholders and the
environment. With recommendations detailed in my written
testimony, the Department believes these bills will go a long
way toward meeting the administration's goals of developing
clean, reliable, cost-effective, and sustainable hydropower in
the United States.
In closing, I would like to offer my commitment to work
with you and your staff to further develop the points in my
testimony, and I would be happy to answer any questions at the
appropriate time. Thank you.
[The prepared statement of Mr. Pimley follows:]
Prepared Statement of Lowell Pimley, Deputy Commissioner of Operations,
Bureau of Reclamation, Department of the Interior, on S. 306 and H.R.
678
Chairman Wyden, members of the Committee, I am Lowell Pimley,
Deputy Commissioner of Operations at the Bureau of Reclamation
(Reclamation). I am pleased to provide the views of the Department of
the Interior (Department) on S. 306 and HR 678, the Bureau of
Reclamation Small Conduit Hydropower Development and Rural Jobs Act.
The Department supports the goals of S. 306 and HR 678, which aim to
increase the generation of clean, renewable hydroelectric power in
existing canals and conduits, and believes these bills will provide
greater certainty and administrative streamlining of these types of
projects. As noted in previous hearings, the Department has an
aggressive sustainable hydropower agenda, which we continue to
implement under existing authorities. My testimony today will summarize
the areas where the Administration supports the objectives of S. 306
and HR 678, as well as detail the areas in the bills where we believe
improvements could be made, recognizing that the House of
Representatives amended HR 678 to address many of the Department's
concerns.
Reclamation is the second largest producer of hydropower in the
country. A 2010 Hydropower Memorandum of Understanding (2010 MOU)\1\
signed by the Secretaries of Energy and the Interior, and the Assistant
Secretary of the Army (Civil Works) provides a strategy to facilitate
the development of sustainable hydropower on federal facilities. Before
I share the Department's views on S. 306 and HR 678, I want to
highlight some of the activities underway at the Department to develop
additional renewable hydropower capacity. In March 2011, Secretary
Salazar and the U.S. Department of Energy Secretary Steven Chu
announced nearly $17 million in funding over three years for research
and development projects to advance hydropower technology. The funding
included ten projects that will receive a total of $7.3 million to
research, develop, and test low-head, small hydropower technologies
that can be deployed at existing non-powered dams or constructed
waterways. The funding will further the Obama Administration's goal of
meeting 80 percent of our electricity needs from clean energy sources
by 2035.
---------------------------------------------------------------------------
\1\ http://www.usbr.gov/power/SignedHydropowerMOU.pdf, 2010
---------------------------------------------------------------------------
In March 2011, the Department released the results of an internal
study, the Hydropower Resource Assessment at Existing Reclamation
Facilities, that estimated the Department could generate up to one
million megawatt hours of electricity annually and create jobs by
addressing hydropower capacity at 70 of its existing facilities. In
March 2012, Reclamation completed the second phase of its investigation
of hydropower development, Site Inventory and Hydropower Energy
Assessment of Reclamation Owned Conduits, as referenced in the 2010
MOU. While the first phase, completed in 2011, focused primarily on
Reclamation dams, the second phase focused on constructed Reclamation
waterways such as canals and conduits, and estimated the Department
could generate over 365,000 megawatt hours of electricity annually by
addressing hydropower capacity on 373 of its existing canals. In total,
the two studies revealed that an additional 1.5 million megawatt-hours
of renewable energy could be generated through hydropower at existing
Reclamation sites.
Reclamation worked diligently with our stakeholders and the
hydropower industry to improve our Lease of Power Privilege (LOPP)
processes, and this collaboration culminated in the release of an
updated and improved LOPP directive and standard in September 2012.
These new procedures better define roles, timelines and
responsibilities that will allow us to better support and encourage
sustainable hydropower development at Reclamation facilities.
In summary, both S. 306 and HR 678 would do two things: 1) provide
a blanket authorization for the installation of small hydropower units
on all Reclamation-owned canals and conduits and 2) require that
Reclamation offer preference to water user organizations for the
development of canal/conduit hydropower under a LOPP. Additionally, S.
306 would exempt small canal/conduit hydropower projects below 5 MW
from the requirements of the National Environmental Policy Act (NEPA),
while HR 678 directs Reclamation to apply its categorical exclusion
process under NEPA to small conduit hydropower development. Finally, S.
306 designates Reclamation's Power Resources Office (PRO) as the lead
point of contact for requests to develop canal/conduit hydropower under
a LOPP. Per the Department's recommendation, HR 678 was amended to
direct Reclamation's PRO as the lead office for policy and procedure
setting activities.
Section 2 of S. 306 and HR 678 would clarify that Reclamation is
responsible for authorizing conduit hydropower development on
Reclamation-owned facilities through LOPP contracts. As background,
Reclamation is authorized by existing law to issue LOPP contracts that
utilize Reclamation-owned facilities for private hydropower development
under Section 5 of the Townsites and Power Development Act of 1906, 43
U.S.C. Sec. 522, and Section 9(c) of the Reclamation Project Act of
1939, 43 U.S.C. Sec. 485h(c). Statutes that are specific to individual
Reclamation projects may also apply. Similar to the LOPP process, the
Federal Energy Regulatory Commission (FERC) may also issue licenses for
hydropower development under the authority of the Federal Power Act, 16
U.S.C. Sec. 791 et seq. To resolve potential confusion over whether a
Reclamation LOPP contract or a FERC license should govern hydropower
development at Reclamation facilities, Reclamation and FERC entered
into agreements in 1981 and 1992 to address hydropower development. In
particular, a 1992 memorandum of understanding between Reclamation and
FERC (1992 MOU)\2\ established a process to resolve questions of
jurisdiction over hydropower development at Reclamation facilities.
Reclamation and FERC continue to work together to improve that process
and make the process more efficient.
---------------------------------------------------------------------------
\2\ The 1992 MOU is available in the Federal Register at: 58 Fed.
Reg. 3269 (Jan. 8, 1993).
---------------------------------------------------------------------------
Section 2 of S. 306 and HR 678 would specifically authorize
Reclamation to develop or enter into LOPP contracts for the development
of new hydropower on conduits or canals on Reclamation-owned projects.
This language would streamline the issuance of LOPP contracts by
simplifying the Reclamation-FERC jurisdictional consultation that was
established in the 1992 MOU. This language also could provide
Reclamation with an opportunity to discuss programmatically resolving
jurisdiction over hydropower development on Reclamation conduits with
FERC, thus creating the potential to eliminate case-by-case
jurisdictional consultations for development on Reclamation conduits.
Section 2 of S. 306 and HR 678 would also require that Reclamation
offer preference in the award of LOPPs to ``irrigation districts or
water users associations'' with which Reclamation has an existing
contract for operations and maintenance (O&M) of that project or
project feature. While Reclamation already provided preference to
existing irrigation districts and water user associations pursuant to
Section 9(c) of the Reclamation Projects Act of 1939 we agree that
these irrigation districts and water users currently operating and
maintaining Reclamation transferred works should get additional
favorability. In September 2012 we incorporated this concept into our
revised LOPP directive and standard. Reclamation would be happy to work
with the sponsors of the bills and the Committees to resolve any
concerns regarding preference.
Section 2 of S. 306 would provide that NEPA ``shall not apply to
small conduit hydropower development, excluding siting of associated
transmission on Federal lands[.]'' The Department opposes a waiver of
NEPA. Furthermore, this language is in contrast to the existing
provision in Section 30 of the Federal Power Act (16 U.S.C. 823a) that
allows FERC to approve an application to develop hydropower within
conduits located on non-federal lands under certain conditions.
Accordingly, as provided in FERC's regulations at 18 CFR Sec.
380.4(a)(14), FERC is not required to prepare an environmental
assessment or environmental impact statement for certain conduit
hydropower projects that meet the statutory and regulatory criteria and
do not have the potential for significant environmental impacts.
The Department understands the intent of S. 306 to be that conduits
and canals are existing, man-made structures where environmental
impacts associated with construction have already occurred and/or been
mitigated. However, the Department's view is that low-impact
hydropower, particularly in conduits and canals, can be efficiently
developed by utilizing existing environmental review provisions that
will not unduly delay project development and ensure environmental
health and safety. Environmental analysis for many LOPP contracts has,
for example, been addressed through environmental assessments rather
than environmental impact statements. Reclamation's newly published
LOPP procedures also allow for an existing categorical exclusion under
NEPA to be applied to low-impact hydropower projects where low impact
is defined by their impact to project operations as opposed to the size
of the project. Reclamation believes that low-impact hydropower
developed in conduits or canals may be appropriately analyzed under the
same categorical exclusion procedures that are documented in the
Departmental Manual at 516 DM 14.5(C)(3) and (D)(4).
HR 678, as amended by the House of Representatives, directs
Reclamation to ``apply its categorical exclusion process under the
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) to
small conduit hydropower development under this subsection, excluding
siting of associated transmission facilities on Federal lands.'' The
Department recognizes the intent of HR 678 to encourage the use of the
categorical exclusion procedures that are allowed for in its LOPP
directives and standards and documented in the Departmental Manual. If
enacted, Reclamation would interpret this language as endorsing its
current directive and standard to potentially apply categorical
exclusions, provided that no extraordinary circumstances exist,
pursuant to 40 C.F.R. Sec. 1508.4. Under Section 2 of HR 678,
Reclamation does not guarantee that categorical exclusions will apply
on every small hydropower project. Reclamation believes it should
preserve its discretion to determine whether a closer review under NEPA
is appropriate.
The Department believes that environmental protections should
continue to apply in the context of new construction undertaken on
federal lands, and will continue to apply NEPA through the use of
categorical exclusions or environmental assessments. We understand the
value and importance of expedient environmental review and believe
development of hydropower within Reclamation's existing conduits and
canals can be efficiently analyzed utilizing these existing review
processes.
I would also like to address concerns raised by language in Section
2 of S. 306 specifying that ``the Power Resources Office of the Bureau
of Reclamation shall be the lead office of small conduit hydropower
activities conducted under this subsection.'' The Department
understands the bill sponsor's desire to simplify points of contact for
entities seeking to develop hydropower. However, in practice, project-
specific expertise concerning Reclamation facilities resides first at
the field level where ownership responsibility for the specific
infrastructure resides. It is preferable for developers to approach the
appropriate Reclamation regional or area office with proposals to
develop conduit hydropower, and contact the PRO as needed. There is a
robust channel of communication between the PRO, other Denver Offices,
and Reclamation regional and field offices that allows for successful
implementation of a LOPP agreement. Reclamation organizes its workforce
as appropriate to maximize the efficiency and expertise of personnel.
For these reasons, the Department is pleased to support the House
amended language in HR 678 specifying that ``the Power Resources Office
of the Bureau of Reclamation shall be the lead office of small conduit
hydropower policy and procedure-setting activities conducted under this
subsection.''.
S. 306 and HR 678 would amend 9(c) of the Reclamation Project Act
of 1939, which in addition to providing LOPP authority, authorizes the
Secretary to enter into contracts for municipal water supply and
miscellaneous purposes. Several of the definitions in S. 306 as drafted
would affect the other authorities in the 1939 Act. In particular, the
proposed definition of ``transferred work'' is too narrow to refer to
all works affected by subsection 9(c) of the 1939 Act, since that
subsection authorizes contracts involving works other than conduits.
Either the definition would need to be broadened to include all
affected works, or the term defined narrowed from ``transferred work''
to ``transferred conduit.'' Also, the existing 1939 Act has a
definitions section. Any definitions that are of general application
should be included in the existing definitions section, rather than in
subsection 9(c). Definitions that apply solely to conduit hydropower
need to do so explicitly, to avoid misapplication or confusion. The
Department would be happy to work with the Committee on S. 306 to make
these technical changes to the language of the proposed definitions and
their placement within the existing 1939 Act. The Department
appreciates and supports the language in HR 678 that narrows the terms
defined as recommended above.
As referenced above, Reclamation has procedures in place through
the LOPP process for the sites where Reclamation has the authority to
develop hydropower. In September 2012 we released an updated LOPP
Directive and Standard that improved our processes, especially for
conduits and canals, and incorporated the concept of additional
favorability for irrigation districts and water user associations with
O&M responsibility on Reclamation projects.
Finally, HR 678 provides that ``nothing in this subsection shall
alter or affect any existing preliminary permit, license, or exemption
issued by the Federal Energy Regulatory Commission under Part I of the
Federal Power Act (16 U.S.C. 792, et seq.) or any project for which an
application has been filed with the Federal Energy Regulatory
Commission as of the date of the enactment of the Bureau of Reclamation
Small Conduit Hydropower Development and Rural Jobs Act.'' This
language allows for existing and pending FERC licenses to remain within
FERC's jurisdiction, rather than be redirected into Reclamation's LOPP
process.
In conclusion, as stated at previous hydropower hearings before
this committee, Reclamation will continue to review and assess
potential new hydropower projects that provide a high economic return
for the nation, are energy efficient, and can be accomplished in
accordance with protections for fish and wildlife, the environment, or
recreation. As the nation's second largest hydropower producer,
Reclamation strongly believes in the past, present and bright future of
this important electricity resource. With these recommended revisions,
S. 306 and HR 678 will go a long way towards meeting the
Administration's goals of developing clean, reliable, cost-effective,
and sustainable hydropower in the United States.
Thank you for the opportunity to discuss S. 306 and HR 678. This
concludes my written statement, and I am pleased to answer questions at
the appropriate time.
Senator Franken. Thank you, Mr. Pimley. Mr. McCalman, thank
you for being here to respond to questions that the panel has.
But we will go to Dr. Hogan for her testimony.
Dr. Hogan.
STATEMENT OF KATHLEEN HOGAN, DEPUTY ASSISTANT SECRETARY FOR
ENERGY EFFICIENCY, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE
ENERGY, DEPARTMENT OF ENERGY
Ms. Hogan. Thank you. Chairman Wyden, Senator Franken,
Ranking Member Murkowski, and members of the committee, thank
you for inviting me to testify today on behalf of the
Department of Energy regarding energy efficiency.
We all know energy efficiency is a large, untapped resource
in the United States, which offers many benefits, billions in
consumer savings, improved competitiveness, more domestic jobs,
greater reliability of our energy systems, reduced reliance on
foreign oil, and reduced air pollution. We are making
significant progress on energy efficiency and realizing many of
those benefits. DOE's energy efficiency portfolio is making
important contributions, but there is more that we can do
through high-impact, leveraged efforts to catalyze more of
these benefits.
This year's State of the Union Address included a goal to
cut the energy wasted by our homes and businesses by half over
the next 20 years and to double our energy productivity. It
included a new partnership with the States on energy efficiency
and grid modernization called Race to the Top, and the
President's fiscal year 2014 budget requests additional funding
for energy efficiency and clean energy programs, including Race
to the Top.
So we thank you for your leadership on S. 761, the Energy
Savings and Industrial Competitiveness Act of 2013, and look
forward to working with you on it on the additional things we
can do with energy efficiency.
While the administration is still reviewing the bill and
does not have a specific position at this time, we clearly
support the objectives of the bill. I would like to highlight
some of the areas where we see greater opportunities for energy
savings, particularly ones that relate to S. 761.
We can just look at our homes and buildings where they
consume 40 percent of U.S. energy at a cost of $400 billion a
year and a cost that continues to grow in this country. Here,
DOE-catalyzed innovation is yielding new lighting, heating and
cooling, windows, building envelope, and other technologies,
many offering 50 percent savings over current ones. We are
showing how to design and construct whole new buildings that
put all the pieces together with savings of 50 percent or more.
Building codes help put low-cost energy saving measures in
place during the construction and major renovations of these
buildings and provide savings over the very long lives that our
buildings have. DOE has a longstanding program assisting State
and local governments with adoption and implementation of
building codes for both residential and commercial buildings,
and we know that there are many opportunities for greater
savings here.
We also know that lack of qualified professionals is a
frequently cited issue by home and building owners wanting to
upgrade their buildings. Here DOE is helping to improve the
U.S. Energy efficiency work force by leading multi-stakeholder
efforts to define quality work, establish accreditation
requirements for training programs, and establish certification
requirements for professionals. We are working with GSA on
programs for the Federal work force for the people that are
responsible for energy use in Federal buildings, and we are
engaged in a pilot effort with NIST on building tune-up
trainings. Again, there is much more work that we can do here.
We also know that limited access to financing is a
frequently cited issue, and improving access to financing is
one of the objectives of the DOE's Better Buildings Challenge
effort through which we have partnered with more than a dozen
financial organizations that have put on the table $2 billion
in financing for commercial building improvements, half of
which have been executed. Clearly $2 billion is again just the
beginning of what we need to do in terms of access to
financing, and we continue to work with State and local
governments here on best practices with regard to any number of
finance mechanisms.
Improving industrial energy efficiency and competitiveness
is another priority across the energy-intensive, the less
intensive, the large, small, and medium firms. Here DOE is
advancing next generation materials and processes working with
more than 100 organizations through their Better Plants
commitments to improve their energy intensity by 25 percent or
more, supporting industrial assessment centers across the
country, and participating in the development of new
international standards for energy management and its related
protocols. Again, there is clearly a lot more work that we can
do here.
Our minimum energy conservation standards are providing
tens of billions of dollars in energy savings across all of
these sectors. Just this month, the Department issued a final
standard for distribution transformers which will go into
effect in 2016 providing billions in savings for commercial and
industrial entities through this one area alone. So again, many
more savings that we can achieve.
We also continue our work across the Federal Government to
help the Federal Government lead by example and achieve large
energy savings, water savings, and to meet our renewable energy
goals. Energy savings performance contracts have been a very
important tool. The Federal Government remains on target to
meet the President's goal to implement $2 billion in
performance contracts by December 2013, and again, there is
just a lot more opportunity for the Federal Government with
performance-based contracts. We also know there is a lot of
opportunity for us to continue to do work with data centers and
the use of computers and power management.
So in summary, I will just say that energy efficiency is
the cornerstone of a more secure, resilient, and competitive
energy economy, and we look forward to seeing what we can do
working with you together.
Thank you again for the opportunity to be here today, and I
am happy to answer questions.
[The prepared statement of Ms. Hogan follows:]
Prepared Statement of Kathleen Hogan, Deputy Assistant Secretary for
Energy Efficiency, Office of Energy Efficiency and Renewable Energy,
Department of Energy
Chairman Wyden, Ranking Member Murkowski, and Members of the
Committee: thank you for inviting me to testify today on behalf of the
Department of Energy (DOE) regarding energy efficiency.
The Energy Savings and Industrial Competitiveness Act of 2013
outlines new provisions for building codes, financing building
upgrades, industrial energy efficiency, and efficiency of Federal
buildings among other areas. The legislation would increase DOE's role
in providing technical assistance to building code bodies and would
expand the type of support that DOE provides to States. It would also
establish DOE-administered rebate programs for more energy efficient
electric motors and transformers.
The Administration is still reviewing the Energy Savings and
Industrial Competitiveness Act of 2013 (S. 761) and does not have a
position on the bill at this time. The Administration does, however,
support the objectives of improving energy efficiency in the
residential, commercial, and industrial sectors and in the Federal
government. Energy efficiency is a large, low-cost, but underutilized
U.S. energy resource. Increased energy efficiency offers savings on
energy bills, opportunities for more jobs, improved industrial
competitiveness, and lower air pollution. This year's State of the
Union address included a goal to cut the energy wasted by our homes and
businesses by half over the next 20 years.
The President also called on us to build on the success of existing
partnerships as well as to establish new partnerships, in particular
with the States. This includes his call for a new Race to the Top for
Energy Efficiency and Grid Modernization challenge. Modeled after the
successful Administration approach to education reform to promote
forward-leaning policies at the Statelevel, the President's budget
includes $200 million in one-time funding for Race to the Top awards to
support State governments that implement effective policies to cut
energy waste and modernize the grid.
As Deputy Assistant Secretary for Energy Efficiency in the Office
of Energy Efficiency and Renewable Energy (EERE), I am responsible for
overseeing DOE's portfolio of energy efficiency research, development,
demonstration, and deployment activities. I am pleased to be here today
and look forward to working with Congress, and this Committee in
particular, and discussing how we can catalyze greater energy
efficiency to help address our Nation's energy challenges. My statement
today will provide an update on DOE's energy efficiency portfolio, the
challenges we are working to address, and the progress we are making.
homes and commercial buildings
Improving energy efficiency in our homes and buildings offers a
tremendous opportunity to create well-paying jobs, save money for
businesses and consumers, and make our air cleaner. In the U.S., homes
and buildings consume 40 percent of the Nation's total energy with an
annual energy bill of more than $400 billion.\1\ DOE estimates that
these energy bills can be cost-effectively reduced by 20-50 percent, or
more, through various energy efficiency approaches.\2\
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\1\ Buildings Energy Data Book, U.S. Department of Energy. March
2012, http://buildingsdatabook.eren.doe.gov/TableView.aspx?table=1.2.3.
\2\ See, for example, DOE/ASHRAE's Advanced Energy Design Guides
for commercial buildings (http://www1.eere.energy.gov/buildings/
commercial/aedg.html) and DOE's Building America program (http://
www1.eere.energy.gov/buildings/residential/ba_index.html).
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DOE uses a portfolio approach to pursue the potential energy
savings in buildings. Research and development (R&D) on next-generation
building technologies will lead to advances in enduses representing the
majority of building energy consumption, including efficient lighting
that is cost-competitive in today's market, new technologies in heating
and cooling, and windows that decrease energy demands and improve
comfort. Some highlights from DOE's project portfolio include:
DOE's R&D on solid-state lighting has the potential to
reduce lighting energy usage by one-fourth, saving businesses
and consumers $15 billion annually.\3\ Already, new technology
developed with DOE support has led to a solid state bulb with
lower lifecycle costs that lasts roughly 25 times longer than
traditional incandescent bulbs.
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\3\ BTP ET Program Information Sheet: Solid-State Lighting, August
10, 2011.
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New heat pump water heaters offer households large savings
on water heating, more than 50 percent in many cases. As a
Nation, we spend $34 billion\4\ each year on energy for water
heating,\5\ and heat pump water heaters could free a large
percentage of that cost to meet other household expenses. The
first of these innovative water heaters that use a hybrid of
electric heating and heat pump technologies are being
commercially produced here in the United States.
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\4\ ``Annual Energy Review.'' EERE Buildings Data Book, 2011,
http://buildingsdatabook.eren.doe.gov/TableView. aspx?table=2.3.5.
\5\ ``Saving Energy.'' EERE Buildings Technology Program, 2012,
http://www.eere.energy.gov/buildings/ saving_energy_ge.html.
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Efficient windows, pioneered with EERE funding, have played
a critical role in the market shift toward double-pane windows
with low-emittance coatings, which insulate three times better
than typical single-pane windows. More recently, EERE has
helped develop and commercialize technology to create better,
more efficient windows for cold climates that will allow in
more energy than they lose.
DOE also invests in whole building R&D that demonstrates how new
energy efficient technologies can function together to create an
efficient system, achieve greater overall savings, and inspire the
next-generation of buildings. For homes, this will translate into a new
generation of housing stock that is durable, uses smarter energy
management systems, and offers substantial energy savings. Our recently
introduced Challenge Home program is a new and compelling way to
recognize builders for their leadership in increasing home energy
efficiency, improving indoor air quality, and making homes zero net-
energy ready. DOE Challenge Homes are verified by a qualified third
party and are at least 40-50 percent more energy efficient than a
typical new home.\6\
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\6\ A typical new home as built to recent model energy codes. For
more information on DOE Challenge Home methodology, see http://
www1.eere.energy.gov/buildings/residential/pdfs/
ch_label_methodology_1012.pdf.
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In addition to creating energy efficiency opportunities in the new
buildings market, DOE invests in activities that target the large
savings potential that exists across the stock of existing homes, many
built before modern codes. Here, the Department is working with
organizations in communities across the country to demonstrate upgrade
programs that offer savings of 20 percent or more for single family and
multi-family residences. Within this market space, effective programs
are the ones that include three elements: clear, compelling information
for homeowners on potential energy savings; skilled workers; and access
to financing. To help improve these programs, we are developing new
rating tools to help consumers understand the efficiency of their
buildings and the opportunities for improvement.
In addition, in late September 2012, EERE reached the major
milestone of weatherizing more than one million homes across the
country since 2009, while supporting tens of thousands of jobs in local
communities. These efforts save eligible families hundreds on their
heating and cooling bills in the first year alone. Each year, these
programs train thousands of workers in both the public and private
sectors, boosting their ability to serve the home retrofit market and
helping to grow the clean energy workforce. To ensure the consistency
and quality of this growing U.S. workforce, the Department is leading
efforts to define Standard Work Specifications for Energy Efficiency
Upgrades in residential weatherization and building a foundation for
the home energy industry through professional training and
certification.
We have similar efforts targeting energy efficiency opportunities
for commercial buildings. Two particular efforts to highlight are the
Energy Efficient Buildings Hub and the Better Buildings Challenge. To
accelerate the development and deployment of energy-saving solutions
for commercial buildings, DOE established the Energy Efficient
Buildings Hub, a Regional Innovation Cluster headquartered at the Navy
Yard in Philadelphia. A key feature of the Hub is the availability of a
unique set of buildings as a test bed, including a 30,000-square-foot
building that will be used to demonstrate advanced energy retrofits of
commercial buildings. The tools developed, lessons learned and best
practices from the Hub will ultimately help enable widescale deployment
in similar climate zones and building types nationwide.
The Better Buildings Challenge (BBC) is a signature partnership
effort, with over 110 partners across the commercial, industrial, and
public sectors. Together, these partners represent approximately 2
billion square feet of commercial and industrial space, 300
manufacturing plants, and $2 billion in private sector financing. As
partners advance toward meeting their individual goals, the BBC
website\7\ will highlight their commitment and progress, including
information on showcase projects and hundreds of replicable
implementation models. To date, more than $1 billion of the commitment
from private sector financial firms has been extended to projects, and
we are continuing to look for ways to expand access to private-sector
financing, as this remains an important barrier cited by commercial
building owners.
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\7\ The BBC website address is www.betterbuildings.energy.gov/
challenge.
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Further, DOE assists with the adoption and implementation of state
and local building codes for both commercial and residential buildings.
Building codes take advantage of the broader set of efficiency measures
available during construction and major renovations. The Department
emphasizes updating codes based on cost-effective savings opportunities
and assisting state and local governments with ensuring code compliance
so that savings are realized. To accomplish its objectives in this
area, DOE has developed a suite of assistance tools it routinely
provides to state and local authorities.
advanced manufacturing
The U.S. manufacturing sector also offers important opportunities
for cutting energy waste, while improving our industrial
competitiveness and promoting economic growth. In the United States,
manufacturing represents about 12 percent of the gross domestic product
and nearly 12 million jobs.\8\ The Department's investments in advanced
manufacturing are geared toward developing next-generation
technologies, processes, and materials that offer substantial
improvements in efficiency across a product lifecycle and at costs
competitive with current technologies. We are also assisting industry
with strategic energy management and combined heat and power (CHP).
This portfolio will enhance the competitiveness of U.S. manufacturing
now and for the longer term.
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\8\ Full-time and Part-time employees by industry, U.S. Department
of Commerce, http://www.bea.gov/iTable/
iTable.cfm?reqid=5&step=4&isuri=1&402=43&403=1#reqid=5&step=4&isuri=1&40
2= 43&403=1
Value added by industry as percentage of GDP, U.S. Department of
Commerce, http://www.bea.gov/iTable/
iTable.cfm?reqid=5&step=4&isuri=1&402=5&403=1#reqid=5&step=4&isuri=1&402
=5 &403=1
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In the State of the Union address, President Obama called for a
network of manufacturing innovation institutes that will help to
support investment in U.S. manufacturers' competitiveness and
accelerate innovation in manufacturing. The Department of Energy is a
partner in the pilot institute, the National Additive Manufacturing
Innovation Institute (NAMII), located in Youngstown, Ohio. NAMII is
bridging the gap between basic research and product development for
additive manufacturing, providing shared assets to help companies
(particularly small manufacturers) access cutting-edge capabilities and
equipment, and creating an environment to educate and train workers in
advanced additive manufacturing skills. Additive manufacturing
techniques create 3-D objects directly from computer models, depositing
material only where required. These new techniques, while still
evolving, are projected to exert a profound impact on manufacturing for
high-value products. They can give industry new design flexibility,
reduce energy use, and shorten time to market. To realize the full
potential of additive manufacturing, the technology will need to be
integrated into broad manufacturing solutions. In applications where
additive manufacturing is competitive, DOE estimates that 50 percent or
more energy savings could be realized.
In January, the Department announced the selection of Ames
Laboratory to establish an Energy Innovation Hub that will develop
solutions to help address the domestic shortages of rare earth metals
and other materials critical for U.S. energy security. The Critical
Materials Institute (CMI) will bring together leading researchers from
academia, Department of Energy National Laboratories, and the private
sector. CMI will focus on technologies that will enable the U.S. to
make better use of available materials as well as eliminate the need
for materials that generally must be imported from overseas and are
subject to supply disruptions. These critical materials, including many
rare earth elements, or the development of feasible substitute
technologies are essential for American competitiveness in the clean
energy industry; many materials deemed critical by the Department are
used in modern clean energy technologies such as wind turbines, solar
panels, electric vehicles, and energy-efficient lighting.
In addition to investments in advanced process and materials R&D,
the Department has active technical assistance programs aimed at
reducing manufacturing energy intensity by 25 percent over ten years by
engaging a diverse set of industry partners in effective business
models, continuous improvement in energy efficiency, modeling key
processes, and supporting standards and certifications for third-party
services. DOE technical assistance also supports the achievement of the
national goal set by President Obama in an Executive Order last August
of developing 40 gigawatts of new, cost-effective industrial CHP by
2020. And, DOE provides tools to support improvements in a number of
common systems in manufacturing facilities, including motor, steam,
compressed air, and pumping systems.
appliance and equipment standards
In addition, the Department implements minimum energy conservation
standards for more than 60 categories of appliances and equipment. As a
result of these standards, energy users across all sectors are
estimated to have saved tens of billions of dollars on their utility
bills in 2010. Since 2009, 17 new or updated standards have been
issued, which will help increase annual savings even further over the
coming years.
Most recently DOE finalized a standard for three types of
distribution transformers that take effect in 2016. The standard for
low-voltage dry-type transformers, which are typically used by
commercial and industrial users, represents 30 percent savings over the
prior standard and provides estimated net benefits of up to $11.8
billion on equipment sold through 2045\9\. The two other types of
distribution transformers that were subject to this rulemaking, liquid-
immersed and medium-voltage dry-type transformers, are used primarily
by electric utilities in outdoor settings as opposed to inside
buildings. These two standards combined provide estimated net benefits
of up to $5.7 billion on equipment sold through 2045.
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\9\ Net present value of net benefits, in 2011 dollars, estimated
at a 3 percent discount rate.
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federal lead-by-example
Finally, DOE plays a critical role in providing technical
assistance to Federal agencies to increase understanding and accelerate
cost-effective adoption of energy-saving technologies and strategies.
The U.S. Federal government is the Nation's single largest user of
energy and has both a tremendous opportunity and an acknowledged
responsibility to lead by example in saving energy. In December 2011,
President Obama signed a Presidential Memorandum directing the Federal
government to enter into a minimum of $2 billion in performance-based
contracts over the next two years for energy retrofits on Federal
buildings. Agencies have identified a pipeline of over $2 billion in
energy efficiency projects for Federal buildings that will be contract
awards by December 31, 2013. These projects will use energy savings to
pay for project implementation costs, achieving substantial energy
savings at no net cost to the American taxpayer. More than $500 million
in projects have already been awarded, which will also help agencies
meet the government's goals to reduce Federal building energy
consumption per gross square foot by 30 percent from 2003 through 2015;
increase renewable energy use to 7.5 percent annually; reduce water use
intensity by 26 percent from 2007 through 2020; reduce vehicle
petroleum use by 2 percent annually; and reduce greenhouse gas
emissions by 28 percent from 2008 through 2020.
Federal data center optimization and closures, the use of Energy
Star and EPEAT-registered computers and power management also remain
important opportunities for energy savings.
conclusion
Through R&D, deployment, and collaborations at all levels of
government and the private sector, the Department of Energy aims to
capitalize on the opportunities that energy efficiency affords. The
Department's efforts to lead in next-generation buildings and advanced
manufacturing will result in a more secure, resilient, and competitive
energy economy. While we are making progress, continued efforts are
necessary to capture the full set of opportunities.
Thank you again for the opportunity to speak to this important
issue, and I would be happy to answer any questions.
Senator Franken. Thank you, Dr. Hogan.
I really would like to congratulate Senators Portman and
Shaheen for their bipartisan effort in crafting this
legislation. I certainly hope it is one that we will pass in
the Senate.
Since I am chairing here, I am going to pass it off and
maybe I will ask questions when it appears that the chairman is
coming back so I can get to Judiciary.
Senator Murkowski?
Senator Murkowski. Thank you.
Several questions for each of you. First, thank you for
being here today to provide testimony to the committee on the
various measures that we have in front of us.
Mr. Wright, let me begin with you. You mentioned the 2-year
licensing process within both S. 545 and H.R. 267, and you have
indicated that there are--I think the terminology you used--
``significant constraints? that are imposed by the Federal
Power Act, but you also cite too to other Federal acts, whether
it is endangered species, clean water, coastal zone management.
Can you give me a little more background in understanding
the FERC's inability here to set enforceable licensing
schedules with these other agencies and whether or not there
are any consequences then to these agencies if they miss the
deadlines that might be subject to this FERC licensing process?
Mr. Wright. Thank you, Senator.
First of all, we do not have a regime where we set a
schedule for other agencies which would be similar under the
Natural Gas Act which does have that kind of authority.
What we do have with the Federal Power Act are mandatory
conditions that are allowed by--for instance, for Fish and
Wildlife at the Federal and State level. In that example, we
have to wait for those agencies to act before we can actually
issue a license. For instance, I will go to the Clean Water
Act. That authority is delegated down to the State. They give
water quality certifications. We are dependent upon the State
to act before we can actually issue a license, and in some
respects and in some States, it is a multi-year process.
We do our NEPA work. We continue with that, and in large
part, we are done with our NEPA work within a 2-year period.
Much of the waiting for the final issuance of a license is
dependent upon the other permits from other permitting agencies
to finish their work and allow us to prepare an order and
prepare that license for issuance.
Senator Murkowski. So we can go ahead and provide for this
2-year licensing process, but what you are saying is you cannot
necessarily direct or control what may happen within these
other Federal agencies and the timelines that they have. So is
this kind of a best effort type of an approach in your view, or
is this something that folks can count on as they are looking
to the licensing process, that it is a 2-year hurdle for them?
Mr. Wright. I will say this. We will endeavor, if this bill
passes, to come up with a 2-year licensing process, but we do
not have a hammer, if you will, over the other agencies to
dictate a schedule and make these licenses priorities of their
work product.
Senator Murkowski. This is what we are trying to do here.
We are trying to put forward a path to give some level of
certainty that there is a process that will not be open-ended.
Of course, when we recognize some of the complicating factors
that come up because of ESA, the Endangered Species Act, Clean
Water Act, we do not want these other acts to be used to thwart
the intent which is a more streamlined process. So that may be
something that we need to provide a little focus to.
Mr. Pimley, I wanted to ask you about the NEPA waiver and
the categorical exclusion language. You have given some detail
in both your written and your oral testimony here.
Do you think it would be helpful if we were to provide for
report language on this issue of categorical exclusion? Would
that be helpful just in providing some clarity out there?
Mr. Pimley. I think that we certainly would not oppose any
language like that. We would interpret that as further
clarification that we should follow the process as H.R. 678 has
told us to follow the process we have in place in our directive
and standard. So it certainly would reaffirm that process, yes.
Senator Murkowski. Then finally, Dr. Hogan, for you. Under
the Energy Savings and Industrial Competitiveness Act, there is
a program in there called Supply Star, which is designed to
identify and promote highly efficient supply chains. Are we
going to run into a situation where Supply Star is confused
with the Energy Star program, relatively similar in name, in
purpose? Does this cause confusion? Is this an issue or not?
Ms. Hogan. I think this is all workable. I think first
Supply Star starts as a sort of business-to-business framework
to help organizations that are--the materials that they need to
bring in as part of their processes to help have a good
framework for improving energy efficiency up and down the
supply chain. So I think there is a lot of benefit to have in
that sort of business-to-business world before we start talking
about products and recognition and any potential confusion with
Energy Star. Certainly we can work with the EPA to make sure
that there is no confusion.
Senator Murkowski. Thank you, Mr. Chairman.
Senator Franken. I am not sure if we had an early bird.
Senator Portman, we will go to you.
Senator Portman. Thank you, Mr. Chairman. I appreciate your
comments earlier and appreciate Senator Coons, who was here
earlier, who has been involved in the design of this
legislation.
This is the same bill basically that we had before the
committee last year. So in a sense, it is old business. We have
made some changes. Frankly, in the fiscal climate we have, we
have made it more fiscally prudent. We have dropped the
language that expanded the DOE's loan guarantee program and
replaced it with a State-based financing mechanism that I think
will work better. A number of our colleagues had expressed
concerns about the loan guarantee program. But this is very
similar to the legislation that came through the committee last
year, 18 to 3.
I want to thank the Energy Department and Dr. Hogan, in
particular, for their help on this. They have given us
expertise and advice all the way through.
Senator Coons is now here. Sorry. I did not see you.
This has enabled us, I think, to come up with, again, some
refinements to the legislation that make it even more
effective.
A couple questions I would have for Dr. Hogan briefly. One
is with regard to the Advanced Manufacturing Office, or AMO as
I affectionately call it. This is something that, as you know,
we are focused on as a way to help the manufacturing sector, in
particular, get some of the technology they need to be able to
be more energy efficient, which is important for our
competitiveness and the economy. There are other offices at DOE
that focus more on the science side and focus more on some of
the production even of technologies like solar energy. But we
want to be sure that AMO has this special focus on
manufacturing.
So I guess I would just ask you if you could talk a little
bit about the role of the Advanced Manufacturing Office, why is
it important, why does the Federal Government play a role here,
and if you could explain a little about what the office does
now and maybe what you think it should do.
Ms. Hogan. Great. So as you have noted, we have changed the
name of our program that was focusing on the industrial sector
from the Industrial Technologies Program to the Advanced
Manufacturing Office. I think what you should hear in those
words is our intense focus on manufacturing and our interest in
being able to bring forth new solutions that make sense for all
of industry but as we take sort of a more lifecycle approach
looking at sort of where we use energy in our economy and look
for the big steps that we can make to improve sort of energy
intensity across our economy.
So what we are looking for are opportunities where we can
get 10, 20, 30, but really 50 percent savings in our processes,
in our materials, and to work with all of the industries where
we have those opportunities for such changes. So that includes
energy-intensive industries, as well as sort of advanced
manufacturing techniques that we think are critical to the
competitiveness of our economy going forward.
Senator Portman. Thank you very much.
You noticed Senator Wyden, Chairman Wyden, earlier
mentioned the fact that there are over 200 organizations and
companies that have supported this legislation, and many of
those 200 are industrial companies, manufacturers who are
interested in the energy efficiency best practices and again
the deployment of technology to help them that came out of
this. So they are very excited about having this Advanced
Manufacturing Office work closely with them as partners, and I
think that is the goal of this legislation certainly to engage
them as stakeholders directly so that they are getting what
they need out of this to become more competitive and also to
save energy. So it has both issues.
Earlier you called the energy efficiency a cornerstone of
national energy policies, and I think that is certainly
correct. There are many of us on this committee who believe we
ought to be producing more energy, including hydro, but also we
ought to be using less and being more efficient. That is
certainly consistent.
You also said in your statement that the administration
supports the objectives of the legislation but that you are
still looking at the bill. We appreciate again your working
with us to come up with an even better bill this year.
You also noted several times in your testimony that there
is a lot more opportunity to find energy savings through
efficiency, and we certainly agree with that. That is one
reason we have focused this legislation on some of those areas.
You mentioned that buildings, for instance, is where we use 40
percent of our energy. One of the focuses this year is on the
building side including, as I noted earlier, kick-starting this
private sector investment in building efficiency, but also more
transparency in the national building codes. We have worked
with the home builders and others on that transparency.
We also are focused on training that next generation of
workers, as you talked about, through these university-based
building training and research assessment centers.
Then manufacturing we talked about earlier, which I think
we have got some really exciting opportunities there, including
the Supply Star program that Senator Murkowski talked to you
about.
Then finally, the Federal Government where we have the
largest user of energy in the world, as far as we can tell, and
sometimes it is used efficiently, sometimes not. There is lots
of, as you indicated, opportunity there, including getting
these companies that perform service contracts in efficiency
and are paid over time through the savings to be engaged
directly in some of the objectives of the legislation,
including installing natural gas vehicle charging
infrastructures and electric vehicle infrastructures.
So I think there is a lot of opportunity here, as you said,
and we appreciate your support already and, again, appreciate
the Senators, including Senator Coons and Senator Wyden and
Senator Murkowski and others, who have contributed to the
design of the legislation this year.
Thank you, Mr. Chairman.
The Chairman [presiding]. Thank you, Senator Portman.
Senator Coons is next.
Senator Coons. Thank you, Chairman Wyden, and thank you for
the different sponsors who brought forward these hydropower
bills today that I think are quite interesting and deserving of
consideration.
I want to thank Senator Portman and Senator Shaheen for
their leadership on moving forward this vital energy efficiency
bill. I strongly support this legislation and am determined to
do whatever I can to contribute to its passage through this
committee and its adoption through the whole Senate. It passed
through this committee last Congress by a vote of 18 to 3. So,
as Senator Murkowski mentioned, this is old business that we
hopefully will move forward on swiftly.
I think there is clear indication of strong bipartisan
support for the common sense ideas in this bill. As Senator
Portman mentioned, there are more than 200 off-the-Hill
validators, sponsors from business, trade associations,
advocacy groups. This bill contains no mandates. There are no
compulsory requirements on a company or individual because of
this legislation. It is something that I think has been
misunderstood or miscast. If there are other additional
concerns, my understanding is the sponsors are more than
willing to work through any Member's office to explain them or
address them.
These are difficult economic times. First, we do need to
reduce our deficit, and so I am grateful for the revisions that
have been made. I think this bill offers a perfect opportunity
for responsible bipartisan progress that finds savings wherever
possible and works in public/private partnerships to achieve
that.
Since my work on the State Energy Efficiency Workforce in
Delaware more than a dozen years ago, I have been convinced
that energy efficiency is a powerful, vital way to achieve
progress. There is no winning or losing, simply progress by
improving energy efficiency.
So I would like to mention two other things, if I might. In
your comments, I was encouraged to hear positive reference to
the Better Buildings initiative and performance-based
contracts. So I want to work with the administration to make
sure there is not a CBO scoring hurdle to the broad and
responsive adoption of the ESCO technology.
Also, you mentioned the importance of financing for energy
efficiency. A bill which will be reintroduced this week, The
MLP Parity Act, of which I am a cosponsor, includes a provide
that extends the tax benefits of the MLP structure to
commercial and institutional buildings based on the 179(b) tax
credit, that definition.
Let me get, if I could, to building codes. Last year, the
American Council for an Energy Efficient Economy did a study of
the Shaheen-Portman bill that suggested the benefits it would
provide--more than 90 percent of them would come through
improvements in building codes. As a former county official, I
was responsible for the maintenance, update, and implementation
of our building codes. Your office will play a key role in
working with private code-setting organizations to define
consensus-based standards that can be achieved for higher
energy savings.
Some have raised the concern that these building codes
might then be some Federal mandate. Could you speak to that,
and could you tell us more about what you are doing now in the
building codes area and what more you could do with this
legislation?
Ms. Hogan. Great. Yes, I think there is some confusion out
there in the building code space.
The way this process works in this country is there are
code bodies where various entities bring proposals and those
get examined from any number of angles, including with a lot of
examination from the code officials across the country, and
then the updates, the sort of new proposals get voted on.
So what does DOE do in that process? We bring to the table
what we hope is very sound analysis on the costs and benefits
of new measures that could make sense to deliver cost effective
savings as we upgrade those codes. Of course, we get to vote on
those as well, but really, with a sort of a minor voting role
relative to all the votes that are taken. So what we are really
trying to do is bring forth very good information on the costs
and the benefits of these measures and stay up to date with
technology as it develops.
What we have been able to do with regard to, I guess, the
2012 code update that States and local jurisdictions are
looking at now is bring forth a lot of information around the
savings that, for example, the average household could see as
they would buy a home that would have those advanced measures
in place. What we see is the average homeowner would have a net
cash-flow improvement on the order of $200, $300, $400 a year.
So truly these codes are making a difference in people's lives.
But that is really what we see our role as, is bringing
very good information to the table on what these measures, as
you update the codes, can offer. Then it is up to the States
and the local jurisdictions to look at those numbers, evaluate
them, and adopt the code, consistent with their own legislation
that they have on the books.
The other part that I think that I think we all know is
important is not just code adoption, but looking at how you
ensure that the codes are being abided by on the ground. We
have a variety of technical systems tools that we offer there
as well.
Senator Coons. Thank you, Dr. Hogan. Thank you again to
Senators Portman and Shaheen for their leadership on this
important legislation. I look forward to working with you and
the leadership of the committee in moving this forward
promptly.
The Chairman. Very good.
Senator Barrasso.
Senator Barrasso. Thank you, Mr. Chairman. Thank you also
for allowing my bill and its House counterpart to be considered
in this hearing, this Barrasso-Risch-Tipton bill named the
Bureau of Reclamation Small Conduit Hydropower Development and
Rural Jobs Act. It authorizes the Bureau of Reclamation
hydropower development on nearly 47,000 miles of Federal canals
throughout the West. In Wyoming alone, 121 sites could be
developed, according to the Bureau of Rec March 2012 report.
Oregon has the second highest conduit hydropower capability
with 68 identified sites.
The bills proactively authorize hydropower development on
existing facilities that have already gone through Federal
environmental review.
The bills also provide common sense administrative and
regulatory streamlining to ensure that this development
proceeds to the construction phase.
Both the House and the Senate bills were originally
introduced with a NEPA waiver. That was done because we are
talking about manmade facilities on already disturbed ground
that had to go through Federal permitting previously.
I realize, however, that compromise on this provision is
necessary to get this bill across the finish line. So working
together with the House counterparts, we supported an amendment
that recognizes the Bureau's existing NEPA categorical
exclusion process and it strengthens it by directing it to
apply to, quote, small conduit hydropower, close quote, which
is something the existing process fails to do. This will help
insulate the Bureau and investors from unnecessary lawsuits. It
also matches how FERC currently treats similar conduits when it
comes to NEPA. But by endorsing the categorical exclusion
process, it also gives the Bureau the administrative
flexibility to use what it calls extraordinary circumstances in
case a project does deserve more scrutiny. This off ramp from a
NEPA categorical exclusion is important as part of its
flexibility.
The amendment was adopted by a voice vote in the House and
then the House passed this bill on a roll call vote by 416 to
7. I am happy to report, Mr. Chairman, that all of the Oregon
House Members voted for the bill.
Mr. Chairman, the list of the bill's supporters grows every
day. The National Hydropower Association, Family Farm Alliance,
National Water Resources Association, American Public Power
Association, and the Western Governors Association, the Oregon
Water Resources Congress are just some of the supporters. I
ask, Mr. Chairman, that the letters of support be added to the
record.
The Chairman. Without objection, so ordered.
Senator Barrasso. Thank you, Mr. Chairman.
I sincerely hope that we can move forward on this
compromise, get these small hydro projects underway by getting
this bill signed into law.
With that being said, with all the good work that has been
done to meet everyone's needs, I just want to seek a
clarification with a statement, Mr. Pimley, in your written
testimony. You stated, quote, Reclamation believes it should
preserve its discretion to determine whether a closer review
under NEPA is appropriate. It is my understanding that such a
deviation from the categorical exclusion process for the
installation of a small hydro conduit would occur if there
were, quote, extraordinary circumstances.
So can you describe maybe in a little more detail when the
Bureau would exercise this discretion to do that closer review
under NEPA with regard to small hydro conduits?
Mr. Pimley. Yes. As you pointed out, our assessment of
extraordinary circumstances is based on an evaluation of the
checklist that we utilize for all of our minor construction
categorical exclusions. That document is rooted in the
department's manual, and it has been used since 2008 across the
Department on all agencies to evaluate the relative impact of
anything unusual that would not normally have been analyzed
perhaps in the evaluation.
The experience we have had has been very good. We wanted to
use an existing process so that we were not reinventing or
plowing new ground, and by doing so, we think we have got the
procedure in place to have an efficient and very timely
evaluation to get us past that part of the process, past the
NEPA compliance portion.
Senator Barrasso. Are there any other circumstances where
the Bureau would exercise discretion to do a closer review
under NEPA other than that case of extraordinary circumstances
that you can think of?
Mr. Pimley. In general, if there are some issues with local
impacts or listed species and so forth, we would go through our
normal NEPA assessment on most projects. But again, the idea
was that we would use the minor construction process we already
have in place to try to use a process that has worked very
well, and that seems to capture, at least up until now, the
breadth of what we have encountered on those minor construction
projects.
Senator Barrasso. So is it your opinion that if we adopt
this language that passed the House, would that accelerate the
permitting and installation of the small hydro conduits on
Bureau of Rec canals?
Mr. Pimley. I believe that the intent is to do just that.
Our interpretation, as you mentioned in your opening statement,
is we interpret this as basically endorsing our process we have
now. Yes, we believe that process will accelerate the overall
process from application through construction.
Senator Barrasso. Thank you, Mr. Pimley.
Thank you, Mr. Chairman.
The Chairman. Senator Barrasso, thank you. I think you and
Senator Risch have done good work on this issue. I was going to
ask a question about the extraordinary circumstances issue as
well, and I know we are going to work together on this and get
this out quickly. I think you noted the almost astounding vote
in the House. You practically cannot get that kind of a vote to
order a soda around here.
[Laughter.]
The Chairman. So I really appreciate the good work you all
have done.
Let us see. Next is Senator Udall on our side.
Senator Udall. Thank you, Mr. Chairman.
Welcome. Your testimony today is very important.
Mr. Chairman, I have got an initial statement for the
record that I would like to ask unanimous consent----
The Chairman. Without objection, it will be entered into
the record.
Senator Udall. It goes on at great length about how
fantastic Colorado's approach is.
The Chairman. Eloquent.
Senator Udall. It is eloquent as well.
[Laughter.]
Senator Udall. It's about how targeted and broad-reaching
Colorado's approach is, including the National Renewable Energy
Lab's presence and so on.
But I would like to turn, if I could, to a couple of
questions.
Mr. Wright, I will start with you. Your testimony
referenced the State of Colorado and the FERC have a history
when it comes to working together to streamline the development
of small-scale hydro. In 2010, Colorado and the FERC signed a
memorandum of understanding to develop a pilot program. In
2011, on the heels of that, an irrigation pipeline in Meeker
was the first project to successfully complete that new pilot
process. That approval took just 2 months, while in the past,
similar projects have taken upwards of 3 years to get approval,
and that is a remarkable change of pace.
Can you talk a little bit more about what you have learned
from the pilot program and what role the program may play if
the proposed legislation were to become law?
Mr. Wright. Thank you, Senator.
What we did learn from the MOU with Colorado--and this is
spelled out in the MOU--was seeking sites that are
accommodating for hydro development, and that is one of the
points I made in my testimony, is finding proper sites, also
running the traps, if you will, between the various permitting
agencies. This makes the process go quicker and this is what we
have seen in Colorado, and this is part and parcel of the MOU
with Colorado in terms of finding those spots, those sweet
spots, if you will, for development, making sure that the
government agencies, other permitting agencies are on board,
and that makes the process go that much quicker.
Senator Udall. We look forward to continuing to move in
that direction. We have many, many opportunities in Colorado.
I want to talk about H.R. 678, if I might, which has been
introduced and carried in the House. The chairman talked about
the strong support for it. I am looking forward to working with
the chairman and Senator Barrasso to move the bill from our
committee to the President's desk.
I know we want to maximize our Federal resources to develop
clean, sustainable energy, as H.R. 678 will do, but we should
not do that at the expense of the environment. Some of the
bills have the potential to waive some of the requirements from
NEPA, which has brought tremendous benefits to our country. I
want to highlight one from Colorado.
For years, the I-70 corridor, which runs from Denver to
Glenwood Springs, experienced hours of congestion as travelers
heading to the ski areas, including Senator Murkowski's sons
who are going to college in our great State, hikers, other
recreational destinations. We have had a lot of plans for
improving the corridor's capacity, but some of them were
unattractive and would have channeled the Colorado River and
would have had some negative effects. So the majority of the
stakeholders did not support this preferred alternative, and
the Colorado Department of Transportation then used the NEPA
process to initiate a collaborative decisionmaking process to
identify a new reconstruction plan. Thanks to the input it
received through the NEPA process, CDOT, our Colorado
Department of Transportation, came up with a plan that was not
only safer but it had fewer impacts on the environment and the
river. That project has won now some 30 awards for innovative
design and environmental sensitivity.
I understand Representative Tipton's bill is consistent
with the Bureau of Reclamation's categorical exclusion policy
set by the administration last September. Mr. Pimley, could you
expand on the reasoning used by the BOR to waive the NEPA
requirements on small hydropower projects?
Mr. Pimley. I mean, I would not say that we were waiving
NEPA compliance. The process we would go through is based in a
well established process for a minor construction, which is
designed to recognize that largely you are operating within an
existing footprint of a facility. So you go through a process
to evaluate whether this is--in the conduit hydro process, you
go through a process to evaluate whether or not you are, in
effect, within the same footprint if you are using existing
infrastructure, if you are not changing the diversion flow
rates or timing or discharge locations, and if you are making
sure you are not changing the intent of the facility. In other
words, if it is irrigation primarily, it remains irrigation.
So with those criteria and the ability, the flexibility to
look for extraordinary circumstances which may arise, as is
outlined in our DNS, that gives us the ability--if something
does jump up that does indicate there are some impacts that we
had not anticipated, we still have the ability to go to a more
detailed NEPA evaluation, environmental assessment. That is
what we have used up till now. I think we have got about a half
dozen of these that we have done using the EA process.
Senator Udall. So your overall sense is there is a balance
here, and CE's, categorical exclusions, have a real role to
play, but there is also a check and balance, as you foresee it,
that could be applied to Congressman Tipton's bill.
Mr. Pimley. Yes, absolutely.
Senator Udall. Thank you, Mr. Chairman.
[The prepared statement of Senator Udall follows:]
Prepared Statement of Hon. Mark Udall, U.S. Senator From Colorado
Thank you all for being here today and for your testimony. I'm
pleased that my colleagues, Senators Shaheen and Portman, have
reintroduced their energy efficiency bill--there is certainly more work
to do on these technologies. In Colorado, we are appreciative of the
great research on efficiency and future of energy development being
done at the National Renewable Energy Lab in Golden. I have said it
many times on this Committee, but I will repeat it again--Colorado is a
model for its pursuit of true energy security--and energy efficiency
advancements are a big part of that effort.
That being said, I would like to focus my questions on the
prospects of hydropower development, both for Colorado and for the
nation. Water is a vital part of Colorado society from agriculture to
recreation and from hydropower to the beautiful landscapes that water
helps provide. It is important that we keep these multifaceted uses in
mind as we discuss the future of hydropower today.
Colorado has a long history of hydropower within the state. More
than half of the hydropower sites in Colorado are rated as small-scale
hydropower and these sites combined to provide a capacity of 64.6 MW.
Like many of my colleagues' states here, Colorado has much untapped
energy capacity in the form of small-scale hydropower.
The Chairman. Thank you, Senator Udall.
Senator Risch is next.
Senator Risch. Thank you very much.
Mr. Wright, you made reference in your testimony to the
deadlines that you can put on other agencies when you are
dealing with gas facilities. Two questions. No. 1, does that
work? No. 2, is there reason that procedure cannot be followed
with the small hydro facilities?
Mr. Wright. I will say in the gas side, it works to an
extent. The Energy Policy Act of 2005 allowed FERC to set
schedules for processing natural gas infrastructure. The
hammer, if you will, for that is if the other agencies did not
meet the schedule, then the applicant could sue them in Federal
court. It is not often you see an applicant who wants to sue a
permitting agency.
But what I would say a benefit that has been on the gas
side is that it has established a bit more order, if you will.
We do come out with a schedule of how we process gas projects
and permits from other agencies--we ask them to be complete
with their analysis and their permitting 90 days after we issue
our environmental document. I would say we, on the whole, have
had some success with that.
Going back to hydro, we do not have that kind of regime, if
you will, for scheduling, and I would think that would be very
beneficial in terms of trying to reduce the time it takes for
licensing of hydro projects, if we could establish some sort of
priority, if you will, for the other agencies to realize that
the hydro projects should be higher on their agendas than they
seem to be at times.
Senator Risch. So your characterization is, although not
perfect, it is better under the regime for gas facilities. Is
that right?
Mr. Wright. Senator, I think that is a good
characterization.
Senator Risch. It would seem to me that that is probably
something that should be looked at here inasmuch as one of the
main criticisms we get of the Federal Government always is the
lack of urgency. Urgency is the hallmark of the private sector,
but not so much when it comes to the Federal Government. The
fact that delays take place and private capital is sitting on
the sideline waiting to deploy is always a problem. So I
appreciate your thoughts in that regard.
Without asking you to get too far into the weeds on this,
do you think that is something that could work on the hydro
projects after your experience in gas projects?
Mr. Wright. I would think it would be a good beginning to
try to establish some sort of order to the process, if you
will, and instead of many agencies who wait for us to finish
our environmental work on the hydro side and then they begin
their operations, we have seen on the gas side agencies operate
in parallel to us, if you will. While we are doing our NEPA
analysis on the gas side, other agencies, permitting agencies,
are doing their work at the same time.
Senator Risch. It is shocking to hear the Federal
Government is not doing duplicative work when instructed to do
so by statute. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Risch. Again,
commendations for your good work and I look forward to working
closely with you on these issues.
Mr. Wright, let me start with you on S. 545, Senator
Murkowski's bill. I think it is a first-rate bill and am
looking forward to doing everything I can to work with her to
get this passed.
Now, we are curious, Mr. Wright. How much do you expect the
amount of megawatts in these types of projects to increase if
the reforms in S. 545 are enacted?
Mr. Wright. Senator, to put a number on that is probably
speculative at best, but what I would say is anytime you amend
statutes that in my statement will reduce barriers to entry
into the hydro world, you could probably expect an increase in
applications, an increase in generation and capacity overall.
As I believe you quoted, we have got over 80,000 dams in this
country. Only 3 percent of them are powered. I think a change
especially in conduit and small generation requirements could
only spur an increase in generation. I think as the U.S.
realizes that hydro is kind of the low-hanging fruit, if you
will, of renewables, hydro generation will experience a
resurgence especially in small generation.
The Chairman. I know you do not want to speculate. You do
not want to even give us a ball park, for example, regarding
the amount of megawatts. It is such a good news story. In the
U.S. Senate, you like a good news story when you can get one.
Mr. Wright. I will say that I have also heard the number
that there is the potential for over 60,000 megawatts out there
by 2025. So I think as we liberalize the requirements, so to
speak, we could come close maybe to realizing--you know, 60,000
is probably an upper limit. If we could get to 30,000 megawatts
by 2025, just through some of these actions----
The Chairman. Let us get closer to 60,000.
Mr. Wright. OK. We will try.
The Chairman. All right.
A couple of questions on the mandatory conduit exemption,
just so we can kind of have a clear record in terms of the
history.
The Federal Power Act has an exemption for small conduit
projects, and S. 545 broadens the exemption, makes it more
available, and that certainly makes sense to me as a basic
proposition.
Now, the current exemption is discretionary. It was
proposed in 1978. The exemption would have been mandatory. The
commission would have been required to grant the exemption if a
proposed project met certain criteria. Senator Johnston, who
chaired this committee managing the bill to which an exemption
was offered on the floor, said he did not want to go that route
of the mandatory exemption and offered the amendment if it were
made discretionary. That is where the Senate came down.
So with S. 545, there is a different route with respect to
the smallest of the small conduit projects. It makes the
exemption statutory. For these projects, it removes the
smallest conduit projects from the commission's jurisdiction as
a matter of law if they meet the criteria.
What do you make of the argument--and there is such strong
support for broadening the exemption--that the commission
should be allowed to make the decision instead of it being made
for them?
Mr. Wright. I would notice that in S. 545, it establishes a
noticing regime, if you will. If the conduit does qualify under
the parameters, it would qualify for the 5 megawatt or less.
But it also gives a balance in that it allows parties to
contest a qualifying determination if they do desire to.
I would also say that this change to the FPA does not trump
any other Federal or State law. So in that sense, if another
State or Federal agency wishes to question the development of
the conduit, they may do so. We are not going to stand in their
way.
I would also say there is nothing prohibiting a developer
to come in for a traditional license if they so desire, and we
stand ready to dispose of that as quickly as possible.
The Chairman. Very good.
One other question about S. 545 on the fish and wildlife
protections I think all of us care so much about. This
preserves the fish and wildlife protections afforded by the
current small hydro exemption for the small conduits over 5
megawatts, but goes a different route for those of 5 megawatts
or less. What is your take on that with respect to the waiver
and the issues there?
Mr. Wright. I am sorry. I really have to study that a
little more in depth, but I would be glad to answer a question
on that.
The Chairman. Very good. Why do you not get back to us on
the record on that point?
Mr. Pimley, with respect to H.R. 678 categorical
exclusions--and I kind of want to walk this through it so I can
kind of have for the record and Senator Murkowski and I can
talk about this. We are trying to move this as quickly as we
can. Under departmental rule, only the CE's, the categorical
exclusions, established by the agency rule are subject to this
extraordinary circumstances review and categorical exclusions
that are created by statute are not unless the governing
statute requires it.
So I can really understand this, does H.R. 678 bar the
Bureau of Reclamation from reviewing small conduit projects for
extraordinary circumstances? I was under the impression from
the earlier kind of discussion that it did not, but just so you
are clear on that.
Mr. Pimley. Our interpretation of the amended language in
the bill is that it basically endorses the process we have
documented in our directive and standard which includes the
ability to consider extraordinary circumstances. So the short
answer would be, no, we do not believe it bars----
The Chairman. Very good.
One question for you, Dr. Hogan.
I see my friends, Senator Franken and Senator Manchin, have
arrived.
On the energy efficiency front, the President challenged
the country to double U.S. energy productivity, something I
strongly support. Our economy clearly has shifted in recent
years looking to try, in particular, to use less energy, and
even more recently, companies are moving back to the United
States to reinvest in our manufacturing sector so they can take
advantage of cheaper natural gas.
How are these changes in our economic landscape going to
effect the ability of the country to meet the President's goal?
Ms. Hogan. Yes. I think the President has put out some
ambitious but achievable goals about cutting energy waste by 50
percent and doubling energy productivity over the next 20 years
or so. I think what that really means is we are working hard to
get as much from every Btu that we use as possible, and that is
really what we want to be focusing on here in a way that we
continue to improve industrial competitiveness across the
country. So I think the President is really putting us on the
right path with these goals, and then, of course, as we sort of
move forward and make progress toward them, we can continue to
look at them and revise them as appropriate.
The Chairman. I am over my time. I just want to ask one
question about the Shaheen-Portman legislation that I strongly
endorse.
S. 761 is very similar to S. 1000, as reported by the
committee in the last Congress. It has 4 titles: buildings,
commercial building efficiency finance, manufacturing, and
Federal Government efficiency.
Could you describe the importance of these areas in
achieving the President's goal of doubling national energy
productivity by 2030? My view is that S. 761 would contribute
significantly to achieving that goal that the President set,
but just to have your views on the record would be helpful.
I thank my colleagues for letting me get that extra
question. I know Senator Franken, in particular, is trying to
get back and forth to the Judiciary Committee. So if you could
give us a brief answer, and maybe you could incorporate it for
the record so we could go to--we have Senator Manchin and
Senator Franken next. I want to let them ask their questions.
Dr. Hogan.
Ms. Hogan. Sure. Again, we have not looked into real detail
into this bill, but generally we think that the areas covered
by this bill make an important contribution to the President's
goal. As we have talked about, the bill puts in place some
really new ways for DOE to work hand in hand with the States
and local governments on building codes. Building codes are a
powerful way to deliver savings, consistent with the roles that
the State and local governments play with building codes. We
know that lack of a trained and skilled work force, as well as
lack of access to financing, are also stumbling blocks to
greater investment in energy efficiency where it makes sense,
and there are some great provisions in that area as well.
Industrial energy efficiency is a place for additional
progress to be made both in the supply chain, as we have
discussed, as well as enhancing, I think, some of the things
the Department does in a way that it partners more broadly with
the private and public sector.
We also know that there is more progress we can make in the
Federal sector too as we use the tools that are available to us
or potentially expand what it is those tools can do.
The Chairman. I need you to look into this bill in detail
because I think it is a good bill. It is a bipartisan bill.
There is great interest here in the Senate. Could you get back
to me with your views on the details of this bill, say, within
2 weeks?
Ms. Hogan. Yes, we can.
The Chairman. Very good.
Next in order of appearance is Senator Manchin.
Senator Manchin. We were betting on who was next.
[Laughter.]
Senator Franken. No one wanted to bet. The chairman did it
right.
Senator Manchin. Let me just ask whoever would answer this
question. The reason I say this, in my little State of West
Virginia, I think there are 3 dams that were built during or
before World War II, that had the penstocks, had everything
ready to go for the power this country needed to defend itself,
as you know, during that period of time.
About halfway through the war, they decided not to finish
and put the power units on. The penstocks are still there.
Everything is ready to go.
How many dams were built in America during that time that
have never been retrofitted that were ready to go? Does anybody
know that? You all know you have them in your States. Everybody
has one I am sure.
Mr. Wright. Senator, I will say I do not know the answer to
that question.
Senator Manchin. We are talking about building this and
doing this. I mean, most of them have the--everything is ready
and we just did not need the power at that time and fossil was
so much cheaper, oil, whatever at the time. They never put it
in. But they are all prepared, ready to go. I have got two
ready to happen in my State anytime you want to do it.
That was just a question. If you could give me that answer,
I would deeply appreciate it.
Dr. Hogan, I would go to you because I noticed that it was
said that with the energy efficiencies, that we could cost
effectively reduce by 20 to 50 percent or more is what you have
been saying. Correct? Now, you are saying with homes and
buildings. You are factoring in power plants in that savings,
correct, because of the waste we have from the power plants?
You are saying that power plants are about 30 percent
efficient?
Ms. Hogan. Correct. Power plants are about 30 percent.
But I think as we talk about reducing energy use in the
home, it is really reflective of the energy bill in the home.
Senator Manchin. But I am saying we think that we can do
things much more efficiently with our homes and our buildings
because of all the waste. But you readily admit that we have an
awful lot of waste in our power plants.
Ms. Hogan. Sure.
Senator Manchin. A lot of our coal plants, natural gas
plants. We have a lot of waste there.
How come you are not putting any money to retrofit them?
That is where your greatest savings are. That is where your
greatest efficiencies would be because that is where your
greatest loss is.
Ms. Hogan. I think the Department of Energy has a broad
portfolio of efforts, including looking at ways to improve the
efficiency of our power plants. The other area I think that is
ripe for a significant savings are things like combined heat
and power where we also can greatly improve the conversion
efficiency.
Senator Manchin. Let me just say what you have here. About
half of the budget of the Office of Fossil Energy and in DOE on
the President's energy efficiency initiative, while reducing
funding on programs like the advanced energy systems program at
the National Energy Technology Lab. So it does not make sense,
if you are trying to get the efficiencies you want and you are
not trying to retrofit or make that happen at the largest
plants that you have identified as the most inefficient.
Ms. Hogan. No. I mean, we would be happy to have this
broader conversation with you. I think when you look at what
the role of the Department of Energy is, it is largely one of
looking at what the research challenges are--there are indeed
challenges--and then also helping people understand what their
opportunities are. As we know, sort of what goes on with power
plant retrofits is a very complicated----
Senator Manchin. But I am saying NETL, the National Energy
Technology Lab, has been very effective in working with fossil,
both coal and natural gas, but you keep cutting their budget.
The Department of Energy does not put any money in it.
Ms. Hogan. If we look at the investment the Department has
made in improvements in R&D for our fossil-based system in this
country, we will see that it is very substantial. But I am
happy to sort of continue the conversation.
Senator Manchin. We would be happy to because we are not
seeing what you are seeing, and we had the figures from your
own agency to back that up. But I would love to sit down and
talk with you.
One more very quickly. This is for anyone. Do you have any
estimate at all about how much energy can be saved through the
energy efficiencies programs such as the Shaheen-Portman bill
and if you have any idea about that as far as what you think
that can actively do?
Ms. Hogan. So I think I am the one that is here speaking to
the energy efficiency issues.
This is something we will be happy to go back and look
into. We have sort of gone through that there is a long list of
energy efficiency provisions in the bill that touch on a number
of different areas, the building codes, industrial energy
efficiency, enhancing the work force for commercial buildings,
as well as additional opportunities with the supply chain. So
we will be happy to look into that in more detail.
Senator Manchin. Can you give me a ratio of what the
savings would be per the cost? That is all. I am just looking
if it makes sense--the type of savings that we have for the
cost that we are investing. There has to be a cost ratio.
Ms. Hogan. Yes, and I think everything that you look at in
this bill is looking to address market barriers for things that
really are cost-effective. So I think you can expect a pretty
good cost-benefit ratio.
Senator Manchin. The only thing I would ask real quick--and
I am sorry, Mr. Chairman. I will finish right up. If you are
going to categorize it--and I would categorize it if you have
homes, if you have commercial buildings, and if you have
manufacturing. I would include--manufacturing would be in our
power plants--how much of the total loss is coming from each
one or the inefficiencies, and with the investments you would
make in each category, what type of return you can--to me that
would make it much easier for me to understand it if you
categorize it. So if you are going to spend $100 million here
and only get a $10 million return and you are going to spend
$100 million here and get a $400 million return, I would like
to at least see the comparisons. Does that make sense?
Ms. Hogan. Sure. We can look at it.
Senator Manchin. For the sponsor of the bill, I think you
know where I am going with this.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Nobody on this committee spends more time advocating for
renewable energy than the Senator from Minnesota. So we welcome
your questions.
Senator Franken. I was happy to hear the Senator from West
Virginia talk about renewable energy, about hydro and about
energy efficiency at power plants, as well as in buildings and
commercial buildings and homes.
I started an initiative in Minnesota called Back to Work
Minnesota because I see that this is an opportunity to create
jobs.
Again, I congratulate Senator Portman and Senator Shaheen
on this important bill, S. 761, because it seems to me that the
bang for the buck here is pretty obvious when you are talking
about saving energy and at the same time you are creating jobs.
In Minnesota, we manufacture energy efficient windows,
energy efficient doors, HVAC systems that are incredibly energy
efficient. You have the jobs that are created when people do
the retrofit. People in our building trades have been hit over
the last several years with the depression in their industry,
and we need to put these people back to work. It also pays for
itself. I want to talk to you a little bit about financing.
But I really would like to ask you about what you see as
the job creation possibilities that come out of this piece of
legislation.
Dr. Hogan.
Ms. Hogan. So as you look at the legislation, I mean, you
are building to more efficient levels, providing more access to
financing in the commercial building space, looking at new
opportunities for efficiency in the industrial sector,
particularly as there is clear information about how to improve
energy efficiency up the supply chain. I think there is a fair
amount of information out there supporting what you are saying
about the enhanced jobs that we get by working to improve the
efficiency of our buildings and facilities. So when you look at
the bill, you are seeing some very important provisions that
will help us grow that energy efficiency marketplace and build
those jobs.
Senator Franken. I work closely with my constituents in
Minnesota, and I often hear that a major impediment to doing
retrofits is financing. I support the goals in the bill. I
think it is very smart in the bill that we have provisions to
address exactly that, overcoming financing obstacles.
A 2009 study from McKinsey found that more than $1 trillion
in wasted energy could be saved in this country if we spent on
the scale of hundreds of billions of dollars. That is a great
return on investment that can help our citizens save money and
cut down on unnecessary greenhouse gases and, as you just said
and as I said, create jobs. That is why I believe this bill can
and probably should go further in providing financial
incentives for building retrofits.
How large is the opportunity for energy savings in
buildings? It is 40 percent of our energy. What kind of
financial incentives and also what kind of financing can we do?
Because if you--and we have different financing approaches that
we have used in Minnesota where the energy service company
essentially puts all the money up front and they get paid back
either through--the owner of the building pays the old energy
bill and the excess money goes right back to the energy service
company. There are all kinds of models. Can you speak about
that a little bit?
Ms. Hogan. Yes. Again, we do see that access to financing
is frequently cited as a reason why building retrofits are not
going forward. We do see that many, many, many buildings can be
improved from an energy efficiency standpoint by 20 percent or
more. Then you have to look at sort of the more particular
issues that are out there in the commercial building
marketplace. I think you are referring to some of the issues
with the public sector. Some of them have a harder time getting
access to dollars.
Senator Franken. Actually in the public sector in many
cases, it is easier because they know that in the public sector
that building is going to be in the same hands for 30 or 40
years. MUSH, right?
Ms. Hogan. The MUSH market and using the energy savings
performance contracts that you were referring to. Right.
So the part of the industry that has figured out how to do
that is doing it well, but there are still many more public
entities that do not quite know how to use that type of
contractual mechanism. So there is a lot more work to be done
to expand the number of people that can do that well and to get
the savings we can from the public sector, the MUSH market.
When you go to the private----
Senator Franken. Should we not, just for everyone listening
and watching--it is municipal, university, schools, and
hospitals. That is the MUSH market, everybody. You are welcome.
Ms. Hogan. It has nothing to do with dogs. Right.
Senator Franken. Unless it is a university that teaches
people how to train dogs. I think that is the only overlap.
Ms. Hogan. Right.
Senator Franken. I am sorry I got this off track.
[Laughter.]
Senator Franken. Let us talk about pace laws. Can you
explain to the folks what pace laws are and how they work? I
think they are really a good way of doing this.
Ms. Hogan. Right. So there is a lot of different financing
mechanisms out there, and pace is one where you put--I mean, it
is somewhat similar to what you are saying with the energy
performance contract where you engage in a retrofit for the
building. There is a cost. The cost gests assigned to the
property assessment and you pay it back through your sort of
property tax process.
Senator Franken. Yes. In other words, instead of paying up
front, you put it on your property as a property tax, and even
if the property changes hands, it just stays with it. In this
way, you can get financing from a county or from a city or from
a State. The Edina, Minnesota was the first in Minnesota to do
that, and we are having other cities do it. Actually, you can
borrow money at a lower rate because the city is doing it or
the county is doing it.
Ms. Hogan. Right, and it addresses the issue that the
building may change hands before the energy efficiency measure
may pay itself back. So you are attaching the improvement to
the building as opposed to the owner and addressing some of
those key barriers.
Senator Franken. Mr. Chairman, I am over my time, but can I
ask one more?
The Chairman. Absolutely.
Senator Franken. I want to spend a couple minutes talking
about a separate energy efficiency issue, the energy efficiency
resource standard. Are you familiar with that at all? We have
that in Minnesota and a number of other States, I think, have
implemented these standards.
In Minnesota, there is a requirement for utilities to get
1.5 percent more efficient use of their electricity by their
consumers every year. By dong this, it has incentivized exactly
what we are talking about. It has incentivized retrofitting
because the utilities are looking for customers to do exactly
that, and it is developing more efficient technologies. Can you
talk about the merits of a Federal energy efficiency resource
standard?
Ms. Hogan. I think I can talk generally about that. I mean,
clearly we are interested in policies that, as you are pointing
out, encourage energy savings where energy savings make sense.
At the State level, the energy efficiency resource standard is
proving to be a very effective tool. I think over half the
States across the country have such a standard. It can be at
varying levels, 1 percent, 1.5 percent, 2 percent in some
States. As you are pointing out, it really engages the utility
in delivering effective programs across all of their customer
classes to get the savings where the savings are cost-effective
and with a good payback. So it is a powerful tool.
Senator Franken. It is a powerful tool that I think we
could use and possibly legislate that nationwide, being careful
not to punish the utilities in those States that have already
been doing this for a number of years like they have in
Minnesota.
Thank you all for your testimony. Dr. Hogan, thank you
specifically for answering my questions.
Mr. Chairman, thank you.
The Chairman. Thank you, Senator Franken.
Senator Murkowski has indicated to me she does not have any
further questions, and I think Senator Portman would like to
make a statement. Then we will wrap up.
Senator Portman. Just briefly again, thanks, Dr. Hogan, for
being here. I thank Chairman Wyden and Senator Murkowski for
allowing us to have this hearing today and to move quickly on
the energy efficiency legislation. I thank Senator Franken. He
has obviously got a wealth of experience in this.
We talked earlier about the ESCO's at the Federal level
that are allowed to perform these services for efficiency and
then be paid over time with the savings, which is the Federal
Government. We are expanding what those savings can be to
include the electric and natural gas charging stations, for
instance, which is infrastructure. So we do have some
legislation here which will help to strengthen that at the
Federal level.
I really loved getting the question, Dr. Hogan, from my
colleague from West Virginia, Senator Manchin, because that is
really what this is all about. We are going to get you a lot of
good data, but just a couple thoughts here.
The authorization, based on the CBO numbers we have so
far--and we will get the final numbers before the markup--is
about $570 million. That will all be offset so there will be no
cost. In other words, this is a deficit-neutral bill. Given the
times we live in, we think that is necessary. We are committed
to finding those offsets.
However, in terms of the cost-benefit analysis, we have an
analysis out there that shows that this legislation per what
Senator Franken talked about and also Senator Coons in terms of
jobs, 80,000 new jobs. We have a figure out there that there
would be a savings of $4 billion per year by 2020 to consumers
in terms of energy costs. So in terms of a cost-benefit
analysis, that is pretty impressive.
In terms of the emissions savings, there are a lot of
people concerned about with CO2 in particular. It is
equivalent to taking 5 million cars off the road, which is a
pretty significant savings.
In terms of the Federal Government, the costs there we
talked about earlier, the Federal Government being the biggest
energy user in the world. We think there is about a $24 billion
bill a year for energy just in the Federal Government alone. So
this is a direct help to taxpayers, obviously, because whatever
savings--we will get you some numbers on these--goes directly
into the taxpayers? pocket because this is money otherwise that
would be spent at the Federal level.
So we think this is an incredible bang for the buck, which
is why I am excited about it and appreciate again the fact that
we are moving quickly on this legislation this year. Having
gotten out of committee with a good bipartisan vote last year,
we are hoping to do that again and get it to the floor and, as
Senator Murkowski said and the chairman said, hopefully get it
through the House and then to the President for signature.
Thank you, Mr. Chairman. Thank you, Dr. Hogan.
The Chairman. Senator Portman, thank you very much. A
couple of hours ago, Senator Murkowski and I began saying that
hydro is back, and I think with the good work that you and
Senator Shaheen are doing, we can amend that and say energy
efficiency is coming back, too. So we commend you for your good
work.
With that, the committee is adjourned.
[Whereupon, at 11:46 a.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of Kathleen Hogan to Questions From Senator Wyden
Question 1. S. 761, is very similar to S. 1000 as reported by the
Committee in the last Congress. It has four titles: buildings;
commercial building efficiency financing, manufacturing, and Federal
government efficiency.
Please provide the Department's view on each section of the bill
and an estimate of the savings that would result from each section.
Answer. An analysis of S. 761 is as follows. The Administration is
still reviewing the bill, and the following analysis does not provide
or represent a complete position on the bill or any of its subtitles.
This analysis and estimates therein are preliminary and do not
necessarily reflect all inputs, effects, or impacts.
title i--buildings
Subtitle A--Building Energy Codes
This subtitle would expand on DOE's authority to assist in the
development of model building codes. The bill would add to the existing
building code program certification requirements for States and Tribes
to demonstrate improvements in the energy efficiency of their building
codes and achievements in compliance.
Importantly, the bill would authorize the establishment of stretch
codes and targets for codes by DOE to advance energy efficiency in the
absence of improvements in the model building codes.
The bill would expand upon recent DOE steps to increase the
transparency of its participation in the voluntary codes process. The
bill language would codify many of those efforts and provide further
enhancement of those efforts.
The bill would authorize $200 million to carry out these tasks. DOE
has yet to perform an analysis that details the annual consumer savings
and costs realized upon implementation of these provisions.
Subtitle B--Worker Training and Capacity Building
This subtitle would establish a grant program to develop and
support building and training centers at institutions of higher
education to identify opportunities for optimizing energy efficiency;
to promote emerging concepts and technologies; to train building
engineers, scientists, technicians and code officials in energy
efficiency design and operation; and to promote research in alternative
energy sources and distributed generation.
While the bill would make clear that this authority would be
coordinated with DOE industrial research and assessment center programs
and other Federal programs in order to avoid duplication of effort, DOE
understands this provision as complementing its on-going workforce
training efforts and energy service development activities, including
the current Industrial Assessment Centers program.
title ii--private commercial building efficiency financing
Title II would establish a grant program focused on State-level
investment in programs to promote energy efficiency retrofits through
the use of a variety of innovative financing mechanisms, including
commercial Property Assessed Clean Energy (PACE) programs, credit
enhancements, and revolving loan funds.
The high initial costs of installing improved building energy
efficiency measures can deter businesses from making such investments.
The availability of private sector financing, however, can allow these
projects to happen. We have seen that often businesses with access to
financing to undertake efficiency upgrades could generate enough
savings to pay finance costs associated with their energy efficiency
investments. DOE supports State-level financing programs as a means to
secure long term access to funding for energy efficiency retrofits.
Currently, included with the many eligible activities under the
Department's State Energy Program are State-level activities to improve
access to financing for energy efficiency and renewable energy
projects.
The bill would authorize $250 million for a 5-year period, spanning
from 2015 through 2020, to help States develop financing mechanisms
that would spur increased energy efficiency investments that leverage
private sector financing. Through the financing mechanisms described in
the bill, this funding could be leveraged into a many-fold increase in
available energy efficiency retrofit financing for commercial entities.
Moreover, the grant program authorized under the bill focuses
exclusively on the investment potential for energy efficiency that can
be realized by such programs.
title iii--industrial efficiency and competitiveness
Subtitle A--Manufacturing Energy Efficiency
Manufacturing is the most diverse energy-use sector--in terms of
energy services required, sources of energy used, and technologies
needed and product output. This subtitle would provide further emphasis
to DOE's efforts in interagency cross-program coordination to ensure
the strengthening of the U.S. industrial sector through smarter and
more efficient uses of energy. The Future of Industry Program, as
outlined in the bill, would enhance the potential of the DOE program
offices, the National Laboratories, and the industry sector to identify
and deploy technologies and practices that will increase industrial
efficiency and productivity, which in turn will improve the
competitiveness of the U.S. industrial sector. Such authority would
allow DOE to continue to partner with industry, small business,
universities, and other stakeholders to identify and invest in emerging
technologies with the potential to create high-quality domestic
manufacturing jobs and enhance the global competitiveness of the United
States.
Subtitle B--Supply Star
This subtitle would establish a program to identify and promote
practices, recognize companies, and recognize products that use highly
efficient supply chains in a manner that conserves energy, water and
other resources. This subtitle also authorizes the
Department to award competitive grants and other incentives in
support of such practices.
Benefits from understanding and recognizing energy and resource
efficiency across the supply chain include:
Improved operational efficiencies,
Decreased energy intensity,
Energy data for fact-based decisions,
Support for organizational and cultural change,
Drivers for organizational integration,
Reduced environmental impacts,
Competitive advantages over firms that neglect resource
management,
Visible demonstration of social responsibility, and
Positioning for carbon accounting.
Subtitle C--Electric Motor Rebate Program
This subtitle would establish a program to provide rebates for
expenditures made by entities for the purchase and installation of new
energy efficient electric motor controllers for constant speed motors.
These motors are used in both commercial buildings (elevators,
escalators, moving sidewalks) and manufacturing facilities (conveyor
belts). For the rebate program for motor controllers, preliminary DOE
estimates indicate that the $10 million cost to the government of the
rebate program over two years and the $36 million capital investment
costs for participating entities could save approximately $74 million
(undiscounted, real dollars) in electricity bill payments by the end-
users over the lifetime of the motors with controllers purchased in the
two years that the rebate is in place. The average lifetime of these
motors is approximately 11 years and therefore these electricity bill
savings accrue over a longer period of time than the rebate program.
Subtitle D--Transformer Rebate Program
This subtitle would establish a program to provide rebates for
expenditures made by owners of industrial or manufacturing facilities,
commercial buildings and multifamily residential buildings for the
purchase and installation of a new energy efficient transformer. The
Department has recently finalized improved energy efficiency standards
for this equipment, which are to take effect beginning in 2016. The
availability of rebates could, in the interim, incentivize the
installation of high-efficiency transformers both in advance of and to
exceed the new standards. For products with long estimated lives, such
as distribution transformers, installation of models with higher
efficiency can result in significant long term energy and dollar
savings following the additional initial capital cost.
The rebate program could be beneficial for the purchase of more
energy efficient transformers because of the nature of the market for
the low-voltage, dry-type transformers that would be eligible for this
rebate. In most cases, the low-voltage, dry-type transformers installed
inside buildings and plants are purchased by electrical contractors or
building managers who are not responsible for paying future energy
bills. Thus, most of these purchases are made on the basis of lowest
first cost, not efficiency, which creates a potential for energy
savings that could be realized by purchasing more efficient
transformers. This program could attract more efficient transformers
into the market ahead of the new energy conservation standard for low-
voltage dry-type distribution transformers; however, it should be noted
that NEMA Premium level will be a required efficiency level for the
vast majority of the market (3-phase units) in 2016. For the two year
rebate program, the government cost of $10 million and the purchaser
costs of $20 million could save the end-users approximately $362
million (undiscounted, real 2012 dollars) in electricity bill payments
over the lifetime of the transformers purchased in the two years of the
rebate program. It should be noted that the average lifetime of this
equipment is approximately 30 years, so that these savings are
generated over a long period of time relative to the length of the
rebate program, and that the new energy efficiency standards for this
equipment are to take effect beginning in three years.
title iv--federal agency energy efficiency
As frequently noted, the Federal government is nation's largest
energy consumer. This means that there is tremendous opportunity and a
clear responsibility to lead by example through improvements to energy
management across our buildings, facilities, and fleets. The bill would
further emphasize, and enhance, efforts to identify opportunities for
improving energy efficiency in some of the most energy intensive
sectors of the Federal government, including the increased need for
information, communication, and data center resources.
The bill would also expand the authority of the energy savings
performance contract (ESPC) program to allow the conversion of Federal
fleets to alternative fueled vehicles if substantial savings could be
generated through such a conversion to pay for the investments needed.
This application of ESPC authority is not within the present framework
of Administration policy, which relates only to Federal buildings, and
is beyond the scope of the Administration's current guidance and would
require careful review.
Question 2. Title I of S. 761 directs DOE to support the
development of a voluntary national model building energy code, to
encourage state adoption of the code, and to certify adoption.
How would DOE encourage state adoption, and what would be the
benefits in terms of efficiency and market standardization?
Answer. The Administration is still reviewing S. 761, and the
following preliminary analysis does not provide or represent a position
on Title I of the bill. Moreover, at this time DOE has not determined
how it would implement enhanced activities to encourage State adoption
of more efficient building energy codes under the authorities provided
in the bill.
Title I of S. 761 would expand on DOE's authority to assist in the
development of model building codes. The bill would add to the existing
building code program certification requirements for States and Tribes
to demonstrate improvements in the energy efficiency of their building
codes and achievements in compliance.
Importantly, the bill would authorize the establishment of stretch
codes and targets for codes by DOE to advance energy efficiency in the
absence of improvements in the model building codes.
The bill would expand upon recent DOE steps to increase the
transparency of its participation in the voluntary codes process. The
bill language would codify many of those efforts and provide further
enhancement of those efforts. The bill would authorize $200 million to
carry out these tasks. DOE has yet to perform an analysis that details
the annual consumer savings and costs realized upon implementation of
these provisions.
Question 3. Experience and skill in designing and installing energy
efficiency measures varies widely around the country. Title I of S. 761
would direct DOE to establish Building Training and Assessment Centers
at existing educational institutions to promote training and improve
the skills of building professionals in building energy retrofits.
What lessons has DOE learned from establishing their Industrial
Assessment Centers that would be applicable to these Building Centers?
What does this training provision do to level the availability and
quality of training programs between states, and what impact would this
have on job creation?
Answer. The Administration is still reviewing S. 761, and the
following preliminary analysis does not provide or represent a position
on Title I of the bill.
Title I, Subtitle B of S. 761 would establish a grant program to
develop and support building and training centers at institutions of
higher education to identify opportunities for optimizing energy
efficiency; to promote emerging concepts and technologies; to train
building engineers, scientists, technicians and code officials in
energy efficiency design and operation; and to promote research in
alternative energy sources and distributed generation.
While the bill would make clear that this authority would be
coordinated with DOE industrial research and assessment center programs
and other Federal programs in order to avoid duplication of effort, DOE
understands this provision as complementing its on-going workforce
training efforts and energy service development activities, including
the current Industrial Assessment Centers (IACs) program. Currently,
IAC teams are located at 24 universities across the country. Through
periodic funding opportunity announcements, universities have been
eligible to apply to host an IAC and receive DOE funding to provide
assessments for industrial facilities.
The IAC program enables promising engineering students around the
country to conduct energy assessments in a broad range of manufacturing
facilities, providing skills and experience that prepares the students
to compete in today's economy while helping local companies and
factories to reduce energy waste, save money, and become more
economically competitive. We expect that the training provision in S.
761 would build upon this foundation to achieve additional benefits
related to job creation and access to quality training with a focus on
cutting waste in the nation's buildings.
Question 4. Title II of S. 761 would establish an initiative, under
the existing State Energy Program, to encourage states to focus on the
challenge of increasing investments in private commercial building
efficiency.
Would you briefly explain why this particular sector has been
resistant to energy efficiency investments and improvements and how
this provision would help to overcome this resistance?
Answer. The Administration is still reviewing S. 761, and the
following preliminary analysis does not provide or represent a position
on Title II of the bill.
Title II of S. 761 would establish a grant program focused on
State-level investment in programs to promote energy efficiency
retrofits through the use of a variety of innovative financing
mechanisms, including commercial Property Assessed Clean Energy (PACE)
programs, credit enhancements, and revolving loan funds.
The high initial costs of installing improved building energy
efficiency measures can deter businesses from making such investments.
Also, commercial buildings may have split incentives in cases where the
building owner would be the one to undertake improvements while the
tenants would be the ones to pay the energy bill and receive the
benefits. Additionally, some buildings change ownership frequently so
the owner may not realize the full payback from an energy efficient
upgrade. The availability of one or more private sector financing
mechanisms, however, can allow these projects to happen. We have seen
that often businesses with access to financing to undertake efficiency
upgrades could generate more than enough savings to pay finance costs
associated with their energy efficiency investments. DOE supports
State-level financing programs as a means to secure long term access to
funding for energy efficiency retrofits. Currently, included with the
many eligible activities under the Department's State Energy Program
are State-level activities to improve access to financing for energy
efficiency and renewable energy projects.
The bill would authorize $250 million for a 5-year period, spanning
from 2015 through 2020, to help States develop financing mechanisms
that would spur increased energy efficiency investments that leverage
private sector financing. Through the financing mechanisms described in
the bill, this funding could be leveraged into a many-fold increase in
available energy efficiency retrofit financing for commercial entities.
Moreover, the grant program authorized under the bill focuses
exclusively on the investment potential for energy efficiency that can
be realized by such programs.
Question 5. DOE's Advanced Manufacturing Office (AMO) has
increasingly focused on R&D for new, more efficient industrial
processes. But, our installed industrial base uses about 30 percent of
the nation's energy.
What do you think is the appropriate balance between R&D on new
processes and support for retrofits to increase the efficiency of
existing manufacturers?
How will you interpret Title III of the bill to realign the AMO's
priorities?
Answer. Through the Advanced Manufacturing Office (AMO), DOE works
closely with a broad set of industry sector stakeholders. The Office
approach has shifted emphasis to investments in foundational
technologies--technologies that are anticipated to have a high impact
in helping save energy and improve competitiveness and that will
benefit multiple industries in the installed industrial base. When R&D
investments are approached in this manner, the extensive supply chains
associated with manufacturing multiply the government's initial
investments from one industry to multiple applications in other
industries and end-use products. Examples include improving processes
for the manufacturing of steel and chemicals, as well as advancing
additive manufacturing, development of new lightweight materials, and
new high performance semiconductor materials.
Many of these foundational technologies have cross-cutting
potential and directly enable improved energy efficiency retrofits for
existing manufacturers in the installed industrial base. The need for
cost share typically requires that research be conducted by, or in
partnership with companies that include the installed industrial base,
and would benefit from the development of these foundational
technologies. For example, in 2012 DOE invested over $18 million in
four projects from the Innovative Manufacturing Initiative Funding
Opportunity Announcement that directly benefits the steel industry.
AMO pursues this mission through investments that research,
develop, and demonstrate (RD&D) at convincing scale new energy-
efficient manufacturing processes and materials technologies to reduce
the energy intensity and life-cycle energy consumption of manufactured
products and promote a corporate culture of continuous improvement in
energy efficiency among existing facilities and manufacturers. AMO-
supported technologies must have the potential to reduce the life-cycle
energy consumption of impacted manufactured goods by 50% over ten
years. AMO investments in RD&D projects and shared RD&D facilities are
competitively selected and cost-shared with industry to maximize energy
savings and economic benefits.
AMO also supports industry's adoption of technology through the
Industrial Technology Assistance program by developing strategic
partnerships. DOE support to industry helps lower a range of
institutional barriers to prepare innovative, energy-efficient
technologies and energy management systems for commercial deployment.
AMO's software tools assist existing facilities in identifying energy-
saving opportunities in systems commonly used across the sector such as
steam, process heating, compressed air, pumps, fans, motors, data
centers, and combined heat and power (CHP). The Better Buildings,
Better Plants Program has 118 industry partners demonstrating their
commitment to energy savings by signing a voluntary pledge to reduce
energy intensity by 25% over ten years. Moreover, eleven manufacturers
have signed on to the Better Buildings Challenge to not only make their
buildings and facilities more energy efficient by 2020, but to
transparently share the business approaches they use to achieve these
savings.
AMO's Industrial Assessment Centers (IACs) continue to be a
workforce development initiative to train the next generation of energy
engineers. Led by faculty directors, students receive hands-on
experience conducting assessments for small-and medium-sized
manufacturers (SMEs) in their region, while the SMEs gain access to
critical resources and bottom line benefits. The Regional Clean Energy
Application Centers (CEACs) promote and assist the implementation of
CHP, waste heat to power, and district energy technologies and concepts
across the U.S. by providing market studies, education and outreach,
and technical assistance. The Superior Energy Performance program
offers industrial and commercial facilities the opportunity to earn a
certification by voluntarily demonstrating continual improvement in
energy efficiency. The program provides a transparent system for
verifying improvements in energy performance and management practices
through the application of the internationally accepted ISO 50001
energy management standard.
Title III of S. 761 would provide further emphasis to DOE's efforts
in interagency cross-program coordination to ensure the strengthening
of the U.S. industrial sector through smarter and more efficient uses
of energy. The Future of Industry Program, as outlined in the bill,
would enhance the potential of the DOE program offices, the National
Laboratories, and the industrial sector to identify and deploy
technologies and practices that will increase industrial efficiency and
productivity, which in turn will improve the competitiveness of the
U.S. industrial sector. Such authority would allow DOE to continue to
partner with industry, small business, universities, and other
stakeholders to identify and invest in emerging technologies with the
potential to create high-quality domestic manufacturing jobs and
enhance the global competitiveness of the United States. The
Administration is still reviewing S. 761, and this preliminary analysis
does not provide or represent a position on Title II of the bill.
Question 6. Title III of S. 761 would direct DOE to establish a
rebate program to promote the replacement of inefficient electric
motors and electric transformers.
Why aren't the energy savings achieved by replacement of existing
equipment with more efficient equipment enough of an incentive for
businesses to make these replacements without government incentives?
What's a rough estimate of the energy savings that would be
achieved by replacing the nation's electric motors and transformers
with more-efficient and cost-effective models, and what's a rough
estimate of the savings that would result from these two rebate
programs in S. 761?
Answer. The Administration is still reviewing S. 761, and the
following preliminary analysis does not provide or represent a position
on Title III of the bill.
Title III, Subtitle C of S. 761 would establish a program to
provide rebates for expenditures made by entities for the purchase and
installation of new energy efficient electric motor controllers for
constant speed motors. These motors are used in both commercial
buildings (elevators, escalators, moving sidewalks) and manufacturing
facilities (conveyor belts). For the rebate program for motor
controllers, preliminary DOE estimates indicate that the $10 million
cost to the government of the rebate program over two years and the $36
million capital investment costs for participating entities could save
approximately $74 million (undiscounted, real dollars) in electricity
bill payments by the end-users over the lifetime of the motors with
controllers purchased in the two years that the rebate is in place. The
average lifetime of these motors is approximately 11 years and
therefore these electricity bill savings accrue over a longer period of
time than the rebate program.
Title III, Subtitle D would establish a program to provide rebates
for expenditures made by owners of industrial or manufacturing
facilities, commercial buildings, and multifamily residential buildings
for the purchase and installation of a new energy efficient
transformer. The Department has recently finalized improved energy
efficiency standards for this equipment, which are to take effect
beginning in 2016. The availability of rebates could, in the interim,
incentivize the installation of high-efficiency transformers both in
advance of and to exceed the new standards. For products with long
estimated lives, such as distribution transformers, installation of
models with higher efficiency can result in significant long term
energy and dollar savings following the additional initial capital
cost.
The rebate program could be beneficial for the purchase of more
energy efficient transformers because of the nature of the market for
the low-voltage, dry-type transformers that would be eligible for this
rebate. In most cases, the low-voltage, dry-type transformers installed
inside buildings and plants are purchased by electrical contractors or
building managers who are not responsible for paying future energy
bills. Thus, most of these purchases are made on the basis of lowest
first cost, not efficiency, which creates a potential for energy
savings that could be realized by purchasing more efficient
transformers. This program could attract more efficient transformers
into the market ahead of the new energy conservation standard for low-
voltage dry-type distribution transformers; however, it should be noted
that NEMA Premium level will be a required efficiency level for the
vast majority of the market (3-phase units) in 2016.
For the two year rebate program, the government cost of $10 million
and the purchaser costs of $20 million (undiscounted, real 2012
dollars) could save the end-users approximately $362 million in
electricity bill payments over the lifetime of the transformers
purchased in the two years of the rebate program. It should be noted
that the average lifetime of this equipment is approximately 30 years,
so that these savings are generated over a long period of time relative
to the length of the rebate program, and that the new energy efficiency
standards for this equipment are to take effect beginning in three
years.
Question 7. Title IV of S. 761 would require the Federal government
to develop a plan to use advanced power savings techniques to reduce
energy use by government computers, and it would require the Federal
government to develop a goal for energy savings through the
consolidation of data centers.
How will these requirements be implemented in the context of
existing government efficiency objectives and programs, and are they
duplicative of any existing federal efficiency requirements?
Answer. As frequently noted, the Federal government is nation's
largest energy consumer. This means that there is tremendous
opportunity and a clear responsibility to lead by example through
improvements to energy management across our buildings, facilities, and
fleets.
Currently, Energy Star already provides significant guidance for
power management of computers; in addition, the power management
settings are incorporated into the Energy Star certification process.
As mandated by Executive Order 13423, Federal agencies are required to
activate Energy Star ``sleep'' features on computers and monitors; this
E.O. also mandates that Federal agencies buy Electronic Product
Environmental Assessment Tool (EPEAT) certified products. Executive
Order 13514 requires Agencies to promote electronics stewardship by
ensuring procurement preference for EPEAT-registered electronic
products, enabling of computer power management, activation of duplex
printing functions, and procurement of Energy Star-qualified and FEMP-
designated electronic equipment.
With regard to the data center consolidation, in 2010, the Office
of Management and Budget launched the Federal Data Center Consolidation
Initiative (FDCCI), which seeks to promote the use of Green IT by
reducing the overall energy and real estate footprint of government
data centers; reduce the cost of data center hardware, software and
operations; increase the overall IT security posture of the government;
and shift IT investments to more efficient computing platforms and
technologies, like cloud computing. The FDCCI was built on foundational
efforts across the government, including those carried out under
Section 103 of the Energy Policy Act of 2005.
Title IV of S. 761 would not only codify development of guidance
and goals relevant to the power savings techniques requirements listed
in the Executive Orders and the activities of the FDCCI, it would also
further emphasize and enhance efforts to identify opportunities for
improving energy efficiency in some of the most energy intensive
sectors of the Federal government, including the increased need for
information, communication, and data center resources. To that extent,
it would complement broader Federal efforts to use total cost of
ownership metrics, such as those recently called for in another OMB
initiative, known as PortfolioStat.\1\ Under, PortfolioStat, agencies
are optimizing those data centers that are pivotal to delivering
taxpayer services, while closing duplicative and inefficient data ones
to better enable mission delivery. In this context, energy efficiency
measures are one component of many efficiency measures that agencies
are addressing as complete work under the FDCCI.
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\1\ http://www.whitehouse.gov/sites/default/files/omb/memoranda/
2013/m-13-09.pdf
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The Administration is still reviewing S. 761, and this preliminary
analysis does not provide or represent a position on Title III of the
bill.
1Currently the FDCCI is managed by OMB and GSA, and the Energy Star
Power Management program and the EPEAT program are managed by EPA. The
Department's Federal Energy Management Program (FEMP) also provides
services, tools, and expertise to Federal agencies to help them achieve
their legislated and executive-ordered energy, greenhouse gas, and
water goals. Additional energy savings guidance related to information
and communications technologies would complement existing Federal
efforts.
Responses of Kathleen Hogan to Questions From Senator Murkowski
Question 1. The Energy Savings and Industrial Competitiveness Act
contains a section to ``reform and reorient'' DOE's industrial
efficiency programs. There has been much talk in this Committee and in
the full Senate about the duplication of federal authorities, some of
it across agencies but also some within, and the need to consolidate or
streamline some of the programs or authorizations within our
jurisdiction. What are your thoughts on this type of approach? Are
there other areas that you can point to where a re-organization may be
helpful?
Answer. The Administration is still reviewing S. 761, and the
following preliminary analysis does not provide or represent a position
on Title III of the bill. Title III of S. 761 would provide further
emphasis to DOE's efforts in interagency cross-program coordination to
ensure the strengthening of the U.S. industrial sector through smarter
and more efficient uses of energy. The Future of Industry Program, as
outlined in the bill, would enhance the potential of the DOE program
offices, the National Laboratories, and the industrial sector to
identify and deploy technologies and practices that will increase
industrial efficiency and productivity, which in turn will improve the
competitiveness of the U.S. industrial sector. Such authority would
allow DOE to continue to partner with industry, small business,
universities, and other stakeholders to identify and invest in emerging
technologies with the potential to create high-quality domestic
manufacturing jobs and enhance the global competitiveness of the United
States.
DOE has recently taken steps to ensure that the Department's
investment in industrial-sector energy technologies yields the greatest
benefit possible. In particular, the recently announced EERE's Clean
Energy Manufacturing Initiative will help integrate manufacturing
activities across DOE, focus them on American competitiveness goals,
provide the Advanced Manufacturing Office and the other EERE technology
offices with rigorous analysis on the best use of federal dollars, and
establish an improved mechanism for engaging directly with industry
partners on energy efficiency and clean energy challenges. EERE
coordinates its activities with other Federal agencies through the
Advanced Manufacturing National Program Office at the National
Institute of Standards and Technology (NIST), in order to minimize
overlap and foster increased collaboration in agency goals and
activities. The Department is committed to increasing collaboration
across its programs and with the National Laboratories, as well as with
its academic, non-profit, and private sector partners, in order to
eliminate duplication of activities, reduce fragmentation of efforts,
and accelerate the achievement of its technology goals.
Question 2. In your testimony you describe R&D that is underway on
next-generation building technologies and the idea of these
technologies functioning together with others to create energy-
efficient systems--integrating ``silos'' of efficiency (appliances,
buildings) with the goal of achieving greater overall savings. Please
elaborate.
Answer. In addition to efforts focused on specific building
components, DOE invests in whole building R&D that demonstrates how new
energy efficient technologies can function together to create an
efficient system, achieve greater overall savings, and inspire the
next?generation of buildings. For homes, this will translate into a new
generation of housing stock that is durable, uses smarter energy
management systems, and offers substantial energy savings. DOE's
research in these area focuses on several technologies, including
sensors, controls, and whole building performance.
Sensors are designed to help building owners and operators better
manage their energy use through improved information sharing between
systems and automation. Sensors measure predefined variables, such as
the amount of natural light coming in through an office window, and
then feed this data into a building's control system. The control can
then respond by adjusting the various building systems. For example,
sensors may note when a person leaves a room and let controls know to
turn off the lights, or can ensure that faucets only release water if
someone's hand is waved.
Advanced building controls can play a significant role in improving
building energy performance. Controls can be programmed to
automatically respond to environmental variables, such as daylight, but
can also respond to preprogrammed parameters aligned with other
factors, like whether a particular day falls on a weekend or a holiday.
Responses can include increasing a room's temperature when it is cold
outside, or having the lights turn on automatically when it is too
dark. The delivery of continuous, up-to-date information on building
system and component performance will enable more cost-effective
equipment servicing and optimized building operation. Building owners
and operators can realize lower maintenance and operating costs, and
building occupants could enjoy greater levels of comfort and
personalized control.
Whole building performance energy management systems are designed
to integrate the diverse and numerous systems that a building operates
to control the building environment. These systems include
refrigeration, heating, ventilation, and air conditioning (HVAC),
lighting, and a host of others. By having these systems communicate
with each other, building owners and operators can achieve improved
building performance and reduced energy use.
Response of Kathleen Hogan to Question From Senator Landrieu
Question 1. Energy efficiency is an issue that all sides can agree
is important. One item that unfortunately is not addressed in this
legislation concerns Section 433 of the Energy Independence and
Security Act of 2007 which created a mandate to ban fossil fuel use in
new federal buildings and renovation projects over $2.5 million by
2030. This restriction would prohibit the use of clean and efficient
domestic fuels like natural gas to be used in numerous federal
buildings. When this legislation was passed we had no real idea about
the supply of natural gas that we would be able to provide. Yet the
most recent analysis by the Potential Gas Committee (PGC) showed a
dramatic increase in the estimated recoverable natural gas reserves in
the U.S. The assessment of 2,384 trillion cubic feet is the highest
assessment in the 48 year history of the PGC. Given our increasing
access to these vast reserves of cheap, clean energy, does it seem
reasonable to revisit these restrictions placed on the federal
government which already operates 370.2 million square feet of office
space and instead provide the federal government with the option to use
this fossil fuel which affordable, abundant and American?
Answer. As you note, Section 433 of the Energy Independence and
Security Act directed the Department to establish regulations to
implement statutorily mandated Federal building standards that require
incremental reductions in energy consumption from fossil fuels, as
compared to 2003 levels, with a required 100 percent reduction
beginning in fiscal year 2030. DOE has been working hard to find the
right balance to help agencies meet these ambitious requirements with
as much flexibility as possible. The law does provide the Secretary
with the discretion to adjust the requirement downward for a specific
building upon request by the head of an agency, when meeting the
requirement would be technically impracticable in light of an agency's
specific functional needs (such an adjustment does not apply to the
General Services Administration).
The Administration is committed to an all-of-the-above energy
strategy. The Department of Energy has been working to advance this
rule, as it is an important way for the Federal government to lead by
example. At the same time, we have been listening to stakeholders who
indicate a need for flexibility. We have responded to Congress that we
would seek comment again, and are in the process of doing so currently.
Providing clarity on stakeholders' questions about implementing Section
433 of EISA is a top priority for the Department.
Responses of Kathleen Hogan to Questions From Senator Franken
Question 1. Please outline the merits of state and local energy and
water disclosure policies, particularly as they apply to large
commercial buildings. What can the Department of Energy do to help more
states and localities implement these policies?
Answer. Benchmarking and disclosure policies can facilitate market-
based competition and drive investment in energy efficiency.
Informational resources for State and local governments are available
through The State and Local Energy Efficiency Action Network (SEE
Action).
SEE Action is a state and local effort facilitated by DOE and EPA
that helps States, utilities, and other local stakeholders take energy
efficiency to scale. SEE Action's Working Group on Existing Commercial
Buildings has developed fact sheets that are tailored to State and
local stakeholders and regulators of rate-payer funded programs; as
well as a document entitled, ``Benchmarking and Disclosure: State and
Local Policy Design Guide and Sample Policy Language.'' All of these
publications are available at http://www1.eere.energy.gov/seeaction/
existing_commercial.html.
Question 2. Energy consumption in the U.S. could be reduced
substantially through behavior changes alone. What steps can the
Department take to prioritize consistent and effective research in this
area? Please also provide your recommendations to Congress on how we
can strengthen and improve behavioral research efforts at the
Department of Energy.
Answer. The Department understands the value of behavioral and
social sciences and is increasing the use of these disciplines within
its energy efficiency programs. Several programs within the Office of
Energy Efficiency and Renewable Energy (EERE) are using behavior-based
tools and information to shape program design, implementation, and
evaluation.
These programs span the nation's key energy use sectors and
include: the State and Local Energy Efficiency Action Network (SEE
Action), the Clean Cities initiative, the Better Buildings Neighborhood
Program, and Home Performance with ENERGY STAR. In addition, EERE is
developing a Home Energy Score, and creating a Commercial Building
Asset Rating and Building Performance database. In each case, the
Department is employing social science research--including public
survey data and experimental behavioral research--when designing,
evaluating, and communicating about its programs. We would be happy to
continue the conversation as to how we can build upon and improve the
Department's behavioral research efforts to achieve higher energy
efficient outcomes.
Question 3. Studies show that the energy efficiency of information
and communication technologies could be greatly improved. Please
indicate how best practices and lessons learned from energy efficiency
improvements in the information and communications technology sector at
federal agencies can be communicated, and transferred, to the private
sector.
Answer. The Department's Federal Energy Management Program (FEMP)
assists Federal agencies in reducing data center energy consumption by
encouraging them to adopt best practices, construct energy-efficient
data centers, and educate energy managers and information technology
professionals.
FEMP's Data Center Initiative partners with the General Services
Administration (GSA), the Energy Star Program, and private industry to
make data centers more energy efficient. One of the most visible
results transferrable to the private market from these partnerships is
the training that is created to raise awareness of efficiency
opportunities and support project implementation. These include in-
person seminars to IT and Facilities professionals, webinars on tool
use (Data Center Profiler Suite), and online webinars.
Question 4. Please provide the Department's estimate of the job
creation potential of S. 761.
Answer. The Department has not undertaken a comprehensive analysis
of S. 761 and does not currently have an internal estimate of its job
creation potential. We would be happy to discuss requests for a
comprehensive analysis of impacts of S. 761.
Responses of Kathleen Hogan to Questions From Senator Manchin
Question 1. Homes and commercial buildings last a long time and I
can't imagine we expect them to all get replaced or upgraded at once.
This tells me that while some low-hanging fruit exists--where we can
get significant energy savings from modest investments--our savings
might taper off down a more modest amount after that.
Does the DOE have an estimate of how much energy we can save
through energy efficiency programs such as those that the Shaheen-
Portman bill would support or through the initiatives in the
President's proposed initiatives? Specifically: how much in energy
savings are we talking per year? And does the rate of those savings
change over time because it takes a long time to replace buildings?
Answer. Energy efficiency is a large, low?cost, but underutilized
U.S. energy resource, and the opportunity for energy savings in the
buildings sector is vast. We spend more than $400 billion each year to
power our homes and commercial buildings, consuming more than 70% of
all electricity used in the United States, about 40% of our nation's
total energy bill, and contributing to almost 40% of the nation's
carbon dioxide emissions.\2\ Much of this energy and money is wasted.
If we cut the energy use of U.S. buildings by 20%, we could save
approximately $80 billion annually on energy bills, reduce greenhouse
gas emissions, and create jobs.\3\
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\2\ Buildings Energy Data Book, U.S. Department of Energy. March
2012, http://buildingsdatabook.eren.doe.gov/TableView.aspx?table=1.2.3.
3
\3\ Cross-Agency Priority Goal: Energy Efficiency, FY2013 Quarter 1
Update
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The U.S. built environment includes approximately 80 billion square
feet of commercial space and about 116 million homes. While energy
efficient new construction is important to lock in savings for the life
of the building, strategies to improve the efficiency of existing
buildings are essential to have an impact on U.S. building energy use.
The Department's Building Technologies Office therefore invests in an
array of innovative, cost-effective energy saving solutions that apply
to both new and existing homes and buildings, and appliances that are
used in every sector. These activities range from longer-term R&D on
emerging technologies in building components and systems, to providing
information, tools, and standards for increasing the use of efficient
off-the-shelf technologies and for building code adoption and
implementation in the short term. Having a diverse portfolio of
activities allows the Department to help capture the ``low-hanging
fruit'' of energy efficiency options available today as well as invest
in advances that will save businesses and consumers money in the
future.
The Department has not undertaken a comprehensive analysis of S.
761 and its potential impacts on energy use and savings. We would be
happy to discuss requests for a comprehensive analysis of impacts of S.
761.
Question 2. Deputy Assistant Secretary, in your testimony you state
that homes and buildings consume 40% of the Nation's total energy. It
is my understanding that a large portion of this energy--about half of
it--is lost in the generation of the electricity that is eventually to
be used in those homes and buildings. This is reported as ``Electrical
System Energy Losses'' by the Energy Information Administration (EIA).
That is to say that you're counting the fact that our power plants are
only 30 or 40 percent efficient in your calculations of our energy use.
It would follow that if we improve the efficiency of our
electricity generation and reduce losses in electricity transmission,
we will directly address the energy use--not just in the homes and
buildings, but everywhere electricity is used.
My question to you is this: should we be spending $200 million
dollars--about half the budget of the office of Fossil Energy in the
DOE--on the President's ``Race to the Top'' energy efficiency
initiative, while reducing funding on programs that would help us
generate electricity more efficiently? For example, the Advanced Energy
Systems program at the National Energy Technology Laboratory is a
program which has a long track record of helping improve the efficiency
of our coal and natural gas power plants which we know are going to be
responsible for providing our nation with safe and secure electricity
well into our future? Shouldn't we be spending money on both energy
efficiency and getting more bang out of our buck with our resources?
Answer. The Administration is committed to an all-of-the-above
energy strategy that reduces our dependence on oil, saves businesses
and consumers money, and positions the United States as the global
leader in clean energy.
As part of this strategy, DOE has requested $200 million in one-
time funding for Race to the Top awards, based on demonstrated
performance, to State and tribal governments, local governments with
public power utilities, and electric cooperatives that implement
effective policies to cut waste and modernize the grid. The Department
would offer informational resources and merit-based technical
assistance grants to States and other eligible applicants that wish to
qualify for awards for the greatest demonstrated improvements in energy
efficiency and energy productivity. Race to the Top would lead to
improvements in both energy efficiency and grid modernization.
Race to the Top is just one part of the Department's FY 2014 budget
request, which includes $28.4 billion in discretionary funds (including
$11.7 billion for nuclear security). DOE's request supports an array of
activities including conducting basic science research; advancing the
safe and environmentally sound production of domestic fossil fuels;
supporting clean and secure nuclear energy generation; developing the
next generation of renewable energy technologies; modernizing and
improving our electricity systems; and increasing energy efficiency of
our homes, buildings, and vehicles.
______
Responses of Jeff C. Wright to Questions From Senator Wyden
s. 545 & h.r. 267
Question 1. Two Year Licensing Process: The Commission's default
``integrated licensing process'' (ILP) is designed to take five-years.
S. 545 and H.R. 267 both require the Commission to consider
establishing a two-year licensing process for low impact projects at
existing non-hydro dams and for ``closed loop'' pumped storage.
a) Do you agree that in many instances the Commission is
capable of getting its part of the licensing process done in
two years or less for a low-impact project such as adding hydro
to an existing non-hydropower dam?
Answer. While it is correct that the ILP, established through a
public process with the collaboration of federal and state resource
agencies, Indian tribes, licensees, and other stakeholders, provides
for a five-year licensing process, the Commission's regulations allow
applicants to request approval to use the traditional licensing process
(TLP) or the alternative licensing process (ALP), which can take
substantially less time. Also, the TLP is the default process for
exemptions, both conduit and small hydroelectric power projects. Low
impact projects at existing dams are typically good TLP candidates and
many of the new projects that have been authorized in recent years used
the TLP. In instances where developers select sites that do not raise
significant environmental issues or other public concerns and where
developers engage in outreach with federal and state agencies, Indian
tribes, local communities, and other stakeholders to build a consensus
that projects are desirable, the Commission already can, and does,
issue licenses within as few as two months from when a complete
application is filed.
b) Is it accurate to state that other federal and state
agencies with authority over certain aspects of the licensing
process do not always act in a timely manner?
Answer. Our experience with licensing new projects at existing dams
is that agencies typically act in a timely or near-timely manner such
that licensing is not significantly delayed. We attribute this to most
of these projects being properly sited such that there are few or no
endangered species, water quality, or fish passage issues. Our limited
experience with closed loop pumped storage projects indicates that
these projects are likely to be more challenging to license in a timely
manner because they can affect environmental resources of particular
concern to the public and agencies. Our experience has not been as
positive with respect to project relicensing.
c) Should the Commission adopt a two-year goal or some other
goal significantly shorter than five-years for low-impact
project licensing, recognizing that other involved agencies are
not legally bound by it and may not comply?
Answer. Our goal has been and continues to be to process license
applications in as timely a manner as possible, in some cases in less
than two years, as noted above. Without the ability to set schedules
that are binding on all stakeholders, including federal and state
agencies, the Commission cannot guarantee any specific timeframes.
Whether it would be valuable to set a goal without the power to achieve
it is a matter to be considered.
d) Is a non-binding two-year licensing goal for low impact
projects better than no goal at all?
Answer. Please see response to 1(c) above.
e) Absent a two-year licensing goal or some other goal that
is significantly shorter than five-years what options does a
hydro developer have whose low impact project is uneconomic due
to the costs and length of the ILP or the ``Traditional'' or
``Alternative'' licensing processes? Is dealing with such a
situation best done on an ad hoc basis as it is currently?
Alternatively, would it be better for the Commission to have a
policy or process to address the licensing of low impact
projects that only are viable with a shorter and less costly
licensing process?
Answer. Our experience through licensing new projects and
discussions with developers indicates that it is the lack of financing
or the inability to execute a power sales agreement, and not the
licensing process, that makes a project uneconomic. Moreover, while
Commission staff strongly supports the development of small hydropower,
it is also the case that a developer must have the wherewithal to
engage in the licensing process and to meet licensing requirement. That
said, Commission staff works closely with developers and is constantly
reviewing Commission processes in an effort to ensure that they are as
efficient and cost-sensitive as possible.
We have dedicated a significant amount of staff resources over the
past several years to developing tools and web-based resources to guide
developers in ways to expedite low-impact projects. The process has
worked best and most quickly when developers approach Commission staff
about specific, well-sited projects and staff work with them on the
process that appears best suited to their specific project.
Question 2. Please explain the apparent inconsistency between
paragraphs 2-6 and paragraph 7 of the Commission's declaratory order in
Power Site Reservation Fees Group, 142 FERC,61,196 (Mar. 21, 2013).
(a) If a power site reservation is a valuable interest in
land, which the United States retains under section 24 ofthe
Federal Power Act, and if section 10(e)(1) requires any
licensee who uses the power site reservation to ``pay to the
United States reasonable annual charges ... recompensing'' the
United States for the use of the power site reservation, why
has the Commission decided it ``will no longer assess annual
charges'' for the use of power site reservations'' on ``former
federal lands included within the boundaries of hydropower
projects as to which'' a power site reservation exists?
(b) Paragraph (7) of the Commission's order states that
``licensees have given valuable consideration to obtain fee
ownership of federal lands, and have done so for the
development of hydropower, the very purpose for which the power
site reservation was created.'' But has the licensee given
valuable consideration for the right to use the federal power
site reservation itself, which section 24 requires ``shall be
expressly reserved in every patent issued for lands'' reserved
for power development? If the licensee has already ``given
valuable consideration to obtain'' the power site reservation,
as paragraph (7) suggests, was the power site reservation, in
fact, reserved to the United States? Conversely, ifthe power
site was reserved to the United States, did the United States,
in fact, receive ``valuable consideration'' for its sale to the
licensee?
(c) If a power site reservation is a valuable interest in
land, and section 10(e)(1) of the Federal Power Act requires
the Commission to collect a ``reasonable annual charge'' for
the use of that valuable interest, from what source does the
Commission derive the ``equitable'' power it claims in
paragraph (7) to waive those charges?
Answer. I was not asked to testify as to this matter, and the
Commission's annual federal land use charges are not within my area of
responsibility. The Commission, as an independent regulatory agency,
speaks through its orders, and staff cannot add to what the Commission
has stated in an order.
Question 3. Another important aspect of the current small conduit
exemption is that it only exempts them from FERC licensing
requirements, not from Federal and state fish and wildlife protections.
S. 545 preserves the fish and wildlife protections afforded by the
current small hydro exemption for small conduits over 5 megawatts, but
exempts those of 5 megawatts or less from those protections.
Why is it necessary to waive those fish and wildlife protections
for small conduit projects of 5 megawatts or less?
Answer. In my opinion it is not necessary to waive fish and
wildlife protections for small conduit projects, but my experience is
that fish and wildlife issues rarely arise regarding such projects.
Since October 2004, the Commission staff has issued 65 conduit
exemptions. In none of these cases have fish and wildlife agencies
filed any substantive conditions related to protection of fish and
wildlife resources.
Responses of Jeff C. Wright to Questions From Senator Murkowski
Question 1. Both S. 545 and H.R. 267 establish a process for FERC
to consider ``qualifying conduit hydropower facilities'' through an
expedited public notice and comment period. Such qualifying projects
must (1) use a non-federally owned conduit; (2) be 5 mw or less; and
(3) not have a current FERC license or ``exemption.'' I view this as
maintaining our federal nexus through the FERC review process but
providing flexibility for the vast majority of conduit projects that
are non-controversial. Do you agree? Also, please explain to the
Committee how you envision this new provision working.
Answer. Yes, I agree. The proposed legislation would maintain
flexibility for qualifying conduit exemption projects less than 5 MW.
After a developer files a notice of intent to construct a qualifying
facility as determined by staff, the Commission would issue a public
notice, and if no comments are received during the notice period
alleging that the project doesn't qualify, the developer could then
construct the project without Commission authorization. In the event
that a commenter alleges that the project does not qualify, staff will
review the comments and make a final determination regarding the
project's qualifying status.
Once FERC makes a determination that the proposed project meets the
qualifying criteria and there is no public opposition, then that
project is not required to get a license or an ``exemption'' from the
Commission, correct? But, doesn't any applicable state or other federal
law remain in force? Also, there's no requirement that a project
developer must use this new process, correct?
Under the proposed legislation, projects that do not require
Commission authorization would still be required to obtain other
pertinent approvals. Also, nothing would preclude the project developer
from seeking a license or conduit exemption from the Commission.
Question 2. S. 545 and H.R. 267 are premised on the need to develop
additional hydropower resources. What is your view of the potential of
undeveloped hydropower?
Answer. The U.S. Department of Energy in its April 2012 ``An
Assessment of Energy Potential at Non-Powered Dams in the United
States'' reports that, where conditions are suitable, non-powered dams
could be powered to create up to 12,000 megawatts of new electric
generation capacity.
Question 3. What are some steps Congress can take to improve the
hydropower licensing/relicensing process?
Answer. Congress could enact legislation that provides the
Commission, as lead agency, the ability to establish an enforceable
schedule for all stakeholders, including federal and state agencies
with mandatory conditioning authority.
Response of Jeff C. Wright to Question From Senator Manchin
Question 1. Can you tell me how many dams are out there and not
producing power?
Answer. The U.S. Department of Energy in its April 2012 ``An
Assessment of Energy Potential at Non-Powered Dams in the United
States'' reports that there are more than 80,000 non-powered dams that
provide a variety of other functions, including water supply and inland
navigation.
Especially when you look at dams that were originally supposed to
produce power, dams built before or during World War II, that they for
whatever reason decided to not generate power from?
As a regulatory agency, we only have occasion to investigate the
history of an existing, non-powered dam when a development application
is filed to utilize it or its head potential for electricity
generation. For example, on April 30, 2013 Tygart, LLC filed with the
Commission an application for an original license for the proposed 30-
megawatt Tygart Hydroelectric Project No. 12613 to be located at the
U.S. Army Corps of Engineer's existing Tygart Dam on the Tygart River
in Taylor County, West Virginia.
For those 80,000 non-powered dams that are federally owned, the
particular federal owner (e.g., U.S. Army Corps of Engineers and U.S.
Bureau of Reclamation) may have more information on the history of its
dams, including the reasons it is non-powered.
______
Response of Lowell Pimley to Question From Senator Wyden
s. 306 & h.r. 267
Question 1. H.R. 678 establishes a statutory categorical exclusion
for small conduit hydro projects. It says nothing about extraordinary
circumstances. In a similar situation involving statutory categorical
exclusions for oil and gas development, the Department has taken the
position that it cannot review the action to determine whether there
are extraordinary circumstances since the statute does not require it.
Similarly, H.R. 678 does not expressly require review for extraordinary
circumstances.
If H.R. 678 does not bar the Bureau of Reclamation from reviewing
small conduit projects for extraordinary circumstances, shouldn't the
provision be amended to permit extraordinary circumstances review?
Answer. HR 678, as amended by the House of Representatives, directs
Reclamation to ``apply its categorical exclusion process under the
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) to
small conduit hydropower development under this subsection, excluding
siting of associated transmission facilities on Federal lands.'' If
enacted, Reclamation would interpret this language not as statutorily
creating a categorical exclusion, but as endorsing its current
directive and standard to potentially apply a categorical exclusion,
provided that no extraordinary circumstances exist, pursuant to 40
C.F.R. '1508.4. For that reason, Reclamation does not believe it will
be barred from reviewing extraordinary circumstances for the
development of small conduit hydropower projects. Reclamation would not
be opposed to amendment language clarifying consistency with its
current policies that ensure extraordinary circumstances are considered
when applying categorical exclusions.
Response of Lowell Pimley to Question From Senator Murkowski
Question 1. What are the financial challenges in developing conduit
hydropower at federal canals and pipelines? In particular, what are the
capital costs, regulatory costs and other costs on a project covered by
S. 306 or H.R. 678?
Answer. The cost of hydropower development varies widely and is
dependent on a number of factors. Costs related to licensing, equipment
and civil works, transmission interconnection, and environmental and
cultural resource mitigation all vary greatly by site. According to the
National Hydropower Association small hydropower projects of 10 MW or
less can range from approximately $1,500-$6,000 per kilowatt installed
(http://www.hydro.org/why-hydro/affordableD, and the top 70 sites
identified in the 2011 ``Hydropower Resource Assessment at Existing
Reclamation Facilities'' report show an estimated potential cost of
between $1,455-$7,745 per kW installed.
It is difficult to identify general Capital Costs and Environmental
Costs for conduit hydropower projects due to the wide range of possible
conditions that may present themselves. The hydraulic conditions
themselves will generally dictate the cost effectiveness of a given
site. However, in some cases, other conditions could impact the cost
effectiveness of conduit hydropower projects. For instance, some canal
systems, because of their age, may be considered historic sites in and
of themselves and require special historic property consideration and
documentation. Others may be situated near endangered plant or animal
species or wetlands which may be impacted by construction of penstocks,
powerplants or powerlines. Interconnection studies and contracts are
often required and can vary widely.
Since Reclamation is not the entity developing the sites covered by
S. 306 and H.R. 678, detailed project cost information has not been
developed. That said, based on conversations with recent developers we
can provide some examples of overall project costs. One of the more
recent examples of the costs associated with these projects is a 900 kW
installation on a Reclamation canal. The overall project cost
approximately $2,000,000 (-$2,200/kW installed) according to the
developer, and of that $2,000,000 approximately $50,000 was spent on
the direct costs of executing the Lease. These activities included
NEPA, and design and construction reviews.
Another recent example is a 7.5 MW canal project with an overall
cost, including powerplant, transmission, substation, contingencies
etc., of approximately $20 million (-$2,900/kW installed). Non-Capital
costs including planning, preliminary designs, pre-construction costs,
construction management were $1 Million. The cost of executing the
Lease, including NEPA, and design and construction reviews was
$125,000, and mitigation as a result ofNEPA was $750,000. The cost of
executing the Lease, including NEPA mitigation, accounts for
approximately 4% of the overall cost of the project.
Response of Lowell Pimley to Question From Senator Manchin
Question 1. Can you tell me how many dams are out there and not
producing power? Especially when you look at dams that were originally
supposed to produce power, dams built before or during World War II,
that they for whatever reason decided to not generate power from?
Answer. Approximately 3% of the nation's 80,000 dams currently
generate power. Some nonpowered dams are better configured for power
generation in that power penstocks were installed with the anticipation
that power would be added later. In many instances, other dam outlet
works can be modified to supply water to a hydropower plant. In other
cases a new water conveyance must be installed in the dam. Development
of power at a dam is determined more by the amount of water available
to operate the plant, proximity to transmission, and overall economic
feasibility which factors in any water conveyance structures originally
installed to support hydropower. Reclamation's Hydropower Resource
Assessment, published in March 2011 identified 143 dams in the western
17 states with hydropower potential totaling 180.5 MW of capacity and
795,320 MWh of annual energy potential. Fifty-two of those dams showed
a cost benefit ratio greater than 0.75 percent with a total capacity of
147.5 MW and 674,261 MWh of annual energy potential. Development has
been initiated on 13 of these dams.
Appendix II
Additional Material Submitted for the Record
----------
Statement of the American Public Power Association
The American Public Power Association (APPA) appreciates the
opportunity to submit this statement focusing on hydropower legislation
to the Senate Energy and Natural Resources Committee's April 23, 2013,
hearing on energy efficiency and hydropower bills. APPA is the national
service organization representing the interests of over 2,000
community-owned, non-for-profit electric utilities (collectively known
as public power). These utilities include state public power agencies,
municipal electric utilities, and special utility districts that
provide electricity and other services to over 47 million Americans.
Hydropower is the nation's largest source of clean, renewable
electricity, accounting for 62% of domestic renewable generation and 8%
of total electricity generation. Of public power's total generation
portfolio more than 17% is hydropower according to the most recent
Energy Information Administration data from 2011. It is a reliable
source of base-load (i.e.; available most of the time) energy. Despite
the beneficial use of hydropower, most dams were built, decades ago,
for purposes other than power generation, such as for flood control,
crop irrigation, or storage of municipal water supplies. Therefore,
only 3% of the country's approximately 80,000 dams currently have
facilities that generate electricity. Given this situation, there is
substantial potential for adding renewable hydro-electric generation to
non-power dams by installing electricity generation equipment at those
sites. At the same time, there are a number of regulatory, financial
and other barriers impeding the commercial development of this
hydropower potential. The legislation being considered at this hearing
seeks to address a few of these issues.
APPA appreciates and supports Congress' interest in hydropower and
the provisions in the various bills introduced in the 113th Congress
that would expand hydropower usage, particularly in light of the many
benefits this abundant resource provides as a source of low-cost,
reliable and emissions-free power. Unfortunately, there are significant
impediments to licensing and relicensing of hydropower projects,
especially smaller units. APPA believes the licensing process for these
small projects is overly burdensome and uneconomic. Further, APPA
supports legislation that cuts the lengthy, duplicative and, at times,
contradictory regulatory processes for hydropower projects.
Streamlining the multi-agency inefficiencies associated with hydropower
development on federal projects is also necessary.
Therefore, APPA supports H.R. 678 and S. 306, the Bureau of
Reclamation Small Conduit Hydropower Development and Rural Jobs Act
introduced by Representative Scott Tipton (R-CO) and by Senator John
Barrasso (R-WY), respectively, that address these issues. These bills
would authorize power development at the Bureau of Reclamation's
conduits. This new authorization in both bills will help clarify and
streamline the multi-agency inefficiencies associated with hydropower
development on these federal projects by cutting duplicative processes
and reducing the regulatory burdens that many of our members have
encountered. Further, the legislation protects existing agreements that
water users have on conduit generation projects and provides additional
safeguards to ensure such projects do not undermine water deliveries.
This bill is a needed fix to a burdensome process. APPA also supports
the language added to H.R. 678 during consideration on the House floor
that would replace the NEPA waiver with the following language:
The Bureau of Reclamation shall apply its categorical
exclusion process under the National Environmental Policy Act
(42 U.S.C. 4321 et seq.) to small conduit hydropower
development under this subsection, excluding siting of
associated transmission facilities on Federal lands.
This new language is a good faith effort to bring regulatory
certainty to help spur hydropower development while giving
administrative flexibility to the Bureau of Reclamation. It also
provides a needed fix to the differences in the Department of the
Interior's and the Bureau of Reclamation's NEPA provisions and the
Lease of Power Privilege (LOPP) program. Consequently, this language
strengthens the bill.
APPA also supports the other hydropower legislation by
Representative Cathy McMorris Rodgers (R-WA), H.R. 267, the Hydropower
Regulatory Efficiency Act, and the companion bill in the Senate by
Senator Lisa Murkowski (R-AK), S. 545, the Hydropower Improvement Act
of 2013. Both bills would promote hydropower development at conduits
(i.e.; man-made water conveyances such as tunnels, canals, or pipelines
that are operated for water distribution and not primarily for
electricity generation) by excluding projects under 5 MW from federal
licensing requirements if the project met certain criteria. It would
also facilitate conduit project development by exempting projects
between 5-40 MW from federal licensing requirements, upon approval by
the Federal Energy Regulatory Commission (FERC), amongst other things.
Together, these bills combine to create a worthwhile small
hydropower development program. H.R. 267 and S. 545 give the Federal
Energy Regulatory Commission the tools it needs to streamline its
statutory program for small hydropower development while H.R. 678 and
S. 306 provide a statutory framework missing from its existing
authorities for the companion program at the Bureau of Reclamation.
These bills accomplish this task while retaining the necessary
environmental safeguards that will ensure careful implementation of
this newly directed initiative.
______
ConEdison Solutions,
April 29, 2013.
Hon. Ron Wyden,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate
Building, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Committee on Energy & Natural Resources, 304 Dirksen
Senate Building, Washington, DC.
Dear Chairman Wyden and Ranking Member Murkowski:
On behalf of ConEdison Solutions, I am writing to express our
support for S. 761, The Energy Savings and Industrial Competitiveness
Act and to thank you for holding this hearing today.
ConEdison Solutions is a leading energy services company with over
200 employees in 9 states that provides competitive power supply,
renewable energy, sustainability services, and cost-effective energy
solutions for commercial, industrial, residential, and government
customers. ConEdison Solutions offers programs and services designed to
help customers achieve their energy objectives and is accredited as an
Energy Services Provider (ESP) by the National Association of Energy
Service Companies. (NAESCO).
By addressing energy use in buildings, manufacturing and the
federal government, S. 761 focuses on three major areas of energy use.
This focus will enable the country to reap the greatest return on its
investment in energy efficiency.
Buildings currently consume 40% of all energy used in the United
States. The Energy Savings and Industrial Competitiveness Act would:
Support regular updates to the existing national model
building codes. Building codes help investors overcome the
market barriers that impede energy savings in this sector, and
reduce energy costs for businesses.
Kick start private sector investment in building efficiency
upgrades and renovations by creating a Commercial Building
Energy Efficiency Financing Initiative.
Train the next generation of workers in energy-efficient
commercial building design and operation through university-
based Building Training and Research Assessment Centers.
Energy efficiency is vital to America's manufacturing future. It
helps lower costs for business big and small and the innovation that
drives it through the development of new technologies creates
manufacturing jobs. To help strengthen manufacturing and create more
manufacturing jobs, S. 761:
Directs the U.S. Department of Energy to work closely with
private sector partners to encourage research, development and
commercialization of innovative energy efficient technology and
processes for industrial applications.
Helps manufacturers reduce energy use and become more
competitive by incentivizing the use of more energy efficient
electric motors and transformers.
Establishes a DOE program--SupplySTAR--to help make
companies' supply chains more efficient.
The United States government is the nation's largest energy
consumer. It accounted for 1.5 percent of the country's total energy
use in 2009 (the most recent year for which figures are available) and
spent $24.5 billion the previous year on fuel and electricity for its
roughly 500,000 buildings and 600,000 vehicles. To reduce the federal
government's energy consumption, S. 761:
Requires the federal government to adopt energy saving
techniques for computers, saving energy and taxpayer dollars.
Allows federal agencies to use existing funds to update
plans for new federal buildings, using the most current
building efficiency standards.
Clarifies that Energy Service Companies (ESCOs) and Utility
Energy Service Contracts (UESCs) can be used by federal
agencies to install electric and natural gas vehicle charging
infrastructure, making it easier for agencies to use these
types of vehicles.
Swift passage of S. 761 is essential to improve energy efficiency,
air quality and the economy. According to analysis completed by the
American Council for an Energy-Efficient Economy the version of this
legislation that was introduced in the 112thCongress could lead to
159,000 new jobs, save consumers $20 billion in avoided energy costs,
and reduce carbon dioxide emissions by 108 million metric tons by 2030.
Again, thank you for holding this hearing and I ask that you move
this legislation out of your committee quickly. We at ConEdison
Solutions will continue to do our part to help our nation save energy
and improve our industrial efficiency.
Sincerely,
Michael N. Perna,
Vice President.
______
April 9, 2013.
The undersigned organizations, on behalf of our millions of members
and supporters are writing to express our strong opposition to the
provision in Section 2 of H.R. 678 that waives the National
Environmental Policy Act (NEPA) with respect to small conduit
hydropower projects at Bureau of Reclamation facilities.
While we support the legislation's intent to encourage the
responsible development of low impact, conduit hydropower projects,
waiving NEPA reviews for Bureau of Reclamation projects is
unacceptable. Since this bill was considered last year (H.R. 2842) the
Bureau of Reclamation applied a categorical exclusion under NEPA as a
part of its final Directives & Standards for Lease of Power Privilege
process--thus making the proposed waiver completely unnecessary. The
National Environmental Policy Act is not a roadblock to the successful
approval of conduit hydropower projects at Bureau facilities. We
believe that this backward step will not accelerate hydropower
development. Rather, our experience has shown us that attempts to
shortcut or sidestep environmental review typically result in delayed
projects.
Successfully advancing the development of new energy resources,
like conduit hydropower, requires us to do better than we have done
with other forms of energy and other Bureau of Reclamation projects.
While we do not oppose the development of conduit hydropower, it must
be done responsibly and under all of the appropriate reviews necessary
to make sure that such development is consistent with the public
interest; a guarantee that NEPA provides.
Therefore we respectfully urge you to vote NO on H.R. 678 unless
the language requiring a NEPA waiver is struck from the bill.
April 23, 2013.
The undersigned organizations, on behalf of our millions of members
and supporters are writing to express our strong opposition to the
provision in S. 306 that waives the National Environmental Policy Act
(NEPA) with respect to small conduit hydropower projects at Bureau of
Reclamation facilities.
While we support the legislation's intent to encourage the
responsible development of low impact, conduit hydropower projects,
waiving NEPA reviews for Bureau of Reclamation projects is
unacceptable. Since this bill was considered last year, the Bureau of
Reclamation applied a categorical exclusion (CE) under NEPA as a part
of its final Directives & Standards for Lease of Power Privilege
process--thus making the proposed waiver completely unnecessary. We
would also like to note that, critically, application of CEs require a
consideration of whether any extraordinary circumstances warrant
further environmental review. The proposed waiver would eliminate such
vital consideration. The National Environmental Policy Act is not a
roadblock to the successful approval of conduit hydropower projects at
Bureau facilities. We believe that this backward step will not
accelerate hydropower development. Rather, our experience has shown us
that attempts to shortcut or sidestep environmental review typically
result in delayed projects.
Successfully advancing the development of new energy resources,
like conduit hydropower, requires us to do better than we have done
with other forms of energy and other Bureau of Reclamation projects.
While we do not oppose the development of conduit hydropower, it must
be done responsibly and under all of the appropriate reviews necessary
to make sure that such development is consistent with the public
interest; a guarantee that NEPA provides.
Therefore we respectfully urge you to vote NO on S. 306 unless the
language requiring a NEPA waiver is struck from the bill.
Sincerely,
American Rivers * Buffalo Field Campaign * Center
for Biological Diversity Defenders of
Wildlife * Earthjustice * Great Old Broads
for Wilderness * Grand Canyon Trust *
Klamath Forest Alliance * The Lands Council
Natural Resources Defense Council * Sierra
Club * The Wilderness Society.
______
Statement of Robert S. Lynch, Robert S. Lynch & Associates, on H.R.
267, H.R. 678, S. 306 and S. 545
Chairman Wyden, Ranking Member Murkowski, Members of the Committee,
thank you for having this early hearing on H.R. 267, H.R. 678, S. 306
and S. 545. One of our clients is the Irrigation & Electrical
Districts' Association of Arizona (IEDA), a voluntary association
organized in 1962 to represent the interests of irrigation, electrical
and other special districts, rural communities and other public
entities in the acquisition and use of federal hydropower and water
from Reclamation projects. The Association marked its 50th anniversary
on December 14, 2012. Its 25 members and associate members manage water
systems and supply electricity, much of both originating from or on the
Colorado River. I am pleased to present this Statement supporting these
four (4) bills, which will authorize and promote hydropower development
at all water conduit facilities and streamline the processes for
development of such hydropower generators not only throughout the
Reclamation West but throughout the country. We supported and testified
in favor of these bills' House predecessors in the last Congress and we
supported and testified in favor of these House bills again this year.
We are pleased to offer you our views on these four excellent bills for
your consideration.
Over the last century and more, Arizona has developed irrigated
agriculture, both in central Arizona and along the Colorado River. We
have developed systems of canals and laterals which now serve both
irrigated agriculture and municipal and industrial water users. Much of
these canal systems are Reclamation project systems built over the
years as successive projects were authorized by Congress. A number of
the distribution systems were built or have been acquired by the
Districts receiving project water. The water that flows in these
systems contains energy. Indeed, the water would not flow if it did
not. That energy is largely unused as the water courses through these
systems until it reaches its ultimate destination and stops moving. The
energy is dissipated at that point. Lost.
Recent improvements and innovations in the development of small
hydropower generating turbines have made the idea of installing
multiple small turbines in these systems a potentially attractive
source of electric energy. This technical advance comes at a time when
our electricity providers are scrambling to find alternatives to fossil
fuel generation, developing conservation and demand side management
programs and otherwise trying to make existing electric resources go
farther. Indeed, the Department of Energy released just today an
assessment extolling the virtues of increased hydropower production in
the United States.
Our members would very much like to be part of this effort and
participate in a new widespread small hydropower installation program.
With these bills, that program could be implemented throughout the West
and indeed everywhere water is flowing in the various conduits that
water providers are using.
One key to making this happen is to reduce bureaucratic process,
and its associated costs, to make small hydropower installation
economically attractive in the same fashion as it has become
technically attractive. Since the Bureau of Reclamation holds title to
so many of these facilities in the West, we and others in the Western
Reclamation states have been working with the Bureau of Reclamation to
try to reduce costs and paperwork toward that end. Some of the hurdles
we identified along the way needed to be addressed by Congress; hence,
H.R. 678 and S. 306.
At the same time, colleagues were negotiating concepts introduced
to streamline processes of the Federal Energy Regulatory Commission
(FERC), leading to passage of H.R. 267 and introduction of S. 545.
These four bills provide simplified paths for the development of
small hydropower facilities in existing conduit. H.R. 678 and S. 306
additionally recognize the primacy of water delivery as a Reclamation
mission. They recognize the position that Reclamation law has always
historically given to irrigation districts and water users'
associations as operators and water distributors. They also answer
questions that Reclamation officials have been debating. They give
those of us in the Reclamation West a clear incentive to begin working
aggressively toward using flowing water in these conduits for electric
generation instead of having to let that energy go to waste.
At the same time, we have been working with Reclamation to develop
environmental and permitting guidelines that would complement the
direction Congress, we hope, will give the agency on this subject.
However, Reclamation's reaction to this legislation has not been as
helpful as we would have hoped for. Indeed, the Directives and
Standards document that Reclamation produced last fall appears to us to
complicate rather than simplify the process. We are attaching the
comments that we made on the Interim Directives and Standards to give
you an idea of the problems we have identified in them. These comments
include a two-page timeline we tried to piece together because the
Interim Directives and Standards addressed who does what rather than
giving us a path and a timeline. That has not changed. Just as
importantly, the final Directives and Standards still leave us with a
plethora of questions.
Now, Reclamation has established a website, perhaps in reaction to
our and others' comments. Ostensibly, this website will make things
easier for applicants. The website's 5-page summary is accompanied by
73 pages of attachments and three pages of flow charts illustrating the
various paths this process can follow. I have attached the flowcharts.
As we lawyers say, ``Res ipsa loquitur'' (the thing speaks for itself).
In sum, we strongly support H.R. 678 and S. 306. We also strongly
support H.R. 267 and S. 545, which will give our distribution system
owners a streamlined FERC process to follow for their conduits. We hope
the Committee will mark and report these bills as soon as possible. The
House amendments to H.R. 678 addressed any remaining real issues. There
is an enormous amount of energy being wasted every day as water flows
through these conduits to their ultimate destinations. We now have the
technology to capture a great deal of that energy in small increments
which collectively can provide an enormous resource for the West. This
clean, renewable hydropower is waiting for us to use it. We need your
help. H.R. 678, S. 306, H.R. 267 and S. 545 are a big step forward
toward that end.
Thank you for the opportunity to present this Statement to the
Committee. We would be happy to answer any questions or provide any
additional information that the Committee might desire as it
deliberates over this important and very much needed legislation.
Attachment
Irrigation & Electrical Districts Association of Arizona,
Phoenix, AZ, June 4, 2012.
Mr. Michael Pulskamp,
Bureau of Reclamation, P.O. Box 25007, Denver Federal Center, Denver,
CO.
Re: Comments on the Temporary Directive & Standard for Lease of
Power Privilege requirements, Reclamation Memorandum dated April 4,
2012
Dear Mr. Pulskamp:
The Irrigation & Electrical Districts' Association of Arizona is an
Arizona non-profit association celebrating its 50th year of service to
the State of Arizona. Our 25 Members and Associate Members take power
and water from federal facilities on the Colorado River either directly
or, in case of Hoover power, through the Arizona Power Authority, and
in case of Colorado River water in central Arizona, the Central Arizona
Water Conservation District, one of our Associate Members.
A number of our members operate federal water facilities and others
built or acquired water facilities from the federal government. One of
our members has already gone through the painful process under Section
30 of the Federal Power Act in dealing with the Federal Energy
Regulatory Commission. Others would like to go through a sensible and
streamlined process with the Bureau of Reclamation to install small
hydropower units in existing water facilities whose water energy is
currently being wasted. With this interest in mind, we offer the
following comments on the April 4th Temporary Directive & Standard and
appreciate the opportunity to do so.
timelines
The Temporary Directive & Standard (D&S) is structured along lines
of responsibility by various officials within the Bureau of
Reclamation. As such, it is very difficult to get a sense of when
things are supposed to happen and what timelines exist for seeing to it
that they do. A number of the tasks assigned to various people are not
identified as being associated with any particular timeline and the
timelines that are stated in the D&S. For that reason, we have
attempted to create a timeline that would show a potential applicant
the path it would have to take between expressing a ``formal request''
to Reclamation and actually having an operating electrical device. Our
timeline is attached. It contains a number of question marks that
indicate that the timeframe and positioning of that particular task was
not identified. In our view, it is this very sort of checklist that
potential applicants need up front in order to understand what they are
getting into, what the requirements are and when they occur. We think
Reclamation should consider developing such a timeline and going one
step further by identifying the as yet un-timelined tasks as either
fitting within a timeline already identified or one you assign in order
to properly gauge the sequence and timing of events.
other comments
For ease of reference, we will now provide other comments to you in
the order in which they relate to the Temporary D&S.
Applicability
We do not understand the reference to Reclamation ``development
authority''. Does that mean that there is a specific authorized feature
of a project that Reclamation has not developed and is therefore off
limits to an applicant? Currently Reclamation only has jurisdiction
over its facilities that are part of a project authorization that
includes power development. One could read this paragraph as saying
that any proposed application where Reclamation has jurisdiction could
be denied on the basis of Reclamation deciding to do itself. We doubt
that was the intent but this divergent point of who does what needs
clarifying. No one wants to go through a process or begin to go through
a process only to find out that the agency has decided to do it itself.
Definitions
We do not understand the meaning of the phrase ``conveyance of
water over or through a dam, its abutments, or foundation via existing
or proposed conveyance features.'' This is an addition to the
definition of conduit that has been used in pending federal legislation
and is very close to the definition used by the Federal Energy
Regulatory Commission (FERC). Are there existing conveyance features
that convey water over or through a dam, its abutments, or foundation?
We are not familiar with such facilities but knowing what is already
out there may make it easier for us to understand why this addition is
important and necessary.
We do not understand why gross revenue would be something that
includes renewable energy certificates (RECs). If one of your water
districts or water users associations or someone else is going to spend
money, go through this process and essentially do all the work and pay
Reclamation for its oversight, why would gross revenue be the parameter
for deciding the fee and most especially why would it also include the
REC. Reclamation has done absolutely nothing except allow a portion of
one of its facilities to be utilized at someone else's total expense to
generate electricity. The portion of the facility used will most likely
be very small in comparison to the overall project of which the site is
a part. In a shopping center lease, the triple net lease would be based
on gross revenue of whatever store is occupying that particular space
but not on its tax breaks. Moreover, for small projects, say 5
megawatts or below, the paperwork to keep track of these calculations
and collections would be more expensive than the revenue that would be
created. We think the basis for charging needs to be rethought. All of
the comments we have seen show that everyone wants the new facilities
owner or benefactor to pay a fair share of project obligations. To the
best of our knowledge, there has been no real public debate over how
one would calculate that. Nor has there been any debate over what
concepts should be used for the very smallest of facilities that should
not have to go through the entire process. In short, a one-size-fits-
all rate structure will only inhibit the development of additional
hydropower in Reclamation facilities in our view. We think this process
needs work.
Formal Request
This term first appears in subparagraph 5.A(3) on page 4. There is
no discussion within the document about what constitutes a formal
request, what paperwork is required for such a request and whether or
not there is any information requirement that precedes it. Yet it is
the precipitating event of the process, initiating everything that
follows. We presume without knowing that receiving a formal request
will initiate the process within Reclamation to decide whether or not
Reclamation will turn the requester aside and develop the site in
question. Certainly Reclamation would make that decision early and not
let an applicant spend a lot of time and money before shutting them
out. That Reclamation decision should have a timeline of its own in
order to ensure an applicant that it will not get played.
Requests for Extension of Time
This first appears in subparagraph 5.A(9) and appears to only apply
to timeframes outlined in the Lease of Power Privilege (LOPP).
Reclamation does intend to consider extension requests for an entity
holding a Preliminary Lease. See Section 8. That reference should be
included here.
Public Safety
In paragraph 5.C, the responsibility of the Chief of the Dam Safety
Office is outlined but that individual's role in the timeline is
nowhere to be found. The subject matter is brought up in a number of
places but not with regard to the role this individual plays in
executing the timeline.
Notifications
The appropriate Regional Power Manager or Area Office Manager is
responsible for ensuring the publication of solicitations for
applicants for a LOPP, apparently after being notified of the receipt
of a ``formal request'' and a ``formal determination of jurisdiction
(5.A(3)). The 3 following responsibilities are all intended to precede
that event. The list appears to have been created backwards rather than
forwards. Just as importan