[Senate Hearing 113-70]
[From the U.S. Government Publishing Office]





                                                         S. Hrg. 113-70

                        ENERGY EFFICIENCY BILLS

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   ON
                                     

              S. 717                               S. 1205

              S. 1084                              S. 1206

              S. 1191                              S. 1209

              S. 1199                              S. 1213

              S. 1200



                                     

                               __________

                             JUNE 25, 2013




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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
BRIAN SCHATZ, Hawaii                 ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico          JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin

                    Joshua Sheinkman, Staff Director
                      Sam E. Fowler, Chief Counsel
              Karen K. Billups, Republican Staff Director
           Patrick J. McCormick III, Republican Chief Counsel
                                 ------                                

                         Subcommittee on Energy

                    AL FRANKEN, Minnesota, Chairman

TIM JOHNSON, South Dakota            JAMES E. RISCH, Idaho
MARY L. LANDRIEU, Louisiana          DEAN HELLER, Nevada
MARIA CANTWELL, Washington           JEFF FLAKE, Arizona
BERNARD SANDERS, Vermont             LAMAR ALEXANDER, Tennessee
DEBBIE STABENOW, Michigan            ROB PORTMAN, Ohio
MARK UDALL, Colorado                 JOHN HOEVEN, North Dakota
JOE MANCHIN, III, West Virginia
MARTIN HEINRICH, New Mexico
TAMMY BALDWIN, Wisconsin

      Ron Wyden  and Lisa Murkowski are Ex Officio Members of the 
                              Subcommittee














                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bennet, Hon. Michael, U.S. Senator From Colorado.................     2
Coons, Hon. Chris, U.S. Senator From Delaware....................     3
Diament, Nathan J., Executive Director for Public Policy, Union 
  of Orthodox Jewish Congregations of America....................    48
Franken, Hon. Al, U.S. Senator From Michigan.....................     1
Laskey, Alex, President and Founder of Opower....................    19
Molotsky, Brad A., Executive Vice President, General Counsel and 
  Secretary, Brandywine Realty Trust, on Behalf of the Real 
  Estate Roundtable..............................................    40
Nadel, Steven, Executive Director, American Council for an 
  Energy-Efficient Economy Resources (ACEEE).....................    10
Risch, Hon. James E., U.S. Senator From Idaho....................     8
Sanders, Hon. Bernard, U.S. Senator From Vermont.................    52
Spurr, Mark, Legislative Director, International District Energy 
  Association....................................................    35
Sylvia, Mark, Commissioner, Massachusetts Department of Energy 
  Resources......................................................
Udall, Hon. Mark, U.S. Senator From Colorado.....................     1
Warner, Hon. Mark, U.S. Senator From Virginia....................     8
Wyden, Hon. Ron, U.S. Senator From Oregon........................    51

                               Appendix I

Responses to additional questions................................    65

                              Appendix II

Additional material submitted for the record.....................    71

 
                        ENERGY EFFICIENCY BILLS

                              ----------                              


                         TUESDAY, JUNE 25, 2013

                               U.S. Senate,
                            Subcommittee on Energy,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:30 p.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Al Franken 
presiding.

    OPENING STATEMENT OF HON. AL FRANKEN, U.S. SENATOR FROM 
                           MINNESOTA

    Senator Franken. Good afternoon. The subcommittee will come 
to order. The purpose of this hearing is to consider a number 
of energy efficiency bills that have been introduced by our 
colleagues.
    I'm pleased to be joined by Ranking Member Risch and other 
members. I know that Senators Bennet and Coons would like to 
speak about the energy efficiency legislation they have 
introduced. So we will hear their testimony and then Senator 
Wyden, or Chairman Wyden, would like to make some remarks.
    Then because of a vote on the floor we will recess for 
about 15 minutes then we will move on to the rest of the 
witnesses.
    At some point Senator Warner will testify on an amendment 
that he supports or has written. I know my colleagues are all 
very busy. So you should feel free to leave once you've 
finished with your testimony, if you wish.
    So I'd like to recognize Senator Bennet for his remarks and 
then we'll go to Senator Coons.
    Senator Bennet.

    [The prepared statement of Senator Udall follows:]

  Prepared Statement of Hon. Mark Udall, U.S. Senator From Colorado, 
                               on S. 1084
    Thank you all for your testimony on the importance and benefits of 
furthering energy efficiency efforts in the U.S. As a Coloradan, I am 
proud that my State is a leader in a balanced approach to energy and 
energy security. In particular, the Department of Energy's National 
Renewable Energy Lab in Colorado is a world leader in the research of 
efficiency improvements and the future of energy development. Energy 
efficiency advancements are an important component of our pursuit of a 
clean energy economy, both in my State and throughout the nation.
    As we discuss legislation to promote energy efficiency in 
buildings, I believe one issue of particular importance is increasing 
the efficiency of our children's schools. This is why I, with Senator 
Collins, introduced the Streamlining Energy Efficiency for Schools Act 
(S.1084), which would help organize the Federal government's efforts to 
improve the energy efficiency of our schools. There are numerous 
programs already available to schools to help them become more 
efficient, but it is challenging for schools to traverse the different 
eligibility and application requirements in order to take full 
advantage of these programs. This bill will provide a coordinating 
structure for schools to better navigate the existing federal programs 
and financing options available to them. However, the legislation 
leaves the decisions to the states, school boards and local officials 
to determine what is best for their schools. It is a common-sense way 
to help our schools save money on energy bills, while most importantly, 
strengthening our children's education.
    I look forward to continuing the dialogue on the Streamlining 
Energy Efficiency for Schools Act, and the other efficiency 
legislation, over the coming weeks. I look forward to this committee 
advancing this bipartisan legislation.

        STATEMENT OF HON. MICHAEL BENNET, U.S. SENATOR 
                         FROM COLORADO

    Senator Bennet. Thank you, Mr. Chairman. Thank you for 
beginning the committee hearings so promptly. Senator Risch, 
thank you for being here today as well.
    I'm here today to support the Better Buildings Act. Over 
the last several years we've worked with building owners across 
Colorado and the country to craft this significant bill. I want 
to thank Senator Kelly Ayotte of New Hampshire for working with 
me to improve the bill and being the lead co-sponsor in the 
Senate.
    The economic environmental benefits of improving energy 
efficiency in buildings are clear. Publicized retrofit of the 
Empire State Building reduced energy usage there by 38 percent 
and has saved an estimated $4.4 million annually for the 
building owner. Not only is the building owner reducing 
emissions and saving money, they've also created over 250 good 
paying construction jobs in the process. It's this example and 
these ideas that help form the basis for the Better Buildings 
Act.
    In crafting the bill we sought to think about efficiency in 
buildings, not only from the top/down, where a building owner 
makes improvements, but also from the bottom/up where a tenant 
would see advantages from designing and configuring their 
rented space in an energy efficient manner. Tenants use 50 
percent or more of the energy in all office buildings. With 
this in mind the bill we've introduced accomplishes 2 goals.
    One it allows for a first of its kind study by the 
Department of Energy to chronicle private sector best practices 
as tenants build out their lease spaces and commercial 
buildings. The study would then form a voluntary Department of 
Energy program to recognize tenants that design and construct 
high performance, leased spaces in the future.
    The second provisions called Tenant Star would expand on 
the popular Energy Star program and make it available to 
tenants instead of just landlords. Under the Better Buildings 
Act tenants will be recognized for the energy efficiency 
performance of their leased office space. This will provide 
value to their customers, their investors and to the building 
owners as well.
    The Energy Star label has proven to be a very powerful tool 
all over the country to achieve whole building efficiency. Our 
bill takes the next logical step and confers this recognition 
onto tenants as well. It is broadly supported from the Alliance 
to Save Energy, to the Real Estate Roundtable, to the Sierra 
Club.
    The Congressional Budget Office has confirmed that it has 
no score.
    I hope the committee will see fit to promptly and favorably 
move this bill forward in the process.
    With that I thank my colleague from Delaware for his 
patience. I thank you, Mr. Chairman for holding this hearing.
    Senator Franken. Thank you very much, Senator Bennet.
    Senator Coons.

Prepared Statement of Hon. Michael Bennet, U.S. Senator From Colorado, 
                               on S. 1191
    Thank you Chairman Franken, Senator Risch and other members of the 
panel for holding this important hearing on energy efficiency 
legislation.
    I'm here today to support The Better Buildings Act,
    Over the last several years, I worked with building owners across 
Colorado, and the country, to craft this important bill.
    I want to thank Senator Kelly Ayotte of New Hampshire for working 
with me to improve the bill and being the lead cosponsor in the Senate.
    The economic and environmental benefits of improving energy 
efficiency in buildings are clear.
    A very-well publicized retrofit of the Empire State Building 
reduced energy usage by 38 percent and has saved an estimate $4.4 
million annually for the building owner.
    Not only is the building owner reducing emissions and saving money, 
but they also created over 250 construction jobs in the process.
    It's this example, and these ideas, that helped form the basis for 
Better Buildings Act.
    In crafting the bill, we sought to think about efficiency in 
buildings not only from the ``top down''--where a building owner makes 
the improvements;
    But also from the ``bottom up'' where a tenant would see advantages 
from designing and configuring their rented office space in an energy 
efficient manner.
    After all, tenants use 50 percent or more of the energy in all 
office buildings.
    With all that in mind;
    The bill we've introduced accomplishes two goals:
    One, it allows for a first-of-its-kind study by the Department of 
Energy to chronicle private sector best practices as tenants ``build 
out'' their leased spaces in commercial buildings.
    This study would then inform a voluntary DOE program to recognize 
tenants that design and construct high performance leased spaces in the 
future.
    The second provision-called Tenant Star-would expand on the popular 
Energy Star program, and make it available to tenants instead of just 
landlords.
    Under the Better Buildings Act, tenants will be recognized for the 
energy efficient design and construction of their leased office space;
    This will provide value to their customers, their investors and the 
building owner.
    The Energy Star label has proven a very powerful tool to achieve 
``whole building'' efficiency.
    Our bill takes the logical next step and confers this recognition 
on tenants as well.
    Thank you again Chairman Franken and Senator Risch for allowing me 
to testify this afternoon.

          STATEMENT OF HON. CHRIS COONS, U.S. SENATOR 
                         FROM DELAWARE

    Senator Coons. Thank you, Senator Bennet. Thank you, 
Chairman Franken.
    Before I begin I just wanted to say how much I've enjoyed 
and appreciated my time of service on the Energy and Natural 
Resources committee. I will genuinely miss it. The view from 
this side is nowhere near as good, I must say.
    I am grateful to Chairman Wyden and to Ranking Member 
Murkowski, who have both been enormously supportive. I 
appreciate their leadership and the way that they work 
together. It continues to be my belief that energy efficiency 
is an area where this committee can make real progress and do 
it in a bipartisan way and in a way that contributes to real 
progress for the country.
    I've been a believer in energy efficiency and its 
cumulative power for a long time and an enthusiastic advocate 
for it since my days as a county executive. So I leapt at the 
chance to support energy efficiency work and in particular the 
bill co-sponsored by Senators Shaheen and Portman during the 
last Congress which I'm proud to be one of many co-sponsors of 
again during this Congress.
    The Shaheen/Portman bill receives the bulk of attention in 
the energy efficiency space and with good cause. But I'm glad 
that Chairman Franken, that you're holding this hearing today 
and considering many other great bills in this hearing 
including, of course, 2 of which you are the principle author.
    One which I introduced with Senators Collins of Maine and 
Reed of Rhode Island is bipartisan and it's named the 
Weatherization Enhancement and Local Energy Efficiency 
Investment and Accountability Act, a catchy name or S. 1213. 
This bill reauthorizes 2 critical energy programs for 5 more 
years.
    The Weatherization Assistance Program.
    The State Energy Program.
    Both are programs that have been in place for decades and 
are at work daily in each of our States. These programs link 
national, State and local interests together in a critical way. 
It creates highly effective public/private partnerships that 
have delivered real results.
    For every dollar invested the Weatherization Assistance 
Program returns $2.51 cents in household savings. The program 
has served more than 7 million families including more than a 
million in just the last 4 years.
    For the State Energy Program the results are even more 
impressive. For every Federal dollar invested there's leverage 
of an annual energy cost savings of more than $7 and nearly 11 
in non-Federal funds that are leveraged in terms of multiplier 
effect.
    So this bill isn't just about reauthorization. It is also 
about modernization. We wanted to make sure that we approached 
these long standing programs in a fiscally appropriate way. So 
we've actually reduced the authorization levels by more than 
half from 2007.
    Second, there was some concern or criticism about how a few 
States used the significantly increased Weatherization 
Assistance Program funds that were awarded during the Recovery 
Act.
    Now the vast majority of States used their funds 
effectively. But a few, frankly, did not. There wasn't a set of 
national standards in place so it became apparent that new 
minimum energy efficiency, excuse me, new minimum efficiency 
standards in this program and certifications would be needed 
going forward.
    Now the Department of Energy is already working on some. 
This bill requires they be in place no later than October 2015. 
This will make sure these Federal dollars are being spent more 
wisely and more efficiently.
    Third, we're proposing a complementary, competitive grant 
program in which a wide range of NGO's or non-governmental 
organizations could compete for a piece of the funding. Now the 
goal is to bring in new partners, new approaches, new 
technologies and new ideas to ensure that more homes can be 
weatherized given limited Federal funding going forward.
    All told, S. 1213 supports the base programs, enhances them 
will new ideas and ultimately ensures their long term viability 
so they can keep making a difference in each of our States.
    Now this bill has the support of 25 organizations that work 
day and night in the efficiency space including some of the 
folks you'll hear from on the next panel.
    I'll comment that just this past Friday I had the chance to 
visit the Energy Efficiency Hub at the Philadelphia Navy Yard, 
that Senator Shaheen has also visited, if at some point it 
happens to fit within your priorities and schedule, Senator 
Franken, we would certainly welcome you. It is an impressive 
opportunity to see demonstrated in one place at one time 
compelling technologies and a team approach to energy 
efficiency. At some point I also hope to be able to speak to 
the Master Limited Partnership Parity Act which you were kind 
enough to support in the last Congress which has to do with 
energy financing, not energy efficiency.
    Thank you for the opportunity to be here this afternoon and 
for the opportunity to talk about this particular bill, S. 
1213. Although no longer a member of the committee, I look 
forward to working with you and hope for the passage of it in 
this Congress.
    Thank you very much, Chairman Franken.

  Prepared Statement of Hon. Chris Coons, U.S. Senator From Delaware, 
                               on S. 1213
    Before I talk about my bill, I just wanted to quickly say how much 
I've enjoyed and appreciated my time on the Energy and Natural 
Resources Committee. I'm really going to miss it. Chairman Wyden and 
Ranking Member Murkowski have both been enormously supportive, and I 
really appreciate their leadership, and the way they work together.
    It continues to be my belief that energy efficiency is an area 
where this committee can make some real progress, and can do it in a 
bipartisan way. I've been a believer in energy efficiency for a long 
time, and an enthusiastic advocate for since my days as a county 
executive, so I leapt at the chance to support the work of Senators 
Shaheen and Portman during the last congress. I'm proud to cosponsor it 
again during this congress.
    Shaheen-Portman receives the bulk of the attention in the energy 
efficiency space, and with good cause, but I'm glad, Senator Franken--
Chairman Franken--that you're holding this hearing today on the other 
good ideas in this area. There are a lot of them.
    One of them I just introduced with Senators Collins of Maine and 
Reed of Rhode Island. It's bipartisan. It's the Weatherization 
Enhancement, and Local Energy Efficiency Investment and Accountability 
Act, or S. 1213. The bill reauthorizes two critical energy programs for 
five more years--the Weatherization Assistance Program and State Energy 
Program.
    Both are programs that have been in place for decades and are at 
work daily in each and every one of our states. These programs link 
national, state and local interests together in a very critical way. 
They create highly effective public/private partnerships that have 
delivered real results.
    For every dollar invested, the Weatherization Assistance Program 
returns $2.51 in household savings. The program has served 7.4 million 
families, including more than 1 million in the last four years.
    The results are even more impressive for the State Energy Program, 
where for every federal dollar invested, there is an annual energy cost 
savings of more than $7, and nearly $11 in non-federal funds is 
leveraged.
    Our bill isn't just about reauthorization. It's about 
modernization.
    First, we wanted make sure we approached thee programs in a 
fiscally appropriate way, so we've actually cut the authorizations by 
more than half from their 2007 authorization levels.
    Second, there was some criticism over how a few states used the 
significantly increased Weatherization Assistance Program funds awarded 
under the Recovery Act. The vast majority of states used their funds 
effectively, but a few did not. There wasn't a set of national 
standards in place, so it became obvious that new minimum efficiency 
standards and certifications were needed. The Department of Energy is 
already working on some, and this bill requires that they be in place 
no later than October 2015. This will make sure these federal dollars 
are being spent more wisely and more efficiently.
    Third, we're proposing a complementary competitive grant program in 
which a wide range of NGOs could compete for a piece of the funding. 
The goal is to bring in new partners, new approaches, new technologies, 
and new ideas to ensure that more homes can be weatherized with limited 
federal funding.
    All told, S.1213 supports the base programs, enhances them with new 
ideas, and ultimately ensures their long-term viability so they can 
keep making a difference in each of our states.
    This bill has the support of 25 organizations that work day and 
night in the energy efficiency space, including some of the folks 
you'll hear from on the next panel.
    Thank you for the opportunity to be here this morning. I may no 
longer be a member of this committee, but I look forward to continuing 
to work with you on measures to strengthen energy efficiency, 
innovation, and independence. Thanks.

    Senator Franken. Thank you, Senator Coons and best of 
success in your new committee. If I make a request for approps, 
I hope you grant it.
    [Laughter.]
    Senator Coons. I'll be sure to be attentive.
    Senator Franken. Thank you. That's all I can really ask 
for.
    Thank you, Senator Coons. Thank you, thanks to Senator 
Bennet, who has left, for those remarks on this very important 
work that you both are doing to advance energy efficiency. We 
look forward to hearing more about their legislation from the 
witnesses, other witnesses today.
    I'm pleased to see so many people here. So much interest in 
today's subcommittee hearing on energy efficiency.
    In the United States and by the way, just no emotional 
outbursts, OK?
    [Laughter.]
    Senator Franken. In the United States our energy 
consumption is about one-fifth of the world's total energy 
consumption. That's remarkable when you consider that we have 
less than one-twentieth of the world's population. A tremendous 
amount of that energy is simply lost through inefficient 
buildings, appliances, industrial processes and cars. Those 
losses have been estimated to cost U.S. businesses and 
households $130 billion each year.
    In the same way that we discovered new energy reserves off 
the Gulf of Mexico or in the Bakken formation we can also 
recover and use new energy resources, non-polluting energy 
resources, by simply making our energy use more efficient. By 
making investments in energy efficiency we can help consumers 
lower energy costs and we can reduce pollution, boost our 
manufacturing sector and create jobs. That is a win/win/win 
formula.
    One central question before us today is how to unlock this 
tremendous potential. When I talk with Minnesotans about this 
question I often hear that there are major impediments to 
building retrofits or to industrial energy efficiency. Some 
need help with financing. Others need technical assistance and 
everyone needs assurance that they're making a worthwhile 
investment.
    That's why I'm pleased that our committee passed Senators 
Shaheen and Portman's Energy Savings and Industrial 
Competitiveness Act which will help our economy become more 
energy efficient. Today we have the opportunity to receive 
testimony on a number of other bills to further that goal. Many 
of the bills we will hear about provide ways to overcome 
barriers to improving energy efficiency with modest investment 
or just simple innovation on the part of the Federal Government 
we can help the manufacturing sector, residential and 
commercial buildings and communities overcome hurdles to energy 
efficiency improvements.
    Take one example, over one-third of all the energy consumed 
in the United States is simply lost in the form of waste heat. 
One of the pieces of legislation we will consider today is a 
bill I've developed to help industries, communities, 
universities and others capture this waste heat and put it to 
use in a way that it's already being done in St. Paul, 
Minnesota, and in other places around the country.
    We also have a tremendous opportunity to reduce energy 
consumption in buildings, in homes, schools and in the non-
profit sector. We have a number of bills that address energy 
efficiency in these areas and also in commercial buildings.
    When I am back in Minnesota I often meet with folks who are 
interested in retrofitting buildings, but who can't access the 
required upfront financing. We've got to identify where those 
barriers to financing are and figure out how to overcome them. 
By the way, a lot of this isn't about new funding. It's about 
identifying financing models that already exist and that we 
know are working.
    Of course we have to remember that if we don't measure 
energy use in buildings and compare that use among the 
buildings then we can't make fully informed decisions regarding 
the best available options to reduce energy costs. That's why 
I've introduced legislation to help building owners measure and 
report their energy use which will help private investors and 
energy service contract companies identify and deploy more 
effective energy efficiency retrofit improvements.
    I'm very pleased that we have with us an excellent panel of 
experts to discuss the range of bills that we have before us. I 
was going to turn to the ranking member, but we do have a vote. 
So I will recess this hearing for about 15 minutes because 
there are votes that I have to go to.
    [Laughter.]
    Senator Franken. So we now stand in recess for about 15 
minutes.
    [RECESS]
    Senator Franken. The committee will be in order. Thank you 
all for your patience. I'm going to turn it over to the Ranking 
Member, Senator Risch, for any comments that he might have 
before I introduce the witnesses.
    I just want to thank Senator Risch for working with me on 
this hearing, our first together. I look forward to continuing 
our work together on the Energy Subcommittee.

         STATEMENT OF HON. JAMES E. RISCH, U.S. SENATOR
                           FROM IDAHO

    Senator Risch. Thank you very much, Mr. Chairman. You may 
feel differently after I say a few things here. But I 
appreciate those kind words.
    [Laughter.]
    Senator Franken. OK, well then we'll go right to----
    [Laughter.]
    Senator Risch. That's right, you do have that.
    Senator Franken. I have the gavel.
    Senator Risch. Yes, that's right.
    But anyway, thank you.
    Senator Franken [continuing]. Have consequences.
    Senator Risch. Yes, they do that.
    Thank you, Mr. Chairman. It will be interesting as we 
review these. In the time I've--one of my banes has been the 
regulatory overreach of the Federal Government. It's constant. 
It's regular. It is incredibly oppressive upon the American 
people and upon American businesses.
    Market based economy has worked so very well for us for 
over 2 centuries, has made us a leader in the world and I 
continually look for free enterprise, free market solution to 
all issues. Since I've been here, this particular issue on the 
use of energy, has been one that it seems like there is no end 
to how the Federal Government wants to regulate our lives. I 
was shocked to find out when I first got here that they had 
passed a bill that indicated that Americans were not smart 
enough to buy their own light bulbs.
    In any event, I would hope that we would all use as much 
restraint as we could, going forward, and that we trusted the 
marketplace as we have for over 200 years and that has served 
us so well over that period of time.
    Having said all that, of course, I'm always interested in 
new ideas, innovative ideas and things that can help. Certainly 
everyone wants to conserve energy. Everyone wants to spend less 
on energy. Given the choice in the marketplace people will do 
something.
    So thank you very much, Mr. Chairman.
    Senator Franken. Thank you, Senator. You're almost right 
until the end there. Then I'm very happy that you're here. Look 
forward to working with you.
    Senator Risch. Thank you.
    Senator Franken. I'd like to recognize Senator Warner, who 
is going to speak on one of the amendments that he has proposed 
to. Take it away.

          STATEMENT OF HON. MARK WARNER, U.S. SENATOR 
                         FROM VIRGINIA

    Senator Warner. Thank you, Mr. Chairman.
    Thank you, Mr. Chairman. I actually have one that might 
bridge the gap between the chairman and the ranking member, at 
least on one piece of this. I just want to thank you all for 
having the hearing. I appreciate the fact that you've got folks 
who've traveled long and far and wide to get here. So I'll be 
brief.
    I mean, we have a lot of debate about energy policy in this 
country, but one of the things, I think, we generally agree on 
is that American competitiveness and productivity is something 
we need to improve. All the rankings are in. America ranks dead 
last, behind China, on energy productivity. We've called it in 
the past energy efficiency. I actually think we ought to be 
calling it energy productivity because this is really about 
increasing productivity, about saving money.
    I'm proud to be Chairman of the Bipartisan Alliance to Save 
Energy that's made up of Senators of both environmental groups, 
virtually wide swaths of American industry, who all see this as 
an enormous opportunity. We put out a study that showed that a 
whopping 57 percent of our energy flowing to our economy is 
simply wasted as heat, noise and leaks and cost U.S. businesses 
and household owners about $130 billion bucks a year. This 
commission, co-chaired by Governor Pataki and has Republican 
Senators, Republican House members, Democrats on it as well, 
came forward with a goal that said how do we try to double 
energy productivity between now and 2030? Over the next 20 
years that would create about 1.3 million American jobs, cut 
carbon emissions and boost America's overall economic outlook 
by 2 percent.
    So Senator Manchin and I have established a bill to create 
a State energy race to the top which would reduce energy waste 
and double energy productivity, again as I said, by 2030. 
Again, this is a competitive based grant program. Because it 
would save where a lot of the best work is being done is at the 
local and State level.
    It would be modeled after the very successful race to the 
top education competition. It would create $200 million of 
existing funds that would basically allow States to go out and 
show best examples. Because at the end of the day you need to 
demonstrate and show this increased productivity.
    I think the ability to take this relatively small amount of 
money and leverage it exponentially with local, State, private 
sector, would be a very responsible approach.
    This would be looking at things in retrofitting buildings.
    It would be looking at remote metering.
    It would look at the household level, the office level.
    It would also basically say to the States and local, not 
all wisdom is wise in Washington. I know that's something the 
Ranking Member feels very strongly.
    That said, there may be a better Idaho situation and 
something dictated out of Washington. Let's give Idaho. Let's 
give Boise. Let's give Minneapolis. Let's give Minnesota. Let's 
give Virginia a chance to prove out this concept. Not all best 
ideas come from Washington, but sometimes we can learn from 
best practices around the country.
    It's, my hope is that this would be one of the tools where 
we could find some common agreement. I, again, thank the Chair 
and the Ranking Member for having this meeting. I look forward, 
I'm not going to be able to stay for all the presentations but 
I've got staff here and look forward to hearing the reports of 
all the Commission membership that are involved and the 
committee members.
    Thank you, Mr. Chairman.
    Senator Franken. Thank you, Senator Warner. I know you have 
a busy schedule today. So feel free to leave whenever you need 
to.
    I'm going to turn to our panel now. I'll just briefly 
introduce our witnesses. All of them are very well positioned 
to speak to energy efficiency and the legislation before us.
    We have with us today, Steve Nadel with the American 
Council for an Energy Efficient Economy, ACEEE.
    Alex Laskey, who is President of Power.
    Mark Sylvia, the Commissioner of the Massachusetts 
Department of Energy Resources.
    Mark Spurr with the Internal District Energy Association, 
who is with us from Minnesota. So special thanks to you for the 
hardship getting here. I understand it so well.
    Brad Molotsky joins us from the Brandywine Realty Trust.
    Finally Nathan Diament represents the Union of Orthodox 
Jewish Congregations of America.
    Thank you all for being here. We will start with you, Mr. 
Nadel and just work our way down the table. Since we have 6 
witnesses, I would ask you to please stick to about 5 minutes 
for your testimony.
    Thank you.

STATEMENT OF STEVEN NADEL, EXECUTIVE DIRECTOR, AMERICAN COUNCIL 
            FOR AN ENERGY-EFFICIENT ECONOMY (ACEEE)

    Mr. Nadel. OK. Thank you, Senator Franken.
    As you noted, my name is Steven Nadel. I'm the Executive 
Director of ACEEE. We are a non-profit organization that acts 
as a catalyst to advance energy efficiency policies, programs, 
technologies, investments and behavior. We were formed in 1980 
by energy researchers. Personally I've been involved in energy 
efficiency issues since the late 1970s.
    Today's hearing is on 9 bills that are potential amendments 
to S. 761, the Energy Savings and Industrial Competitiveness 
Act. S. 761 was authored by Senators Shaheen and Portman and 
previously has been voted out by the full committee on a 19 to 
3 vote.
    ACEEE strongly supports S. 761 and urges the Senate 
leadership to schedule this bill for full floor time as soon as 
possible. Now ACEEE has a long history of estimating the energy 
and economic impacts of energy efficiency legislation going 
back to the 1980s. We have recently begun an analysis of this 
year's Shaheen/Portman bill as well as an analysis of most of 
the amendments before us today.
    At this point we have preliminary estimates of energy 
savings, but are only just starting our analysis of the micro 
and macro economic impacts. Our preliminary analysis finds that 
the 2013 Shaheen/Portman bill, as it is currently drafted would 
save about 9 and a half quadrillion BTUs of energy. These are 
called quads. It would save these energy over of the 2014 to 
2030 period.
    As a reference the United States uses about 100 quads per 
year. So saving 9.5 quads is significant even though it's over 
many years. The amendments that we support and that I discuss 
in my written testimony could add 6 additional quads of energy 
savings for a combined total of more than 15 quads. These 15 
quads is more energy than would be used by the State of Utah or 
Nevada over this period or nearly as much energy as would be 
used by the State of Oregon. Savings start modestly and grow 
steadily over time as illustrated in Figure 1 in my written 
testimony.
    Of the 9 bills before us today ACEEE supports all of these 
bills although in one case our support is contingent on several 
modifications. In this oral statement I briefly wanted to touch 
on a few of these bills knowing other witnesses will comment on 
most of the others.
    First I want to discuss S. 1206, dealing with commercial 
building benchmarking. Senator Franken, I'd like to thank you 
for your leadership in this area and for introducing this bill. 
This bill will promote benchmarking of large commercial and 
multifamily buildings.
    Building benchmarking is a process that allows building 
owners to assess the energy use of their buildings and compare 
them to otherwise similar buildings. This process helps 
identify buildings that can most benefit from building 
upgrades. Senator Risch, it's basically providing information 
to building owners so that they can work with the market and 
try to decide what investments make the most sense.
    The Energy Star Building Programs encouraged benchmarking 
for many years and has, so far, benchmarked more than a billion 
square feet of commercial floor area and resulted in average 
energy savings of about 7 percent in those benchmarked 
buildings. However, the majority of existing commercial 
building stock has not been benchmarked. S. 1206 would 
encourage benchmarking of additional buildings by making whole 
building energy use information more readily available to 
building owners and promoting benchmarking in a variety of 
other ways.
    This provision only applies to commercial buildings and 
multifamily residential buildings. Single family homes and 
small buildings that house several families are not included.
    Second, I wanted to note S. 1200, introduced by Senators 
Sanders and Wyden which would establish a pilot program for 
State loans for residential building energy efficiency 
upgrades. Many homeowners lack the capital to make energy 
efficiency investments. This bill would assist States and other 
eligible entities to provide this capital on attractive terms. 
This would be a very useful complement to the commercial 
building loan program now in S. 761.
    Third, I wanted to note S. 1020 and S. 1199, 2 versions 
almost of the same bill introduced by Senators Hoeven and 
Manchin which would repeal section 433 of the Energy 
Independence and Security Act and replace it with 2 new 
provisions that would extend and improve energy performance 
requirements of Federal buildings and extend the Federal Energy 
Efficiency Performance Standards that apply to new construction 
to also include alterations.
    We support this bill because as currently written section 
433 is not workable and because according to our analysis, the 
2 new provisions will result in larger energy savings and 
repeal Section 433 would use.
    Fourth I would note S. 717 introduced by Senators Klobuchar 
and Hoeven which would help non-profit organizations save 
energy, a laudable goal. We do support this bill, but it does 
take its authorization out of the Building Technology Program, 
a very important program. So our support is contingent upon 
finding another offset. We also recommend a few wordsmithing 
details to make the program clearer.
    Fifth, while I do not want to go into the details, we do 
support the various other bills that are before this hearing.
    S. 1191, the Better Buildings Act.
    S. 1209, on Race to the Top.
    S. 1084, on School Retrofits.
    S. 1205, on local energy supply, your bill, Senator 
Franken.
    S. 1213, on weatherization and State energy programs.
    Regarding this last bill, we understand that finding 
funding offsets may be difficult in which case we encourage the 
Senate to consider moving forward with the usual refinements, 
the modernization, as Senator Coons said, that are contained in 
the bill while perhaps being silent on the authorizations.
    With that, in conclusion, we believe that the energy 
savings and industrial competitiveness Act would be an 
important step toward improving the energy efficiency to the 
U.S. economy. All the bills before us today, as well as several 
additional amendments I discuss in my written testimony would 
add to these savings. We estimate that we're talking about 16 
quads of energy savings over the 2014 to 2030 period. We 
recommend that this bill, these bills, be adopted to benefit 
our economy and our environment.
    So, thank you.
    [The prepared statement of Mr. Nadel follows:]

   Prepared Statement of Steven Nadel, Executive Director, American 
            Council for an Energy-Efficient Economy (ACEEE)
Summary
    This hearing is on nine energy efficiency bills that are potential 
amendments to S. 761, a bill endorsed by the full Senate Energy 
Committee that may soon reach the Senate floor. ACEEE strongly supports 
S. 761 and also supports the nine bills before us, although for one 
bill our support is contingent on a few modifications. In addition, I 
discuss several other possible amendments, most of which we support but 
one of which is a potential ``poison pill.''
    ACEEE has conducted a preliminary energy savings analysis of S. 761 
and many of the potential amendments. Overall, we estimate that S. 761, 
together with all the amendments we support, will reduce U.S. energy 
use by over 15 quadrillion Btu's over the 2014-2030 period. This is 
nearly as much energy as will be used by the state of Oregon over this 
period. Saving this much energy will benefit our economy and our 
environment and we urge the Senate to adopt S. 761 and the other bills 
I discuss, but to avoid ``poison pills'' that lack broad support.
Introduction
    My name is Steven Nadel and I am the Executive Director of the 
American Council for an Energy-Efficient Economy (ACEEE), a non-profit 
organization that acts as a catalyst to advance energy efficiency 
policies, programs, technologies, investments, and behavior. We were 
formed in 1980 by energy researchers and celebrated our 30th 
anniversary in 2010. Personally I have been involved in energy 
efficiency issues since the late-1970s and have testified multiple 
times before this committee and its Subcommittees as well as before the 
House Energy and Commerce Committee.
    Today's hearing is on nine bills that are potential amendments to 
the Energy Savings and Industrial Competitiveness Act of 2013 (S. 761) 
that was previously reported out of the Senate Energy and Natural 
Resources Committee on a 19-3 vote. ACEEE strongly supports S. 761 and 
urges the Senate leadership to schedule this bill for floor time as 
soon as possible.
    ACEEE has a long history of estimating the energy and economic 
impacts of energy efficiency legislation, going back to the 1980s. For 
example, last year we prepared an analysis on the 2012 Shaheen-Portman 
bill.\1\ We have begun an analysis of this year's Shaheen-Portman bill 
as well as an analysis of most of the amendments, which I discuss later 
in my testimony. At this point we have preliminary estimates of energy 
savings, but are only just starting our analysis of micro- or macro-
economic impacts. Our preliminary analysis finds that the 2013 Shaheen-
Portman bill, as it is currently drafted, would save about 9.5 
quadrillion Btu's (``quads'') of energy over the 2014-2030 period. As a 
point of reference, the United States uses about 100 quads annually. 
The amendments we support and that I discuss below could add 6.3 
additional quads of energy savings, for a combined total of 15.8 quads. 
This is more energy than would be used by the state of Utah or Nebraska 
over this period, and nearly as much energy as would be used by the 
state of Oregon (assuming annual use stays constant at current levels). 
Savings start modestly and grow steadily over time, as illustrated in 
Figure 1.* Near the end of my testimony I will provide additional 
information on our analysis including energy savings by provision.
---------------------------------------------------------------------------
    \1\ Farley et al. 2012. Impacts of Energy Efficiency Provisions in 
Pending Senate Energy Efficiency Bills. American Council for an Energy-
Efficient Economy. http://aceee.org/files/pdf/white-paper/shaheen-
portman.pdf
    * All figures have been retained in subcommittee files.
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    Of the nine bills before us today, ACEEE supports all of these 
bills, although in one case our support is contingent on a few 
modifications. In the next section of my testimony I discuss each of 
these bills, and then touch on several additional potential amendments 
that may be introduced when S. 761 reaches the Senate floor.
Bills We Support
            S. 1206--Benchmarking
    S. 1206, introduced by Senator Franken, would promote benchmarking 
of large commercial and multifamily buildings. Building benchmarking is 
a process that allows building owners to assess the energy use of their 
buildings and compare them to otherwise similar buildings. This process 
helps to identify buildings that would most benefit from building 
upgrades. The federal ENERGY STAR Buildings program has encouraged 
benchmarking for many years and U.S. Environmental Protection Agency 
estimates that this program has benchmarked more than 185 million 
square feet of U.S. commercial building floor area, and resulted in 
average energy savings of about 7 percent in these buildings each year. 
However, the vast majority of the existing commercial building stock 
has not been benchmarked. This provision would encourage benchmarking 
of additional buildings by making whole building energy use data more 
readily available to building owners and promoting benchmarking in a 
variety of ways. This provision only applies to commercial buildings 
and multifamily residential buildings. Single-family homes and small 
buildings that house several families are not included.
    Specific provisions in the bill call for:

          1. Benchmarking additional federal buildings. Under existing 
        federal law, federally-owned buildings must be benchmarked but 
        most federally-leased buildings are not included in this 
        requirement. This provision requires benchmarking of leased 
        buildings where practical, addressing a gap in current law.
          2. A study by the U.S. Department of Energy (DOE) on best 
        practices for benchmarking, energy use data aggregation, and 
        energy use disclosure. Many cities and some States are 
        considering policies in these areas and this study would 
        provide guidance on approaches that work and those that have 
        been problematic so that new policies can take advantage of 
        these lessons.
          3. Combining existing public federal buildings databases and 
        facilitating consolidation of other existing public buildings 
        databases to make reporting easier for building owners and 
        identification of best practices easier for analysts.
          4. Establishing a small competitive grant program for 
        utilities, their partners, and utility regulators to make whole 
        building energy use data available to building owners. This 
        includes aggregated tenant consumption so that whole buildings 
        can be benchmarked. Data on individual tenants would not be 
        provided in order to protect privacy.

    This provision has been extensively vetted with the real estate 
industry and has been significantly modified to address their views.
            S. 1191--Better Buildings Act (Tenant Star)
    S. 1191, introduced by Senators Bennet and Ayote, would encourage 
landlords and tenants to cooperate on energy efficiency. Presently most 
leased buildings suffer from a ``split incentive'' problem. Tenants pay 
energy bills but are usually not in buildings long enough to justify 
making energy-saving capital investments. Building owners make capital 
investments but since tenants pay the energy costs, they have little 
incentive to invest in energy efficiency upgrades. This bill would help 
address these problems by:

          1. Identifying best practices for energy efficiency during 
        tenant ``fit-outs''--the improvements to a space tenants make 
        between when they sign a lease and when they move in.
          2. Establishing a new voluntary ``Tenant Star'' program to 
        recognize tenants whose energy performance is substantially 
        above average, complementing the existing whole building ENERGY 
        STAR Buildings program.
          3. Encouraging ``energy-aligned'' federal leasing by having 
        the General Services Administration develop model leasing 
        provisions that would spur cooperation on energy savings 
        between federal tenants and building owners. Such leases can 
        reduce costs to federal agencies and also serve as a model for 
        leases by non-federal tenants.

    Another witness at this hearing will be discussing this bill in 
depth so I will keep my comments brief.
            S. 1200--Residential Energy Savings Act of 2013 
                    (Residential Financing)
    S. 1200, introduced by Senators Sanders and Wyden, would establish 
a pilot program for state loans for residential building energy 
efficiency upgrades. Many homeowners lack the capital to make energy 
efficiency investments and this bill would assist states and other 
eligible entities in providing this capital at attractive terms, often 
working with banks and other financial institutions. The bill would 
have DOE make loans to states, local governments, utilities, and other 
eligible entities who would use the funds to recapitalize, expand, or 
begin energy efficiency loan programs. The loans would be repaid with 
interest, providing for a high degree of cost recovery. States and 
other eligible entities would apply for funding and DOE would evaluate 
these applications based on a variety of criteria in the bill designed 
to encourage best practice program design. For example, the bill calls 
for consumer repayments to be ``consumer friendly'' and would encourage 
innovative approaches such as on-bill repayment. Since the federal cost 
of capital is lower than the cost of capital for many eligible 
entities, the program could provide a moderate-cost source of loan 
capital. To the extent states and other eligible entities could provide 
or raise additional funds for such activities as loan loss reserves, 
interest rates that are very attractive to consumers may be possible. 
This provision is a useful complement to the commercial building loan 
program now in S. 761.
            S. 1209--Race to the Top
    S. 1209, introduced by Senators Warner and Manchin, would establish 
a ``race-to-the-top'' program for states to spur innovative energy 
efficiency efforts, just as the program by the same name at the 
Department of Education has spurred innovation in that field. The Race 
to the Top initiative was a top recommendation of the Energy 2030 
initiative led by the Alliance to Save Energy, so I will leave it to 
their witness to provide more details on this bill.
            S. 1084--School Retrofits
    S. 1084, introduced by Senators Udall and Collins, would have DOE 
coordinate federal efforts to help school systems, including K-12 and 
higher education, make their buildings more efficient. Currently there 
is a patchwork of efforts by various departments that are not well 
coordinated. We believe this is a useful objective that will make it 
easier for school systems to retrofit their buildings.
            S. 1020--All of the Above Federal Energy Conservation Act
    S. 1020, introduced by Senators Hoeven and Manchin, would repeal 
Section 433 of the Energy Independence and Security Act of 2007 and 
replace it with two new provisions that would:

          1. Extend and improve energy performance requirements for 
        federal buildings. Under current law these requirements call 
        for reducing energy use of federal buildings by 30 percent by 
        2015 relative to a fiscal year 2003 base. The new provision 
        would extend this requirement to a 45 percent reduction by 
        2020.
          2. Extend the federal energy efficiency performance standards 
        that now apply to new construction to also include alterations. 
        These standards call for performance levels 30 percent better 
        than those in the most recent model building code for 
        commercial buildings established by the American Society of 
        Heating, Refrigerating and Air-conditioning Engineers (ASHRAE).

    We support this bill because, as currently written, Section 433 is 
not workable and because, according to our analysis, the two new 
provisions would result in larger energy savings than repeal of Section 
433 would lose. The current Section 433 is not very workable because in 
its present form it discourages investments in long-term energy savings 
contracts and in combined heat and power systems. This was not its 
intent. Regarding energy savings, our analysis is summarized near the 
end of my testimony. We believe that Section 433 had a laudable goal--
to reduce dependence on fossil fuels. We would prefer that Section 433 
be rewritten to be more workable rather than outright repealed, but the 
legislative process requires compromise and we believe that S. 1020 is 
a workable compromise.
    We also support the following two bills but recognize that they 
have significant costs and therefore to move forward will likely need 
reasonable funding offsets.
            S. 1213--WAP and SEP Reauthorization
    S. 1213, introduced by Senators Coons, Collins and Reed, 
reauthorizes the low-income Weatherization Assistance Program (WAP) and 
the State Energy Program (SEP). WAP has been the key federal program to 
help low-income households to reduce their energy bills. It makes sense 
to help these households reduce their energy bills on an on-going 
basis, rather than just help to pay bills through the federal Fuel 
Assistance program (e.g., recall the old proverb, ``Give a man a fish, 
and you feed him for a day; show him how to catch fish, and you feed 
him for a lifetime''). The WAP program has been very successful--the 
last ``meta-evaluation'' on the program found average energy savings of 
more than 20 percent.\2\ The new legislation includes several useful 
improvements to the current program--a requirement that DOE develop 
minimum professional standards for WAP contractors and workers, a 
requirement for an independent quality assurance program, and a new 
competitive leveraged grant program for non-profit agencies that have a 
track record of success in serving low-income communities. This bill 
will also reauthorize the SEP program, which has been a key program 
funding State Energy Offices in all states, including some states where 
this is the only funding. Another witness at this hearing will discuss 
these programs in more depth.
---------------------------------------------------------------------------
    \2\ See Schweitzer, Martin. 2005. Estimating the National Effects 
of the U.S. Department of Energy's Weatherization Assistance Program 
with State Level Data: A Meta-Evaluation Using Data from 1993-2005. Oak 
Ridge National Laboratory. http://weatherization.ornl.gov/pdfs/
ORNL__CON-493.pdf.
---------------------------------------------------------------------------
            S. 1205--Local Energy Supply and Resiliency Act
    S. 1205, proposed by Senator Franken, is intended to enable energy 
efficiency and renewable energy projects by addressing market barriers 
for both the planning and financing of district energy and waste energy 
recovery projects. From an efficiency perspective, promoting district 
energy projects is important in that the aggregation of thermal loads 
creates opportunities for expanded combined heat and power, and 
implementing thermal systems at scale can improve efficiency and be 
responsive to electric system demands. In addition, waste energy 
recovery projects offer the opportunity to reduce electricity and 
fossil fuel requirements needed to meet local energy needs. The focus 
of this provision on the valuation of thermal energy represents an 
important precedent. ACEEE has not yet estimated the energy savings 
opportunities from this provision, but intends to analyze the provision 
in the coming weeks.
Bill We Support with Modifications
            S. 717--Non-Profit Energy Efficiency Act
    S. 717, introduced by Senators Klobuchar and Hoeven, would help 
non-profit organizations save energy, a laudable goal. It provides 
matching grants, up to a cap, so that the non-profit organizations 
themselves will have to provide a significant contribution. In general 
we find this a useful bill. We are troubled, however, by the proposal 
to offset this bill with funding from the Building Technologies Program 
at DOE, an important program with a budget of only $220 million for 
this fiscal year. The Buildings Technology Program is working on 
developing and popularizing a variety of new and cost-effective energy-
saving technologies and practices. A cut of $50 million in this program 
would be devastating. From our research, spending $50 million on the 
Building Technology Program provides a higher return on the federal 
investment than would be provided by spending the same money on 
retrofits using conventional technologies in a narrow subset of the 
building sector. To gain our support, this bill would need to be funded 
using an alternative offset.
    In addition, we suggest a few other modifications. First, we 
suggest adding two criteria by which to prioritize grants: (1) the 
percentage of funds leveraged from other sources (e.g., a grant for 25 
percent of the cost would receive priority over one for 50 percent of 
the cost); and (2) the financial need of the non-profit (e.g., poor 
non-profits should have priority over those with large available 
resources). Second, the language on eligible measures is probably too 
broad as it appears to include items whose primary purpose is not 
saving energy.\3\
---------------------------------------------------------------------------
    \3\ Specifically, on page 2, lines 17-20, we recommend deleting 
``electrical wiring'' (on lines 17 and 19) and ``plumbing, sewage'' (on 
line 18). Likewise, on page 3, lines 9-10, ``modernize'' should be 
deleted. If the primary purpose of a measure is improving energy 
efficiency, the remaining language on p. 3, lines 9-12 should be 
sufficient.
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Additional Useful Potential Amendments to S. 761
    In addition to the bills that are formally part of this hearing, we 
wish to briefly mention several other likely amendments to S. 761 that 
we support as follows:
            S. 1106--Sensible Accounting to Value Energy Act (SAVE)
    S. 1106 was recently introduced by Senators Bennet and Isakson and 
has been referred to the Banking Committee. The bill would encourage 
energy efficiency upgrades to homes by: (1) encouraging efficiency 
improvements at the time of purchase; and (2) recognizing the value of 
efficiency upgrades, and the operating cost savings they provide, when 
buildings are assessed and qualification for mortgages determined. 
Specifically, this bill instructs the Department of Housing and Urban 
Development (HUD) to issue updated underwriting and appraisal 
guidelines for borrowers who submit a qualified home energy report. The 
bill would cover any loan issued, insured, purchased, or securitized by 
the Federal Housing Administration and other federal mortgage loan 
insurance agencies or their successors. These agencies collectively 
guarantee more than 90 percent of all new loans. The bill has three 
components:

   Debt-to-Income Adjustment--Instructs lenders to account for 
        expected energy cost savings as an offset to other expenses in 
        the debt-to-income qualifying ratio, which tests the borrower's 
        ability to afford monthly mortgage payments. If no qualified 
        energy report is provided, the DTI will not be adjusted.
   Loan-to-Value Adjustment--Instructs lenders to add the 
        present value of expected energy savings when calculating the 
        loan-to-value ratio, where not already accounted for in the 
        home's appraisal report. If no qualified energy report is 
        provided, the valuation will not be adjusted.
   Consumer Information--Instructs lenders to inform loan 
        applicants of the costs and benefits of energy efficiency and 
        resources for improving the energy efficiency of a home.

    The bill does not add to the current deficit or rely on taxes or 
fees; instead it removes current obstacles holding back more efficient 
building and remodeling of our homes. A recent study of more than 
70,000 mortgages found that mortgages on energy-efficient homes were 32 
percent less likely to be in default.\4\ This study provides strong 
evidence that the SAVE Act is good credit policy and would help protect 
lenders and taxpayers from the risk of mortgage default. The bill 
removes an impediment to home energy efficiency from federal mortgage 
policy by recognizing how energy efficiency can increase home value and 
reduce operating costs, freeing up more income to pay a mortgage. In 
addition, the bill would allow American homeowners to finance cost-
effective home energy upgrades as part of a traditional mortgage, 
improving access to the comfort and money-saving benefits of efficiency 
without increasing the cost of homeownership. The result is improved 
and lower cost access to capital to invest in making homes better.
---------------------------------------------------------------------------
    \4\ Sahadi et al. 2013. Home Energy Efficiency and Mortgage Risks. 
Institute for Market Transformation. http://www.imt.org/resources/
detail/home-energy-efficiency-and-mortgage-risks.
---------------------------------------------------------------------------
    The SAVE Act has support from a broad, diverse coalition including 
the National Association of Manufacturers, U.S. Chamber of Commerce, 
National Association of Realtors, National Association of Home 
Builders, ACEEE, the Institute for Market Transformation, the Alliance 
to Save Energy, and the Natural Resources Defense Council.
Manchin Power Plant Efficiency
    This bill has not been introduced yet but would direct DOE to 
conduct a study on opportunities to improve the efficiency of existing 
electrical generation plants. There are significant opportunities to 
improve existing power plants\5\ and this bill would help identify the 
most promising approaches, helping power plant owners and regulators to 
identify cost-effective opportunities to improve their plants.
---------------------------------------------------------------------------
    \5\ For example, the Electric Power Research Institute hosted a 
conference on this topic in February, 2013. See http://mydocs.epri.com/
docs/PublicMeetingMaterials/1202/epri/call__to__papers.pdf.
---------------------------------------------------------------------------
H.R. 540--Energy Efficient Government Technology Act
    This bill was introduced in the House by Representatives Eshoo and 
Rogers. We are aware of several senators who plan to shortly introduce 
a similar bill. The bill would encourage the use of information and 
communication technologies to save energy and would also assist efforts 
to improve the energy efficiency of data centers. The bill would expand 
upon the guidance in section 401 of S. 761 and also ``turbo-charge'' 
section 453 of the Energy Independence and Security Act of 2007, 
dealing with energy-efficient data centers and cloud computing. Both of 
these provisions would take advantage of recent advances in information 
and communications technologies to increase opportunities for saving 
energy, including reducing energy required to run data centers. To 
provide one example of these opportunities, the Natural Resources 
Defense Council and an ``intelligent efficiency'' service provider 
worked with the owner of several already-efficient Washington, D.C. 
office buildings and achieved 13 percent average energy savings in the 
first year by monitoring building meter data, identifying problems, and 
making actionable suggestions to building operations staff.\6\
---------------------------------------------------------------------------
    \6\ Report forthcoming shortly.
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Use of Federal Disaster Relief and Emergency Assistance for Energy-
        Efficient Products and Services
    Senator Gillibrand is now developing a bill to authorize and 
encourage the use of efficient products and services when buildings and 
other structures need to be replaced following a disaster. Under 
current law, if the old building was inefficient, disaster funds cannot 
be used to replace it with a more efficient building, which just 
perpetuates inefficiency. The proposed bill will specifically authorize 
acquisition of efficient equipment that has been screened by the ENERGY 
STAR or Federal Energy Management Program, or efficient buildings that 
meet national model building codes.
Water Efficiency
    S. 761 is focused on energy efficiency, but in a number of places 
the term ``and water'' can and should be added to also encourage water 
efficiency. Using water more efficiently saves energy by reducing 
energy used for water and waste water pumping and treatment. Specific 
suggestions have been forwarded to Senators Shaheen and Portman by the 
Alliance for Water Efficiency and we hope that some of these 
suggestions can be included in a managers' amendment to S. 761.
Potential ``Poison Pill'' Amendments to S. 761
    In addition to all of the above amendments which we generally 
support, we have heard about a few amendments that have been drafted 
but not introduced that would reduce energy efficiency and increase 
energy use.
    Most importantly, we are concerned about a provision being advanced 
by the National Rural Electric Cooperative Association (NRECA) to 
establish new efficiency standards for ``grid-enabled'' electric water 
heaters that will use twice as much energy as water heaters that meet a 
federal efficiency standard that will go into effect in 2015. NRECA 
wants to allow electric coops to promote off-peak electric water 
heating and to use other demand response techniques. However, their 
proposed amendment is poorly drafted and will allow widespread use of 
less-efficient water heaters in applications without off-peak water 
heating or load management. Furthermore, their proposal would establish 
a standard that has not been well vetted and would prohibit DOE from 
ever revising that standard to improve energy efficiency. DOE also 
understands NRECA's concern and is working on a waiver to the standard 
for the appropriate use of electric water heaters in demand response 
programs. DOE's initial proposal had some problems, but NRECA and 
others heavily commented on the DOE proposal and DOE is now working to 
address these comments. We recommend that instead of dictating a 
solution that has the support of only one set of parties to this 
proceeding, Congress specifically direct DOE to make a decision and 
provide a deadline for such a decision. We are also open to discussing 
other potential compromises. There is also a potentially troubling 
amendment dealing with the Leadership in Energy and Environmental 
Design program (LEED), a voluntary ``green building'' certification 
program. Fortunately, we understand that negotiations are ongoing 
between the interested parties and we hope that a reasonable compromise 
can be found.
Energy Savings from these Provisions
    As discussed at the beginning of my testimony, ACEEE has conducted 
a preliminary analysis of the energy savings from S. 761 and most of 
the bills and provisions discussed in my testimony. In compiling these 
estimates, we have made informed assumptions on their impacts. For 
example, where appropriations are required, given the tight federal 
budget, we assume that full authorizations will not be funded and 
instead we assume that the appropriation is half of the authorization. 
Our savings estimates are summarized in Table 1. Table 1 lists annual 
savings in 2020 and 2030 as well as cumulative savings over the 2014-
2030 period (e.g., the sum of annual savings for each year over this 
period). The largest savings, in order, come from Section 101 of S. 761 
(on building codes), S. 1106 (the SAVE Act), improving the efficiency 
of existing power plants (Manchin), and Section 311 of S. 761 
(industrial efficiency).


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Overall, the savings from the provisions we support are roughly the 
same as those from last year's version of Shaheen-Portman. Some 
sections that were included in last year's version of this bill have 
changed or been dropped, and we now have one year less to accrue 
savings before the 2030 end-point in our analysis. Also, we revised 
some of our earlier estimates based on updated data. Furthermore, none 
of the amendments we analyzed this year were in last year's bill.
    In last year's analysis we estimated that the Shaheen-Portman bill 
would generate nearly $60 billion in net consumer savings (i.e., 
savings minus costs) and would support nearly 160,000 net jobs by 2030. 
Since the energy savings from the new bill with amendments are nearly 
the same, we would expect similar economic impacts in the new bill as 
in the old. We will publish a detailed report when we complete our 
analysis.
    We are aware that S. 1020 (``repeal and replace'') has attracted 
much attention so we paid special attention in our preliminary analysis 
to that section of that bill. We found that the fossil fuel energy 
savings achieved as a result of the implementation of Section 433 of 
the Energy Independence and Security Act of 2007 (EISA) would be less 
than intended when accounting for other, existing requirements 
applicable to new and renovated federal buildings. New federal 
buildings are already required by Section 305 of the Energy 
Conservation and Production Act to operate at 30 percent below the 
energy consumption levels of applicable building code. In addition, 
there is an existing requirement in Section 431 of EISA for a reduction 
of overall energy intensity of federal buildings by 30 percent in 2015. 
The benefit to new and renovated federal buildings from these two 
requirements effectively reduces the impact of Section 433 by roughly 
50-80 percent annually. It is also important to note that these reduced 
impacts are also due to some drafting problems with Section 433 that 
has hindered its implementation; recognizing this, we assume that 
Section 433 would ultimately only achieve 75 percent of its objective 
and not 100 percent. If S. 1020 is adopted, it would extend the 
existing 30 percent below code requirement for new buildings to all 
buildings undergoing major renovations. The energy savings from this 
provision, when paired with energy savings from a proposed increase in 
the energy intensity target for all federal buildings to 45 percent by 
2020, would exceed any savings gap from repeal of Section 433. Together 
these two provisions could save approximately 0.03 quads more than 
Section 433 would have in both 2020 and 2030, with an estimated total 
cumulative additional savings of about 0.4 quads over the 2014-2030 
period.
Conclusion
    ACEEE believes that Energy Savings and Industrial Competitiveness 
Act of 2013 (S. 761) would be an important step toward improving the 
energy efficiency of the U.S. economy. All of the bills before us 
today, as well as many of the additional amendments that may be 
considered, would add to the energy efficiency savings achieved. We 
support:

   S. 1206--Benchmarking
   S. 1191--Better Buildings Act (Tenant Star)
   S. 1200--Residential Energy Savings Act of 2013 (Residential 
        Financing)
   S. 1209--Race to the Top
   S. 1084--School Retrofits
   S. 1020--All of the Above Federal Energy Conservation Act
   S. 1213--WAP and SEP Reauthorization
   S. 1205--Local Energy Supply and Resiliency Act
   S. 717--Non-Profit Energy Efficiency Act provided our 
        recommended modifications are made
   S. 1106--Sensible Accounting to Value Energy Act (SAVE)
   Senator Manchin's Power Plant Efficiency provision
   H.R. 540--Energy Efficient Government Technology Act
   Senator Gillibrand's provision on Use of Federal Disaster 
        Relief and Emergency Assistance for Energy-Efficient Products 
        and Services
   Adding Water Efficiency to S. 761 in appropriate places

    On the other hand, a potential amendment supported by NRECA on 
water heater efficiency standards is a potential ``poison pill'' that 
could make enactment of energy efficiency legislation difficult.
    Overall, we estimate that S. 761, together with all the amendments 
we support, will reduce U.S. energy use by more than 15 quadrillion 
Btu's over the 2014-2030 period. This is nearly as much energy as will 
be used by the state of Oregon over this period. Saving this much 
energy will benefit our economy and our environment and we urge the 
Senate to adopt S. 761 and the other bills I have discussed, but to 
avoid ``poison pills'' that lack broad support.
    This concludes my testimony. Thank you for the opportunity to 
present these views.

    Senator Franken. Thank you, Mr. Nadel. I'll note that all 
of your written statements will be entered into the record.
    Mr. Laskey.

        STATEMENT OF ALEX LASKEY, PRESIDENT AND FOUNDER 
                           OF OPOWER

    Mr. Laskey. Thank you, Senator Franken, Senator Risch, 
Senator Sanders. It's an honor to be here.
    My name is Alex Laskey. I'm the President and Founder of 
Power. We are the world's leading provider of energy efficiency 
software for the utility industry.
    My friend, Dan Yates and I started the company 6 years ago 
because we thought that Americans deserved better than a bill 
that was basically impossible to understand. That people had a 
right to know, ordinary homeowners had a right to know, more 
about the energy they use and the energy they waste in their 
own homes. What they ought to do to save.
    We're based just here in Arlington, Virginia. We're now 400 
employees, 2 of us 6 years ago. We're in 7 countries with 
serving 91 utilities in 30 States including Minnesota and 
Idaho, not yet Vermont and 7 countries.
    Today we've helped save ordinary families more than $300 
million on their electric bills. This includes as much as $6 
million last year in Minnesota alone. I think this year it will 
be close to ten million. We're just starting with a vista in 
Idaho so we can give you numbers before too long.
    But we're just getting started. This year alone, in the 
next 12 months, we'll generate another 2 Terrawatt hours in 
energy savings. Two Terrawatt hours, that's more than enough 
energy to power every home in St. Paul and Cincinnati combined. 
It's every home in Vermont uses less, in total, uses less than 
2 Terrawatt hours a year. It's roughly a third the size the 
State of Idaho.
    Put in another context the solar industry last year in this 
country produced 4 Terrawatt hours of electricity. We're 
producing 2. The Hoover Dam produces just about 2 Terrawatt 
hours a year in energy savings, in energy.
    I'm pleased to be here today as a designee of the Alliance 
to Save Energy and as a Commissioner on Senator Warner's 
Commission, the bipartisan Commission, that he led with 
National Grid President, Tom King. This was a truly bipartisan 
Commission. We--Governor Pataki was on the Commission, 
Executives from the Southern company, Exelon Utilities, EEI, as 
well as the Presidents of both the National Resources Defense 
Council and EDF.
    We didn't agree on everything, to put it mildly. But one 
thing that we did agree on was that energy productivity was a 
significant problem that we needed to address. We believed we 
could double energy productivity in this country by 2030. One 
of the ways that we had in mind to get there was this race to 
the top which I'll speak about in a moment.
    So, but before I do I just pose the question that perhaps 
doesn't need to be posed in this room with the people sitting 
on both sides of the table which is why should we care about 
energy productivity?
    Senator Warner talked to it. But 57 percent of the energy 
in our economy is flat out wasted. I don't know about you, but 
I wouldn't tolerate having 57 percent of the coffee I pour into 
my coffee mug every morning could fall out the other side of 
it. Although I have a 2-year old, so sometimes some of that 
coffee does fall out. But all the more reason I need more of 
it.
    But we tolerate somehow 57 percent of the energy entering 
our economy being lost to things like heat, leakage, noise. 
This doesn't even account for the energy that's lost and wasted 
in homes when lights are left on regardless of the light bulb 
in empty rooms or air conditioning is left on in unoccupied 
homes. That we've estimated that 20 percent of the energy 
that's consumed in homes is wasted on energy that does not 
contribute to lifestyle but does contribute to climate change. 
It's $40 billion a year just on behavioral waste.
    So this is an urgent problem that we ought to do something 
about. As the Senator talked we rank ninth of the twelfth 
industrialized countries in terms of energy productivity that 
is GDP per energy input. We rank behind China. This is costing 
us $130 billion a year. That's $1,000 a household.
    So the question is what can we do to eliminate waste and 
make our economy more productive?
    In many places utility regulation, this is in part not just 
about regulation, but it's about reforming bad regulation. 
Regulation hasn't changed much since Thomas Edison. Rate 
utilities are still rewarded when their customers waste energy. 
They ought to be rewarded for helping their customers save it.
    Thomas Edison may not have envisioned a world in which we 
incentivize utilities to help customers use less power, but 
it's common sense. Because helping people use less energy costs 
a lot less than building new power plants and transmission 
lines.
    Some States including Massachusetts already get this. Over 
the last 2 decades about half the Nation's States have put in 
place energy efficiency goals or other policies for their 
utilities to help businesses and families use energy more 
productively. These policies are working.
    Between 2002 and 2011 States without efficiency goals 
exhibited an average increase in per capita consumption of 9 
percent over a 10-year period. In States with efficiency goals 
it's been a 5 percent reduction. So it's a 14 percent swing in 
10 years just because of better policy.
    These are not just States like Minnesota and Vermont. 
Governor Bush passed the first energy efficiency resource 
standard in Texas. Arkansas, Ohio, North Carolina and Arizona 
have all passed efficiency resource standards. Even this week, 
I know Senator Landrieu isn't here, but this week in Louisiana 
tomorrow they're considering passing a law in Louisiana as 
well.
    So how do we do more of this? From the Federal Government's 
perspective the easiest way to do this is to create a race to 
the top. It's, you know, as the Senator mentioned, this would 
be based on the education race to the top. This is S. 1209. We 
are highly supportive of it.
    By providing States with incentives to enact policy and 
regulatory reforms, that will stimulate new investment in 
energy efficiency and demand response. This legislation would 
reduce family's energy bills, increase American competitiveness 
and help the environment. More specifically S. 1209 would 
challenge States to design effective policies to produce 
productivity using a $200 million incentive fund.
    While States will have flexibility to address their own 
local circumstances, they must demonstrate how the money would 
be spent, how the savings and increased productivity will be 
measured and how the public dollars can be leveraged through 
cooperative efforts with utilities.
    Finally, to ensure that energy productivity is actually 
improving, the National Resource Council would be required to 
produce an independent evaluation of the program's performance.
    So in conclusion, right now our approach to energy is 
wasting our money, polluting our skies and reducing our 
competitiveness. S. 1209, the Energy Race to the Top bill, is a 
common sense approach that will accelerate the elimination of 
outdated regulation, spur innovative reform of energy markets 
and energize our economy.
    Thanks again for letting me be here. I look forward to 
hearing your questions.
    [The prepared statement of Mr. Laskey follows:]

   Prepared Statement of Alex Laskey, President and Founder of Opower
Introduction
    As President and Founder of Opower, I am pleased to appear before 
this Subcommittee as the designee of the Alliance to Save Energy and a 
Commissioner on the Alliance's Commission on National Energy Efficiency 
Policy. Thank you Chairman Franken, Ranking Member Risch, and the other 
esteemed members of the Subcommittee for the opportunity to testify.
    Opower is the world's leading provider of energy efficiency 
software and customer engagement solutions to the utility industry. My 
friend Daniel Yates and I founded Opower six years ago because we 
believed that if we provided families better information about their 
energy use, they could save money and help the environment all at the 
same time.
    Based in Arlington, Virginia with offices now in San Francisco, 
London, and Singapore, our company has grown to more than 400 employees 
and works with 91 utilities to serve 18 million households in 30 states 
and 7 countries. To date, we have helped families save more than $300 
million on utility bills. Last year alone, we saved Ohioans $7 million, 
Minnesotans $6 million, Arizonans and Michiganders $3 million, and 
Coloradans more than $2 million on their electricity bills.
    We're just getting started. Over the next twelve months we' ll 
generate another 2 Terrawatt hours in energy savings. That is more than 
enough energy to power every home in Cincinnati and St. Paul combined, 
or to take all of the homes in Las Vegas off the grid for the whole 
year. It's enough energy to power every home in Portland (OR), 
Nashville, Albuquerque, or Tucson for a year. 2 Terrawatt hours is 
roughly half of what the entire US Solar industry produced last year, 
and it's equivalent to the annual production from the Hoover Dam.
    Utilities partner with Opower to provide families both the 
motivation and information to save energy. Smart people understandably 
struggle to decipher typical energy bills with esoteric terms such as 
Kilowatt Hours. We firmly believe everyone has a right to personally 
relevant energy usage information. To that end, we show families how 
their energy use compares to similarly sized homes coupled with 
personalized tips for saving. Importantly, our approach delivers 
consistent savings regardless of one's age, income, education, or 
access to technology.
    Broad-based engagement on energy efficiency is a prerequisite for 
reducing energy waste at scale. To that end, Opower is helping make 
every household and every person a part of the solution to energy 
waste. For instance, as part of our partnership with National Grid 
Rhode Island, we will soon be delivering energy usage information to 
all 425,000 households in that stale.
Commission on National Energy Efficiency Policy
    For the past year and a halC l have served on the the Alliance to 
Save Energy's Commission on National Energy Eiliciency Policy's (see 
attached list of Commission members and their biographies). The 
Alliance is a non-partisan group of business leaders, policymakers, and 
utility executives, representing stakeholders ranging fi'om leading 
utilities such as Southern Company, Exelon, and the Edison Electric 
Institute to leading non-governmental organizations including the 
Natural Resources Defense Council and the Environmental Defense Fund.
    Our Commission, co-chaired by Senator Mark Warner and National Grid 
USA President Tom King, released a report earlier this year calling for 
a bold national strategy to double our energy productivity by 2030 
(i.e., in 2030, every unit of energy consumed will correspond to twice 
the amount of GDP as compared to 2011). We issued a list of policy 
recommendations (Energy 2030) designed to help America meet this goal. 
Meeting this goal would deliver exceptional benefits to the United 
States, including enhanced economic competitiveness and technological 
innovation, greater energy reliability and security, and strengthened 
stewardship of our environment and natural resources.
    Created in 2012 to identify solutions for increasing U.S. energy 
productivity and jump starting the economy, the Commission built its 
recommendations upon a large body of research that examines the issues 
of investment, technology, human behavior, and government in relation 
to growing energy productivity in the United States across an array of 
economic sectors, including residential, commercial, industrial, and 
transportation.
    An independent analysis by the Rhodium Group for the Commission 
found that doubling energy productivity would require investment of 
$166 billion each year through 2030, but would avoid $327 billion a 
year above those costs, save the average household $1000 a year, add 
over a million jobs, and reduce both carbon dioxide emissions and oil 
imports by a third.
    Moreover, the enclosed figure demonstrates how the Commission's 
energy productivity target compares with the reference (i.e., current 
course of activity) case projection of the U.S. Energy Information 
Administration (EIA) 2012 Annual Energy Outlook
    Over the last 40 years, the United States has made significant 
gains in energy productivity. In 1970, about $63 billion of GDP in year 
2005 dollars were produced per quadrillion Btu (quad) of energy used 
domestically according to the U.S. Energy Information Administration. 
In 2011, the figure was about $135 billionon per quad. The Commission's 
goal is for the U.S. economy to achieve $270 billion (in 2005 dollars) 
of GDP for each quadrillion Btu consumed in 2030.
    If not for energy productivity gains since the early 1970s, the 
United States would need about 50 percent more energy--with concomitant 
impacts on energy bills, oil imports, energy reliability and security, 
and environmental quality--to deliver today's GOP. The following 
Alliance to Save Energy figure graphically illustrates the point.
    While the United States has made significant energy productivity 
progress over the last several decades, the nation cannot afford to 
rest on its laurels. Indeed, heightened international economic 
competition; stresses on American energy, transportation, and other 
physical infrastructure; continued economic and geopolitical 
vulnerabilities to energy price shocks (despite increased North 
American oil and natural gas production); and multiple environmental 
challenges associated with energy all underscore the need to strengthen 
U.S. efforts to enhance energy productivity.
    In addition to the Commission's work, three other reports have been 
issued recently that call for energy efficiency as a central pillar of 
sound U.S. energy policy. These include the National Association of 
Manufacturers' Energy Efficiency Task Force on the building sector; the 
Business Roundtable's Taking Action on Energy: A CEO Vision for 
America's Energy Future; and the Bipattisan Policy Center's America's 
Energy Resurgence: Sustaining Success, Confronting Challenges. The 
Commission intends to work collaboratively with these organizations and 
their associates to implement our common and important agendas on 
energy efficiency.
    The Alliance Commission on National Energy Efficiency Policy urges 
policy makers and the private sector to take immediate and concerted 
action to grow our economy and create jobs while using less energy and 
reducing associated costs, environmental harm and security impacts.
    Of the recommendations, three overarching strategies were 
established to meet this energy productivity goal:

   UNLEASH INVESTMENT in energy productivity throughout the 
        economy;
   MODERNIZE REGULATIONS and Infrastructure to improve energy 
        productivity; and
   EDUCATE and ENGAGE consumers, workers, business executives, 
        and government leaders on ways to drive energy productivity 
        gains.
LEGISLATIVE INITIATIVES
            State Energy Race to the Top (S. 1209)
    The education ``Race to the Top'' initiative spawned significant 
education reforms and has received broad, bipartisan support. 
Similarly, an energy productivity competition that provides federal 
resources and rewards states for progress toward becoming more energy 
productive could spur significant advances in efficiency throughout the 
nation.
    To that end, Opower applauds Alliance to Save Energy Honorary Chair 
Senator Mark Warner (D-Va.) and Senator Joe Manchin (D-W.Va.) for 
introducing the State Energy Race to the Top proposal (S. 1209) that 
would create, fund, and implement a voluntary energy productivity 
competition for states. This concept was a key pillar of the Alliance 
Commission's consensus-based Energy 2030 recommendations to double U.S. 
energy productivity.
    This Race to the Top-style competition- which was embraced by the 
President in his State of the Union and Fiscal Year (FY) 2014 budget-
aims to promote innovation and adoption of best practices in energy 
efficiency at the state and local levels of government. By providing 
states with incentives to enact policy and regulatory reforms that will 
stimulate new investment in energy efficiency and demand response, this 
legislation would help keep more money in local communities, save 
taxpayer dollars, reduce families' energy bills, and increase American 
competitiveness.
    More specifically, S. 1209 would empower the federal government to 
challenge states and local governments to design effective policies to 
boost energy productivity, using a $200 million incentive fund. The 
legislation builds upon existing public/private networks and encourages 
states, businesses, and utilities to modernize. Key aspects of the 
legislation include;

   Up to 25 states would compete tor a combined $60 million to 
        develop innovative energy productivity programs and policies.
   States must demonstrate how the money would be spent, how 
        the savings and increased energy productivity will be measured, 
        and how the public dollars can be leveraged through cooperative 
        efforts with utilities.
   Eighteen months after the initial allocation to 25 states, 
        an additional $105 million would be divided among no more than 
        six additional states to continue implementation of energy 
        productivity e11orts, including adoption of ``best practices'' 
        spearheaded by the initial group of 25 states.
   $25 million would be set-aside for innovative energy 
        productivity programs proposed by public power utilities, rural 
        electric cooperatives and utilities serving recognized Native 
        American reservations.
   The National Research Council would be required to produce 
        an independent evaluation of the program's performance.
            Proposals Related to the Building Sector
    Buildings account tor approximately 40 percent of all U.S. energy 
use. Efficiency in the domestic building sector represents an 
investment opportunity in the hundreds of billions of dollars, with 
potential savings estimated as high as $1 trillion over the next 10 
years--30 percent of what we now spend annually on electricity. New and 
existing building stock can become more eflicient and productive 
through adoption and enforcement of codes and standards, investment in 
efficiency retrofits, improvement in technologies, and greater 
education of users, among other means.
    The Alliance's Commission on National Energy Efficiency Policy also 
assesses the state of building energy efficiency to inform the 
development of policy recommendations for expanding energy productivity 
in residential and commercial buildings. It examines the unique 
financing challenges in the buildings sector, an array of available 
energy productivity technologies, new developments in providing 
building efficiency information, and recent policy innovations.
    Building owners and builders themselves decide on components that 
affect energy use; building operators affect energy use through 
operations and maintenance; and occupants exert control over many types 
of energy-using equipment. Importantly, energy management can be 
improved through building energy use feedback and benchmarking systems, 
building staff training and occupant education, social norms and 
marketing, and financial incentives. Behavior-based energy efficiency 
approaches, such as energy feedback systems, can empower building 
operators and individual households to better manage their energy use 
and costs. An Environmental Defense Fund study estimated a $3 billion 
potential annual savings if simple monthly comparative energy-e reports 
were sent to residential customers nationally.
    For these reasons, the Alliance to Save Energy supports Chairman Al 
Franken's (D-Minn.) legislation (S. 1206) that would extend the 
existing federally owned building benchmarking requirement to federally 
leased buildings; require an agency study on benchmarking methodologies 
for commercial and multifamily buildings; and authorize a competitive 
grant program for interested utilities and regulators to ensure 
availability of building energy use data. Similarly, the Alliance also 
commends Senators Michael Bennet (D-Colo.) and Kelly Ayotte (R-N.H.) 
for introducing the Better Buildings Act (S. 1191 ), which would 
advance a voluntary, market-driven approach by creating a Tenant Star 
program within ENERGY STAR to promote efficiency in tenant-occupied 
commercial spaces. Both of these measures are in keeping with the 
policy recommendation in the Education Energ 2030 category, which calls 
for effective building energy ratings, benchmarks, and disclosure 
methods to reduce energy waste.
    Equally important is the leadership role that all levels of 
government can play. The federal government is the largest single 
energy user in the United States, responsible for just over 1 percent 
of total energy use. State and local governments combined own one fifth 
of commercial building space, with much larger energy use. But beyond 
their own energy use, governments can serve as highly visible test beds 
and early adopters of innovative technologies and practices. They also 
can influence their large base of contractors and suppliers to increase 
their energy productivity.
    Furthermore, Federal agencies should adopt the Investment category 
Energy 2030 policy recommendation that focuses on applying innovative 
best practices to government buildings, including setting targets for 
efliciency improvements; implementing energy management systems (under 
ISO 50001 standard); benchmarking, rating, and disclosing of building 
energy use and eniciency; and conducting recommissioning.
    As such, the Alliance to Save Energy has publicly endorsed the All-
Of-The-Above Federal Building Energy Conservation Act (S. 1199). 
Authored by Senators John Hoeven (R-N.D.) and Joe Manchin (D-W.Va.), 
this bipartisan legislation would strengthen several energy efliciency 
targets and requirements for federal buildings by extending the current 
efficiency targets to require each agency to reduce energy intensity of 
its buildings (energy use per square foot) by 3 percent each year, 
ending in a 45 percent reduction by 2020. It would also modify a 
current directive to conduct energy and water audits, and adjust 
efficiency standards that apply to new federal buildings.
    Although the proposal is much different in scope, the Streamlining 
Energy Efficiency for Schools Act (S. 1084) falls under the same Energy 
2030 policy recommendation, and is backed by the Alliance as well. 
Introduced by its Honorary Vice-Chairs Senator Mark Udall (D-Colo.) and 
Senator Susan Collins (R-Maine), this bill would simplify the scope of 
existing federal energy effciency programs available to schools and 
provide clearer guidance on financing options to help make certain that 
they are able to take advantage of energy savings opportunities.
    Uncertainties and risks, capital constraints, corporate strategy, 
and public policy affect decisions to invest in energy productivity in 
the building sector as significantly as they do other investment 
decisions. Businesses and households can be dissuaded from making 
energy or other upgrades by high first-costs. Both often demand very 
rapid payback on investments.
    Energy productivity investments may be undertaken primarily to 
achieve energy benefits, but often energy productivity gains are a co-
benefit of investments made for other purposes. A broader modernization 
of manufacturing, renovation of building stock, replacement of 
vehicles, and upgrade of infrastructure can yield energy productivity 
gains while simultaneously improving economic productivity and business 
competitiveness, quality of products and services, and energy and 
environmental performance.
    Promising opportunities for such investments include the 
Weatherization Enhancement and Local Energy Efficiency Investment and 
Accountability Act (S. 1213). This bipartisan measure, which was 
sponsored by the Alliance to Save Energy's Honorary Vice-Chairs 
Senators Chris Coons (D-Del.) and Susan Collins (R-Maine), would 
reauthorize and improve the Weatherization and State Energy Programs, 
which have been responsible for efficient upgrades in more than 7.4 
million homes. This important bill would maintain the national profile 
of the programs, allowing millions of low-income Americans to reduce 
their energy consumption and save money, and also introduce a 
complementary innovation initiative to leverage private funding tor 
weatherization projects.
    Other potential initiatives that aim to address investments include 
the Non-Profit Energy Efficiency Act (S. 717), which would create a 
Federal pilot program to provide grants of up to $200,000 (with a 50 
percent match) to schools, youth centers, houses of worship, hospitals 
and other nonprofit facilities to undertake energy efficiency 
improvements. Chairman Franken's Local Energy Supply and Resiliency Act 
(S. 1205) also offers promise by offering financing for public and 
private entities the ability to assess and implement energy systems 
that recover and use waste heal and local renewable energy resources.
CONCLUSION
    While the United States has made significant energy productivity 
progress over the last several decades, the nation cannot afford to 
withhold support for policies or investments in energy efficiency. 
Heightened international economic competition; stresses on American 
energy, transportation, and other physical infrastructure; continued 
economic and geopolitical vulnerabilities to energy price shocks 
(despite increased North American oil and natural gas production); and 
multiple environmental challenges associated with energy all indicate a 
necessity to strengthen U.S. efforts to enhance energy productivity.
    Opower recognizes that today's economic and political challenges 
make it increasingly diflicult to address national energy policies. 
Advancement of the State Energy Race to the Top initiative and other 
efficiency proposals, however, would help address high energy costs, 
create jobs, improve our national energy security and reduce the 
harmful environmental impacts associated with the production and use of 
energy.
    In many places, utility regulation has not changed much since the 
days of Thomas Edison. Utilities make more money when their customers 
waste energy. They ought to be rewarded for helping their customers 
save it. While Thomas Edison may not have envisioned a world in which 
we incentivize utilities to help customers use less power, it is common 
sense. Reducing demand and increasing energy productivity is cheaper 
and cleaner than building new power plants and transmission lines.
    Thank you for your time and attention, and I would be glad to 
respond to any questions that you may have.

    Senator Franken. Thank you, Mr. Laskey. I'm sure Senator 
Risch is looking forward to those figures from your project in 
Idaho. It is Risch, by the way, not Reesch. It's Risch.
    Mr. Laskey. Sorry.
    Senator Franken. It's OK. I just want to recognize that 
Senator Saunders is here.
    [Laughter.]
    Senator Sanders. Thank you, Senator Franken.
    Senator Franken. Mr. Sylvia.

     STATEMENT OF MARK SYLVIA, COMMISSIONER, MASSACHUSETTS 
                 DEPARTMENT OF ENERGY RESOURCES

    Mr. Sylvia. Thank you very much, Chairman Franken and 
Senator Sanders. My name is Mark Sylvia. I am the Commissioner 
of the Massachusetts Department of Energy Resources. I'm 
appearing today on behalf of the National Association of State 
Energy Officials.
    As noted in the written testimony we generally support the 
multiple pieces of legislation being considered by the 
subcommittee today. We appreciate your consideration of these 
bills. In my oral statement I will mostly focus on the 
bipartisan legislation introduced by Senators Coons, Collins 
and Jack Reed, to reauthorize the State Energy Program and the 
Weatherization Assistance Program.
    As discussed in my written testimony there are good 
examples of energy efficiency programs from every State. We 
would be happy to answer questions and supply other information 
for the record. However a few overarching points should be 
stressed.
    One, the existing State programs leverage a large amount of 
non-Federal funds.
    Two, these energy efficiency programs are a key to economic 
development and international competitiveness.
    Three, there is an important and continuing Federal role in 
key areas of energy efficiency as reflected in the bills the 
subcommittee is considering today.
    The Coons/Collins/Reed bill reauthorizes the State Energy 
Program at a lower funding level than contained in the 2007 
authorization. But otherwise recognizes that the program has 
been a continuing success. Because it encourages State 
flexibility and acknowledges the programs efforts with the 
private sector.
    For the Weatherization Program the bill makes some changes 
to the underlying statutes, but also recognizes that this 
program is robust and has been successful as well. The bill 
would strengthen weatherization standards and establish a 
modest innovations program that would encourage other 
organizations, such as volunteer organizations, to expand on 
the fine work of the Community Action Agencies and non-profit 
delivery agents. Our biggest challenge for the State energy 
program in weatherization is maintaining strong Federal 
appropriations.
    Just a brief word on other bills you are considering today.
    The Warner/Manchin State Energy Race to the Top Initiative 
would build on the success of the State energy program while 
acknowledging that all States are at different places. The 
Massachusetts Lead by Example program is the type of activity 
that could be expanded with this program and adopted by other 
States. We support this bill as well.
    Mr. Chairman, your bills on benchmarking and encouragement 
of combined heat and power focus attention on important 
untapped resources. We hope these bills are advanced as well.
    Finally the Sanders/Wyden bill would encourage the 
establishment and expansion of energy efficiency financing 
programs by creating a Federal loan program to the States. We 
also support this bill.
    That concludes my oral statement. I would be happy to 
answer any questions. Thank you.
    [The prepared statement of Mr. Sylvia follows:]

     Prepared Statement of Mark Slvia, Commissioner, Massachusetts 
                          Department of Energy
    My name is Mark Sylvia. I am Commissioner of the Massachusetts 
Department of Energy Resources (DOER). I am very pleased to be here 
today. I am appearing before the Subcommittee on behalf of the National 
Association of State Energy Officials (NASEO). NASEO represents the 56 
states, territories and the District of Columbia on energy matters. The 
state energy officials generally represent their Governors and address 
a range of energy issues. Our primary focus is the development and 
implementation of rational energy policies in the context of economic 
development, promotion of a diverse portfolio and working with the 
private and public sectors to achieve these goals. As a NASEO member I 
am very pleased to serve on the Board of Directors. As energy directors 
we share ``best practices'' and work across party lines and across 
state lines to move the country forward.
    In general, NASEO supports the bills that the Subcommittee is 
considering today. I would be remiss if I did not offer some additional 
context with respect to the Shaheen-Portman bill (S. 761). NASEO worked 
with the bi-partisan sponsors as well as the Committee Staff of this 
committee, on both sides of the aisle, in developing this rational 
legislation. We certainly urge swift floor action and, we hope, passage 
by the Senate. We will continue to support House action on their 
companion legislation, also introduced on a bi-partisan basis, by 
Representatives' McKinley and Welch. S. 761 addresses a variety of 
matters, and certainly relevant to today's discussion is the private 
commercial buildings energy financing program included as Section 201 
to that bill. Some of the pieces of legislation that you are debating 
today are complementary to that provision of S. 761.
Reauthorization of the State Energy Program and the Weatherization 
        Assistance Program
    Senators' Coons, Collins and Reed have introduced a bill to 
reauthorize the State Energy Program (SEP) and the Weatherization 
Assistance Program (WAP), ``The Weatherization Enhancement and Local 
Energy Efficiency Investment and Accountability Act''. These two 
programs are critical to our nation and need to be continued. The bill 
reauthorizes SEP at a lower funding level than the level contained in 
the 2007 reauthorization, but otherwise recognizes that the program has 
been a success because it encourages state flexibility. After the 
original authorization in the 1970s, Congress has modified the 
underlying statute to increase that flexibility through the State 
Energy Efficiency Programs Improvement Act of 1990, the Energy Policy 
Act of 1992, the Energy Policy Act of 2005 and the Energy Independence 
and Security Act of 2007. Many of the bills that you are considering 
today are intended to expand on many of the pilot programs developed in 
SEP. The goals of the states' implementation of SEP include:

   Support the public and private sectors;
   Strengthen America's competitive position and energy 
        security;
   Provide high value programs and projects that facilitate the 
        private sector delivery of energy innovation;
   Maximize energy, environmental, and economic benefits;
   Increase market acceptance of energy efficiency and domestic 
        energy resources; and
   Use innovative approaches to reach market segments and meet 
        policy goals.

    The provisions regarding WAP in this bill make some changes to the 
underlying statute. I should stress that the underlying program is 
robust and has been a success. With changing times, we all recognize 
that certain modifications can help this program in the 21st century. 
The bill would strengthen standards for weatherization services, 
something that has been worked on by state and local officials, 
community action agencies, the private sector and DOE. Over the years, 
training has certainly improved and DOE and the states have had a 
strong partnership in expanding these activities. I should also note 
that Oak Ridge National Laboratory has been extremely helpful in 
assisting in this effort. Regional training centers have also been 
established to update the program. New technologies have been used for 
the first time in WAP, such as blower-door testing programs. In 
addition to reauthorizing the basic program, also at a reduced funding 
level, the bill would establish an innovation program that would 
encourage other potential participants to seek out opportunities to 
weatherize dwellings of low-income Americans, those with disabilities, 
the elderly and an expanding population of returning veterans. 
Organizations such as Habitat for Humanity and Rebuilding Together, 
that have a track record of helping people with volunteer labor, are 
the types of groups that we hope will participate in the program. We 
also hope that the community action agencies and existing nonprofit 
entities that deliver WAP services will also participate in the 
innovation program.
    Some examples of the states' accomplishments utilizing WAP funding, 
include:

   Served over 7.4 million low-income homes since the program's 
        inception, with millions more high-energy use units still 
        eligible and in dire need of services;
   Saves low-income families an average of $250 to $450 per 
        year in heating, cooling, and electric costs, depending on 
        their housing type, location, and fuel source;
   Returns $2.51 for every dollar spent in energy and non-
        energy benefits over the life of the weatherized home;
   Serves as a foundation for residential energy efficiency 
        retrofit standards, technical skills, and workforce training 
        for the emerging broader residential energy efficiency retrofit 
        market;
   Impacts communities through local purchasing and jobs, 
        supporting over 10,000 local, American businesses nationwide; 
        and
   Decreases national energy consumption by the equivalent of 
        24.1 million barrels of oil annually.

    Following enactment of landmark environmental and economic 
legislation in 2008, Massachusetts, has used funding for the energy 
efficiency and renewable energy investments from a variety of sources, 
including ratepayer funds, RGGI auction proceeds, renewable energy 
credits, and the forward capacity market created through the New 
England Independent System Operator. Massachusetts also uses SEP funds, 
which support the core functions of the Department of Energy Resources 
(DOER), including oversight of the state's energy efficiency programs, 
recognized by ACEEE as the best in the nation for the last two years.
    SEP funding awarded to Massachusetts enables DOER to support the 
state as an innovation hub for energy policy and technology. In FY2013 
Massachusetts used federal SEP funding to 1) conduct energy reliability 
planning and monitoring; 2) develop an energy data and analysis 
database to be used for public and private energy market analyses; 3) 
support the Commonwealth's Renewable Portfolio Standard to enhance our 
state's robust solar and emerging renewable heating and cooling 
markets; and 4) fund education and infrastructure enhancement to 
facilitate a transition to alternative forms of transportation, 
including expanded use of biofuels and electric vehicles. Following are 
a few examples:

   We have leveraged federal funds through our Leading by 
        Examples (LBE) program to procure $122.3 million in additional 
        public and utility investments for state facility improvements 
        estimated to produce greenhouse gas emission reductions 
        equivalent to removing 139,802 cars from the road. In addition, 
        LBE project investments generated 1,162 construction-related 
        jobs.
   The majority of LBE funding, $9.7 million, went toward 
        supporting the Enterprise Energy Management System (EEMS) 
        program, which installed 1,291 real-time energy meters at 469 
        buildings to enhance energy efficiency planning. EEMS is the 
        largest project of its kind in the United States. Other LBE 
        projects include: 238 energy efficiency measures by the 
        Division of Capital Asset Management and Maintenance, low 
        emissivity ceilings at five public ice skating rinks, 86 small-
        scale energy efficiency and lighting projects, and the purchase 
        of 7,464 LED light bulbs for 58 state facilities. Overall, 
        LBE's investment of funds helped reduce energy use and GHG 
        emissions at more than 200 state-owned facilities.
   SEP funds led to a wide variety of innovative initiatives, 
        ranging from deep energy retrofits at commercial and 
        residential buildings that achieved greater than 50 percent 
        savings, creative new energy outreach strategies, pellet boiler 
        installations at schools and residences, real-time metering at 
        dozens of state facilities, envelope, lighting and HVAC 
        improvements at state buildings, and over 9 megawatts of solar 
        installations across public and private entities. The SEP 
        program for the past five years is projected to save $290M over 
        the lifetime of the projects.

    A few other examples of state innovation utilizing SEP funding to 
leverage other public and private sector resources include:

   Idaho's K-12 Energy Efficiency Project began with a pilot in 
        the Homedale School District that replaced two failed 
        compressors, a blower motor, multiple thermostats and outside 
        air damper actuators; at a cost of $11,196, these projects 
        provide an estimated $18,000 in yearly savings to the district. 
        With the success of the K-pilot, the state moved forward with 
        the K-12 Energy Efficiency project to audit 894 K-12 school 
        buildings throughout Idaho; continued with HVAC and control 
        system tune-ups on 836 of the buildings resulting in an 
        estimated yearly energy savings of up to $3.9 million dollars; 
        and Energy Expert Software was installed in 91 schools.
   Michigan utilizes SEP funding to leverage private sector 
        resources to upgrade energy efficiency in state buildings. Over 
        25 loans and grants have been made through the Michigan Clean 
        Energy Advanced Manufacturing program. One example of a private 
        sector project is a Michigan based company that manufactures 
        biomass gasification systems for waste to energy projects. The 
        firm built a pilot scale biomass gasification center and an 
        advanced manufacturing rapid prototyping center. Their labs are 
        capable 4 of characterizing many types of biomass giving them 
        the ability to optimize their gasification technology.
   North Dakota operates a cost-shared training initiative 
        implemented by North Dakota State University that helps farmers 
        adopt conserving farming practices to lower production cost. To 
        date, 43 workshops have been held with 861 participants. 
        Another SEP--supported program has provided 23 grants to state 
        agencies, cities and towns to incorporate energy efficiency 
        equipment into their facilities to reduce energy usage. The SEP 
        funding provides for energy efficiency measures that have a 
        payback of less than ten years.
   In Washington the state's transportation and commerce 
        departments leveraged SEP funds and teaming up to implement the 
        nation's first ``electric highway,'' an initial network of 
        public access electric vehicle recharging locations along 
        Interstate 5. The infrastructure will enable electric vehicle 
        drivers to travel the length of the state along the 276 miles 
        of Interstate-5 between Washington's borders with Oregon and 
        Canada.

    We strongly support reauthorization of SEP and WAP.
    Our biggest challenge in 2013 and now looking at 2014 is the lack 
of funding for the programs. SEP has received approximately $50 million 
in each the past three years (postsequester--$47 million), with $36.6 
million going to the base, formula program in FY'13. We really want to 
see the base, formula program receive the maximum amount of funding 
because, by its nature, it encourages innovation and flexibility at the 
state level. The most recent comprehensive study showed that for every 
Federal dollar invested approximately $11 is leveraged and over $7 is 
saved in energy costs.
    For WAP, the House passed a $68 million funding level in FY'12, 
which was maintained through the FY'13 Continuing Resolution. We are 
very concerned that the House Energy and Water Development 
Appropriations Subcommittee has continued to cut the program. Though 
the Subcommittee marked-up their version of the FY'14 bill on June 
18th, we have not seen the details, other than a 50 percent cut in the 
overall Energy Efficiency and Renewable Energy accounts. A national 
program cannot be run on $68 million. Funding in FY'11 for WAP was $174 
million. The Senate Energy and Water Development Appropriations 
Subcommittee was scheduled to act today. We remain hopeful. 40 Senators 
signed a ``Dear Colleague'' letter supporting a funding level of $57 
million for SEP and $230 million for WAP.
    We urge the committee to approve this legislation. It is good for 
the country and costeffective. The changes in the bill will only make 
the program better.
State Energy Race to the Top (S. 1209)
    Senators' Warner and Manchin have introduced the State Energy Race 
to the Top legislation (S. 1209), which would authorize $200 million to 
further encourage innovation at the state level. The proposal would 
provide $60 million to up to 25 states to offer amended plans for 
policy and program changes. After 18 months, a smaller group of states 
would share a larger portion of funds (up to 6 states) based upon their 
success in implementing their plans. This would be a voluntary, 
competitive program operated by DOE. It is focused on improving energy 
productivity. One key facet of the bill, is that it is based on 
improvements from where states are now, without an arbitrary set of 
absolute goals. Based upon the Administration's recommendation, there 
is a set-aside for consumer-owned utilities and tribes of $25 million. 
Each state is in a different position, with different resources and 
priorities. The fine work of the Alliance to Save Energy's, Commission 
on Energy Policy, recommended a Race to the Top. A wide variety of 
groups support this effort.
    NASEO also strongly supports this legislation.
The Residential Energy Savings Act of 2013 (S. 1200)
    Senators' Sanders and Wyden have introduced the Residential Energy 
Savings Act of 2013 (S. 1200). It would provide homeowners with access 
to low-cost loans for energy efficiency upgrades. Funds would run 
through the states and tribes, but the bill encourages cooperation with 
local utilities, financial institutions and others. The key objective 
is to reduce the financing barriers by limiting up-front costs. As 
energy cost savings generated through buildings upgrades payback over 
time, financing programs can be catalysts for energy efficiency 
investment.
    In Massachusetts, the Mass Saver HEAT loan program has closed 
18,371 zero interest loans valued at nearly $155 million from 2006-
2012, for residential energy efficiency upgrades. The program has been 
a great success, but we have had to promote it tirelessly, as consumers 
often do not understand the value of investing in energy efficiency. 
This program is offered through 40 local banks across Massachusetts.
    A number of other states' programs are worth stressing, including 
the following:

   Delaware's SEP funds have supported rebates and loans for 
        residential efficiency measures through which 3,000 homeowners 
        have improved their home's energy efficiency. Through the same 
        program, 96 solar electric systems, 14 geothermal system 
        installations, one wind system, and one solar thermal hot water 
        system have been supported with SEP funding since 2010.
   Louisiana's Energy Office manages an SEP-funded Home Energy 
        Rebate Option Program (HERO) that offers cash rebates for 
        energy retrofits and provides training and quality control for 
        the energy raters who certify efficiency projects. During the 
        past two years, more than 1,100 existing homes were 
        retrofitted, resulting in a 30 percent average increase in 
        energy efficiency per home completed. SEP funding also 
        supported energy efficiency designs in 565 new homes, resulting 
        in a 35 percent average increase in energy efficiency per home. 
        For the commercial portion of the program, 89 energy retrofits 
        were completed, resulting in a 25 percent average increase in 
        energy efficiency.
   Nebraska's Energy Office has operated the Dollar and Energy 
        Saving Loan Program for more than 21 years, which finances 
        energy efficient improvements in homes, farms, ranches, 
        businesses, industrial facilities, schools, and other 
        buildings. SEP funds are leveraged with utility and other funds 
        for a total loan pool of $36 million. Between 1990 and 2011, 
        27,339 projects totaling more than $258.7 million have been 
        financed with low-interest loans from the Energy Office and the 
        state's 894 participating lender locations. Although the 
        overwhelming majority of loans are for residential projects, in 
        the summer of 2011 the first two public compressed natural gas 
        stations in Omaha were financed with low-interest loans. 
        Defaults of only $106,000 on the $258 million in loans has 
        occurred since the program began.
   Oregon, in 2010, issued nearly 77,000 Residential Energy Tax 
        Credits with SEP funding, saving more than $4 million in energy 
        costs for Oregonians. SEP has also helped fund more than $11 
        million of projects in 60 urban and rural school districts 
        across Oregon in the past two years providing for lighting 
        upgrades, window replacements, HVAC improvements, and biomass 
        boiler installations, resulting in enhanced learning 
        environments, reduced energy bills, and contractor jobs. SEP 
        also provided for energy audits that provided work for audit 
        firms and students in the local college energy management 
        program in 101 rural Eastern Oregon school districts 
        participating in the Governor's School Energy Audit Initiative.

    Consumers need more information on energy efficiency. In working 
with the Senators' staffs we believe this proposal can really encourage 
innovation and public-private partnerships. This will build on the work 
of the revolving loan programs that are operated in over 35 states. 
Other opportunities include, guarantees, bond financing, on-bill 
financing, etc. In order to reduce the cost to the U.S. Treasury, the 
bill is designed through loans to states and tribes. The key criteria 
are: 1) reduction in energy use and increased energy efficiency; 2) 
leveraging of non-federal funds; and 3) consumer-friendly financing 
options.
    Separate legislation that is not jurisdictional to this committee 
would also have a positive impact on residential energy efficiency. The 
Sensible Accounting to Value Energy Act of 2013 (SAVE Act), introduced 
by Senators Bennet and Isakson, would encourage the consideration of 
energy costs in the appraisal process. NASEO supports enabling the 
consideration of the energy performance of residential properties 
through the appraisal process. This will be a true market 
transformation that will build awareness of energy performance and 
allow for greater transparency to facilitate more informed real estate 
investments. DOER is managing a residential ``HomeMPG'' project, also 
funded through a competitive SEP grant award, to provide property 
owners in Western Massachusetts with better information about the 
energy performance of their homes. The Colorado Energy Office recently 
launched a new partnership with The Appraisal Institute to incorporate 
building energy elements into a Green Multiple Listing Services (MLS) 
program.
Benchmarking and CHP bills
    Subcommittee Chairman Franken has introduced two innovative bills 
to promote: 1) building benchmarking--to encourage entities to utilize 
available resources so they know what they are using in terms of 
energy; and 2) Combined Heat and Power (Local Energy Supply and 
Resiliency Act of 2013). We support both bills.
    Benchmarking has been used in increasing numbers of jurisdictions 
so that businesses and consumers know how much energy they are using 
and can help bridge the ``information gap.'' As noted above, helping 
consumers understand their energy use and their energy use patterns is 
a key first step in appropriately increasing energy efficiency as well 
as energy conservation behavior. The bill would facilitate benchmarking 
of federally-leased buildings, require a benchmarking sturdy, and 
establish a small competitive grant program.
    There are a number of good state models in the area of public 
facility efficiency improvements and benchmarking, such as the 
following:

   Alaska's program which established a $250 million Alaska 
        Energy Efficiency Revolving Loan Fund (AEERLF) to finance 
        public facility energy efficiency improvements, using SEP funds 
        to benchmark 1,300 public facilities in order to identify 
        high--energy use buildings and provide an Investment Grade 
        Audit. SEP funding was also used to develop the Alaska Retrofit 
        Information System (ARIS) database that holds 60,000 records of 
        residential energy audits and benchmark data from the 1,300 
        public facilities.
   In addition to Minnesota's groundbreaking benchmarking of 
        state facilities and the creation of a model Energy Savings 
        Performance Contracting Program, 36 facilities were retrofit 
        across the state which are now realizing more than $3 million 
        in permanent, ongoing annual energy savings through a one-time, 
        $4.1 million energy upgrade grant program. The grants, funded 
        through SEP, were completed during the past year and are 
        contributing significant energy-savings to commercial, 
        industrial, and nonprofit facilities across Minnesota.

    Combined Heat and Power (CHP), district heating and cooling, and 
waste-heat-to power are an enormous untapped resource in the United 
States. This bill will help begin to address the economic necessity of 
encouraging us not to waste energy. Industrial and commercial 
facilities throughout the United States presently use these 
technologies. Unfortunately, the upfront costs tend to be high. The 
positive impacts on economic productivity, especially when measured 
against our foreign competition, is critical to our nation's future. 
Flexible actions are the key to success. A number of the state energy 
offices are involved in promoting these activities. Ohio is among the 
states taking action to support industrial efficiency and CHP through 
actions such as the state's Energy Efficiency Program for Manufacturers 
(EEPM) program, which provides facilitation services and financial 
assistance to Ohio manufacturers to diagnose, plan, and implement cost-
effective energy improvements at their facilities, estimates energy 
savings of 28,331,432 kwh/year (electric) and 876,349 MMBTU/year (gas, 
oil, other) through $21 million in grants supported by SEP. There are 
other examples and district heating systems have been operational for 
decades. The benefits for economic development cannot be overstated.
    Combined Heat and Power (CHP) can be a cornerstone to efficiency 
gains and add resiliency, as communities and businesses diversify their 
fuel supply. Massachusetts has been effective in driving more adoption 
of CHP in our industrial, commercial, institutional, and multiunit 
residential sectors. The Commonwealth deploys two mechanisms to support 
CHP. The first is through the energy efficiency programs, based on 
projected energy savings. The second is through the Alternative Energy 
Portfolio Standard, where annual payments are achieved as a matter of 
system performance.
    The success of these programs is supported by the Northeast CHP 
Application Center, one of the regional Centers supported by DOE across 
the country. The Northeast CHP Application Center, co-located at Pace 
University and the University of Massachusetts Amherst, provides 
important policy and market support and technical assessments directly 
to industry. Federal funding for this Center is highly leveraged by our 
programs and affords opportunities for industrial facilities to drive 
down their energy costs.
Tenant Star (S. 1191)
    The Bennet-Ayotte ``Better Buildings Act'' (Tenant Star) (S. 1191) 
would help address the ``split incentives'' problem that exists which 
discourages energy efficiency investments by both tenants and 
landlords. The people paying the bill don't generally get the benefits 
of energy efficiency investments. This voluntary effort should help 
break down these problems. Tenant Star should be read in conjunction 
with Section 201 of Shaheen-Portman (S. 761), which would help provide 
financing for large and small commercial building energy efficiency 
retrofits.
    Massachusetts believes that there is a need for a transformation of 
the manner in which commercial markets consider energy use and cost. 
Information about the energy performance of a building can be difficult 
to ascertain and the incentive programs do not always benefit the bill 
payer.
    In recent years state energy offices and their private sector 
allies have tried to address problems such as the split incentive, in 
both the residential and commercial markets, and to provide market 
actors with more accessible and accurate information about the energy 
performance of building assets, with which we believe they are better 
able to make informed investments.
    For example, a 2012 analysis of the potential gas and electric 
savings in Massachusetts' commercial sector suggests that nearly 38 
percent of the electric savings and 55 percent of the gas savings 
reside in office buildings. In such properties, where a high proportion 
of occupants lease space from the building owner, investments in the 
building's major assets may be a low priority for owners as the 
performance benefit, in the form of lower utility bills and increased 
comfort accrue to the tenant. For this reason, DOER and one of the 
state's largest utilities,
    Northeast Utilities, have convened a Commercial Real Estate Working 
Group to address problems such as this split incentive. Additionally, 
DOER's Building Asset Rating (BAR) pilot, which is funded by a 
competitive SEP grant, seeks to develop new, low cost methods to assess 
the energy performance of buildings. These new methods conduct an 
analysis in a fraction of the time and cost of conventional techniques 
and with a lower barrier to information, DOER hopes they will provide 
the market with more information about building energy use to drive 
increased investment in energy efficiency.
    NASEO also supports this bill.
School Retrofits Legislation (S. 1084)
    NASEO also supports the Udall-Collins ``Streamlining Energy 
Efficiency for Schools Act'' (S. 1084). Both Senators have worked on 
school energy issues for many years. NASEO worked with Senator Udall's 
staff in the House when they were first developing energy efficiency 
schools legislation. Many of the innovations in school energy 
efficiency programs stemmed from the Institutional Conservation Program 
(ICP)(42 U.S.C. 6371e), which has not been funded for many years. This 
program began in the 1970s, but in 1986, through an amendment to an 
annual appropriations bill pushed by Iowa and Oregon (and their 
Senators), these states were able to utilize their ICP funds to promote 
alternative delivery systems. Oregon had prepared bond financing, which 
it implemented, while using the small amount of federal ICP dollars to 
support the private financing. It produced much greater leverage. In 
Iowa, they established a Schools Facilities Program, in which the state 
energy office utilized an RFP to bring in the best financing available, 
developed fill-in-the-blank forms for the school superintendents, 
prequalified engineers to evaluate energy efficiency upgrade options 
and do all the legal work necessary to get the program going. The 
hundreds of school districts utilized this program, with private 
financing, and it achieved over 100 percent of projected savings with 
net-present-value paybacks of less than 6 years for measures.
    In Massachusetts, we have several relevant models that we have 
implemented in both state and local facilities. The schools sector has 
been a real test-bed for energy service performance contracts, and we 
would expect that the Udall-Collins bill will help with this set of 
activities. The states stand ready to help implement S. 1084, in 
conjunction with the schools.
    We support the legislation.
Non-Profit Grants Program (S. 717)
    Senators' Hoeven and Klobuchar have introduced ``The Non-Profit 
Energy Efficiency Act'' (S. 717), which is intended to provide funding 
from DOE to non-profits, including religious institutions, to provide 
energy efficiency upgrades to these facilities. A number of state 
energy offices have programs targeted to non-profits and look forward 
to expanding those activities. S. 717 could be a key asset in this 
effort. We are concerned that the $50 million authorization takes 
funds, generically, from the buildings technology office at DOE, which 
is already underfunded. We hope to work with the sponsors and the 
outside groups to identify alternatives. Otherwise, the bill is well-
grounded and provides the opportunity for states to work with these 
institutions. We have not had the opportunity to examine individual 
state laws or constitutional constraints that may limit the ability in 
certain areas to provide funding. We have been assured by the outside 
groups that this situation has been addressed.
CONCLUSION
    We applaud the Subcommittee for holding this hearing. As noted 
above, we support the legislation being considered and we encourage an 
early mark-up, with full Senate consideration quickly.

    Senator Franken. Thank you, Mr. Sylvia.
    Mr. Spurr.

 STATEMENT OF MARK SPURR, LEGISLATIVE DIRECTOR, INTERNATIONAL 
                  DISTRICT ENERGY ASSOCIATION

    Mr. Spurr. Chairman Franken, Ranking Member Risch and 
members of the committee, I want to thank you for inviting me 
to talk with you today about opportunities to reduce energy 
waste and strengthen the resilience of our energy 
infrastructure.
    My name is Mark Spurr. I'm Legislative Director for the 
International District Energy Association. This is a group 
formed 104 years ago to improve the efficiency of thermal 
energy delivery.
    I'm also President of FEB Energy which is an international 
consulting firm that focuses on energy efficiency.
    I want to congratulate Senators Shaheen and Portman on S. 
761. It's an outstanding bipartisan bill that will help 
increase energy efficiency in 2 important sectors, buildings 
and industry.
    I invite the committee to consider the broader picture of 
U.S. energy use and how S. 761 can be amended to make 
significant additional strides in reducing energy waste. We can 
do this by considering not only the buildings and industrial 
sectors, but also the potential synergies between these sectors 
as well as with a broad array of energy resources that exist in 
every State represented at the U.S. Senate. Of particular note 
is a huge energy consuming sector that is not considered in S. 
761 and that's power generation.
    When you look at the total picture of U.S. energy use what 
is striking is that based on DOE data 36 percent of total 
national energy consumed is wasted, largely in the form of heat 
from power generation, industry and buildings. We've heard 
several times today a figure of 57 percent which is also 
correct. However, given the difficulty of chasing around 
millions of cars and trying to harvest the waste heat from the 
tailpipes, we're focusing on the waste heat that we have a 
prayer of actually recovering. That's the 36 percent.
    I know that Senator Manchin has called attention to this 
issue in prior committee deliberations on S. 761. Speaking of 
power generation, which is currently only 32 percent efficient, 
Senator Manchin commented we have a lot of waste there. He's 
quite right.
    I believe this committee is well aware that combined heat 
and power systems are highly efficient. They generate power 
while recovering the normally wasted heat boosting efficiency 
from the current 32 percent to over 80 percent. DOE has 
estimated that increasing CHP from its current 9 percent share 
of U.S. electric power to 20 percent by 2030 would create more 
than 1 million new high skilled jobs.
    So, how do we get there?
    It's important to note that CHP is more cost effective at 
larger scales. Industrial plants can provide those economies of 
scale. So can district energy systems.
    District energy systems supply hot water or steam and 
chilled water to buildings for space heating, domestic hot 
water, air conditioning and industrial process energy. These 
systems pool the thermal users to accommodate larger, more cost 
effective CHP units. District energy systems exist in all 50 
States and cities, colleges, universities, industrial 
facilities, hospitals and military bases.
    District energy systems are critical to more widespread 
implementation of CHP because they provide not only economies 
of scale but also because they're usually operated by 
organizations that have a long term economic perspective. 
Existing district energy systems represent a substantial heat 
sink for implementation of combined heat and power.
    Beyond CHP, there are plenty of other sources of local 
energy, homegrown energy sources that exist in our backyards. I 
noted a few examples in my testimony. I would be happy to 
elaborate as time permits.
    Mr. Chairman, with your permission I'd like to call 6 
additional witnesses to this hearing. Their names are Sandy, 
Katrina, Ike, Irene, Gustav and Wilma. Beyond huge property 
damage these storms resulted in enormous economic losses from 
interruption of business operations, reducing output, income 
and employment.
    For example, Moody's Analytics attributed nearly $20 
billion in losses from suspended business activity just due to 
super storm Sandy.
    CHP and other local energy sources are inherently more 
resilient to disruption from natural disasters or other events 
that interrupt energy supply from complex and interconnected 
grids. CHP systems can be designated to operate in island mode 
during a grid outage and have demonstrated that they can keep 
the power on, keep businesses running and continue to keep 
people warm in the winter and cool in the summer even when the 
power grid is down.
    I cited a few examples in my written testimony. I'd be 
happy to elaborate as we have time.
    I urge your support for S. 1205, recently introduced by 
Senator Franken. The Local Energy Supply and Resiliency Act 
will help industry, universities, hospitals, cities and others 
implement combined heat and power, capture industrial waste 
heat and use renewable resources for heating, cooling and power 
generation. It will also strengthen our ability to keep the 
lights on, keep buildings comfortable, keep people safe and 
enable uninterrupted business operations during increasingly 
common severe weather events.
    I greatly appreciate the opportunity to talk with you 
today. I would be happy to answer any questions.
    [The prepared statement of Mr. Spurr follows:]

 Prepared Statement of Mark Spurr, Legislative Director, International 
                      District Energy Association
    Chairman Franken, Ranking Member Risch, and Members of the 
committee, thank you for inviting me to testify today on behalf of the 
International District Energy Association regarding opportunities to 
reduce energy waste and strengthen the resilience of U.S. energy supply 
infrastructure.
    I want to congratulate Senators Shaheen and Portman on S.761--the 
Energy Savings and Industrial Competitiveness Act of 2013. It is an 
outstanding bipartisan bill that will help increase energy efficiency 
in two important sectors: buildings and industry.
    I invite the committee to consider the broader picture of U.S. 
energy use, and how S.761 can be amended to make significant additional 
strides in reducing energy waste. We can do this by looking at energy 
efficiency holistically, considering not only the buildings and 
industrial sectors but also the potential synergies between those 
sectors as well as with a broad of energy sources right in our own 
backyards. Of particular note is a huge energy consuming sector that is 
not considered in S.761: power generation.
    Lawrence Livermore National Laboratory produces a flow diagram 
showing the total picture of U.S. energy use, based on data from the 
U.S. Department of Energy. I've included the 2011 version as Figure 1* 
on the next page. It shows how each source of fuel flows through five 
energy-using sectors: power generation, residential buildings, 
commercial buildings, industry and transportation.
---------------------------------------------------------------------------
    * All figures have been retained in subcommittee files.
---------------------------------------------------------------------------
    What is striking is that of the total 97.3 quadrillion Btu (quads) 
of energy consumed, only 43 percent was converted to useful energy, and 
57 percent was wasted (or, in the more neutral term, ``rejected''). Of 
the wasted energy, power generation and transportation loom large. 
Boiling down the data, Figure 2 shows that 36 percent of our total 
national energy use is waste energy--largely in the form of heat--from 
power generation, industry and buildings.
    I know that Sen. Manchin has called attention to this issue in 
prior committee discussion of S.761. Speaking of the power generation 
sector, which is only 32 percent efficient, Sen. Manchin commented ``We 
have a lot of waste there.'' He's quite right.
    Combined heat and power (CHP) refers to a set of technologies for 
generating power while recovering the normally-waste heat, boosting 
efficiency to over 80 percent. The recovered heat can be used for 
industrial process heat, space heating and/or domestic hot water, or 
can be converted to cooling for industrial processes or air 
conditioning.
    CHP currently represents 82 GigaWatts (GW) or about 8 percent of 
U.S. power generation capacity, compared to 30 percent or more in 
European countries such as Denmark, Finland and the Netherlands.
    A recent study estimated a technical potential of 125 GW in 
additional CHP capacity in systems below 100 MegaWatts (MW) in size. Of 
the technical potential for new CHP capacity, 56 GW is in the 
industrial sector and 69 GW is in the commercial sector. Of the total 
technical potential, it is estimated that 6 GW has strong economic 
potential (payback less than 5 years), 35 GW has moderate economic 
potential (payback 5-10 years) and 82 MW has low economic potential 
(payback exceeds 10 years).\1\
---------------------------------------------------------------------------
    \1\ The Opportunity for CHP in the United States, ICF 
International, May 2013.
---------------------------------------------------------------------------
    The Department of Energy has estimated that increasing CHP from its 
current 9 percent share of U.S. electric power to 20 percent by 2030 
would:

   Avoid 60 percent of the projected increase in U.S. carbon 
        dioxide emissions (equivalent to taking half of all U.S. 
        passenger vehicles off the road);
   Create more than 1 million new, high-skilled jobs here in 
        the U.S.; and
   Generate $234 billion in new investments.\2\

    \2\ U.S. Department of Energy, ``Combined Heat and Power: Effective 
Energy Solutions for a Sustainable Future'' (Dec. 1, 2008), p. 3-4.

    Economies of scale make it more cost-effective to install CHP in 
sizes above 5 MW, which is why district energy systems are critical to 
more widespread implementation of CHP.
    District energy systems supply hot water or steam and chilled water 
to buildings for space heating, domestic hot water, air conditioning 
and industrial process energy. These systems pool the thermal users to 
accommodate larger, more cost-effective CHP units. Widespread use of 
district energy is the reason that countries like Denmark and Finland 
have high levels of CHP.
    District energy systems help increase CHP because they pool the 
thermal users to accommodate larger, more cost-effective CHP units. 4 
District energy systems represent a substantial ``heat sink'' for 
further implementation of CHP. Many U.S. cities, colleges, 
universities, industrial facilities, hospitals and military bases use 
district energy. These systems exist in all 50 U.S. states. Landmark 
buildings like the White House, U.S. Capitol and Supreme Court, Empire 
State Building, Mayo Clinic and Harvard Medical School use district 
energy. District energy systems serve over 8 billion square feet of 
building space, equal to 12 percent of total commercial floor space.\3\ 
About 13 percent of U.S. district energy systems incorporate CHP.\4\
---------------------------------------------------------------------------
    \3\ Commercial Buildings Energy Consumption Survey, 2003, U.S. 
Energy Information Administration, with updated based on data collected 
by the International District Energy Association.
    \4\ Energy and Environmental Analysis Inc. and IDEA, District 
Energy Services: Commercial Data Analysis for EIA's National Energy 
Modeling System, August 2007; unpublished surveys by IDEA, 2003-2009.
---------------------------------------------------------------------------
    Beyond CHP, there are plenty of other sources of local energy--
``home-grown'' energy sources that exist today in our backyards. For 
example:

    Most of the buildings in downtown St. Paul, Minnesota are 
        heated and cooled using energy that literally comes from 
        residents' backyards: tree trimmings and other waste wood. This 
        community waste material is converted to supply heating, 
        cooling and electricity.
   In Detroit, Michigan, the downtown district energy system 
        fueled with municipal solid waste.
   Both the University of Iowa and the University of Minnesota 
        have used oat hulls, a food processing waste, as fuel.
   Lake Cayuga is in Cornell University's backyard. Cornell 
        constructed a piping system which uses the naturally occurring 
        cold lake water for air conditioning, cutting power consumption 
        by 87 percent.
   Montpelier, Vermont broke ground in April on a district 
        heating system to be fueled with local wood.
   The Oregon Institute of Technology uses a resource under its 
        backyard-- geothermal hot water that provides a clean, 
        renewable source of campus heat.
   A BMW manufacturing plant in Spartanburg, SC uses local 
        landfill gas as a CHP fuel. Combustion turbines produce 11 MW 
        of electricity as well as process steam.
   Cox Interior is a Kentucky company that makes interior and 
        exterior finishing products. They use wood waste from their 
        manufacturing process to fuel a 5 MW CHP system, providing 
        process power and heat.

    Hurricanes Sandy (2012), Irene (2011), Gustav (2008), Ike (2008), 
Katrina (2005) and Wilma (2005) brought power grids down, causing huge 
economic losses in output, income and employment. The Northeastern 
blackout in 2003 was not caused by severe weather but by transmission 
system failures, but also resulted in substantial economic losses as 
data centers, factories, hospitals, offices and other employers shut 
down.
    The economic losses from energy supply disruption from interruption 
of business operations are enormous. For instance, economic research 
firm Moody's Analytics attributed nearly $20 billion in losses from 
suspended business activity just due to Superstorm Sandy.\5\ Rutgers 
recently published a report that estimates economic losses, not 
including damages to physical structures, of approximately $11.7 
billion in state Gross Domestic Product (GDP).\6\ The study found that 
overall GDP losses could have been reduced in New Jersey if there had 
been additional backup sources of power such as CHP, which would have 
lessened the economic losses associated with power outages.
---------------------------------------------------------------------------
    \5\ http://money.cnn.com/2012/10/29/news/economy/hurricane-sandy-
business/index.html
    \6\ Rutgers Regional Report, The Economic and Fiscal Impacts of 
Hurricane Sandy in New Jersey, January 2013.
---------------------------------------------------------------------------
    In 2001 report,\7\ the Electric Power Research Institute (EPRI) 
evaluated industrial and digital economy businesses to determine the 
economic costs of power outaes and power quality disturbances, focusing 
on 3 sectors:
---------------------------------------------------------------------------
    \7\ Consortium for Electric Infrastructure to Support a Digital 
Society (CEIDS), An Initiative by EPRI and the Electricity

          1. Digital Economy (DE) sector: comprised mainly of data 
        storage and retrieval, data processing, or research and 
        development operations such as the telecommunications, data 
        storage, biotechnology, electronics manufacturing, and the 
        financial industry.
          2. Continuous Process Manufacturing (CPM) sector: comprised 
        of manufacturing facilities that continuously feed raw 
        materials through an industrial process such as the paper, 
        chemical, petroleum, rubber and plastics, stone, clay, glass, 
        and primary metals industries.
          3. Fabrication and Essential Services (F&ES) sector: all 
        other manufacturing industries, plus utilities and 
        transportation facilities, water and wastewater treatment, and 
        gas utilities and pipelines.

    Although these three sectors only accounted for 17 percent of all 
U.S. businesses, they amounted to 40 percent of U.S. GDP. The study 
found that industrial and digital economy firms are losing about $45.7 
billion per year due to power outages, with an additional $6.7 billion 
in costs resulted from power quality disturbances other than outages. 
The EPRI study concluded that the cost of power outages for all 
industry combined is an estimated at $120 to $190 billion per year.
    The total cost of business interruptions from the 2003 Northeastern 
blackout, which lasted 2 days, have been estimated as follows: 1) 
Anderson Economic Group\8\--$4.5 to $8.2 billion; 2) U.S. Department of 
Energy\9\--$6 billion; and 3) ICF Consulting\10\--$7 to $10 billion.
---------------------------------------------------------------------------
    \8\ Anderson, Patrick L. and Ilhan K, Geckil, ``Northeast Blackout 
Likely to Reduce US Earnings by $6.4 Billion,'' AEG Working Paper 2003-
2, August 19, 2003
    \9\ Transforming the Grid to Revolutionize Electric Power in North 
America, Bill Parks, U.S. Department of Energy, Edison Electric 
Institute's Fall 2003 Transmission, Distribution and Metering 
Conference, October 13, 2003.
    \10\ The Economic Cost of the Blackout: An Issue Paper on the 
Northeastern Blackout, ICF Consulting, August 14, 2003.
---------------------------------------------------------------------------
    CHP and other local energy sources are inherently more resilient to 
disruption from natural disasters or other events that interrupt energy 
supply from complex and interconnected grids. CHP systems can be 
designed to operate in ``island'' mode during a grid outage. CHP and 
district energy systems have demonstrated that they can keep the power 
on, keep factories and business running, and continue to keep people 
warm in the winter and cool in the summer even when the power grid is 
down.
    A recent report for Oak Ridge National Laboratory\11\ notes: ``When 
Superstorm Sandy made landfall on the eastern coast of the United 
States-New Jersey, New York and Connecticut were the most heavily hit 
areas.
---------------------------------------------------------------------------
    \11\ Combined Heat and Power: Enabling Resilient Energy 
Infrastructure for Critical Facilities, prepared for Oak Ridge National 
Laboratory, ICF International, March 2013.
---------------------------------------------------------------------------
    Extended power outages affected the region for days. However, some 
commercial and industrial facilities in the area were able to power 
through Superstorm Sandy due to onsite CHP.'' Here are very brief 
summaries of some of case studies presented in that report:

   Princeton University--Princeton, NJ.--During Superstorm 
        Sandy, Princeton disconnected from the grid and used its 
        district energy CHP system to power the campus. The CHP system 
        was also able to provide uninterrupted steam and chilled water 
        service. Many staff members stayed overnight at the University 
        because of the storm. CHP was vital to maintaining important 
        university facilities such as research labs, experiments and 
        data that could have been compromised by a loss of power.
   Louisiana State University--Baton Rouge, LA.--For four days 
        during Hurricane Gustav in 2008, the CHP system provided 
        electricity to critical sections of the campus. During 
        Hurricane Katrina, LSU stayed on-line and never lost power, 
        which allowed the school to continue to operate and allow 
        administrative offices of the University of New Orleans and the 
        LSU Medical School to relocate to the main LSU campus.
   Nassau Energy Corporation--Garden City, NY.--During 
        Superstorm Sandy, the CHP system was able to continue supplying 
        power to the grid, and also maintained the supply of thermal 
        energy to the Nassau University Medical Center, Nassau 
        Community College, and all other end-use customers. Nassau 
        Community College served as an emergency shelter during the 
        hurricane and provided services to over 1,000 people displaced 
        by the storm for about a month and a half. A representative 
        from the Community College said that the College has never 
        experienced any disruptions in service from the district energy 
        CHP system.
   South Oaks Hospital--Amityville, NY.--South Oaks isolated 
        itself from the grid on the evening of October 28 and remained 
        disconnected from the grid for 15 days. South Oaks was able to 
        provide critical services relying solely on their CHP system. 
        They admitted patients from other sites that had been displaced 
        by the storm. They offered refrigeration for vital medicines to 
        those who had lost power and had no means of keeping medicines 
        refrigerated.
   Greenwich Hospital--Greenwich, CT.--Due to its CHP system, 
        Greenwich Hospital was able to continue normal operations 
        throughout the storm. The hospital admitted additional patients 
        during the outage period. In addition, 150 extra staff stayed 
        overnight to ensure the hospital remained fully functioning.
   Public Interest Data Center--New York, NY.--During the storm 
        the power to the building and surrounding area was out for over 
        two days; however, the data center was able to remain fully 
        operational. Even though the areas surrounding the building 
        were out of power, employees of PINS were able to come into the 
        office and resume their normal functions. In addition to 
        keeping the power and cooling operational for the data center, 
        the CHP system was also able to provide the building landlord 
        with power to continue to run their computer and security 
        systems.
   New York University--New York, NY. NYU's core campus 
        maintained both power and heat during Superstorm Sandy because 
        of its CHP system. The system provided uninterrupted 
        electricity, heating, and cooling to the campus, and also 
        enabled NYU and City officials to set up a command post on the 
        campus as well as serve area residents forced to evacuate their 
        homes.

    I urge your support for legislation introduced by Sen. Franken. The 
Local Energy Supply and Resiliency Act (LESRA) will help industry, 
universities, hospitals and others implement CHP, capture waste heat 
and use renewable resources for heating, cooling, and power generation. 
It will also strengthen our ability to keep the lights on, keep 
buildings comfortable and enable uninterrupted business operations.
    Industrial competitiveness will be enhanced by LESRA because it 
will help steel mills, paper mills and other businesses develop new 
revenue streams. LESRA will also help communities, universities and 
others reduce energy costs, reduce emissions and enhance energy supply 
resiliency.
    The bill establishes two programs:

   Technical Assistance Program.--The bill establishes a grant 
        program in the Department of Energy to provide technical 
        assistance for identifying, evaluating, planning and designing 
        waste heat recovery systems for the purposes of heating, 
        cooling, and power generation. This program helps for-profit 
        and nonprofit entities identify opportunities, assess 
        feasibility, overcome barriers to project implementation, 
        conduct financial assessments and perform the required 
        engineering. Authorized appropriations: $150 million over the 
        period 2014 to 2018.
   Local Energy Infrastructure Loan Guarantee Program.--The 
        bill authorizes the Department of Energy to provide loan 
        guarantees to projects that: 1) recover waste heat or use local 
        renewable energy for heating or cooling: 2) generate power 
        locally with CHP or renewable energy; 3) distribute power in 
        microgrids, or 4) distribute heating or cooling energy to 
        buildings. Reducing interest costs is the key to implementing 
        highly efficient and resilient energy infrastructure. Unlike 
        past DOE loan guarantees for innovative technologies, this 
        program would focus on proven technologies, with the goal of 
        reducing interest costs for local energy infrastructure. Funds 
        to carry out the program will come from user fees and unused 
        funds that were previously appropriated.

    Thank you for the opportunity to speak with you today.
About the International District Energy Association
    IDEA is a non-profit trade association founded in 1909 to 
facilitate the exchange of information among district energy 
professionals. IDEA currently has 1733 members in 27 countries, and is 
governed by a 20-member, all-volunteer Board of Directors. IDEA's 
mission is to foster the success of its members as leaders in providing 
reliable, economical, efficient and environmentally sound district 
energy services. IDEA promotes energy efficiency and environmental 
quality through the advancement of district heating, district cooling 
and cogeneration (also known as combined heat and power or CHP).

    Senator Franken. Thank you, Mr. Spurr.
    Mr. Molotsky.

   STATEMENT OF BRAD A. MOLOTSKY, EXECUTIVE VICE PRESIDENT, 
  GENERAL COUNSEL AND SECRETARY, BRANDYWINE REALTY TRUST, ON 
              BEHALF OF THE REAL ESTATE ROUNDTABLE

    Mr. Molotsky. Good afternoon, Chairman Franken, Ranking 
Member Risch and Senator Sanders. Thank you for the opportunity 
to testify today. My name is Brad Molotsky. I am the Executive 
Vice President and General Counsel of Brandywine Realty Trust, 
one of the Nation's largest commercial office building owners 
with over 30 million square feet of built and owned space.
    I'm here today on behalf of the Real Estate Roundtable 
where I currently serve as the Vice Chair of its Sustainability 
and Policy Committee. My comments will focus on S. 1191, the 
Better Buildings Act introduced by Senators Bennet and Ayotte.
    This is a priority initiative for the roundtable and many 
other real estate stakeholders. Yesterday a letter signed by 
over 50 organizations and companies, representing over 5 
billion square feet of built space, including real estate 
firms, trade associations and environmental advocates, all 
lined in support of the bill was sent to the committee.
    The Better Buildings Act is innovative in that it's readily 
actionable and potentially transformative energy policy. It 
imposes no mandates and as Senator Risch had indicated earlier, 
no additional regulations. It comes at no cost to taxpayers 
because it builds upon already existing, highly successful 
programs already existing with the EPA and DOE which have 
already achieved extraordinarily high levels of market 
penetration throughout the Nation's commercial real estate 
markets.
    S. 1191 is unique and powerful and will be a piece of 
legislation because it focuses on the end users of energy. In 
my sector, which is the commercial buildings environment, this 
is the tenant. Tenants in our office buildings tend to use well 
over 50 percent of the energy in the building. Lights and plug 
loads being the main culprit.
    Visualize for a moment all the data, Senators, to law 
firms, the banks, the restaurants, the stores that lease space 
in commercial office buildings.
    Think about the spaces leased in buildings to medical 
offices and high tech companies like Google, Facebook and 
LinkedIn. Now think in that space about all of the computers, 
monitors, printers, coffee machines, vending machines and cell 
phone chargers being used each and every day.
    Now consider how those office spaces are lit, heated and 
cooled. Over 70 billion square feet of built space in the 
United States uses these types of devices every single day, 365 
days a year.
    Now consider how and when those devices are turned off or 
down at night and if in fact they are at all.
    The Better Buildings Act will help focus attention on these 
types of consumption and move the market forward to reduce it.
    Meaningful efficiency legislation should, as the bill 
indicates, encourage commercial tenants to work with their 
landlords to design, construct and operate within leased spaces 
to achieve optimal levels of energy performance. That, in fact, 
is the Better Buildings Initiative or Better Buildings Act 
objective. To date much of the policy coming from Congress and 
the Federal agencies focused on what owners can do at the whole 
building level. A worthy endeavor and initiative, but it only 
hits on half of the puzzle and as I said earlier tenant's 
consumption in their built space consumes the other 50 percent 
via plug load and lighting.
    As Senator Bennet noted in his comments earlier today the 
Better Buildings Act recognizes that energy efficiency in 
buildings must be tackled both from the top/up and the bottom 
or reverse that from the bottom/up and the top/down. S. 1191 
centerpiece revision is known as Tenant Star. It would give 
tenants in leased spaces the same opportunity for energy 
efficiency recognition that building owners like me currently 
receive from the EPA through the Energy Star label.
    The Energy Star label for buildings is something that has 
helped transform the real estate markets by bringing focused 
energy consumption within the built environment. It's free and 
it's voluntary and it provides a marketing incentive that is a 
powerful motivator toward higher performing buildings.
    I'd like to refer to pages 9 and 10 of my written testimony 
which describes a huge success that Energy Star's building 
program has had to date. Namely over 240 thousand buildings in 
the United States, out of over 5 million buildings that exist, 
use portfolio manager to measure their energy consumption. 
While 240 thousand buildings is a mere 5 percent of the 
building stock in the United States, in terms of the square 
footage it represents, those 240 thousand buildings represent 
27.5 billion square feet out of 70 billion square feet of built 
space.
    Suffice it to say that buildings rated by the EPA's Energy 
Star are located in every single State in the country. Energy 
Star certified buildings with scores of over 75 represent over 
3 billion square feet of that inventory. EPA estimates that 
these buildings alone help save businesses more than $2.7 
billion annually in energy costs.
    Clearly Energy Star for the whole building has positively 
impacted the real estate markets. Imagine, however, the added 
benefit we would see if tenants also get similar opportunities 
for recognition via S. 1191 Tenant's Star program. A national 
platform for Tenant Star spaces in Energy Star buildings could 
very easily reshape how commercial landlords and tenants 
interact together on energy use and help create a more 
collaborative exchange between the 2 parties most needed to 
overcome inertia to not doing anything in the middle of a lease 
term and to breaking down the split incentive barriers that 
exist in certain markets of energy efficiency investments.
    I speak a bit from experience. Because at Brandywine we've 
engaged with a large 125 thousand square foot new tenant Reed 
Smith. At the beginning of the lease term, prior to their build 
out and connected them with the NRDC Center for Market 
Innovation which is doing some ground breaking work on the high 
performance lease space demonstration project at the Empire 
State Building and elsewhere. This upfront innovative focused 
collaborative effort will allow them to save over $1.5 million 
over the term of their lease which they can then reinvest in 
people, plant and equipment inside their law firm.
    With the national Tenant Star platform envisioned by 
Senators Bennet and Ayotte there will be important recognition 
based incentives to encourage more landlords to work with their 
tenants in the common goal of lowering energy consumption 
across the United States.
    In summary it's my view and that of the Roundtable that 
Congress should enact the Better Buildings Act as its earliest 
opportunity. Together we can reduce the over $210 billion we 
all spend on energy in the built environment. A 10-percent 
reduction via energy efficiency gains can and will make a 
difference for all of us, each and every year, the gift that 
keeps giving.
    Saving energy is much less expensive to our Nation and 
better, frankly, for our collective health and now the planet 
than producing more energy. With this bill it can be done. 
Enacting the Better Buildings Act and Tenant Star will help us 
take a big step toward making that goal a reality.
    I thank you and I appreciate any questions you would have.
    [The prepared statement of Mr. Molotsky follows:]

   Prepared Statement of Brad A. Molotsky, Executive Vice President, 
 General Counsel and Secretary, Brandywine Realty Trust, on Behalf of 
                       the Real Estate Roundtable
Introduction
    Chairman Franken, Ranking Member Risch, and Members of the Energy 
Subcommittee, thank you for the opportunity to testify at this hearing 
on pending energy efficiency legislation.
    My name is Brad A. Molotsky, and I am the Executive Vice President, 
General Counsel and Secretary of Brandywine Realty Trust (http://
www.brandywinerealty.com/.) My curriculum vitae is attached for your 
reference. I am currently Vice Chair of the Sustainability Policy 
Advisory Committee (SPAC) of The Real Estate Roundtable (www.rer.org), 
and appear before you on its behalf. The Roundtable represents the 
leadership of the nation's top privately owned and publicly held real 
estate ownership, development, lending and management firms, as well as 
the elected leaders of the major national real estate industry trade 
associations. Collectively, Roundtable members hold portfolios 
containing over 5 billion square feet of developed property valued at 
over $1 trillion; over 1.5 million apartment units; and in excess of 
1.3 million hotel rooms. Participating Roundtable trade associations 
represent more than 1.5 million people involved in virtually every 
aspect of the real estate business. Gerard H. Sweeney, Brandywine's 
President and CEO, is one of The Roundtable's members.
    Of the bills that the subcommittee is considering today, my 
statement will focus on and emphasize S. 1191, the ``Better Buildings 
Act,'' introduced by Senators Michael Bennet (D-CO) and Kelly Ayotte 
(R-NH). Companion legislation has also been introduced in the House 
(H.R. 2126) by Representatives David McKinley (R-WV) and Peter Welch 
(D-VT).
    As explained in more detail below, the Better Buildings Act will 
help drive commercial real estate markets across the nation to become 
more energy efficient through a voluntary, non-regulatory, non-
financial, recognition-based program. This bill requires no 
appropriations, because it would build upon existing, highly successful 
partnership programs between the Environmental Protection Agency 
(``EPA''), the Department of Energy (``DOE''), and the private sector 
real estate community. S. 1191 has garnered widespread support from a 
diverse group of real estate and energy advocacy stakeholders, as 
evidenced by the letters to Senate and House energy committee 
leadership that are attached to this statement.
(II) Brandywine Realty Trust and its Commitment to a Sustainable Real 
        Estate Portfolio
    I would like to provide a bit of context as to my company and our 
commitment to owning and managing a high performance real estate 
portfolio. Brandywine Realty Trust (NYSE: BDN) is headquartered in 
Radnor, PA, and is one of the largest, full-service, integrated real 
estate companies in the nation. Organized as a real estate investment 
trust (REIT), Brandywine owns, leases and manages an urban, town center 
and suburban office portfolio of over 30 million square feet with 
properties in California, Delaware, Maryland, Metro DC, New Jersey, 
Pennsylvania, Texas, and Virginia.
    An energy efficient real estate portfolio lowers utility bills and 
other operating costs. Minimizing energy use in our buildings is not 
simply good business for Brandywine and our tenants, but also responds 
to investors who increasingly demand more efficient and 
environmentally-responsible performance. Sustainability and energy 
efficiency are thus among Brandywine's core values, consistent with an 
overall commitment to provide excellent office environments to our 
customers, our employees and our vendor service providers. As part of 
our management structure, we have established a Sustainability Advisory 
Group led by a coordinator who organized a ``Green Team'' that meets on 
a regular basis to develop and prioritize corporate-wide policies and 
practices, makes recommendations to the Senior Management Committee, 
and keeps sustainability initiatives at high levels of awareness in our 
company through employee education and discussion programs. The Green 
Team is responsible for providing periodic reports to Brandywine's 
management and for posting results on-line regarding progress in 
minimizing our company's environmental footprint--reflected in policies 
such as those that encourage energy conservation in our assets' 
heating, cooling and lighting systems; negotiations with tenants and 
utilities to realize higher and more efficient performance from our 
buildings and spaces; use of sustainability criteria in the purchase of 
supplies, equipment, and services; and waste reduction and recycling 
platforms to minimize disposables and packaging, and foster the reuse 
of equipment and supplies where feasible.
    As a result of these and other efforts, Brandywine is proud to have 
been distinguished with several of the real estate industry's prominent 
awards that recognize leadership in sustainability including an EPA 
Energy Star Partner of the Year (2013); Honorable Mention for NAIOP 
Sustainable Development Award--2012; Finalist for NAIOP Developer of 
the Year 2012 and 2013; Pinnacle Award Winner for our sustainable 
efforts; and NAREIT Leader in Light Silver Award winner (2011).
            Brandywine's Voluntary Participation in the EPA ENERGY STAR 
                    Program and Tenant Engagement on Energy Efficiency
    As S. 1191 draws heavily on the market acceptance of EPA's ENERGY 
STAR program for commercial buildings, it is worthwhile to discuss 
Brandywine's voluntary commitment to the program. In 2009, eight of the 
approximately 260 buildings in our real estate portfolio at that time 
were labeled as ENERGY STAR. Today, we have 97 ENERGY STAR-labeled 
buildings, representing over 14.5 million square feet of our owned 
portfolio as labeled by EPA (i.e., receiving a ``75'' score or higher 
on the agency's rating scale). This represents over 50 percent of 
Brandywine's owned square footage, and over 75 percent of buildings 
where utility meters are in our name and where we can fully benchmark 
those assets ourselves. Monthly data from these meters is automatically 
fed into EPA's energy consumption benchmarking tool, Portfolio Manager; 
no human interaction is needed to direct this data or to return it to 
us with our ENERGY STAR scoring. The energy consumption data is then 
provided back to us on a per building basis, and shared every month 
with our Property Managers for over 205 assets that we presently own. 
This process reveals to us the ``top performers'' in our portfolio that 
strive for the ENERGY STAR label, and those that can improve their 
energy performance with positive impacts from equipment, behavioral 
changes, and/or increased education.
    As a result of and in connection with Brandywine's voluntary 
involvement in the ENERGY STAR program and our use of the Portfolio 
Manager benchmarking tool, we have:

   Engaged a local company out of Richmond, VA to check 25 
        buildings in our Pennsylvania portfolio to confirm and fix 
        metering configurations and assist in reducing consumption;
   Developed building-by-building energy plans in our Northern 
        Virginia portfolio to review and reduce consumption;
   Automated our Richmond portfolio with Trane system controls 
        that measure building energy consumption daily via pulse 
        meters, and which send warning emails to our engineers when 
        tolerance is out-of-kilter or if set points (start and stop 
        times) are off by five percent;
   Retrofitted all parking lots serving our Richmond buildings 
        with LED fixtures--which will save wattage and extend useful 
        life ten-fold;
   Retrofitted lobby and elevator lights in selected buildings 
        in the Philadelphia, PA central business district, thereby 
        reducing consumption and extending useful life--and using all 
        local workers.
   Participated in EPA's national ``Battle of the Buildings'' 
        competition--a ``biggest loser'' program to recognize buildings 
        that lower the most energy consumption over a 12-month period--
        where our participating assets have placed in the top 10-15 
        office buildings nationwide over the last two years.

    Finally, while the energy measures I discussed above are steps 
Brandywine has taken that are within our control, the work we have 
started to better align tenants with our ENERGY STAR-related goals 
warrants a brief description. We have directly engaged with a tenant 
prospect and connected them with the team at NRDC's Center for Market 
Innovation, which is assisting them with an integrated design for their 
energy usage in a new leased space ``fit-out.'' This high performance 
new tenant space design should save this tenant approximately $1.25 
million dollars in utility costs over the leased term (i.e., the 
savings are between $.85 to $1.00 per square foot in a 225,000 square 
foot leased space). With another set of tenants in the middle of their 
leases, we have agreed to a 50/50 split to share the costs of lighting 
upgrades. The payback on this effort was less than three years, which 
was inside the lease term--a great result for the tenants and for our 
building's performance. Also, we have met with various tenants to 
engage them in discussions about how they can better manage ``plug 
loads'' and lighting loads within their leased spaces via wireless 
devices (e.g., Modlet and BERT).
    In short, Brandywine's voluntary commitment to ENERGY STAR has had 
a profound impact across our real estate portfolio. Creating a brand of 
EPA recognition for tenants in our buildings--as the Bennet-Ayotte bill 
(S. 1191) would accomplish--will allow us to better engage on energy 
efficiency initiatives with our key customer base, and can help achieve 
an even higher level of energy performance in our assets.
(III) Fast Facts on Energy Efficiency
    As part of an ``all of the above'' energy policy, the Subcommittee 
is right to emphasize efficiency legislation. The following ``fast 
facts''\1\ from EPA, DOE's Energy Information Administration, and other 
sources confirm that the cheapest barrel of oil or the least expensive 
kilowatt of energy is the one that is avoided. Programs to encourage 
energy efficiency are the most effective and lowest-cost measures in 
moving our nation closer to energy independence, and spurring U.S. job 
growth in a globally competitive ``new energy economy":
---------------------------------------------------------------------------
    \1\ http://www.energystar.gov/ia/business/challenge/learn--more/
FastFacts.pdf.

   There are over 5 million commercial buildings and industrial 
        facilities in the U.S., totaling about 70 billion square feet.
   The vast majority of commercial buildings standing today 
        will be with us for decades and into the middle of this 
        century. For example, in New York City, as much as 85 percent 
        of commercial buildings that exist today will still be standing 
        in 2030.\2\
---------------------------------------------------------------------------
    \2\ PlaNYC, ``Greater Greener Buildings Plan'': http://www.nyc.gov/
html/gbee/downloads/pdf/greener__greater__buildings__plan.pdf.
---------------------------------------------------------------------------
   Commercial buildings account for approximately 20 percent of 
        the nation's energy consumption, and as much as 80 percent of 
        energy consumed in urban areas.
   The combined average annual energy costs for U.S. commercial 
        buildings and industrial facilities is $202.3 billion.
   About $20 billion can be saved every year if the energy 
        efficiency of commercial buildings and industrial facilities 
        improves by 10 percent.
   The basic tools to retrofit buildings--like efficient 
        furnaces, boilers, water heaters, and spray foam insulation--
        are manufactured here in the United States and not in China, 
        Germany, or elsewhere overseas.\3\ Construction workers on 
        retrofit projects rely on local workforce resources where, 
        obviously, buildings are located.
---------------------------------------------------------------------------
    \3\ http://green.blogs.nytimes.com/2010/03/12/made-in-the-u-s-a-
efficiency-materials/.
---------------------------------------------------------------------------
   Saving energy is cheaper than producing energy. Our country 
        should pursue an ``all of the above'' energy policy, but it is 
        important to recognize the cost of a kilowatt hour of energy 
        saved is cheaper than the cost of an equivalent kilowatt hour 
        of energy produced: 


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


        
    --As a result of the $79.7 billion expenditures for office 
            operations, 1.6 million indirect jobs were created across 
            all sectors of the economy, about the same number employed 
            by McDonald's worldwide. This is in addition to the 
            estimated 2.2 million jobs directly related to the on-site 
            management and operations of buildings.

    With that foundation on the importance that Congress should place 
on energy efficiency policy, I appreciate this opportunity to draw the 
Subcommittee's attention specifically to ``The Better Buildings Act'' 
(S. 1191).
(IV) The Better Buildings Act (S. 1191) (a.k.a., ``TENANT STAR'')
    Congress should enact S. 1191, sponsored by Senators Michael Bennet 
(D-CO) and Kelly Ayotte (R-NH), at the earliest opportunity.
    Owners and managers of large buildings report that tenants consume 
50 percent or more of their structures' total energy.\7\ Accordingly, 
choices made by office tenants in designing and operating within leased 
commercial spaces have a great impact on U.S. energy consumption. 
Although tenants and building occupants have an essential role to play 
within spaces they control to improve overall building efficiency, to 
date bills introduced by Congress have focused on how real estate 
owners and developers may lower energy consumption at the ``whole-
building'' level. This is only part of the issue. Office tenants like 
data centers, law firms, banks, trading floors, restaurants, and retail 
stores use high amounts of energy--especially in our nation's growth 
centers.
---------------------------------------------------------------------------
    \7\ See http://www.nrdc.org/business/cgi/process.asp.
---------------------------------------------------------------------------
    In Brandywine's experience, voluntary education and recognition 
programs create motivation for building owners to engage with tenants 
who account for vast quantities of the energy consumed by commercial 
real estate. S. 1191 is an innovative step forward in federal energy 
efficiency policy, because it takes a holistic approach by considering 
office tenants' impact on energy consumption. It will synchronize 
commercial landlords and tenants toward a common goal of lowering 
energy use in built environments across our nation. Notably, the bill 
does not impose regulations or mandates on businesses. Rather, the 
Better Buildings Act relies on market-driven, non-regulatory, ``best 
practices'' and recognition incentives to align building owners and 
occupants to cooperatively reduce demands on the energy grid. It 
warrants emphasis that this bill does not require new federal spending 
or appropriations, because it fits within existing, proven, and 
already-funded public-private partnership programs at EPA and DOE.
    The Better Buildings Act offers two mechanisms to prompt tenants 
and landlords to cooperate on energy efficiency. The first concerns 
``best practices'' to encourage high-performance design and 
construction of new tenant ``fit-outs'' of spaces in buildings, prior 
to the point they are occupied pursuant to the terms of a commercial 
lease agreement. The second concerns valuable marketing recognition for 
leased spaces after they are occupied, by offering a ``Tenant Star'' 
label for building occupants that distinguish themselves through high 
efficiency operations in the spaces or floors they lease. The ``Tenant 
Star'' label will serve to incent positive end-user behavior, help 
companies attract and retain like-minded employees, and may satisfy 
increasing demands from the shareholder and pension fund communities 
that call for investments in environmentally responsible business 
concerns.
            (1) Best Practices to Encourage New High Performance Tenant 
                    ``Fit-Outs''
    Commercial tenants are most likely to make structural investments 
in the building spaces they occupy at the time they enter into new 
leases, or renew leases. S. 1191 would encourage high-performance 
design and construction of leased spaces at the point of new ``fit-
outs'' by authorizing DOE to study and learn from private sector ``best 
practices'' of how commercially leased spaces are constructed up-front 
to achieve high performance, implement cost effective measures with 
viable pay-back periods, and ultimately reduce utility costs for 
businesses. Based on DOE's study, it may then develop a voluntary 
program--with stakeholder comment--to reward and recognize tenants that 
design and construct high performance leased spaces.
    DOE would be given the platform to draw heavily from the 
groundbreaking work by the Natural Resources Defense Council's Center 
for Market Innovation (CMI). In particular, CMI is spearheading a 
``High Performance Tenant Demonstration Project'' in collaboration with 
industry leaders and technical advisors including Goldman Sachs, 
Johnson Controls, Jones Lang LaSalle, Malkin Holdings, SKANSKA, and 
Urban Land Institute(ULI)/Greenprint.
    I strongly encourage the Subcommittee's members and staff to 
explore CMI's webpage\8\ to gain a fuller appreciation for this 
project, which makes the business case for the design and construction 
of cutting edge and efficient tenant spaces. As CMI explains, the 
``High Performance Tenant Demonstration Project'':
---------------------------------------------------------------------------
    \8\ http://www.nrdc.org/business/cgi/.

          [A]ims to promote the compounding effect of owner/tenant 
        collaboration, as tenants who value high performance spaces 
        choose to locate or remain in buildings with highly efficient 
        central systems and transparent energy management practices. As 
        a result, building owners investing in central system energy 
        efficiency improvements will not only garner operating savings, 
        but will also gain competitive advantage in attracting and 
        retaining these high value tenants.
          CMI's Project team is modeling, quantifying, documenting, and 
        publishing the energy savings generated by a series of high 
        efficiency tenant build-outs, and the corresponding return on 
        the tenants' respective incremental investments in the 
        installed energy performance measures (EPMs). The Project case 
        studies will also note the value placed by tenants on various 
        other advantages to these build-outs, including furthering 
        corporate social responsibility goals, and increasing employee 
        attraction, retention, and productivity.

    The CMI website contains a ``how to'' design guide, case studies, 
and describes a replicable ``optimization process'' for commercial 
landlords and tenants to consider how various energy performance 
measures can be packaged to reduce loads and manage occupant behavior 
in leased commercial spaces. CMI's work shows that its process--used in 
actual buildings (such as the Empire State Building) during the early 
stages of build-out and design of leased spaces--can provide 30 to 50 
percent energy use savings compared to a standard code compliant space. 
The payback period for these measures is three to five years, ensuring 
that these projects ``pencil out'' and make for sound investment 
choices given the duration of commercial leases (generally around 10 
years) in the nation's urban and suburban growth centers.
    The Bennet-Ayotte bill fills a market need in providing commercial 
landlords and tenants with information and ``best practices'' 
guidelines to select, design, build, and occupy spaces that will make a 
significant difference in energy usage and operations across the U.S. 
real estate sector.
            (2) Opportunities for Voluntary ``Tenant Star'' Recognition 
                    in Existing Leases
    In addition, once tenants move into their leased spaces, they 
should be able to gain recognition for energy efficient behaviors as a 
marketing tool to advertise to their own customers, investors, and 
other audiences. S. 1191 furthers this objective by authorizing EPA and 
DOE to develop a new program for a voluntary ``Tenant Star'' label. 
Such a program would build upon the widely successful ENERGY STAR label 
that is already available for real estate owners at the whole-building 
level.
    The ENERGY STAR label for buildings has been available since 1999. 
Its growth, popularity--and impact--are well-documented.\9\ Across the 
U.S., owners strive to voluntarily distinguish their buildings as 
ENERGY STAR rated, to attract tenants and satisfy investor demands. The 
Better Buildings Act brings this market-based program to the next 
level--with a tenant-oriented certification for leased spaces. Today's 
ENERGY STAR is based on whole- building recognition for ``top of the 
class'' energy performers. The Bennet-Ayotte bill correctly tackles 
energy efficiency as an issue that the commercial real estate sector 
must advance from both the ``top-down'' and ``bottom-up.'' It would 
enable ``Tenant Star'' certified spaces within ``ENERY STAR'' whole-
buildings and thereby transform--in a non-regulatory way--how building 
owners and their tenants think about energy efficiency.
---------------------------------------------------------------------------
    \9\ See ``Celebrating a Decade of ENERGY STAR Buildings,'' 
available at: http://www.energystar.gov/
index.cfm?c=business.bus__ES__bldgs
---------------------------------------------------------------------------
    Just as ENERGY STAR has dramatically improved how real estate 
owners, utilities, governments, and businesses interact to improve 
energy efficiency in buildings and lower energy costs, ``Tenant Star'' 
has vast potential to do the same. Please consider the following:

   ENERGY STAR buildings are located in all 50 states. Any 
        member of Congress can find where these buildings are located 
        in their states or districts with EPA's easy-to-use on-line 
        locator tool.\10\
---------------------------------------------------------------------------
    \10\ http://www.energystar.gov/
index.cfm?fuseaction=labeled__buildings.locator.
---------------------------------------------------------------------------
   Attached at the end of this statement are fact sheets\11\ 
        that EPA makes available on its website. They show the 
        geographic range of cities and real estate markets from coast-
        to-coast that boast the most ENERGY STAR labeled buildings.
---------------------------------------------------------------------------
    \11\ See ``Data Trends'' series: http://www.energystar.gov/
index.cfm?c=business.bus__energy__star__snapshot
---------------------------------------------------------------------------
   EPA's facts sheets also explain that:

    --As of December 2012, more than 20,000 ENERGY STAR certified 
            buildings across America helped save more than $2.7 billion 
            in annual utility bills.
    --The cumulative number of ENERGY STAR certified buildings 
            increased by more than 24 percent from 2011 to 2012, 
            representing more than 3 billion square feet of floorspace 
            nationwide. In 2012 alone, more than 8,200 buildings earned 
            EPA's ENERGY STAR certification. The program is thus 
            experiencing great growth.

    --ENERGY STAR certified whole-buildings use an average of 35 
            percent less energy and emit 35 percent fewer greenhouse 
            gas emissions than typical buildings.
    --As of December 2011--on a voluntary basis--organizations have 
            used the ENERGY STAR benchmarking tool known as ``Portfolio 
            Manager,'' to track and manage the energy use of over 
            260,000 buildings across all 50 states, representing nearly 
            28.2 billion square feet--that is, nearly 40 percent 
            penetration of the commercial real estate market.
    --ENERGY STAR certification is good business for commercial 
            building owners. Studies show that ENERGY STAR labeled 
            buildings may command higher rents, have less volatile 
            occupancy rates, and can command higher selling prices than 
            otherwise similar conventional buildings.

    With these metrics for success at the whole-building level, the 
Better Buildings Act sets the stage for further innovation through 
voluntary recognition for commercial office tenants that may cooperate 
with their landlords to earn the ``Tenant Star.'' The Bennet-Ayotte 
bill would help to further unleash the economic and environmental power 
of the ENERGY STAR brand, through the innovative next step of allowing 
tenants to join their landlords in striving for--and reaching--higher 
levels of energy performance, and giving them the tools they need to 
understand how much energy is consumed by the devices and equipment 
they control within their leased spaces.
    Thank you again for this opportunity to testify on behalf of The 
Real Estate Roundtable on the important topic of energy efficiency, and 
S. 1191 in particular. I look forward to answering the committee's 
questions.

    Senator Franken. Thank you, Mr. Molotsky.
    Mr. Diament.

 STATEMENT OF NATHAN J. DIAMENT, EXECUTIVE DIRECTOR FOR PUBLIC 
   POLICY, UNION OF ORTHODOX JEWISH CONGREGATIONS OF AMERICA

    Mr. Diament. Subcommittee Chairman Franken and Ranking 
Member Risch and members of the subcommittee, thank you for 
inviting me to participate in today's hearing. My name is 
Nathan Diament. I'm the Executive Director for Public Policy of 
the Union of Orthodox Jewish Congregations of America.
    But I'm not here today just representing the largest 
Orthodox Jewish umbrella organization in the United States and 
our nearly 1,000 congregations. I'm here representing a diverse 
coalition of faith based and other non-profit sector groups 
including the U.S. Conference of Catholic Bishops, National 
Council of Churches, the YMCA Association, the Association of 
Art Museum Directors, Jewish Federations of North America and 
more. Our organizations all strongly support S. 717, the Non-
Profit Energy Efficiency Act sponsored by Senators Klobuchar 
and Hoeven.
    We appreciate your consideration of this legislation today.
    As you know our organizations and so many others in the 
non-profit sector provide an array of social welfare, 
educational, recreational and communal across this country to 
people from all walks of life. But across the diversity of 
services we provide and citizens we serve we have at least one 
thing in common, our training workshops, English language 
classes, soup kitchens, clothing co-ops, tutoring sessions, 
homeless shelters, health clinics and more all take place in 
buildings. Some of those buildings are quite old and quite 
drafty, but they must be warmed in the winter and cooled in the 
summer.
    According to the EPA non residential buildings in the 
United States consume more than $200 billion annually in energy 
costs. Among those many buildings are this country's 2,700 
YMCAs, 2,900 non-profit hospitals, 17,000 museums and more than 
370,000 houses of worship. Looking just at the house of worship 
sector, the EPA, based on its Green Congregations project 
estimates that these entities could cut their energy use and 
costs by one-third through energy efficiency improvements.
    If America's houses of worship cut their energy use by just 
10 percent, the EPA estimates that would save 1.8 billion 
kilowatt hours of electricity and reduce 1.3 million tons of 
greenhouse gas emissions, the equivalent of the emissions of 
240,000 cars. We, in the non-profit sector are eager to achieve 
these results by updating and replacing outdated and 
inefficient energy systems. Unfortunately the front end costs 
to make these improvements and retrofits are very high. For the 
non-profit charity world, the hurdle of these front end costs 
is even higher to surmount because we cannot just raise the 
prices of our widgets we sell or take on greater debt to 
finance them. Candidly a new HVAC unit or boiler in the 
basement is not the most exciting project to pitch to even the 
most deeply dedicated donor to our institutions.
    Moreover while there have been and still are a variety of 
State and Federal financial incentives to making energy 
efficiency retrofits, they are often in the form of tax credits 
and rebates which are, of course, not available to tax exempt, 
non-profit charities. That's why we are supported the 
Klobuchar/Hoeven proposal which will create a pilot program in 
the Department of Energy to award financial grants to non-
profits for energy efficiency building improvements. Under S. 
717, non-profits could apply for grants for up to 50 percent of 
the cost of an energy efficiency retrofit project with a 
maximum grant of $200,000.
    The legislation authorizes an appropriation of $50 million 
for each of the fiscal years 2014 through 2017 and identifies 
an offset for those funds.
    We are confident that by making these funds available in a 
cost sharing program Congress would enable non-profits to raise 
or borrow the balance of the funding needed for an energy 
efficiency project and thus leverage public funds as they 
should.
    We also suggest that S. 717' program would be a catalyst 
for job creation as non-profits would finally be able to 
undertake deferred projects and generate demand for the 
products and the contractors to install them.
    Finally, the Federal investment in the non-profit sector's 
energy efficiency would be leveraged through our sector's 
social capital to generate greater private action and 
investment toward efficiency. This would recognize the 2010 
report of the President's Advisory Council on faith based 
partnerships which spoke of this multiplier effect for 
congregations.
    Senators, the Orthodox Union and our coalition partners 
appreciate and support your efforts to enact broad and 
impactful energy efficiency legislation including the various 
other bills before the subcommittee today as well as other 
legislation pending before the Senate. Improving America's 
energy efficiency is, in our view, critical for the long term 
welfare of our Nation's environment and economy. We hope you 
recognize and support S. 717, aiding the non-profit sector as a 
complementary effort to those other bills.
    But if I may, I'd like to conclude with an important note 
that improving energy efficiency and reducing harmful pollution 
is not just a matter for the economy and the environment. From 
our perspective it's also a matter of values. God charged us 
with a mission to be his partner in creation to work the Earth, 
but also in Genesis 2:15 spoke of our mission to preserve the 
Earth.
    As you Senators work to enact legislation to help us be 
good stewards of God's creation and our energy resources and 
environments, you are serving this mission as well. For that, 
we thank you.
    [The prepared statement of Mr. Diament follows:]

Prepared Statement of Nathan J. Diamenti, Executive Director for Public 
       Policy, Union of Orthodox Jewish Congregations of America
    Subcommittee Chairman Franken, Ranking Member Risch and Members of 
the Subcommittee--thank you for inviting me to participate in today's 
hearing. My name is Nathan Diament and I am the Executive Director for 
Public Policy of the Union of Orthodox Jewish Congregations of America.
    But I am not here today just representing the largest Orthodox 
Jewish umbrella organization in the United States and our nearly 1000 
congregations, I am here representing a diverse coalition of faith 
based and other nonprofit sector groups--including the U.S. Conference 
of Catholic Bishops, the National Council of Churches, the YMCA 
Association of the USA, the Association of Art Museum Directors, Jewish 
Federations of North America and more.
    Our organizations strongly support S.717--the Nonprofit Energy 
Efficiency Act--sponsored by Senators Klobuchar and Hoeven. We 
appreciate your consideration of this legislation today.
    As you know, our organizations--and so many others in the nonprofit 
sector--provide an array of social welfare, educational, recreational 
and communal services across this country to people from all walks of 
life. But across the diversity of services we provide and citizens we 
serve, we have at least one thing in common--our job training 
workshops, English language classes, soup kitchens, clothing co-ops, 
tutoring sessions, homeless shelters, health clinics and more all take 
place in buildings. Some of those buildings are quite old and drafty, 
but they must be warmed in the winter and cooled in the summer.
    According to the EPA, nonresidential buildings in the United States 
consume more than $200 billion annually in energy costs. Among those 
many buildings, are this county's 2700 YMCAs, 2900 nonprofit hospitals, 
17,000 museums and more than 370,000 houses of worship. Looking just at 
the houses of worship sector-- the EPA, based on its ``Green 
Congregations'' project,\1\ estimates that these entities could cut 
their energy use--and costs--by one third through energy efficiency 
improvements. If America's houses of worship cut their energy use by 
just ten percent, the EPA estimates that would save 1.8 billion kWh of 
electricity and 1.3 million tons of greenhouse gas emissions, 
equivalent to the emissions of 240,000 cars.
---------------------------------------------------------------------------
    \1\ http://www.energystar.gov/
index.cfm?c=small__business.sb__congregations
---------------------------------------------------------------------------
    We are eager to achieve these results by updating and replacing 
outdated and inefficient heating and cooling systems, lighting and 
other electrical systems, windows and doors and more. Unfortunately, 
the ``front end'' costs to make these improvements and retrofits are 
very high. For nonprofit charities, the hurdle of these front end costs 
is even higher to surmount because we cannot just raise the prices of 
the widgets we sell or take on greater debt to finance them. Candidly, 
a new HVAC unit or boiler is not the most exciting project to pitch to 
even deeply dedicated donors to our institutions.
    Moreover, while there have been (and still are) a variety of state 
and federal financial incentives for making energy efficiency 
retrofits, they are typically in the form of tax credits and rebates--
which are, of course, unavailable to tax exempt, non-profit 
charities.\2\
---------------------------------------------------------------------------
    \2\ At the federal level, the Energy Policy Act of 2005 enacted 
Section 179D of the Internal Revenue Code, providing a one-time 
accelerated depreciation for commercial, multifamily, and public agency 
owned facilities; there are also federal tax credits available for 
residential homeowners installing energy efficiency improvements http:/
/www.energystar.gov/index.cfm?c=tax__credits.tx__index
---------------------------------------------------------------------------
    This is why we are supporting the Klobuchar--Hoeven proposal which 
will create a pilot program in the Department of Energy to award 
financial grants to nonprofits for energy efficiency building 
improvements.
    Under S.717, nonprofits could apply for grants for up to 50 percent 
of the cost of an energy efficiency retrofit project--with a maximum 
grant amount of $200,000. The legislation authorizes an appropriation 
of $50 million for each of the fiscal years 2014-2017, and identifies 
an offset for those funds.
    We are confident that making these funds available--in a cost 
sharing program--will enable nonprofits to raise or borrow the balance 
of the funding needed for an energy efficiency project, and thus 
leverage public funds as they should.
    We also suggest that S.717's program would be a catalyst for job 
creation as nonprofits would finally be able to undertake deferred 
projects and generate the demand for new HVAC systems, windows and 
insulation as well as the contractors and workers to install them.
    Finally, the federal investment in the nonprofit sector's energy 
efficiency will be leveraged through our sector's social capital to 
generate greater private action and investment toward energy 
efficiency. As was stated in 2010 by the President's Advisory Council 
on Faith Based Partnerships:

          Houses of worship can exert a powerful influence when they 
        practice good energy stewardship . . . Similarly, actions taken 
        by nonprofit organizations can serve as an important role model 
        for their employees, volunteers, and beneficiaries. There is a 
        multiplier effect as congregants and nonprofit participants 
        adopt the energy-saving practices in their homes and 
        businesses\3\
---------------------------------------------------------------------------
    \3\ Report and Recommendations to the President; Environment & 
Climate Change-- http://www.whitehouse.gov/sites/default/files/
partnerships-environment-climate-change.pdf

    Senators--the Orthodox Union and our coalition partners appreciate 
and support your efforts to enact broad and impactful energy efficiency 
legislation, including the various other bills before the Subcommittee 
today, as well as other legislation pending in the Senate.
    Improving America's energy efficiency is, in our view, critical for 
the long term welfare of our nation's environment and economy; and we 
hope you recognize and support S.717--aiding the nonprofit sector--as a 
complementary effort to these other bills.
    But if I may, I would like to conclude with an important note--that 
improving energy efficiency and reducing harmful pollution is not just 
a matter of the economy and the environment. From our perspective, it 
is also a matter of values.
    God charged us with the mission to be His partner in creation--to 
``work'' the earth; But God also charged us to ``preserve'' it. 
(Genesis 2:15)
    As you, Senators, work to enact legislation to help us be good 
stewards of our energy resources and environment, you are serving this 
mission as well.
    For that, we thank you.

    Senator Franken. Thank you, Mr. Diament.
    The Chair of the full committee, Chairman Wyden, is here. I 
know that you'd like to make a few remarks, sir.

           STATEMENT OF HON. RON WYDEN, U.S. SENATOR 
                          FROM OREGON

    The Chairman. Thank you very much, Mr. Chairman. I will 
make them very, very few. I apologize for just parachuting in 
and having to go out again. But I want to commend you and 
Senator Risch for holding this very important hearing.
    You know, I think it's very clear if you look at the 
President's address today, whether one agrees or disagrees with 
a particular part of it, there is strong support for energy--
efficiency, what you and Senator Risch are looking at this 
afternoon. Certainly the Shaheen/Portman legislation, which we 
hope to have on the floor early in July after we come back from 
the work period, is an example of it.
    It has exceptional bipartisan support. The Chamber of 
Commerce and the Business Roundtable understand it makes sense. 
It's jobs. It's the quality of life that empowers our 
communities.
    You're going the next step today which is to look at bills 
that would complement the Shaheen/Portman legislation. I very 
much appreciate that you're doing it because the fact is all of 
these bills that constitute the energy efficiency agenda put 
points on the board in the fight against climate change which 
you, Mr. Chairman, have hammered away at. Senator Sanders has 
hammered away at it.
    We talked about it this morning; the NOAA finding, in terms 
of concentration, we're talking about 400 parts per million 
now. This is not something made up by an advocacy group. This 
is the government's finding. I think it reaffirms how important 
the energy efficiency agenda is.
    I commend you and Senator Risch for tackling something 
which is demonstratively bipartisan. I'm glad you're holding 
this hearing.
    I also want to commend the leadership of Senator Sanders. 
I'm very proud to join him in this effort to try to use the 
States in a creative role to promote energy efficiency. I think 
we all understand.
    It really stems from earlier days, the earliest days of our 
Republic, that we wanted to use the States as a laboratory to 
try out fresh, creative approaches. Senator Sanders, in my 
view, deserves considerable credit for really zeroing in on the 
energy efficiency needs of homeowners. So I am proud to be a 
partner in this Sanders effort.
    I think it really--without mandates, without requirements, 
the participation is voluntary--really targets in a way that I 
think it'd be very effective in the energy efficiency area. I 
want to commend my colleague from Vermont. Again, apologize to 
Senators for my bad manners to just be here so shortly. The 
Intelligence Committee is meeting now and I'm being brought 
back to that.
    But I want to commend all of you and especially Senator 
Sanders for his good work on this. I thank you.
    Senator Franken. Thank you for your statement.
    Now we're going to go to questions, but first Senator 
Sanders, would you like to make a statement?

  STATEMENT OF HON. BERNARD SANDERS, U.S. SENATOR FROM VERMONT

    Senator Sanders. I would just very briefly. I want to thank 
Senator Wyden for his work and thank you and Senator Risch for 
holding the hearing and the fine testimony from all of our 
panelists.
    Here's the issue. Let me boil it down and maybe somebody 
agrees with me, maybe they don't. In my view, global warming is 
real. It is the major crisis facing our planet.
    We have already seen many of the disastrous impacts of 
global warming today. If we don't get our act together in terms 
of extreme weather disturbances, floods, droughts, fires, it 
will only get worse in years to come.
    There are a lot of ways we can tackle this problem. I've 
got legislation in global warming. But what Senator Wyden and I 
are trying to do is something enormously simple. What every one 
of you has said and what every American understands is we are 
an enormously wasteful society. We all agree on that. We all 
agree that the lowest hanging fruit, the easiest way to save 
energy is through energy efficiency.
    One of the great stumbling blocks is that while millions of 
Americans want to be involved. They want to make their homes 
more energy efficiency. They want to move to sustainable 
energy. They understand that they could cut their fuel bills, 
play a role in protecting our environment.
    What the problem?
    The problem is they don't have the $10,000, $15000, $20,000 
that they need in order to become energy efficient.
    The beauty of what, in a sense, all of us are talking 
about, but what Senator Wyden's bill and my bill does, is say 
to these people, look, we are going to lend you. Each State 
will do it in a different way. We're going to lend you the 
money.
    You're going to save, I think it was Mr. Molotsky or 
somebody talking about 20, 30 percent reduction. You're going 
to save in your home 20, 30, 40 percent. You know what? You're 
going to pay back the loan with that savings.
    Now if that doesn't make sense to everybody, I can't see 
that this is a partisan issue. We're lending people money. 
They're going to pay that money back by saving energy and at 
the same time we cut greenhouse gas emissions.
    You know what else we do? Somebody has to make those 
products. Somebody has to install those products. You create 
jobs.
    So if this is not a win/win/win situation of which there 
should be no ideological opposition. I cannot understand why we 
all can't come together on this.
    So I look forward to working with you, Mr. Chairman, 
Ranking Member Risch, certainly Senator Wyden and everybody 
else. With all of your help to bring forth this legislation.
    Thank you very much.
    Senator Franken. Thank you, Senators Sanders.
    Now we'll start the questions. I'll go first, then the 
ranking member and then we'll go to Senator Sanders.
    I'd like to start with Mr. Spurr. Thank you for coming from 
Minnesota.
    I'd like to discuss distributed energy with you, in 
particular combined heat and power, CHP. As you said in your 
testimony in the United States up to 36 percent of all energy 
we consume is lost from power plants, industrial facilities and 
buildings as waste heat. Combined heat and power or co-
generation and district energy systems are available, tested 
the technologies that can be used to capture waste heat and put 
it to use.
    In Minnesota the city of St. Paul, as a biomass district 
energy system, it's a great model on how to do this. By using 
more of our abundant biomass more efficiently we can support 
more forest jobs, invest in our power infrastructure and 
provide environmental benefits.
    Senator Risch has pointed out that we need to be doing a 
better job of getting rid of the hazardous fuel in our forests 
to prevent forest fires. We can do that. Use the biomass we get 
out of this to power our combined heat and power systems or our 
district energy plants.
    Mr. Spurr, I know that you've been working with the city of 
Grand Marais on the north shore of Lake Superior and others 
throughout Minnesota to deploy combined heat and power in other 
distributed energy systems. Can you talk about the level of 
interest that you've received from communities there and 
elsewhere in the country?
    Mr. Spurr. Alright. Thanks very much for that question, 
Senator Franken.
    We're seeing an enormous increase in the interest of 
communities large and small in becoming more efficient and in 
using the resources in their own backyards.
    You mentioned fire hazard. That actually was the initial 
motivation by the city of Grand Marais to develop a biomass 
district heating system. When I first went up to Grand Marais 
to talk with folks there I usually ask people, well, why are 
you interested in this? When the guy, who was on the Public 
Utilities Commission, said fire, I was taken aback. I was 
expecting energy or jobs or what not.
    It's certainly true, certainly in Minnesota and I think, in 
many other places the decline of the forest products industry 
has led to a lot of forests becoming what the foresters call 
decadent. In other words they're falling in on themselves. 
They're becoming fire hazards.
    So one of the things that I think is a tremendous 
opportunity is to take that problem and turn it into a positive 
for the communities.
    But beyond biomass and smaller communities that don't have 
natural gas. They rely on fuel and on propane. There's also 
strong interest by larger communities that do have natural gas 
but are very much interested in the resiliency of having a CHP 
system serving their downtowns.
    I think this is really a turning point in this country. 
Many other countries have long had municipal governments 
getting it when it comes to energy opportunities and reducing 
energy waste. I'm seeing a great growth in the U.S. now.
    Thank you.
    Senator Franken. I wish Senator Risch had been here to hear 
that. But we'll make sure that he, you know, has access to that 
testimony because he's someone who has a degree in Forest 
Management. This is something that he talks about a lot which 
is these hazardous waste materials that are on the forest floor 
in the forests that we need to harvest if we're going to 
prevent the kind of wildfires that we've had.
    I'd just like to follow up on combined heat and power. I 
have a feeling that when Senator Risch comes back we'll maybe 
have a couple rounds to be able to do it.
    Can you talk, Mr. Spurr, about how combined heat and power 
could be helpful to utilities, to electric utilities?
    Mr. Spurr. Thank you, Senator Franken.
    I do think sometimes when you bring up combined heat and 
power to utilities they can approach it with a bit of 
trepidation. Because in many cases these facilities, these 
combined heat and power facilities, are being developed by 
somebody other than that utility. But in fact, combined heat 
and power can really be a great partner for electric utilities.
    Utilities have a tough time when the July afternoon comes. 
It's 95 degrees and the power demand is peaking. It's a 
challenge meeting that peak power demand not only from the 
standpoint of generation because it requires them to bring on 
inefficient, expensive, usually dirty power generating plants. 
But also oftentimes they're having a tough time getting the 
power into the load centers relative to transmission 
constraints. So combined heat and power systems can actually 
help electric utilities solve problems and manage the grid 
better.
    A great example is Princeton University. They have, not 
only a combined heat and power system, but also a thermal 
energy storage system. So they make chilled water at night when 
power is cheap and clean. Store it in big tanks and use it in 
the daytime to meet peak power demands.
    They've been able to reduce their peak power demand from 27 
megawatts to 2 megawatts, more than a 90 percent decrease 
through the use of, what I think of, is the dynamic duo. It's 
combined heat and power and thermal energy storage. I think 
oftentimes when utilities stop to think about it they realize 
hey, this is actually helping us do our job. I'm hoping more 
utilities will look at it from that perspective.
    Senator Franken. Thank you. I understand the Princeton 
stayed on line because they had a combined heat and power 
plant.
    Mr. Spurr. Yes, that's a----
    Senator Franken. During Hurricane Sandy. I'll get to that 
maybe in a while, but about the resilience of these systems in 
these hurricanes.
    Let me move on. I'll come back to other, the combined heat 
and power. But let's talk, Mr. Nadel, about data.
    One of challenges improving energy efficiency in buildings 
is lack of important data. Unless we really know how well our 
buildings are performing, we can't be sure what types of energy 
efficiency technologies will be the most effective. That's why 
the city of Minneapolis and there are others around the country 
have begun looking at energy data disclosure policies for large 
commercial buildings.
    I would like to help more cities take advantage of these 
opportunities. To that end I have introduced legislation to 
provide grants to utilities and their partners to help them 
work with building owners and pursue energy benchmarking and 
disclosure. Now Mr. Laskey's company, Power, is doing great 
work based on the idea that if you tell people how much energy 
you are using and how their energy consumption compares to that 
of their neighbors, that will lead people to change their 
behavior. How they use energy and how much they use. That will 
lead to energy savings.
    I think we can get energy savings by applying this model to 
the commercial building sector. So Mr. Nadel, is there evidence 
that that same basic idea that more information energy can lead 
to energy savings can be applied at the commercial level? Can 
you talk about how energy disclosure in large commercial 
buildings can lead to improved energy use and money being 
saved?
    Mr. Nadel. Yes. You are absolutely right. Providing that 
information to the building owner so that they can understand 
it and then to decide to act can be very influential. As I 
mentioned earlier, EPA has found that average energy savings 
among buildings that have been benchmarked has averaged 7 
percent over about, a multiyear period.
    Do a little bit 1 year. Do a little bit more. So 7 percent 
savings is very significant.
    You also pointed out a number of cities that are doing--
going farther. Are understanding they are well on the path to 
achieving additional energy savings. Because in this way not 
only the building owner gets the information but in some of 
these cities the information is also provided to perspective 
purchasers, perspective renters and therefore there is--creates 
a demand for these more efficient buildings.
    I do know that it's been shown by Costar that occupancy 
rates tend to be a little bit lower in buildings that are 
Energy Star lead certified. Rents tend to be a little higher. 
So these are ways if the tenants can understand what the 
benefits are they can create a benefit as well.
    Thank you.
    Senator Franken. They can have a more desirable building.
    Mr. Nadel. Exactly.
    Senator Franken. Somebody talked about the Empire State 
Building earlier. Maybe it was in the earlier testimony by one 
of the Senators, but my understanding is not did it save an 
incredible amount of energy, but also drove up the cost of the 
tenants, the rent.
    Mr. Nadel. Right.
    Senator Franken. Why can't I think of the word?
    So let's go to Mr. Laskey and Mr. Molotsky.
    What, in your view, should we be doing to maximize energy 
efficiency of commercial buildings?
    Mr. Laskey. I think your proposal is an excellent one. 
Providing the data is one first piece. I think doing it absent 
the utilities though is there's an opportunity to engage the 
utilities. After all even in commercial buildings the amount of 
money that goes to energy is relatively low. We have relatively 
low energy prices in this country.
    In households the average American household spends less 
than 2 percent of their income on household energy. So even the 
promise of cutting that by 50 percent is not significant 
savings for ordinary people. So, engaging cities as you have 
and as you propose in your legislation, but also engaging 
utilities which have the scale to act across multiple buildings 
across multiple tenants, I think, is a necessary step in 
addition to making the data available.
    Senator Franken. Mr. Molotsky.
    Mr. Molotsky. Yes, Senator Franken. Thank you for the 
opportunity.
    I'd just add a couple of points to that. It goes back to 
your original opening comments.
    It's giving people information to make informed decisions, 
I think. So 7 different things.
    Creating a national equipment data base where owners, like 
me and friends and colleagues like us that own a lot of square 
footage, can go without having to be nipped at by 50 different 
vendors. So an objective national equipment data base that 
tells us what the return on the investment is in particular 
environment at a particular tariff rate would be extremely 
helpful.
    Assistance with national policy and/or discussion with 
utilities to provide us, the owner, with real time data would 
also be extraordinarily helpful. In certain sectors of the 
country the utilities do share that data. In others, it's much 
more difficult to obtain. So I own the building, yet I need to 
get permission from the tenant, who has a meter in the 
building, to get their consumption data. Difficult in order for 
me to move a conversation forward, in order to reduce 
consumption if I don't know what they are consuming.
    A national repository of case studies for different 
buildings and what they've been able to achieve and how quickly 
they've been able to get a return on their investment would be 
helpful.
    Education, frankly. Resources for training of building 
owners and engineers on energy efficiency and frankly, where to 
start. I'll have a conversation with informed folks in this 
room but once we leave it folks are a little bit less informed 
as to--they are overwhelmed with the information. They're not 
exactly sure where to start. So education.
    Continued support for portfolio manager and what Energy 
Star has been able to do. Again, a free resource, online, easy 
to access, easy to use, good information.
    I think following up on some earlier conversations with 
this committee and the Tax Committee. Liberalization of 179(d) 
which is a great tool which has not been used under the tax 
code to provide for tax deductions for energy efficiency 
upgrades to create a sliding scale and to allow that deduction 
to be portable so that folks like to my left, who are 
501(c)(3)'s that can't use that. But then they can assign it to 
the installer to reduce the cost of the equipment. That type of 
initiative would start to, again, start to move the discussion 
along.
    Senator Franken. Thank you.
    In crafting this we've been very conscious of partnering 
with utilities. So it's very important. My bill provides 
grants, $2.5 million in grants to utilities and utility 
partners to help building owners develop these benchmarking 
practices.
    Is there any, I mean, what is the data on benchmarking, 
just----
    Sure, Mr. Laskey.
    Mr. Laskey. So we've been able to demonstrate now over 5 
and a half years that in the residential sector across, now 
more than 8 million homes, on average just by providing people 
benchmark data, proactively delivered to them. The importance 
of engaging utilities is that this table is filled with energy 
geeks. But most of the voters and citizens out there are not 
energy geeks.
    Senator Franken. Oh, I don't know.
    [Laughter.]
    Mr. Laskey. In Minnesota I wouldn't discount it.
    [Laughter.]
    Mr. Laskey. But so the utilities have the ability to 
proactively deliver this information not just about making the 
information available for some geek or ordinary citizen to come 
find but actually delivering it. When you deliver that data on 
average in the residential sector you can reduce consumption by 
between 2 and 3 percent just on behavior. Then that in turn 
spurs interest in larger investments in the home whether it's 
insulation, new appliances, lighting, etcetera. Those numbers, 
of course, grow over time in terms of the total impact.
    Two to 3 percent is diminimus in any one home, but across 
millions of homes it adds up to quite a bit of energy.
    Senator Franken. What about the evidence in commercial 
buildings?
    Mr. Molotsky. Again the use of Energy Star and when you, 
kind of, marry that with either voluntary or mandatory 
benchmarking the trajectory is left side of the page to the 
right side of the page, almost straight up.
    The number of buildings that have been included in 
portfolio manager on Energy Star in their numbers is rather 
extraordinary. So that 240,000 buildings I was alluding to 
earlier most of that is in the recent, 3, 4, 5 years. The 
amount of energy that's been saved is rather extraordinary. 
It's in the billions of dollars in those buildings.
    Not per se because they've benchmarked. But because they're 
starting to pay attention to and use that information to, 
again, make these informed decisions.
    Senator Franken. I'm here and I might as well go on. This 
is--I want to talk about combined heat and power and district 
energy some more. Can you just describe for everyone St. Paul's 
district energy and combined heat and power system and just in 
a nice nutshell?
    Mr. Spurr. I'd be happy to. I have a lot of familiarity 
with that system.
    That system was started in the early 1980s. It's a district 
hot water system. It supplies about 80 percent of the heating 
in the downtown area. I don't recall now what they're up to on 
cooling but a substantial majority of the cooling in downtown.
    It's fueled with urban waste wood, tree trimmings, old 
pallets, land clearing waste. This is community waste that 
would otherwise end up in a landfill. It's used to produce 
power and heat and cooling.
    Ironically enough one can make cooling with heat. So----
    Senator Franken. For those who aren't energy geeks, just 
explain how you can create cooling from heat.
    Mr. Spurr. It's--well, there actually are 2 ways.
    One is to use steam and push it through a steam turbine to 
make heat.
    Another is a chemical process kind of like----
    Senator Franken. To make electricity which in turn?
    Mr. Spurr. No, actually you directly turn the chiller 
compressor with the steam turbine.
    Senator Franken. Oh, I see. OK.
    Mr. Spurr. But in St. Paul they use a process called 
absorption cooling. Basically the heat is used to recharge a 
set of chemicals, who once they want to combine together 
they're actually able to chill another water loop.
    I remember, Senator Franken, some years ago you asked me to 
explain in simple terms how absorption cooling works. It's 
pretty hard to do it in a simple way.
    Senator Franken. Right.
    Mr. Spurr. But it's----
    Senator Franken. Obviously.
    [Laughter.]
    Mr. Spurr. Thank you very much.
    But the other element in that system besides using urban 
waste wood to make power heating and cooling is they use 
extensively chilled water storage.
    So as I spoke earlier----
    Senator Franken. I see.
    Mr. Spurr. They depress that electric demand by making 
chilled water.
    Senator Franken. OK. Speaking of that because you were 
talking about Princeton and I want to talk about the resilience 
and this island mode. Can you explain what an island? What it 
means to be in island mode and why this could represent 
incredible savings in terms of saving businesses from incurring 
tremendous costs during an electrical, electricity outage?
    Mr. Spurr. The use of CHP in island mode has saved the 
bacon of a lot of universities and industries and other areas 
during storms. In my written testimony----
    Senator Franken. Mr. Diament, sorry about the bacon.
    [Laughter.]
    Mr. Spurr. Exactly.
    It's been--what happens with an island mode is that you 
generally CHP systems are run in integration with the broader 
grid. But it can be designed so that if the broader grid goes 
down, it can cutoff the relationship and operate as its own 
micro grid. That has allowed many places, noted in my written 
testimony.
    Senator Franken. Right.
    Mr. Spurr. To survive these storms. In my written testimony 
is only a sampling of the case studies that have taken place. 
It's an enormously important issue because whatever your 
beliefs are about what's happening with climate change. The 
fact is we're having a lot more severe storms. They're causing 
power outages.
    Senator Franken. Thank you.
    Your written testimony does provide a number of examples 
that are very interesting.
    I want to talk about retrofitting and why it obviously 
makes sense. I've been partnering with leaders in Minnesota 
like Governor Dayton, local chambers of commerce, businesses, 
utilities, elected officials, non-profits on the retrofitting. 
I call it back to work Minnesota because as Senator Sanders 
suggested it's just win/win/win/win/win because when you do a 
retrofit it obviously saves energy. That's the purpose.
    Over a certain amount of time pays for itself. A great 
retrofit can pay for itself or, you know, very quickly or over 
a certain amount of time. But in the meantime you're putting 
people to work. You're putting people to work actually doing 
the work on the retrofit, people in the building trades, also 
people in energy service companies, who design the retrofit and 
implement them.
    You are putting people to work who manufacture the energy 
efficient material that's being used and who make the software 
for energy efficient lighting and those kinds of things. Also 
you're lowering the carbon footprint which we all know or most 
of us know is very important. So that's a win/win/win/win/win. 
I think that's 4 or 5. Anyway, it's a lot of wins.
    Now and so sometimes there are barriers. One of the 
barriers is in the financing. We have been focused and back to 
work Minnesota is providing different creative and I want just 
everyone or anyone who wants to talk about this of what we can 
do to help people help entities. This can be everything from 
commercial buildings to hospitals, university, you know MUSH, 
municipals, universities, schools and hospitals, MUSH.
    The city--I'll give one example, the city of Edina has set 
up the first commercial property assess clean energy or PACE 
program outside of California. Minneapolis has begun energy 
benchmarking programs for large commercial buildings and that. 
But as far as--talk to me about barriers and about financing.
    Anybody? I'm throwing it up. It's a jump ball.
    Mr. Molotsky. I'll jump in.
    So the barrier in particular, I guess, it's not my 
expertise or my area, but it won't stop me from talking about 
it. In the residential side and also on the commercial side one 
of the big barriers is when you go to borrow money from a 
financing source. The lack of underwriting criteria and 
appraisal techniques that would take into account energy 
efficiency for purposes of value for the asset is not there 
yet. So the appraisal institute some of us have talked with or 
aware of it, but they still need to promulgate educational 
activities for their members because they don't take that into 
account.
    So when they come up with what the value of the building or 
what the home is, to the extent somebody has invested in some 
good technology, it's not typically counted or ever counted for 
purposes of what that property is worth. Separate from today 
but there's the SAVE Act, S. 1106, addresses or starts to focus 
on that particular issue which is appraisal techniques and 
getting the appropriate amount of credit on the credit score. 
So that would be one thing in particular I would start to think 
about or continue to think about.
    Senator Franken. Thank you.
    Mr. Laskey. Just quickly on the, I think, some lessons from 
the short lived PACE programs on the residential side. You 
look, there was a paper that came out of Elton, the Lawrence 
Berkeley National labs in California looking at financing 
programs, I think, 19 different financing programs across the 
country. It looked at--had different structures, different 
underwriting criteria.
    One thing that was striking to me was that even in 
Berkeley, California where everyone agrees climate change is an 
issue and where there was an opportunity to take advantage of 
PACE financing, less than one-third of 1 percent of people took 
advantage of PACE financing when it was available, residential. 
This was not from lack of interest, high electric rates, access 
to financing, all this. In spite of that only one-third of 1 
percent.
    I think one of the reasons for this is that energy just is 
a low engagement thing. People only think--I was in a meeting 
with a utility CEO, who compared it to toilet paper. You only 
notice it when it's not there. So when the lights don't work.
    So I think one of the things as you look to push out MUSH 
or MUSH, is to think about how are you going to market it. How 
are--and I think your data benchmarking idea is a terrific one 
because if you can identify which of the buildings that are 
most likely to benefit the most then you can go after those 
buildings aggressively to make--so they can avail themselves to 
the financing.
    So this isn't about mandates, but it's about targeted 
marketing using these kinds of marketing techniques that are 
used in other industries to make--so when you design these 
financing systems they actually have customers.
    Senator Franken. Let's--actually Mr. Diament, let's talk 
about this in the context of the non-profit sector. Then we'll 
go to Mr. Nadel. Then Mr. Sylvia I'd like to talk about in 
terms of weatherization.
    Let's go first to Mr. Diament.
    Mr. Diament. Thank you, Senator.
    So as I said before, I mean, the front end cost is 
definitely the highest barrier, the front end cost of an HVAC 
system or a whole, you know, or a couple scores of windows, 
especially if they have to be specially designed to fit over 
very pretty stained glass windows and other things. So the 
front end cost is a barrier that the non-profit sector shares 
with the other sectors as well.
    I would, before I forget, want to say you asked what can 
you do aside from the legislation before the committee today. 
What my colleague mentioned earlier which is with regard to the 
Section 179(d) tax credit. If that could be made portable, if 
that could be made transferrable that would be very valuable to 
the non-profit sector because----
    Senator Franken. Can it be made transferrable to a vendor?
    Mr. Diament. Yes.
    Senator Franken. That's what you're talking about, Mr. 
Molotsky, right?
    Mr. Diament. Or to some other party that's--either a vendor 
or it could be like--you could structure it like air rights 
where you could really have a market for it, theoretically.
    But the other thing is when you're talking about the 
financing sector, I mean, when you're talking about small and 
midsized non-profits, they have real trouble getting financing. 
If you're looking at, you know, open market sort of terms 
because the balance sheets of small and midsized non-profits 
are not something that people who----
    Senator Franken. Pretty.
    Mr. Diament. Yes.
    [Laughter.]
    Mr. Diament. Pretty much. I mean, you know, you can--they 
are very much living whether they are secular or sacred they 
are very much living on a wing and a prayer.
    [Laughter.]
    Mr. Diament. On, you know, you can know that your donor is 
going to come through to help you close your budget gap, but 
when you go in for the loan application that doesn't really, 
they don't have a box for that.
    Senator Franken. Right.
    Mr. Diament. Just the last thing I would mention in the 
non-profit sector and certainly in the religious non-profit 
sector to make up for the comment before, I mean, going down 
the road of energy retrofits is both kosher and commendable.
    [Laughter.]
    Mr. Diament. We've seen that in the fact that the EPA 
Energy Star runs a green congregations project which has 
gotten, I think, thousands of churches and synagogues and 
others participating in it. It's not a finance. It's a set of 
webinars and internet tools that you can use to try to 
benchmark your own institution and so on.
    But there's a substantial amount of traffic on that on a 
regular basis because in the non-profit sector folks know that 
every dollar of savings they can squeeze out of their overhead 
budget is--are dollars they can devote to the kinds of social 
welfare and other kinds of programs that they're really in the 
mission to do.
    Senator Franken. Thank you.
    Mr. Nadel? Then we'll go to Mr. Sylvia on the 
weatherization assistance program.
    Mr. Nadel. Right. Just to add to the discussion about 
financing which I agree can be a very useful tool for those 
people who lack the capital.
    But as Mr. Laskey pointed out only a limited number of 
people want to apply to these special programs whether they are 
PACE or what have you. To the extent we can make the 
conventional financing much more accessible for energy 
efficiency. Mr. Molotsky mentioned the SAVE Act and how it 
would incorporate energy efficiency into evaluations. That's 
helpful.
    But another part of the SAVE Act would encourage the 
lenders to offer energy efficiency financing at the time of the 
mortgage.
    Senator Franken. Right.
    Mr. Nadel. You already have someone taking out a loan. Why 
not add the energy efficiency at that point? Likewise in the 
commercial sector the average building gets refinanced every 8, 
10 years, something like that. They vary.
    That's a great time to add in the energy efficiency. Not 
have a special loan, but make energy efficiency part of that.
    Senator Franken. Add it to the refinance.
    Mr. Nadel. Exactly.
    One other thing I'd say is we need creative ways to make it 
much easier for people to participate in these loan programs 
instead of having to go down to the bank and the special 
system.
    Two examples come to mind.
    One is OnBill repayment where the utility arranges for 
capital could actually do a credit check based on whether you 
pay your utility bill or not. Then collect the money as part of 
your bill. It makes it very simple for people.
    A variation on that and I'll use this to pass off to Mr. 
Sylvia. In Massachusetts they have worked with a whole 
coalition of community banks and credit unions to make it very 
simple.
    I'll let him take it from here.
    Senator Franken. Nice segway.
    Mr. Sylvia. Thank you.
    Senator Franken. Beautiful.
    Mr. Nadel. Yes, sorry.
    Mr. Sylvia. Thank you very much, Steve.
    In Massachusetts the experience has been particularly with 
the heat loan program which is a program that is offered in 
conjunction with the utilities that provide our efficiency, 
energy efficiency programs and working with local community 
banks and credit unions and others to provide loans to 
residents and businesses to do energy efficiency work. Over the 
course of the loan program there have been 18,000 loans that 
have been made and over $155 million worth of investments made 
in energy efficiency as a result.
    So this program has been very successful and has had high 
utilization. We had to deal with some of the challenges that 
have been talked about in terms of educating lenders in the 
banking community of the value of energy efficiency. But 
certainly once you get over that hump it's a pretty easy sell. 
In Massachusetts we have a very good model with the heat loan 
program.
    As to the weatherization assistance program from, certainly 
from our perspective at NASEO and more specifically as an 
official for Massachusetts, the weatherization assistance 
program has provided critical support to low income families 
and households so that they are able to provide for their 
families. Comfort, reduced costs, without the weatherization 
assistance program they would, in all likelihood, not be able 
to take advantage of energy efficiency programs or they 
themselves provide the necessary resources to do the types of 
things to reduce their costs to provide a healthy and safe 
environment for their families.
    So from our perspective in Massachusetts using the 
weatherization assistance program has been critically important 
for low income families.
    Senator Franken. Thank you, Mr. Sylvia. Thank you everyone. 
It's been a great discussion today.
    I hope we can move these bills soon as part of the Shaheen/
Portman package on the Floor.
    Thanks again to everybody.
    With that, we will adjourn.
    [Whereupon, at 4:30 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

                                             July 12, 2013,
                 Union of Orthodox Jewish Congregations of America.
Hon. Ron Wyden,
Chairman, Senate Committee on Energy & Natural Resources, Washington.
    Dear Chairman Wyden & Subcommittee Chairman Franken,
    Thank you for the opportunity to testify at the Subcommittee's June 
25 hearing in support of S.717, the Nonprofit Energy Efficiency Act. I 
am writing to respond to the Question for the Record transmitted to me 
by your staff.
    Question 1. Production of energy is not the same as energy 
efficiency, yet the definition of ``energy-efficient improvement'' in 
this bill includes ``an installed measure involving a renewable energy 
generation or heating system, including a solar, photovoltaic, wind, 
geothermal, or biomass system or component of the system.'' Why is 
this?
    Answer. As we discussed at the hearing, S.717 seeks to aid 
nonprofit entities reduce their energy use--and thus their overhead 
costs--by improving the energy efficiency of their buildings. These 
efficiencies can be achieved by replacing outdated HVAC, electrical and 
other systems with newer more efficient ones. It is our understanding 
that a nonprofit's energy usage can also be reduced by installing the 
types of energy systems listed in Section (2)(B)(ii) of S.717 in 
circumstances in which these alternative or renewable energy systems 
are most cost efficient than others. We anticipate that, with the 
assistance of the grants program proposed by S.717--nonprofits will be 
able to make market-informed choices about the most cost effective 
building retrofit they can implement to improve their efficiency and 
reduce their operating costs.
    Thank you again for your interest in and support for this 
bipartisan legislation.

                                                    .Nathan Diament
                                 ______
                                 
      Responses of Alex Laskey to Questions From Senator Murkowski
    Question 1. Federal vs. State Budgets--Why is it appropriate for 
the federal government--which has $16.8 trillion in debt, and 
counting--to give grants to the States, for efficiency, when many of 
them have budgets that are in far better shape?
    Answer. Energy is a national issue: it impacts our national 
economy, environment, and security. If not for energy productivity 
gains since the early 1970s, the United States would need about 50 
percent more energy to deliver today's GDP. However, the U.S. is far 
behind many developed countries in our energy productivity, which 
undermines our competitiveness and leads to hire utility bills for 
businesses and families.
    Energy efficiency is a sound national investment because it pays 
for itself and delivers a healthy return on every taxpayer dollar 
spent. An independent analysis by the Rhodium Group done for the 
Alliance to Save Energy found that doubling energy productivity by 2030 
would provide net savings to Americans of $327 billion per year.
    While some states have made significant investments in energy 
efficiency, others lack the expertise, capacity or resources to develop 
their own energy productivity policies and programs. The Department of 
Energy has experts and best practices that can assist states in meeting 
their energy productivity objectives and can share innovative 
approaches for those looking to do even more.
    Finally, the initiative does not constitute new federal energy 
efficiency spending-it is paid for with an offset from an existing 
program. Therefore, it should have no negative impact on our national 
debt.
    Question 2. Legislative Goal--This bill has a goal of doubling 
electric and thermal energy productivity by the year 2030. How does 
that compare to the past 20 years? How close is the U.S. is projected 
to come to that mark--through 2030--under the current collection of 
codes, standards, regulations, and programs?
    Answer. According to the Energy Information Agency (EIA), energy 
productivity improved by 47 percent between 1993 and 2013. The EIA 
projects a baseline improvement of only 45 percent between 2013 and 
2030-leaving us less than half way toward our goal of doubling energy 
productivity by 2030.
    Question 3. As I understand it, this bill would require States to 
establish a ``statewide baseline of energy use.'' How, exactly, are 
States expected to do that? What are the practical limits on that 
baseline--would the private sector, not to mention private individuals, 
have to report their energy use?
    Answer. Participation in the Race to the Top initiative is entirely 
voluntary, and states that don't opt to participate will not be 
required to establish a baseline or do anything different from what 
they are doing right now. In order to ensure that energy efficiency 
programs stimulated by the Race to the Top initiative actually move the 
needle on energy productivity, states that do choose to participate 
will have to establish the a baseline consisting of the energy use and 
potential resources for calendar year 2010.
    Most state public utility commissions/ regulators will already have 
the data necessary to determine the baseline energy use in 2010. In the 
unlikely event they do not, there will be no need for the private 
sector or private individuals to report energy use, because aggregate 
statewide energy use can be easily determined entirely from the supply 
side.
    States must also develop a plan to determine potential resources as 
of 2010. This is important because it will allow states to identify 
opportunities to cost effectively replace energy generation with energy 
savings. The initiative encourages states to view energy efficiency and 
improvements in energy productivity as an alternative to increased 
energy generation.
                                 ______
                                 
   Responses of Steven Nadel to Questions From Senator Murkowski, on 
                             S.1084, S.1199
    Question 1. This bill seeks to coordinate and streamline efficiency 
programs for schools across federal agencies. It's an admirable goal, 
and something I think we should do more of. But while I am supportive 
of the effort to streamline, it concerns me that we have an 
authorization of ``such sums''. What do you consider to be an 
appropriate level of funding for this legislation? How exactly would 
any appropriated funds be used?
    Answer. ACEEE was not involved in drafting this bill so I would 
suggest you address your question to the bill authors. This said, my 
take is that the funding would be used for staff time and outreach and 
meeting expenses to coordinate among agencies and identify productive 
paths forward. My guess is this might cost a million dollars per year 
or perhaps a little more. S. 1199--The Better Buildings Act-- Steve 
Nadel, ACEEE
    Question 2. In your testimony, you said that the enhanced 
efficiency provisions in S. 1199 would actually save more energy than 
the original Energy Independence and Security Act provision it will 
replace (Sec. 433). Can you elaborate on this point?
    Answer. Through our analysis we found that Sec. 433 would not yield 
as much energy savings as we had expected due to the extent of overlap 
between Sec. 433 and existing provisions already on the books. The 30 
percent below code requirement for new federal buildings set forth in 
Sec. 305 of the Energy Conservation and Production Act as amended, 
coupled with Sec. 431 of the Energy Independence and Security Act of 
2007 which lays out the current energy intensity reduction goals of all 
federal buildings (30 percent below 2003 levels for a similar building, 
as measured by CBECS, by 2015), would significantly limit the 
standalone consumption reductions attributable to Sec. 433. 
Additionally, we assume only 75 percent compliance will be achieved 
because of the challenges associated with implementation that have 
arisen due to of the ambiguous language of Sec. 433.
    When comparing the savings we anticipate would be attributable to 
Sec. 433 with the savings likely to be achieved by S. 1199 we found 
that subjecting major renovations to the same energy consumption 
requirement that new buildings are already subjected to (energy 
consumption 30 percent below model code) by itself results in greater 
cumulative energy savings than what we might expect from Sec. 433 
alone. Our analysis is based on current model codes and does not assume 
future code upgrades. When you add in the even greater savings that 
result from an additional 15 percent improvement in the energy 
intensity of the federal building stock from 2015-2020 we found that S. 
1199 savings would significantly exceed what we would have expected to 
achieve under Sec. 433.
                                 ______
                                 
      Responses of Mark Spurr to Questions From Senator Murkowski
    Question 1. Many of the members of this panel have significant 
concerns about the Department's loan guarantee program, including poor 
funding decisions that have been made in the not-too-distant past. This 
bill would create a new program for local energy infrastructure, and 
reserves $4 billion of the existing loan volume limitation for it. Is 
it really necessary to expand the loan guarantee program? What types of 
local energy infrastructure are not covered by current statutory 
authorities?
    Answer. Rather than expand the program, S.1205 would reform and 
redirect a portion of the existing program. S.1205 represents a reform 
because it focuses on demonstrated, commercial technologies backed by 
long-term contracts, in contrast to innovative businesses which have 
business risks associated with project revenues and expenses. Without 
S.1205, loans can't be made to less-risky commercial projects.
    Congress has provided a total of $60 billion in loan or loan 
guarantee authority ($34.8 billion in loan guarantees for 1703 and $25 
billion for the Advanced Technology Vehicles Manufacturing (AVTM) loan 
program. No loan guarantees have been made under the 1703 program and 
only $8.4 billion in loans have been made in the ATVM program. Of the 
total $51.4 billion in remaining authority, S.1205 would redirect less 
than 8 percent to the S.1205 loan guarantee program.
    The purpose of the proposed S.1205 loan guarantees is to reduce the 
interest rate on loans for local energy infrastructure projects. 
Reducing interest costs is the key to implementing highly efficient and 
resilient energy infrastructure because these technologies, although 
they reduce energy consumption, reduce emissions and increase 
resiliency, tend to have relatively high capital costs.
    Following are some examples of commercial local energy 
infrastructure technologies that are not covered by the statutory 
authority:
Natural gas combined heat and power (CHP)
          CHP provides both electricity and thermal energy in one 
        highly efficient integrated fuel combustion system. There are 
        three main types of commercial natural gas CHP systems: 
        combustion turbines, steam turbines and reciprocating engines.

          CHP can be added to many existing industrial and district 
        energy systems. For example:

   The Texas Medical Center in Houston recently added a 48 
        MegaWatt (MW) natural gas CHP system as well as thermal energy 
        storage (TES) to its existing district heating and cooling 
        systems.
   Broshco Fabricating Products, a ferrous metal fabricator in 
        Mansfield, OH, operates a 4.6 MW natural gas CHP system that 
        generates electricity and hot water to meet building and 
        process heat loads.
   The Medical Center Co. in Cleveland OH wants to add natural 
        gas CHP to supply heat and power as it seeks to phase out use 
        of coal and boost the resilience of its heating, cooling and 
        power supply to educational, cultural and health care 
        institutional customers.
   Arlington County VA, in partnership with a major real estate 
        company and Washington Gas, recently completed a feasibility 
        study and is evaluating financing options for a natural gas CHP 
        district heating and cooling system to serve Crystal City.
Thermal energy storage systems (TES)
          In TES systems, chilled water or ice is produced at night 
        (when power load is low and power is cheaper and cleaner) and 
        stored for use during the following day, thereby reducing peak 
        power demand. TES reduces power demand because it allows 
        cooling to be provided from stored cooling energy rather than 
        running power-intensive chillers.
          TES can be much more extensively deployed, thereby helping 
        manage peak demands on power generation, transmission and 
        distribution.
Biomass
    Biomass CHP or heat-only boilers can convert a wide variety of 
biomass materials to thermal energy and/or power. Common biomass fuels 
include urban waste wood (tree trimmings), sawmill wastes, agricultural 
residues and food processing wastes. Examples include:

   In downtown St. Paul MN a 25 MW CHP system fueled with urban 
        waste wood generates electricity, heating and cooling for most 
        of the downtown.
   Urban waste wood is also the primary fuel for Seattle Steam 
        Co., which supplies steam heating for downtown Seattle.
   University district energy systems are evaluating use of 
        biomass in place of coal as a major heating fuel.
   Many small communities throughout the country which lack 
        natural gas service are considering biomass district heating in 
        order to reduce and stabilize fuel costs, boost local 
        employment and productively use ageing forest resources which 
        have become a significant fire hazard. The heating cost 
        predicament is especially acute in the more than 100 
        communities in Alaska that are only accessible by air or water. 
        Heating oil prices in these communities are among the highest 
        in the nation, exceeding $10 per gallon in 2012.
Industrial waste heat recovery
    Oil refineries, natural gas compressor stations, chemical 
facilities, paper plants, steel mills, cement plants and glass 
manufacturers and other energy intensive industries generate large 
quantities of waste heat.

   Industrial exhaust gases or liquids are no longer useful for 
        the industrial process but are hot enough to provide building 
        space heating and domestic hot water. Recovery of this waste 
        heat requires installation of heat exchangers in the 
        manufacturing plant as well as hot water piping to transport 
        the heat to users.
   Waste heat can also be converted into electricity through 
        backpressure steam turbines or organic rankine cycle generation 
        systems.

Heat recovery chillers
    This equipment, sometimes called heat pump chillers, enables the 
heat that is produced by air conditioning to be recovered and used for 
heating. This saves energy by reducing the need to burn fuel for 
heating. It also saves water because with conventional systems water is 
consumed to dissipate the heat that is extracted from buildings by air 
conditioning systems. Particularly large quantities of heat are 
produced by data centers.
Geothermal direct use
    Over 270 communities, primarily in the western states of ID, NV, 
NM, CA, OR and WA, have been identified with geothermal resources 
located nearby. Directly using geothermal hot water for district 
heating reduces the use of fossil fuels, improves air quality and 
increases energy supply reliability. Downtown Boise ID and the Oregon 
Institute of Technology are among the current users of geothermal 
district heating.
District heating piping to distribute hot water or steam to users
    Although in many circumstances the district heating piping is 
already installed, in some projects it will be necessary to install an 
underground closed loop piping system to supply hot water to buildings 
and return the cooled water to the plant to be re-heated. In expansion 
of an existing steam district heating system, steam supply piping would 
be installed with a return piping system for condensate.
District cooling piping to distribute chilled water to users
    Similarly, in a district cooling system, chilled water is pumped 
through supply piping to absorb heat from buildings. The water is then 
returned to the plant to be re-chilled.
    Question 2. In the wake of high-profile failures like Solyndra, 
Abound Solar, and Beacon Power, many people believe that the Loan 
Guarantee Program should be abolished, or at the very least, 
significantly reformed. Do you agree that reforms are needed so that 
taxpayers are not left on the hook for business failures? Please 
explain your answer.
    Answer. As the committee is aware, the Solyndra loan guarantee was 
made under Section 1705, a temporary loan guarantee program for rapid 
deployment of projects as part of the American Recovery and 
Reinvestment Act of 2009. The 1705 authority is now expired. S.1205 
will better protect taxpayer dollars because unlike 1703 or 1705 it is 
focused on proven technologies that have been tested and are 
commercially available. As discussed above, S.1205 would reform and re-
direct less than 8 percent of the authorized loan guarantee authority 
to proven, commercial technologies backed by long-term contracts for 
the thermal and/or electric energy produced.
    With S.1205, the federal government can play an important and 
appropriate role in reducing energy waste and increasing energy supply 
resiliency: leveraging the credit of the federal government to reduce 
interest costs and thereby facilitate the implementation of energy 
infrastructure that captures and productively uses otherwise-wasted 
heat or other local sources of energy.
    Question 3. This bill appears to continue the practice of using 
taxpayer dollars to cover the credit subsidy for loan guarantees. Do 
you believe it is appropriate to ask taxpayers to foot the bill for 
credit subsidy for these projects?
    Answer. S.1205 provides the opportunity to use funds that have 
already been appropriated to facilitate implementation of less-risky 
projects, thereby reducing risks for taxpayers. S.1205 would use funds 
already appropriated for 1703 to the extent that they are available. To 
the extent that such alreadyappropriated funds are not available, the 
costs of guarantees under S.1205 would be covered through fees assessed 
to borrowers. We believe that the use of a limited amount of 
alreadyappropriated funds can make a crucial difference in reducing 
borrowing costs, particularly for smaller projects being undertaken by 
cities and universities. In these smaller projects, loan guarantee 
transaction costs are relatively higher than for large projects, such 
as nuclear power plants or carbon sequestration projects.
    Question 4. This bill has an authorization for ``technical 
assistance,'' including assistance with utility interconnection, 
negotiation of power and fuel contracts, permitting and siting issues, 
marketing and contract negotiation, business planning and financial 
analysis and engineering design. It seems to me that these services 
would be better handled by the private sector. Even so, it's my 
understanding that the Clean Energy Application Center within DOE 
already offers some of these services. Is a new authorization 
necessary? Why would we need the additional technical assistance? What 
is needed that the existing center does not already provide?
    Answer. We anticipate that most of the technical assistance would 
be provided by the private sector. What is needed is additional funding 
to provide the assistance called for in S.1205. The DOE can then 
procure the appropriate support from the private sector and/or the 
Clean Energy Application Centers (CEACs) (which we understand will be 
rebranded the Technical Assistance Program next year). The CEACs have 
developed expertise in screening tools to assist in the early stage 
evaluation of the economic viability of CHP/district energy projects. 
If a project is feasible based on an initial assessment, in-depth 
feasibility studies, engineering, business assessment and financial 
analysis is required before capital financing can be sought. It is in 
these next stages of more robust technical assistance that private 
sector support would be facilitated by the technical assistance program 
established by S.1205.
    An example of a situation where S.1205 technical assistance would 
be important is in Ely, MN. Preliminary studies have been done which 
have identified a range of opportunities to use biomass for district 
heating in this small community. Ely is representative of the types of 
communities described above: they lack natural gas service and are 
considering biomass district heating in order to reduce and stabilize 
fuel costs, boost local employment and productively use ageing forest 
resources which have become a significant fire hazard. However, they 
lack the funds to carry out the additional studies and engineering work 
necessary to make the project ready for financing. S.1205 technical 
assistance would make the crucial difference.
                                 ______
                                 
      Responses of Mark Sylvia to Questions From Senator Murkowski
    Question 1. As I understand it, these programs currently exist and 
are functioning successfully on the state or even the local level. Is 
this accurate? If so, why shouldn't they remain state or local level 
programs? Is there anything stopping states, many of which have budget 
situations that are less dire than what we face here, from doing this 
on their own? If state programs are working, why is there a need for 
legislation to authorize a new program at the Department of Energy?
    Production of energy is not the same as energy efficiency, yet the 
definition of an ``energy-efficient upgrade'' includes the 
``installation or improvement of renewable energy for heating or 
electricity generation serving a residential building carried out in 
conjunction with an energy efficiency project or activity.'' Why is 
this?
    Answer. While state and local programs are successful in the area, 
there is always room for improvement as programs evolve over time. As 
discussed in the testimony, there are examples of programs and policies 
that work across the United States. We provided a number of examples in 
the testimony and would be happy to provide other examples for the 
record.
    This does not mean that there is not a role for federal legislation 
or the federal government in encouraging energy efficiency financing 
programs through the loan vehicle propounded in the bill. There remain 
a wide variety of barriers to successful implementation of energy 
efficiency financing programs. Reducing the costs of borrowing, using 
limited federal funds as a ``seed'' fund to leverage private and state 
funding, and expanding consumer-friendly financing options are all 
areas where a state-federal partnership can be useful. The State Energy 
Program is a flexible model, which utilizes this type of approach. S. 
1200 is a vehicle to address the barriers identified and provides 
limited federal funding for stated objectives.
    Many state and local governments (in addition to utilities and 
other entities) are running effective programs designed to make it 
easier for homeowners and tenants to finance energy efficiency 
upgrades. S.1200 is designed to support those programs by providing 
funding that states, local governments, and others can use to re-
capitalize an existing, successful program that has depleted its 
initial capital, to capitalize the expansion of existing, successful 
programs, and to capitalize new programs that states and local 
governments believe will effectively meet the needs of their own 
communities.
    The federal program should accommodate the reality on the ground, 
which is that many homeowners integrate energy efficiency and renewable 
energy projects. The core of S.1200 is energy efficiency, but it can 
accommodate homeowners and residents that are integrating energy 
efficiency and renewable energy upgrades. We are happy to answer any 
further questions on this important legislation.
    Question 2. Of all the topics the Department of Energy's Inspector 
General has written about in the wake of the 2009 stimulus, 
weatherization has to be one of the most frequent. We've seen report 
after report about waste, fraud, and abuse within the program, after $5 
billion was awarded to it. Does this bill take any concrete steps--
aside from new ``standards''--to ensure that taxpayer dollars aren't 
wasted like we've seen in recent years?
    Answer. The Weatherization Assistance Program has been, and 
remains, a very successful state-federal initiative targeting a 
specific population of low-income Americans, as well as veterans, the 
disabled, and the elderly, who fit defined economic criteria. While the 
Inspector General for DOE and other agencies perform an important 
function, we would expect that any federal or state program, no matter 
how well run or well intentioned, will have some degree of waste. This 
is not a rationale for eliminating the programs, but another reason for 
continuous improvements and updates. The proposed legislation helps to 
address these issues.
    The states, the federal government, local delivery providers, and 
others, have learned from mistakes and made positive changes in order 
to ensure that Weatherization is improving over time. In fact, many of 
the shortcomings identified by the IG, however limited, were found 
through the regular post-project audit process conducted by the state 
and the providers. These problems were later ``identified'' by the IG; 
though they had already been corrected. The states and DOE take their 
responsibilities to be good stewards of funding very seriously. In our 
experience, this has not been a partisan issue. To the extent that 
problems are found, we have worked to correct them. In addition to the 
changes included in the reauthorization bill, if the committee has 
additional suggestions or recommendations, we would certainly attempt 
to address them as expeditiously as possible. Overall, the program is 
making a significant difference in Americans lives.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

Statement of Steven Nadel, Executive Director, American Council for an 
          Energy-Efficient Economy (ACEEE), (revised version)
Summary
    This hearing is on nine energy efficiency bills that are potential 
amendments to S. 761, a bill endorsed by the full Senate Energy 
Committee that may soon reach the Senate floor. ACEEE strongly supports 
S. 761 and also supports the nine bills before us, although for one 
bill our support is contingent on a few modifications. In addition, I 
discuss several other possible amendments, most of which we support but 
one of which could be a backward step.
    ACEEE has conducted a preliminary energy savings analysis of S. 761 
and many of the potential amendments. Overall, we estimate that S. 761, 
together with all the amendments we support, will reduce U.S. energy 
use by over 15 quadrillion Btu's over the 2014-2030 period. This is 
nearly as much energy as will be used by the state of Oregon over this 
period. Saving this much energy will benefit our economy and our 
environment and we urge the Senate to adopt S. 761 and the other bills 
I discuss, but to avoid ``backward steps'' that lack broad support.
Introduction
    My name is Steven Nadel and I am the Executive Director of the 
American Council for an Energy-Efficient Economy (ACEEE), a non-profit 
organization that acts as a catalyst to advance energy efficiency 
policies, programs, technologies, investments, and behavior. We were 
formed in 1980 by energy researchers and celebrated our 30th 
anniversary in 2010. Personally I have been involved in energy 
efficiency issues since the late-1970s and have testified multiple 
times before this Committee and its Subcommittees as well as before the 
House Energy and Commerce Committee.
    Today's hearing is on nine bills that are potential amendments to 
the Energy Savings and Industrial Competitiveness Act of 2013 (S. 761) 
that was previously reported out of the Senate Energy and Natural 
Resources Committee on a 19-3 vote. ACEEE strongly supports S. 761 and 
urges the Senate leadership to schedule this bill for floor time as 
soon as possible.
    ACEEE has a long history of estimating the energy and economic 
impacts of energy efficiency legislation, going back to the 1980s. For 
example, last year we prepared an analysis on the 2012 Shaheen-Portman 
bill.\1\ We have begun an analysis of this year's Shaheen-Portman bill 
as well as an analysis of most of the amendments, which I discuss later 
in my testimony. At this point we have preliminary estimates of energy 
savings, but are only just starting our analysis of micro- or macro-
economic impacts. Our preliminary analysis finds that the 2013 Shaheen-
Portman bill, as it is currently drafted, would save about 9.5 
quadrillion Btu's (``quads'') of energy over the 2014-2030 period. As a 
point of reference, the United States uses about 100 quads annually. 
The amendments we support and that I discuss below could add 6.3 
additional quads of energy savings, for a combined total of 15.8 quads. 
This is more energy than would be used by the state of Utah or Nebraska 
over this period, and nearly as much energy as would be used by the 
state of Oregon (assuming annual use stays constant at current levels). 
Savings start modestly and grow steadily over time, as illustrated in 
Figure 1.* Near the end of my testimony I will provide additional 
information on our analysis including energy savings by provision.
---------------------------------------------------------------------------
    \1\ Farley et al. 2012. Impacts of Energy Efficiency Provisions in 
Pending Senate Energy Efficiency Bills. American Council for an Energy-
Efficient Economy. http://aceee.org/files/pdf/white-paper/shaheen-
portman.pdf
    * All Figures have been retained in subcommittee files.
---------------------------------------------------------------------------
    Of the nine bills before us today, ACEEE supports all of these 
bills, although in one case our support is contingent on a few 
modifications. In the next section of my testimony I discuss each of 
these bills, and then touch on several additional potential amendments 
that may be introduced when S. 761 reaches the Senate floor.
Bills We Supports
S. 1206--Benchmarking
    S. 1206, introduced by Senator Franken, would promote benchmarking 
of large commercial and multifamily buildings. Building benchmarking is 
a process that allows building owners to assess the energy use of their 
buildings and compare them to otherwise similar buildings. This process 
helps to identify buildings that would most benefit from building 
upgrades. The federal ENERGY STAR Buildings program has encouraged 
benchmarking for many years and U.S. Environmental Protection Agency 
estimates that this program has benchmarked more than 185 million 
square feet of U.S. commercial building floor area, and resulted in 
average energy savings of about 7 percent in these buildings each year. 
However, the vast majority of the existing commercial building stock 
has not been benchmarked. This provision would encourage benchmarking 
of additional buildings by making whole building energy use data more 
readily available to building owners and promoting benchmarking in a 
variety of ways. This provision only applies to commercial buildings 
and multifamily residential buildings. Single-family homes and small 
buildings that house several families are not included.
    Specific provisions in the bill call for:

          1. Benchmarking additional federal buildings. Under existing 
        federal law, federally-owned buildings must be benchmarked but 
        most federally-leased buildings are not included in this 
        requirement. This provision requires benchmarking of leased 
        buildings where practical, addressing a gap in current law.
          2. A study by the U.S. Department of Energy (DOE) on best 
        practices for benchmarking, energy use data aggregation, and 
        energy use disclosure. Many cities and some states are 
        considering policies in these areas and this study would 
        provide guidance on approaches that work and those that have 
        been problematic so that new policies can take advantage of 
        these lessons.
          3. Combining existing public federal buildings databases and 
        facilitating consolidation of other existing public buildings 
        databases to make reporting easier for building owners and 
        identification of best practices easier for analysts.
          4. Establishing a small competitive grant program for 
        utilities, their partners, and utility regulators to make whole 
        building energy use data available to building owners. This 
        includes aggregated tenant consumption so that whole buildings 
        can be benchmarked. Data on individual tenants would not be 
        provided in order to protect privacy. This provision has been 
        extensively vetted with the real estate industry and has been 
        significantly modified to address their views.
            S. 1191--Better Buildings Act (Tenant Star)
    S. 1191, introduced by Senators Bennet and Ayote, would encourage 
landlords and tenants to cooperate on energy efficiency. Presently most 
leased buildings suffer from a ``split incentive'' problem. Tenants pay 
energy bills but are usually not in buildings long enough to justify 
making energy-saving capital investments. Building owners make capital 
investments but since tenants pay the energy costs, they have little 
incentive to invest in energy efficiency upgrades. This bill would help 
address these problems by:

          1. Identifying best practices for energy efficiency during 
        tenant ``fit-outs''--the improvements to a space tenants make 
        between when they sign a lease and when they move in.
          2. Establishing a new voluntary ``Tenant Star'' program to 
        recognize tenants whose energy performance is substantially 
        above average, complementing the existing whole building ENERGY 
        STAR Buildings program.
          3. Encouraging ``energy-aligned'' federal leasing by having 
        the General Services Administration develop model leasing 
        provisions that would spur cooperation on energy savings 
        between federal tenants and building owners. Such leases can 
        reduce costs to federal agencies and also serve as a model for 
        leases by non-federal tenants.

    Another witness at this hearing will be discussing this bill in 
depth so I will keep my comments brief.
            S. 1200--Residential Energy Savings Act of 2013 
                    (Residential Financing)
    S. 1200, introduced by Senators Sanders and Wyden, would establish 
a pilot program for state loans for residential building energy 
efficiency upgrades. Many homeowners lack the capital to make energy 
efficiency investments and this bill would assist states and other 
eligible entities in providing this capital at attractive terms, often 
working with banks and other financial institutions. The bill would 
have DOE make loans to states, local governments, utilities, and other 
eligible entities who would use the funds to recapitalize, expand, or 
begin energy efficiency loan programs. The loans would be repaid with 
interest, providing for a high degree of cost recovery. States and 
other eligible entities would apply for funding and DOE would evaluate 
these applications based on a variety of criteria in the bill designed 
to encourage best practice program design. For example, the bill calls 
for consumer repayments to be ``consumer friendly'' and would encourage 
innovative approaches such as on-bill repayment. Since the federal cost 
of capital is lower than the cost of capital for many eligible 
entities, the program could provide a moderate-cost source of loan 
capital. To the extent states and other eligible entities could provide 
or raise additional funds for such activities as loan loss reserves, 
interest rates that are very attractive to consumers may be possible. 
This provision is a useful complement to the commercial building loan 
program now in S. 761.
            S. 1209--Race to the Top
    S. 1209, introduced by Senators Warner and Manchin, would establish 
a ``race-to-the-top'' program for states to spur innovative energy 
efficiency efforts, just as the program by the same name at the 
Department of Education has spurred innovation in that field. The Race 
to the Top initiative was a top recommendation of the Energy 2030 
initiative led by the Alliance to Save Energy, so I will leave it to 
their witness to provide more details on this bill.
            S. 1084--School Retrofits
    S. 1084, introduced by Senators Udall and Collins, would have DOE 
coordinate federal efforts to help school systems, including K-12 and 
higher education, make their buildings more efficient. Currently there 
is a patchwork of efforts by various departments that are not well 
coordinated. We believe this is a useful objective that will make it 
easier for school systems to retrofit their buildings.
            S. 1020--All of the Above Federal Energy Conservation Act
    S. 1020, introduced by Senators Hoeven and Manchin, would repeal 
Section 433 of the Energy Independence and Security Act of 2007 and 
replace it with two new provisions that would:

          1. Extend and improve energy performance requirements for 
        federal buildings. Under current law these requirements call 
        for reducing energy use of federal buildings by 30 percent by 
        2015 relative to a fiscal year 2003 base. The new provision 
        would extend this requirement to a 45 percent reduction by 
        2020.
          2. Extend the federal energy efficiency performance standards 
        that now apply to new construction to also include alterations. 
        These standards call for performance levels 30 percent better 
        than those in the most recent model building code for 
        commercial buildings established by the American Society of 
        Heating, Refrigerating and Air-conditioning Engineers (ASHRAE).

    We support this bill because, as currently written, Section 433 is 
not workable and because, according to our analysis, the two new 
provisions would result in larger energy savings than repeal of Section 
433 would lose. The current Section 433 is not very workable because in 
its present form it discourages investments in long-term energy savings 
contracts and in combined heat and power systems. This was not its 
intent. Regarding energy savings, our analysis is summarized near the 
end of my testimony. We believe that Section 433 had a laudable goal--
to reduce dependence on fossil fuels. We would prefer that Section 433 
be rewritten to be more workable rather than outright repealed, but the 
legislative process requires compromise and we believe that S. 1020 is 
a workable compromise.
    We also support the following two bills but recognize that they 
have significant costs and therefore to move forward will likely need 
reasonable funding offsets.
            S. 1213--WAP and SEP Reauthorization
    S. 1213, introduced by Senators Coons, Collins and Reed, 
reauthorizes the low-income Weatherization Assistance Program (WAP) and 
the State Energy Program (SEP). WAP has been the key federal program to 
help low-income households to reduce their energy bills. It makes sense 
to help these households reduce their energy bills on an on-going 
basis, rather than just help to pay bills through the federal Fuel 
Assistance program (e.g., recall the old proverb, ``Give a man a fish, 
and you feed him for a day; show him how to catch fish, and you feed 
him for a lifetime''). The WAP program has been very successful--the 
last ``meta-evaluation'' on the program found average energy savings of 
more than 20 percent.\2\ The new legislation includes several useful 
improvements to the current program--a requirement that DOE develop 
minimum professional standards for WAP contractors and workers, a 
requirement for an independent quality assurance program, and a new 
competitive leveraged grant program for non-profit agencies that have a 
track record of success in serving low-income communities. This bill 
will also reauthorize the SEP program, which has been a key program 
funding State Energy Offices in all states, including some states where 
this is the only funding. Another witness at this hearing will discuss 
these programs in more depth.
---------------------------------------------------------------------------
    \2\  See Schweitzer, Martin. 2005. Estimating the National Effects 
of the U.S. Department of Energy's Weatherization Assistance Program 
with State Level Data: A Meta-Evaluation Using Data from 1993-2005. Oak 
Ridge National Laboratory. http://weatherization.ornl.gov/pdfs/
ORNL_CON-493.pdf.
---------------------------------------------------------------------------
            S. 1205--Local Energy Supply and Resiliency Act
    S. 1205, proposed by Senator Franken, is intended to enable energy 
efficiency and renewable energy projects by addressing market barriers 
for both the planning and financing of district energy and waste energy 
recovery projects. From an efficiency perspective, promoting district 
energy projects is important in that the aggregation of thermal loads 
creates opportunities for expanded combined heat and power, and 
implementing thermal systems at scale can improve efficiency and be 
responsive to electric system demands. In addition, waste energy 
recovery projects offer the opportunity to reduce electricity and 
fossil fuel requirements needed to meet local energy needs. The focus 
of this provision on the valuation of thermal energy represents an 
important precedent. ACEEE has not yet estimated the energy savings 
opportunities from this provision, but intends to analyze the provision 
in the coming weeks.
Bill We Support with Modifications
            S. 717--Non-Profit Energy Efficiency Act
    S. 717, introduced by Senators Klobuchar and Hoeven, would help 
non-profit organizations save energy, a laudable goal. It provides 
matching grants, up to a cap, so that the non-profit organizations 
themselves will have to provide a significant contribution. In general 
we find this a useful bill. We are troubled, however, by the proposal 
to offset this bill with funding from the Building Technologies Program 
at DOE, an important program with a budget of only $220 million for 
this fiscal year. The Buildings Technology Program is working on 
developing and popularizing a variety of new and cost-effective energy-
saving technologies and practices. A cut of $50 million in this program 
would be devastating. From our research, spending $50 million on the 
Building Technology Program provides a higher return on the federal 
investment than would be provided by spending the same money on 
retrofits using conventional technologies in a narrow subset of the 
building sector. To gain our support, this bill would need to be funded 
using an alternative offset.
    In addition, we suggest a few other modifications. First, we 
suggest adding two criteria by which to prioritize grants: (1) the 
percentage of funds leveraged from other sources (e.g., a grant for 25 
percent of the cost would receive priority over one for 50 percent of 
the cost); and (2) the financial need of the non-profit (e.g., poor 
non-profits should have priority over those with large available 
resources). Second, the language on eligible measures is probably too 
broad as it appears to include items whose primary purpose is not 
saving energy.\3\
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    \3\ Specifically, on page 2, lines 17-20, we recommend deleting 
``electrical wiring'' (on lines 17 and 19) and ``plumbing, sewage'' (on 
line 18). Likewise, on page 3, lines 9-10, ``modernize'' should be 
deleted. If the primary purpose of a measure is improving energy 
efficiency, the remaining language on p. 3, lines 9-12 should be 
sufficient.
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Additional Useful Potential Amendments to S. 761
    In addition to the bills that are formally part of this hearing, we 
wish to briefly mention several other likely amendments to S. 761 that 
we support as follows:
            S. 1106--Sensible Accounting to Value Energy Act (SAVE)
    S. 1106 was recently introduced by Senators Bennet and Isakson and 
has been referred to the Banking Committee. The bill would encourage 
energy efficiency upgrades to homes by: (1) encouraging efficiency 
improvements at the time of purchase; and (2) recognizing the value of 
efficiency upgrades, and the operating cost savings they provide, when 
buildings are assessed and qualification for mortgages determined. 
Specifically, this bill instructs the Department of Housing and Urban 
Development (HUD) to issue updated underwriting and appraisal 
guidelines for borrowers who submit a qualified home energy report. The 
bill would cover any loan issued, insured, purchased, or securitized by 
the Federal Housing Administration and other federal mortgage loan 
insurance agencies or their successors. These agencies collectively 
guarantee more than 90 percent of all new loans. The bill has three 
components:

   Debt-to-Income Adjustment--Instructs lenders to account for 
        expected energy cost savings as an offset to other expenses in 
        the debt-to-income qualifying ratio, which tests the borrower's 
        ability to afford monthly mortgage payments. If no qualified 
        energy report is provided, the DTI will not be adjusted.
   Loan-to-Value Adjustment--Instructs lenders to add the 
        present value of expected energy savings when calculating the 
        loan-to-value ratio, where not already accounted for in the 
        home's appraisal report. If no qualified energy report is 
        provided, the valuation will not be adjusted.
   Consumer Information--Instructs lenders to inform loan 
        applicants of the costs and benefits of energy efficiency and 
        resources for improving the energy efficiency of a home.

    The bill does not add to the current deficit or rely on taxes or 
fees; instead it removes current obstacles holding back more efficient 
building and remodeling of our homes. A recent study of more than 
70,000 mortgages found that mortgages on energy-efficient homes were 32 
percent less likely to be in default.\4\ This study provides strong 
evidence that the SAVE Act is good credit policy and would help protect 
lenders and taxpayers from the risk of mortgage default. The bill 
removes an impediment to home energy efficiency from federal mortgage 
policy by recognizing how energy efficiency can increase home value and 
reduce operating costs, freeing up more income to pay a mortgage. In 
addition, the bill would allow American homeowners to finance cost-
effective home energy upgrades as part of a traditional mortgage, 
improving access to the comfort and money-saving benefits of efficiency 
without increasing the cost of homeownership. The result is improved 
and lower cost access to capital to invest in making homes better.
---------------------------------------------------------------------------
    \4\ Sahadi et al. 2013. Home Energy Efficiency and Mortgage Risks. 
Institute for Market Transformation. http://www.imt.org/resources/
detail/home-energy-efficiency-and-mortgage-risks.
---------------------------------------------------------------------------
    The SAVE Act has support from a broad, diverse coalition including 
the National Association of Manufacturers, U.S. Chamber of Commerce, 
National Association of Realtors, National Association of Home 
Builders, ACEEE, the Institute for Market Transformation, the Alliance 
to Save Energy, and the Natural Resources Defense Council.
            Manchin Power Plant Efficiency
    This bill has not been introduced yet but would direct DOE to 
conduct a study on opportunities to improve the efficiency of existing 
electrical generation plants. There are significant opportunities to 
improve existing power plants\5\ and this bill would help identify the 
most promising approaches, helping power plant owners and regulators to 
identify cost-effective opportunities to improve their plants.
---------------------------------------------------------------------------
    \5\ For example, the Electric Power Research Institute hosted a 
conference on this topic in February, 2013. See http://mydocs.epri.com/
docs/PublicMeetingMaterials/1202/epri/call__to__papers.pdf.
---------------------------------------------------------------------------
            H.R. 540--Energy Efficient Government Technology Act
    This bill was introduced in the House by Representatives Eshoo and 
Rogers. We are aware of several senators who plan to shortly introduce 
a similar bill. The bill would encourage the use of information and 
communication technologies to save energy and would also assist efforts 
to improve the energy efficiency of data centers. The bill would expand 
upon the guidance in section 401 of S. 761 and also ``turbo-charge'' 
section 453 of the Energy Independence and Security Act of 2007, 
dealing with energy-efficient data centers and cloud computing. Both of 
these provisions would take advantage of recent advances in information 
and communications technologies to increase opportunities for saving 
energy, including reducing energy required to run data centers. To 
provide one example of these opportunities, the Natural Resources 
Defense Council and an ``intelligent efficiency'' service provider 
worked with the owner of several already-efficient Washington, D.C. 
office buildings and achieved 13 percent average energy savings in the 
first year by monitoring building meter data, identifying problems, and 
making actionable suggestions to building operations staff.\6\
---------------------------------------------------------------------------
    \6\ Report forthcoming shortly.
---------------------------------------------------------------------------
            Use of Federal Disaster Relief and Emergency Assistance for 
                    Energy-Efficient Products and Services
    Senator Gillibrand is now developing a bill to authorize and 
encourage the use of efficient products and services when buildings and 
other structures need to be replaced following a disaster. Under 
current law, if the old building was inefficient, disaster funds cannot 
be used to replace it with a more efficient building, which just 
perpetuates inefficiency. The proposed bill will specifically authorize 
acquisition of efficient equipment that has been screened by the ENERGY 
STAR or Federal Energy Management Program, or efficient buildings that 
meet national model building codes.
            Water Efficiency
    S. 761 is focused on energy efficiency, but in a number of places 
the term ``and water'' can and should be added to also encourage water 
efficiency. Using water more efficiently saves energy by reducing 
energy used for water and waste water pumping and treatment. Specific 
suggestions have been forwarded to Senators Shaheen and Portman by the 
Alliance for Water Efficiency and we hope that some of these 
suggestions can be included in a managers' amendment to S. 761.
Potential ``Backward Steps'' on Energy Efficiency
    In addition to all of the above amendments which we generally 
support, we have heard about a few amendments that have been drafted 
but not introduced that could reduce energy efficiency and increase 
energy use.
    First, we are concerned about a provision developed by the National 
Rural Electric Cooperative Association (NRECA) to establish new 
efficiency standards for ``grid-enabled'' electric water heaters that 
will use substantially more energy than water heaters that meet a 
federal efficiency standard that will go into effect in 2015. NRECA 
wants to allow electric coops to promote off-peak electric water 
heating and to use other demand response techniques. While we are 
hopeful we can work something out with them, their initial draft has 
multiple problems and we strongly oppose its adoption. DOE also 
understands NRECA's concern and is working on a waiver to the standard 
for the appropriate use of electric water heaters in demand response 
programs. DOE's initial proposal had some problems, but NRECA and 
others heavily commented on the DOE proposal and DOE is now working to 
address these comments. While we will work hard to reach an agreement 
with NRECA, if those discussions do not succeed, we recommend that 
instead of dictating a solution that has the support of only one set of 
parties to this proceeding, Congress should instead include a provision 
to direct DOE to make a decision and provide a deadline for DOE to make 
such a decision.
    There is also a potentially troubling amendment dealing with the 
Leadership in Energy and Environmental Design program (LEED), a 
voluntary ``green building'' certification program. Fortunately, we 
understand that negotiations are ongoing between the interested parties 
and we hope that a reasonable compromise can be found.
Energy Savings from these Provisions
    As discussed at the beginning of my testimony, ACEEE has conducted 
a preliminary analysis of the energy savings from S. 761 and most of 
the bills and provisions discussed in my testimony. In compiling these 
estimates, we have made informed assumptions on their impacts. For 
example, where appropriations are required, given the tight federal 
budget, we assume that full authorizations will not be funded and 
instead we assume that the appropriation is half of the authorization. 
Our savings estimates are summarized in Table 1. Table 1 lists annual 
savings in 2020 and 2030 as well as cumulative savings over the 2014-
2030 period (e.g., the sum of annual savings for each year over this 
period). The largest savings, in order, come from Section 101 of S. 761 
(on building codes), S. 1106 (the SAVE Act), improving the efficiency 
of existing power plants (Manchin), and Section 311 of S. 761 
(industrial efficiency). 


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Overall, the savings from the provisions we support are roughly the 
same as those from last year's version of Shaheen-Portman. Some 
sections that were included in last year's version of this bill have 
changed or been dropped, and we now have one year less to accrue 
savings before the 2030 end-point in our analysis. Also, we revised 
some of our earlier estimates based on updated data. Furthermore, none 
of the amendments we analyzed this year were in last year's bill.
    In last year's analysis we estimated that the Shaheen-Portman bill 
would generate nearly $60 billion in net consumer savings (i.e., 
savings minus costs) and would support nearly 160,000 net jobs by 2030. 
Since the energy savings from the new bill with amendments are nearly 
the same, we would expect similar economic impacts in the new bill as 
in the old. We will publish a detailed report when we complete our 
analysis.
    We are aware that S. 1020 (``repeal and replace'') has attracted 
much attention so we paid special attention in our preliminary analysis 
to that section of that bill. We found that the fossil fuel energy 
savings achieved as a result of the implementation of Section 433 of 
the Energy Independence and Security Act of 2007 (EISA) would be less 
than intended when accounting for other, existing requirements 
applicable to new and renovated federal buildings. New federal 
buildings are already required by Section 305 of the Energy 
Conservation and Production Act to operate at 30 percent below the 
energy consumption levels of applicable building code. In addition, 
there is an existing requirement in Section 431 of EISA for a reduction 
of overall energy intensity of federal buildings by 30 percent in 2015. 
The benefit to new and renovated federal buildings from these two 
requirements effectively reduces the impact of Section 433 by roughly 
50-80 percent annually. It is also important to note that these reduced 
impacts are also due to some drafting problems with Section 433 that 
has hindered its implementation; recognizing this, we assume that 
Section 433 would ultimately only achieve 75 percent of its objective 
and not 100 percent. If S. 1020 is adopted, it would extend the 
existing 30 percent below code requirement for new buildings to all 
buildings undergoing major renovations. The energy savings from this 
provision, when paired with energy savings from a proposed increase in 
the energy intensity target for all federal buildings to 45 percent by 
2020, would exceed any savings gap from repeal of Section 433. Together 
these two provisions could save approximately 0.03 quads more than 
Section 433 would have in both 2020 and 2030, with an estimated total 
cumulative additional savings of about 0.4 quads over the 2014-2030 
period.
Conclusion
    ACEEE believes that Energy Savings and Industrial Competitiveness 
Act of 2013 (S. 761) would be an important step toward improving the 
energy efficiency of the U.S. economy. All of the bills before us 
today, as well as many of the additional amendments that may be 
considered, would add to the energy efficiency savings achieved. We 
support:
   S. 1206--Benchmarking
   S. 1191--Better Buildings Act (Tenant Star)
   S. 1200--Residential Energy Savings Act of 2013 (Residential 
        Financing)
   S. 1209--Race to the Top
   S. 1084--School Retrofits
   S. 1020--All of the Above Federal Energy Conservation Act
   S. 1213--WAP and SEP Reauthorization
   S. 1205--Local Energy Supply and Resiliency Act
   S. 717--Non-Profit Energy Efficiency Act provided our 
        recommended modifications are made
   S. 1106--Sensible Accounting to Value Energy Act (SAVE)
   Senator Manchin's Power Plant Efficiency provision
   H.R. 540--Energy Efficient Government Technology Act
   Senator Gillibrand's provision on Use of Federal Disaster 
        Relief and Emergency Assistance for Energy-Efficient Products 
        and Services
   Adding Water Efficiency to S. 761 in appropriate places

    On the other hand, a potential amendment supported by NRECA on 
water heater efficiency standards is a potential ``backward step'' that 
could make enactment of energy efficiency legislation difficult.
    Overall, we estimate that S. 761, together with all the amendments 
we support, will reduce U.S. energy use by more than 15 quadrillion 
Btu's over the 2014-2030 period. This is nearly as much energy as will 
be used by the state of Oregon over this period. Saving this much 
energy will benefit our economy and our environment and we urge the 
Senate to adopt S. 761 and the other bills I have discussed, but to 
avoid ``backward steps'' that lack broad support.
    This concludes my testimony. Thank you for the opportunity to 
present these views.
                                 ______
                                 
                                  American Civil Liberties,
                                                     June 25, 2013.
Hon. Al Franken
Chairman, Subcommittee on Energy and Natural Resources, 304 Dirksen 
        Senate Office Building, Washington, DC.
Hon. James E. Risch,
Ranking Member, Subcommittee on Energy, Committee on Energy and Natural 
        Resources, 304 Dirksen Senate Office Building, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch:
    We, the undersigned organizations, write to express our concerns 
about S. 717, ``the Nonprofit Energy Efficiency Act,'' as it is 
currently written. Although we do not object to the creation of a 
program that awards grants to nonprofit organizations for the purpose 
of retrofitting nonprofit buildings with energy-efficiency 
improvements--indeed some of us would actively support such a program--
we do object to providing those grants to ``houses of worship.'' All 
programs funded by Congress must adhere to the Establishment Clause of 
the U.S. Constitution, which has been the foundation of religious 
liberty in our country for over two hundred years. S. 717, in its 
current form, however, cannot meet that demand.
    Longstanding Supreme Court precedent\1\ firmly establishes that 
``the State may not erect buildings in which religious activities are 
to take place'' and ``it may not maintain such buildings or renovate 
them.''\2\ This bedrock constitutional principle remains controlling 
law. The Supreme Court has long maintained that direct money grants 
create ``special Establishment Clause dangers.''\3\
---------------------------------------------------------------------------
    \1\ Tilton v. Richardson, 403 U.S. 672 (1971) (holding unanimously 
that a government subsidy used to construct buildings at colleges and 
universities was constitutional only if the buildings could never be 
used for religious activities); Hunt v. McNair, 413 U.S. 734 (1973) 
(upholding issuance of revenue bonds to finance the construction and 
renovation of facilities because the law included a condition barring 
government-financed buildings from being used for religious worship or 
instruction); Committee for Public Education v. Nyquist, 413 U.S. 756 
(1973).
    \2\ Nyquist, 413 U.S. at 777 (emphasis added).
    \3\ Mitchell v. Helms, 530 U.S. 793, 819 (1999) (quoting 
Rosenberger v. Rector and Visitors of Univ. of Va., 515 U.S. 819, 842 
(1995)) (Thomas, J., plurality opinion); see also id. at 856 (O'Connor, 
J., controlling and concurring opinion) (describing Tilton as striking 
down the grant statute because it lacked a ``secular content 
requirement'').
---------------------------------------------------------------------------
    For nearly four decades, Congress has also consistently recognized 
this constitutional principle. Statutory prohibitions on using taxpayer 
funds to construct, renovate, or improve sanctuaries and buildings used 
primarily for religious purposes exist throughout the U.S. Code.\4\ 
Most recently, Congress recognized the applicability of this precedent 
when it limited green construction funding in the Recovery Act to 
buildings in which secular activities take place.\5\
---------------------------------------------------------------------------
    \4\ See, e.g., 20 U.S.C. Sec.  1066c; 20 U.S.C. Sec.  1062; 20 
U.S.C. Sec.  1103e; 25 U.S.C. Sec.  1813; 20 U.S.C. Sec.  1068e; 25 
U.S.C. Sec.  3306; 20 U.S.C. Sec.  1011k; & 29 U.S.C. Sec.  2938.
    \5\ Section 14004(c)(3) of the Americans Recovery and Reinvestment 
Act of 2009 prohibited renovation of buildings used for religious 
worship or instruction.
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    Religious liberty is one of our Nation's most cherished values and 
it is best protected when the institutions of religion and government 
are kept separate. The core constitutional rule prohibiting taxpayer 
funds from being used to construct or renovate houses of worship is not 
hostile to religion, but rather is a fundamental protection for 
religious liberty.
    Houses of worship are fundamentally religious, and as such, may and 
sometimes must receive certain rights and protections that are 
different from other nonprofits. When it comes to taxpayer funds, for 
instance, there are certain limitations that serve to protect their 
autonomy and independence from the government-the strings that come 
attached to government funding ultimately weaken religion. Treating 
houses of worship just like other nonprofits undermines the very 
foundation underlying many of their special rights and protections.
    Moreover, funding houses of worship would defy the fundamental 
principle that no taxpayer should be forced to fund a religion with 
which he or she disagrees and would open the door to government 
favoring, or creating the perception that it favors, certain religions 
over others.
    Encouraging energy efficiency is a worthy goal, but cannot be done 
in a way that jeopardizes the religious freedom for which our country 
stands. We request that the bill be amended to reflect the 
constitutional prohibition on providing direct government funds to 
houses of worship and align with existing statutes.
            Sincerely,
                            American Civil Liberties Union,
       Americans United for Separation of Church and State,
             Baptist Joint Committee for Religious Liberty,
                                 Hindu American Foundation,
                                       Interfaith Alliance,
                                  Union for Reform Judaism,
                                 ______
                                 
Statement of Maggie Garrett, Legislative Director, Americans United For 
                     Separation of Church and State
    Americans United offers this written statement to the Energy 
Subcommittee of the Senate Committee on Energy and Natural Resources to 
express our strong concerns regarding S. 717, ``the Nonprofit Energy 
Efficiency Act,'' as it is currently written. Although we take no 
position on the underlying purpose of the bill-the creation of a 
program that awards grants to nonprofit organizations for the purpose 
of retrofitting nonprofit buildings with energy-efficiency 
improvements-we oppose the language in the bill that explicitly 
authorizes these grants to ``houses of worship.'' Providing taxpayer 
funded retrofitting grants to houses of worship threatens religious 
liberty and creates serious Establishment Clause concerns. Regardless 
of the value of the proposed grant program, it should not be 
implemented in a manner that violates cherished religious freedom 
protections.
    Founded in 1947, Americans United is a nonpartisan educational 
organization dedicated to preserving the constitutional principle of 
church-state separation as the only way to ensure true religious 
freedom for all Americans. We fight to protect the right of individuals 
and religious communities to worship as they see fit without government 
interference, compulsion, support, or disparagement. Americans United 
has more than 120,000 members and supporters across the country.
The Bar on Providing These Grants to Houses of Worship Protects 
        Religious Freedom
    The bar on the government grants to retrofit houses of worship is 
an important limitation that exists to protect religious freedom for 
all. First, it protects religion and houses of worship. Houses of 
worship are special in our country and our constitution. They are both 
the place where worship takes place and are themselves expressions of 
worship. Accordingly, they are accorded special protections-exemptions, 
accommodations, and tax deductions. Restrictions on government funding 
of religion is also a special protection-they protect the conscience of 
the individual taxpayer, safeguard the autonomy of the religious 
institution, and ensure an equal playing field for all religions by 
prohibiting the government from playing favorites.
    Such a bar also upholds the fundamental principle that no taxpayer 
should be forced to fund a religion with whom he or she disagrees and 
that the government should never support building (``establishing'' 
religion in its most basic form) religious sanctuaries. It protects 
against the government favoring, or creating the perception of 
favoritism for, certain religions over others.
The Tilton and Nyquist Line of Supreme Court Cases Prohibits Such 
        Grants for Houses of Worship
    In order to further religious freedom, the U.S. Constitution places 
certain limits on the government's ability to fund houses of worship. 
The Tilton and Nyquist\1\ line of Supreme Court cases firmly establish 
that the constitution prohibits the government from providing aid for 
the construction, repair, and maintenance of houses of worship. These 
cases stand for the proposition that ``the State may not erect 
buildings in which religious activities are to take place'' and ``it 
may not maintain such buildings or renovate them when they fall into 
disrepair.''\2\
---------------------------------------------------------------------------
    \1\ Tilton v. Richardson, 403 U.S. 672 (1971); Hunt v. McNair, 413 
U.S. 734 (1973); Committee for Public Education v. Nyquist, 413 U.S. 
756 (1973).
    \2\ Nyquist, 413 U.S. at 777.
---------------------------------------------------------------------------
    Tilton v. Richardson\3\ the first in the line of cases, involved a 
challenge to the constitutionality of a federal law under which federal 
funds were used by secular and religious institutions of higher 
education for the construction of libraries and other campus buildings. 
The law allowed money to go to religious institutions, but it also 
contained a provision that expressly prohibited funds from being spent 
on buildings that would be used for worship or sectarian instruction. 
Although the Court upheld the program, it unanimously held that the 
provision was constitutionally required and unanimously invalidated 
part of the statute that would have allowed religious schools to 
convert the federally-funded facilities for worship or sectarian 
instruction after twenty years had passed. The court explained: ``If at 
the end of 20 years, the building is, for example, converted into a 
chapel or otherwise used to promote religious interests, the original 
federal grant will in part have the effect of advancing religion.''\4\ 
Tilton stands for the proposition that no building constructed with 
federal funds can ever be used for worship or sectarian instruction.\5\
---------------------------------------------------------------------------
    \3\ 403 U.S. 672 (1971).
    \4\ 4 Id. at 683.
    \5\ Id. at 692 (Douglas, J., concurring in part and dissenting in 
part).
---------------------------------------------------------------------------
    The Supreme Court reaffirmed this principle two years later in Hunt 
v. McNair,\6\ when it upheld the South Carolina Educational Facilities 
Authority Act, which established an ``Educational Facilities 
Authority,'' through which educational facilities could borrow money 
for the construction and renovation of their facilities at favorable 
interest rates. The Act, however, required each lease agreement to 
contain a clause forbidding religious use in such facilities and 
allowing inspections to enforce that requirement.\7\ The Court upheld 
the Act, including the condition that government-funded physical 
structures could never be used for religious worship or instruction.
---------------------------------------------------------------------------
    \6\ 413 U.S. 734 (1973).
    \7\ Id. at 744.
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    Finally, in Committee for Public Education v. Nyquist,\8\ the 
Supreme Court struck down New York's program of providing grants to 
nonpublic schools for the maintenance and repair of ``school facilities 
and equipment to ensure health, welfare, and safety of enrolled 
students.'' The Court summarized its previous holdings as ``simply 
recogniz[ing] that sectarian schools perform secular, educational 
functions as well as religious functions, and that some forms of aid 
may be channeled to the secular without providing direct aid to the 
sectarian. But the channel is a narrow one.''\9\ The Court then held 
that ``[i]f the State may not erect buildings in which religious 
activities are to take place, it may not maintain such buildings or 
renovate them when they fall into disrepair.''\10\ In other words, 
government funding for the construction, maintenance, or repair of 
physical structures is unconstitutional unless there is no possibility 
that the structures will be used for sectarian worship or instruction.
---------------------------------------------------------------------------
    \8\ 413 U.S. 756, 762 (1973),
    \9\ Id. at 775.
    \10\ Id. at 777.
---------------------------------------------------------------------------
    This line of cases clearly holds that, in accordance with the 
constitution, the federal government may not provide direct grants to 
renovate and green houses of worship.
The Tilton and Nyquist Line of Cases Remains Good Law and Is Applicable
    The rule set down by the Supreme Court in the Tilton/Nyquist line 
of cases remains controlling law, as it has never been overruled in any 
subsequent Supreme Court decision. Indeed, in its more recent cases 
examining the constitutionality of government aid under the 
Establishment Clause, the Supreme Court has maintained that direct 
money grants create ``special Establishment Clause dangers.''\11\
---------------------------------------------------------------------------
    \11\ Even though Mitchell was a fractured opinion, justices agreed 
that direct money grants are different than in-kind aid. Mitchell v. 
Helms, 530 U.S. 793, 819 (1999) (quoting Rosenberger v. Rector and 
Visitors of Univ. of Va., 515 U.S. 819, 842 (1995)) (Thomas, J.,); see 
also id. at 856 (O'Connor, J., concurring) (describing Tilton as 
striking down the grant statute because it lacked a ``secular content 
requirement'').
---------------------------------------------------------------------------
    Proponents of this provision may try to argue that the Sixth 
Circuit case, American Atheists v. City of Detroit Downtown Dev. 
Auth.,\12\ limits Tilton and Nyquist and justifies these grants. This 
case involved a challenge to a downtown revitalization project that 
issued grants to organizations, including houses of worship. The 
decision, which upheld the grants, is an outlier in this area of the 
law\13\ and, nonetheless, cannot overturn a Supreme Court decision. 
Furthermore, the court considered only ``neutrality'' to uphold the 
program even though Mitchell states that the Supreme Court has ``never 
held that a government-aid program passes constitutional muster solely 
because of the neutral criteria it employs as a basis for distributing 
aid.''\14\ Neutrality alone cannot not save a grant program.
---------------------------------------------------------------------------
    \12\ 567 F. 3d 278 (6th Cir. 2009).
    \13\ See, e.g., Community House v. Boise, 490 F.3d 1041, 1059 (9th 
Cir. 2007) (enjoining a private company that leased a government built 
and owned building from conducting religious services and other 
religious activities at a homeless shelter, even though the religious 
activities were voluntary); FFRF v. Bugher, 249 F.3d 606, 614 (7th Cir. 
2001) (striking down cash grants for telecommunications access for both 
public and private schools because the grants ``provide[] a direct 
subsidy to participating religious schools.''); Foremaster v. City of 
St. George, 882 F. 2d 1485 (1989) (striking down a grant of free 
electricity to a house of worship).
    \14\ Mitchell, 530 U.S. at 840 (emphasis in original).
---------------------------------------------------------------------------
    Proponents of providing government construction grants to houses of 
worship also try to distinguish Tilton and Nyquist by pointing to free 
speech cases. But in Locke v. Davey,\15\ the Supreme Court explained 
that the speech-forum cases do not apply to government grant cases: A 
government-funded scholarship program ``is not a forum for speech. . . 
. Our cases dealing with speech forums are simply inapplicable.''\16\
---------------------------------------------------------------------------
    \15\ 540 U.S. 712 (2004).
    \16\ Id. at 720 n.3 (2004); accord Teen Ranch v. Udow, 389 F. Supp. 
2d 827, 839 (W.D. Mich. 2005), aff'd 479 F. 3d 403, 410 (6th Cir.2007) 
(``the unconstitutional viewpoint restriction discussed in Rosenberger 
is limited to cases involving speech in a public forum''); see also 
Freedom from Religion Foundation v. McCallum, 179 F. Supp. 2d 950, 980 
(W.D. Wis. 2002) (This ``interpretation of the free speech clause would 
require the state government to recognize a forum for private 
expression with regard to each of its fiscal decisions.'')
---------------------------------------------------------------------------
Congress Has Consistently Followed the Principle of Tilton and Nyquist
    Congress has consistently recognized that the constitution bars 
direct funding for the building, renovating, and repairing of buildings 
used primarily for religious purposes. Such provisions exist throughout 
the U.S. Code\17\ Most recently, Congress recognized the applicability 
of this precedent when it limited green construction funding in the 
Recovery Act to buildings in which secular activities take place.\18\ 
We urge Congress to continue following Supreme Court precedent and the 
principles of religious liberty.
---------------------------------------------------------------------------
    \17\ See, e.g., 20 U.S.C.A. Sec.  1066c; 20 U.S.C.A. Sec.  1062; 20 
U.S.C.A. Sec.  1103e; 25 U.S.C.A. Sec.  1813; 20 U.S.C.A. Sec.  1068e; 
25 U.S.C.A. Sec.  3306; 20 U.S.C.A. Sec.  1011k; & 29 U.S.C.A. Sec.  
2938.
    \18\  Section 14004(c)(3) of the Americans Recovery and 
Reinvestment Act of 2009 prohibited renovation of buildings used for 
religious worship or instruction.
---------------------------------------------------------------------------
    For all of the reasons listed above, we object to S. 717 as written 
and urge this subcommittee to fix this Constitutional infirmity. We 
urge that the subcommittee remove ``houses of worship'' from the list 
of eligible entities and include language, similar to the language in 
so many other statutory provisions, that restricts the grants from 
funding the renovation of buildings in which primarily religious 
activities take place. 18
                                 ______
                                 
                                      Art Museum Directors,
                                     Washington, DC, June 24, 2013.
Hon. Al Franken,
Chairman, Senate Subcommittee on Energy, Washington, DC.
Hon. James E. Risch,
Ranking Member, Senate Subcommittee on Energy, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch,
    On behalf of 200 leading art museums in the United States, I am 
writing to ask you to support S. 717, the Nonprofit Energy Efficiency 
Act.
    Given their prominence as civic institutions and their importance 
to public education, museums have generally been built to high 
architectural standards. That tradition continues today, with energy 
efficiency now being a priority for new museum buildings. For example, 
the Barnes Foundation's facility in Philadelphia, opened to the public 
in 2012, was certified as Platinum under the US Green Business 
Council's LEED (Leadership in Energy and Environmental Design) rating 
system. The Grand Rapids Art Museum, built in 2008, received a Gold 
LEED certification.
    However, about half of America's leading art museums were opened to 
the public before 1950. If you think of the word ``museum'' and try to 
form a mental picture, chances are you'll see a grand colonnaded 
building, vintage about 1920.
    These building are often energy-inefficient and extraordinarily 
expensive to maintain. In fact, building maintenance and utilities 
comprise about fifteen percent of art museum operating expenses. The 
problem is exacerbated considering that standards for climate control 
are extraordinarily strict, with objects needing to be kept at nearly 
uniform temperature and humidity regardless of external and internal 
conditions. The director of the Boise Art Museum succinctly stated the 
challenge:

          The building has been added onto several times so that the 
        HVAC systems don't all function well together. The building is 
        fitted with a geothermal system, but using it could pose a 
        potential threat to the artwork.

    The effort to achieve efficiency is time-consuming and expensive. 
To cite one example, the Toledo Museum of Art has worked for twenty 
years to reduce consumption in its 101-year-old Beaux Arts main 
building.
    Museums that are able to undertake retrofitting will serve as 
highly visible public examples of the importance of energy-efficiency. 
Most museums also have extensive outreach and education programs 
focused on students, providing an excellent opportunity to help foster 
greater awareness of the importance of energy sustainability, involve 
young people in museum projects, and facilitate their discussion of 
current energy issues.
    Simply put, money saved by museums on utilities and maintenance 
will be put back into the community in the form of exhibitions, 
programming, education services to schools and families, and jobs.
    For these reasons, the art museum community strongly supports the 
bi-partisan Klobuchar-Hoeven legislation.
            Sincerely,
                                         Christine Anagnos,
                                                Executive Director.
                                 ______
                                 
       Committee on Domestic Justice and Human Development,
                                      Washington DC, June 24, 2013.
Hon.  Al Franken,
Chairman, Senate Subcommittee on Energy, Washington, DC.
Hon. James E. Risch,
Ranking Member, Senate Subcommittee on Energy, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch:
    On behalf of the Committee on Domestic Justice and Human 
Development of the United States Conference of Catholic Bishops 
(USCCB), I write to express our support of The Nonprofit Energy 
Efficiency Act (S. 717) to be heard before the Energy Subcommittee of 
the U.S. Senate Committee on Energy and Natural Resources on Tuesday, 
June 25, 2013.
    Introduced by Senators Amy Klobuchar (D-MN) and John Hoeven (R-ND), 
the Nonprofit Energy Efficiency Act will establish a pilot program at 
the U.S. Department of Energy to provide financial grants to non-profit 
organizations to help make the buildings they own and operate more 
energy efficient. Under the proposal, $50 million would be authorized 
for Fiscal Years 2014-2017 with non-profits eligible to apply for 
grants up to 50 percent of the total cost of the energy efficiency 
program-up to $200,000 per project.
    The breadth of the Catholic Church's institutions includes 
thousands of schools, parishes, hospitals and other organizations that 
serve people and communities in need. Our institutions would benefit 
greatly from this important pilot program meant to assist non-profits 
to become more energy-efficient and environmentally responsible.
    As Catholics, we are called to care for God's creation and to be 
stewards of the environment and the earth's resources. As the U.S. 
bishops insist in their statement Renewing the Earth, ``As individuals, 
as institutions, as a people, we need a change of heart to preserve and 
protect the planet for our children and for generations yet unborn.''
    Currently there are no programs to incentivize the non-profit 
community to invest in the energy efficiency of their hundreds-of-
thousands of buildings across the country. If enacted, S. 717 will 
enable America's schools, youth centers, houses of worship, hospitals, 
museums, community centers, and more to reduce operating costs, invest 
more in the communities they serve and lessen their impact on the 
environment, all while helping to conserve energy.
    We thank you for your thoughtful consideration of this necessary 
pilot program that will provide an important pathway for nonprofits 
serving our communities to become more energy-efficient. We hope you 
will join us in supporting S. 717, The Nonprofit Energy Efficiency Act.
            Sincerely,
                           Most Reverend Stephen E. Blaire,
   Bishop of Stockton, Chairman, Committee on Domestic Justice and 
                                                 Human Development.
                                 ______
                                 
   Statement of Elizabeth Thompson, President, Environmental Defense 
                        Action Fund, on S. 1218
    I would like to thank Chairman Franken and Ranking Member Risch for 
this opportunity to provide written testimony to the Committee on 
Energy and Natural Resources and the Subcommittee on Energy. On behalf 
of the Environmental Defense Action Fund (EDAF) I urge your support for 
an important piece of legislation that would advance energy efficiency 
policies and measures to dramatically reduce America's energy waste. 
Please support the Warner-Manchin bill, S. 1218, to establish a State 
Energy Race to the Top Initiative.
    EDF's mission is to preserve the natural systems on which all life 
depends. Guided by science and economics, we find practical and lasting 
solutions to the most serious environmental problems--including 
America's wasteful energy consumption. We believe the State Energy Race 
to the Top Initiative is one of those solutions.
    This idea of a Race to the Top program for energy productivity has 
been emerging over the last several months. The Alliance Commission on 
National Energy Efficiency Policy published a set of policy 
recommendations aimed at doubling U.S. energy productivity by 2030, a 
goal that has also been echoed by President Obama. Within this set of 
recommendations was the idea of a Race to the Top program. Senators 
Warner and Manchin took this idea and created a workable solution that 
could provide real energy and cost savings across the Nation. Modeled 
after the successful Education Race to the Top, the initiative created 
under their bill will challenge states and utilities to develop 
innovative new policies that would advance energy productivity. This 
voluntary initiative allows states the flexibility to pursue ideas that 
make sense for their circumstances and economic conditions. By allowing 
states the opportunity address their energy needs by their unique 
design, the programs will encourage the states to be the nursery of new 
ideas which can then be shared with other states to further energy 
savings.
    Under a Race to the Top Initiative, states, public power utilities, 
electric cooperatives and Indian tribes would be eligible to apply for 
funding. Applicants would be judged on their plans to implement 
policies and programs aimed at improving the state's energy 
productivity--this could include policies related to building 
efficiency, combined heat and power, demand response, and smart grid.
    As an example, because they deliver cleaner air, better health, 
more reliable electricity and greater consumer control over electric 
power and costs, programs and policies related to the advancement of 
smart grid technologies could be incentivized under a State Energy Race 
to the Top Initiative. The Federal Energy Regulatory Commission (FERC) 
estimates that the installation of smart meters, programmable 
thermostats and other technologies, along with Time-Of-Use (TOU) 
pricing and full use of potential demand response, could reduce the 
Nation's peak demand by 150GW by 2020--this reduction equates to the 
output of about 2,000 power plants\1\. Implementation of smart grid 
technologies not only reduces energy consumption and associated carbon 
pollution, but also creates opportunities for American households and 
businesses to save money. A number of states and localities are already 
putting such programs and policies in place- and these efforts would be 
rewarded and potentially expanded to other cities and states under a 
Race to the Top Initiative.
---------------------------------------------------------------------------
    \1\ 1) Federal Energy Regulatory Commission, A National Assessment 
of Demand Response Potential, June 2009, p. x, ferc.gov/legal/staff-
reports/06-09-demand-response.pdf
---------------------------------------------------------------------------
    We recognize that the federal government faces significant budget 
challenges. For this reason the State Energy Race to the Top Initiative 
would provide merely the seed money for innovative thinking, pushing 
policymakers and program managers in the states to design new policies 
that will drive energy efficiency, smart grid, and demand response. 
These modest funds will drive innovative policies that will help states 
best use their program dollars--further leveraging these funds. By 
providing the initial funding for innovation, and additional support to 
those with winning proposals, the Initiative will be able to drive 
innovation at minimal cost, sending resources to the states who know 
best how to save energy within their borders.
    EDF believes that energy efficiency is vital to our economic growth 
and international competitiveness. Thank you for providing this 
opportunity to submit testimony. We look forward to working with you.
                                 ______
                                 
                 Friends Committee on National Legislation,
                                     Washington, DC, June 21, 2013.
Hon. Al Franken,
Chairman, Senate Subcommittee on Energy, Washington, DC.
Hon. James E. Risch,
Ranking Member, Senate Subcommittee on Energy, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch:
    On behalf of the Friends Committee on National Legislation (FCNL), 
I would like to thank you for scheduling a hearing on pending energy 
legislation, including the Klobuchar-Hoeven Nonprofit Energy Efficiency 
Act (S. 717). FCNL is a strong supporter of S. 717 and its companion, 
the Shaheen-Portman energy efficiency bill (S. 761), and we thank the 
subcommittee for its hard work on these issues.
    FCNL is a Quaker lobby in the public interest, established in 1943. 
We have been on Capitol Hill, across from what is now the Senate Hart 
Office Building, since our founding. In 2005, following a renovation, 
we became Capitol Hill's first LEED-certified green building. Our 
reflective and anti-leak windows, green roof and rain-capture system; 
and geothermal heating and cooling system are all features of the 
building that reduce our carbon footprint and save money.
    With experience in energy efficiency, FCNL believes that S. 717 is 
a common-sense measure that will help non-profits around the country 
advance to the new standard in energy efficiency. Hospitals, schools, 
and community centers-t a few institutions that will benefit from S. 
717-will be able to devote resources to their constituents rather than 
to energy bills. It will also help all of us become more 
environmentally responsible.
    FCNL is proud to support the Shaheen-Portman bill (S. 761) which 
passed out of committee in early May. We know, however, that the 
maximum impact from energy efficiency initiatives comes from full 
participation: it is not sufficient to have only the for-profit or 
private sectors taking advantage of the opportunity afforded by S. 761. 
With its pair, S. 717, the non-profit sector can also become more 
efficient and we are able to maximize our impact. Therefore, we are 
also proud to support S. 717 on its own merits, but also as an effort 
to extend the benefits of energy efficiency to the other half of the 
institutions in the United States.
    We thank you for your consideration of our support and for holding 
this hearing on S. 717. We look forward to working with you in the 
months to come to secure passage of both S. 717 and the broader 
Shaheen-Portman bill.
            Sincerely,
                                                Jose Aguto,
                     Legislative Secretary, Energy and Environment.
                                 ______
                                 
    Statement of Rev. Dr. C. Welton Gaddy, President of Interfaith 
                          Alliance, on S. 1084
    On behalf of Interfaith Alliance, whose members across the country 
belong to more than 75 different faith traditions, I write to express 
our religious freedom concerns with the Non-Profit Energy Efficiency 
Act (S. 717) as it is currently written. As an organization who works 
to protect the proper boundaries between institutions of religion and 
government-in the best interests of both-Interfaith Alliance strongly 
opposes grants to houses of worship to retrofit their facilities.
    By including ``houses of worship'' in the list of non-profit 
organizations eligible to receive government grants, this legislation 
sets in motion a violation of religious liberty that ultimately hurts a 
house of worship more than helps it. To steer such money to religious 
institutions opens the door to government intrusion into the affairs of 
houses of worship. Making an exception in this case will only result in 
damaging a principle that has ensured the ability of diverse faiths and 
beliefs to flourish in this country for centuries. Interfaith Alliance 
has long been critical of efforts to funnel tax dollars to religious 
institutions because of reverence and respect for these important 
institutions in our society.
    As a Baptist minister to a congregation in Monroe, Louisiana, I saw 
first-hand the attempts of state and national officials to provide 
houses of worship with rebuilding aid after Hurricane Katrina. Indeed, 
just this year in the wake of Superstorm Sandy such attempts were made-
and continue to be made-to change existing Federal Emergency Management 
Agency policies to enable houses of worship to receive direct 
rebuilding grants. Though there is an understandable, compassion-based 
temptation to steer federal funds to help houses of worship that have 
been damaged or could become greener, I continue to believe it a 
temptation we must resist. An act of compassion must not be allowed to 
erode our Constitution.
    The independence of houses of worship from the government 
regulations which accompany government funds is more important than a 
few federal dollars with which to rebuild or renovate. Becoming 
dependent on or indebted to our government's financial benevolence is 
far from being in a house of worship's best interest. The autonomy of 
religious institutions-and religious leaders-from the government 
coffers and the government's regulation is what enables religion to 
flourish, enabling clergy to speak truth to power and be a prophetic 
voice to our government.
    I urge you to strike ``houses of worship'' from the language of the 
bill and to add language to clarify that the funds authorized cannot be 
used to retrofit buildings and spaces used for primarily religious 
purposes. Government can do so much to help communities live greener 
lives and build more energy efficient buildings. But to violate a 
principle inherent in the foundation of our religious freedom would be 
a disservice to all Americans.
    Thank you for your consideration.
                                 ______
                                 
                                  Interfaith Power & Light,
                                  San Francisco, CA, June 21, 2013.
Hon. Al Franken,
Chairman, Senate Subcommittee on Energy, Washington, DC.
Hon. James E. Risch,
Ranking Member, Senate Subcommittee on Energy, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch:
    Interfaith Power & Light (IPL) strongly urges your support for 
S.717, the Nonprofit Efficiency Act, to be heard before the Energy 
Subcommittee of the US Senate Committee on Energy and the Environment 
on June 25, 2013.
    With bipartisan support from its sponsors, Senators Amy Klobuchar 
and John Hoeven, the Nonprofit Energy Efficiency Act will establish a 
new pilot program at the U.S. Department of Energy to provide financial 
grants to nonprofit organizations to help make buildings they own and 
operate more energy efficient.
    IPL and our 40 state affiliates are reaching over 15,000 
congregations around the country, educating them about energy 
stewardship, and inspiring them to utilize energy efficiency and 
renewable energy in their facilities. However, as nonprofits with 
limited resources and no access to tax credits, there is a cost barrier 
for many of our faith communities. Grants for energy efficiency would 
make a big difference and expedite adoption of these cost saving, 
pollution reducing solutions while providing the added benefit of 
demonstrating energy efficiency to congregational and community members 
who visit the facilities.
    Thank you and please let me know if you would like any more 
information about our organization. I hope you will support S. 717.
            Best regards,
                                          Susan Stephenson,
                                                Executive Director.
                                 ______
                                 
           National Rural Electric Cooperative Association,
                                      Arlington, VA, July 10, 2013.
Hon. Al Franken,
309 Hart Senate Office Building, Washington, DC.
Hon. James Risch,
483 Russell Senate Office Building, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch:
    The Energy Subcommittee recently held a hearing on energy 
efficiency, and the Energy Savings and Industrial Competitiveness Act 
of 2013 (S. 761), and we wanted to make the subcommittee aware of the 
important work electric cooperatives have done and will continue to do 
in the area of energy efficiency. Additionally, we would like to 
clarify the importance of both energy efficiency and demand response 
programs for cooperative consumer-members.
    The National Rural Electric Cooperative Association (NRECA) is the 
not-for-profit, national service organization representing over 900 
not-for-profit, member-owned, rural electric cooperative systems, which 
serve 42 million customers in 47 states. NRECA estimates that 
cooperatives own and maintain 2.5 million miles or 42 percent of the 
nation's electric distribution lines covering three-quarters of the 
nation's landmass. Cooperatives serve approximately 18 million 
businesses, homes, farms, schools and other establishments in 2,500 of 
the nation's 3,141 counties. Our member cooperatives serve over 13 
million member owners in states represented on the Senate Energy & 
Natural Resources Committee.
    Rural electric cooperatives have a straightforward mission: to 
provide safe and reliable electric service at the lowest possible cost. 
Electric cooperatives believe energy efficiency, conservation and 
demand response play an important role in helping to lower consumers' 
energy costs, shift peak demand, and meet power supply goals all while 
maintaining positive consumer member relationships. In fact, 96 percent 
of electric cooperatives nationwide operate efficiency programs while 
70 percent of co-ops offer financial incentives to promote greater 
efficiency.
    A recent nationwide American Customer Satisfaction Index (ACSI) 
survey confirmed what cooperative consumer-members already know--that 
the electric coops are unmatched in their service compared with other 
industries. In the third quarter of 2012, Touchstone Energyr co-ops 
tied their all-time high showing in the ACSI, scoring an 83. That 
compares to an average of 76 for investor-owned utilities.
    This responsiveness to membership and high quality of service is 
exhibited by the fact that electric cooperatives across the country 
have long provided information and advice to consumers to help them 
manage their energy bills. This includes programs and incentives for 
their member-owners to use electricity in an efficient and cost-
effective manner. The wide range of assistance includes rebates for 
energy-efficient appliances, the replacement of compact fluorescent 
light bulbs, and time of day rates to encourage off-peak usage.
    Further, many co-ops across the country have voluntary programs 
called ``Beat the Peak'' that are designed to provide consumer-members 
with information on the amount of energy they use, and ways to take 
additional steps at home that will save money and energy by reducing 
energy use during peak periods.
    Midwest Energy, in Hays, Kansas, has saved almost 1.4 million 
kilowatt hours per year through the cooperative's ``How$mart'' program, 
a ground-breaking on-bill financing initiative that aims to help 
consumer-members overcome the cost hurdles standing in the way of 
energy efficiency improvements.
    Accordingly, NRECA supports legislative proposals such as The Rural 
Energy Savings Program Act (RESPA) that would assist rural electric co-
operatives in offering or expanding efficiency programs like the 
``How$mart'' program that offer of low-interest loans to their 
consumer-members for efficiency improvements, while allowing repayment 
of the loan through savings on monthly electric bills.
    NRECA believes that RESPA would be a powerful tool that electric 
co-ops can use to enable their member-owners to maximize energy 
efficiency. The RESPA program would provide an ``on-bill financing'' 
mechanism that allows co-op members to borrow money from the co-op for 
energy efficiency improvements at their homes and businesses and to pay 
back those loans through their monthly electric bills. In most cases, 
it is anticipated that even after adding the loan repayment on their 
bill, consumer members' bills will still be lower than before the 
efficiency improvements were made. This will improve consumer-members 
quality of life and economic circumstances, while saving energy and 
delaying or avoiding costly new investments in generation facilities.
    Central Electric Power Cooperative (Central) and The Electric 
Cooperatives of South Carolina (ECSC) commissioned a report on their 
``Help My House'' Loan Pilot Program. This cutting-edge pilot program 
provided on-bill financing through the South Carolina co-ops for 
consumer-owners to make energy efficiency improvements to their homes. 
For the 125 participating South Carolina homes, there was a 34 percent 
reduction in total energy use (or 1.35 million kWh) in the year 
following the completed improvements, with an average savings of $288 
per home per year even while making the loan payment.
    This report provides further evidence that on-bill financing for 
energy efficiency improvements is a success, and should be expanded to 
all electric cooperatives who wish to establish such an efficiency 
program.
    The prospects for these programs expanding in rural areas is 
improving with the inclusion of language in both the House and Senate 
Farm Bill reauthorizations that would provide for or expand co-op 
relending to consumer-members for efficiency improvements.
    The South Carolina co-ops have an existing load control program 
with 120,000 switches for water heaters and air conditioners that also 
allowed a comprehensive view of the benefits of both an on-bill 
financing program and a demand response program. Importantly, the study 
also concluded that load control devices coupled with energy efficiency 
measures provided added value to efficiency retrofit programs. The 
study determined that on-bill financing programs ``should deploy load 
control devices and energy efficiency measures simultaneously, which 
will improve load factor and benefit the system, the power purchaser, 
and even the non-participants.'' This is a critical finding for 
electric cooperatives that also provide leadership in load control 
programs that save at least 500 MW of demand and hundreds of millions 
of dollars per year for consumers.
    In numerous major energy bills (including the Public Utility 
Regulatory Policies Act (PURPA) of 1978; the Energy Policy Act of 1992; 
the Energy Policy Act of 2005; and the Energy Independence and Security 
Act (EISA) of 2007) Congress has declared the promotion of demand 
response an important federal policy. A 2012 report by the Federal 
Energy Regulatory Commission (FERC) based on the 2007 energy bill 
recognized co-ops' leadership in demand response. It is through the use 
of large capacity electric resistance water heaters that co-ops are 
able to meet such federal goals.
    Approximately 250 co-ops in 34 states have voluntary demand 
response programs using large capacity electric resistance water 
heaters that allow co-ops to reduce demand for electricity during peak 
hours. In parts of the country, large capacity electric water heaters 
also allow co-ops to integrate renewable energy like wind and store it 
for use during daytime on-peak hours. Because the wind blows as much or 
even more in the evening, generating energy at a time when consumers 
least need it, large capacity electric resistance water heaters act as 
a battery that stores wind energy at night that can be discharged 
during the day in the form of hot water. This results in energy 
efficiency benefits that offset the need to build new peaking 
generation and transmission lines, not to mention cost benefits for co-
ops and consumers.
    Great River Energy a generation and transmission cooperative in 
Minnesota estimates that their 70,000 large capacity electric 
resistance water heaters that are ``charged'' in the off-peak hours 
each night each store approximately 14 Kilowatthours per water heater 
per evening, totaling nearly one Gigawatthour of energy stored each 
night. This could be considered the largest battery in the Midwest, and 
a significant way to store renewable energy.
    On April 16, 2010, the Department of Energy (DOE) issued a new 
standard requiring 200 percent efficiency for large electric resistance 
water heaters, which was a much higher standard than was expected. This 
standard, which applies to manufacturers, is set to take effect in 
April 2015. The new standard will require the use of heat pump water 
heaters for electric water heaters larger than 55 gallons. However, 
heat pump water heaters are more expensive, not considered as effective 
in colder climates, and do not currently work with our co-ops' demand 
response programs.
    While NRECA continues to push DOE to find a common sense solution, 
we believe a legislative fix would provide the clearest direction. We 
also believe that the Energy Savings and Industrial Competitiveness Act 
of 2013 (S. 761) sponsored by Senators Shaheen and Portman provides the 
most appropriate vehicle to provide such a solution.
    NRECA continues to work diligently to seek common ground with 
energy efficiency and environmental advocacy groups who we believe see 
the value in co-ops' demand response programs. We also continue to 
solidify our coalition of stakeholders, including manufacturers of both 
electric resistance and heat pump water heaters, as well as Regional 
Transmission Organizations (RTOs) to find the best way to continue the 
beneficial use of electric resistance water heaters.
    We appreciate the Committee's leadership in the area of energy 
efficiency, and look forward to continue to work with you minimizing 
the impact of DOE's water heater efficiency standard on co-ops' demand 
response programs. Also, even though RESPA is under the jurisdiction of 
the Agriculture Committee, we will continue to update the Energy 
Committee on its progress. Further, we believe that the notion of 
combining demand response in conjunction with other energy efficiency 
measures to achieve maximum impact, as concluded in the EESI study, is 
something the Subcommittee should explore further. Again, we appreciate 
the opportunity to provide information on the co-ops' work in the area 
of energy efficiency and would be happy to answer any questions.
            Sincerely,
                                              Kirk Johnson,
                          Sr. Vice President, Government Relations.
                                 ______
                                 
 Statement of Rabbi David Saperstein, Director and Counsel, Religious 
                    Action Center of Reform Judaism
    On behalf of the Union for Reform Judaism, whose more than 900 
congregations across North America encompass 1.5 million Reform Jews, 
and the Central Conference of American Rabbis, whose membership 
includes over 2000 Reform Rabbis, I write to express our concerns about 
the Nonprofit Energy Efficiency Act (S. 717) as it is currently 
written. In its current form, the Nonprofit Energy Efficiency Act 
threatens our nation's founding principle of separation of church and 
state. We are asking that ``houses of worship'' be struck from section 
(3)(B) and that protective language be added clarifying prohibited uses 
of the funds. Leaving this section as is not only begs a lawsuit if 
that provision remains in the enacted bill, but can hurt support for 
the bill and make it needlessly controversial.
    We believe that retrofitting buildings for increased efficiency is 
one important way to meet emissions reductions targets. However, we are 
deeply troubled by the language that explicitly makes houses of worship 
eligible to receive funding for building retrofits. The Reform Jewish 
Movement has a long history of strong opposition to government funds 
flowing directly to houses of worship as it is both unconstitutional 
and bad public policy (raising serious concerns for ``church autonomy'' 
and religious liberty). Indeed, direct cash funding of houses of 
worship has never been upheld by the Supreme Court.
    We are inspired by our tradition to fight for a climate and energy 
future that protects our earth and all of its inhabitants. The Book of 
Genesis tells us that God placed men and women on earth to till and 
tend creation, and our sages remind us to ``Take care, lest you spoil 
and destroy my world, because if you do, there is no one after you to 
make it right again.'' (Kohelet Rabbah 7:13). As people of faith, we 
are responsible for seeking justice as we work for a healthier and 
safer environment for all. At the same time, we remain committed to our 
long-established position that the principle of separation of church 
and state is best for both church and state and is indispensable for 
the preservation of that spirit of religious liberty which is a unique 
blessing of American democracy.
    The Supreme Court (in Tilton v. Richardson and Committee for Public 
Education v. Nyquist, among other cases) has long held that taxpayer 
dollars cannot go to construct, rebuild or repair buildings used for 
religious activities. As written, without language prohibiting use of 
these funds in sectarian settings, this bill would allow government 
money to do just that. No taxpayer should be forced to support a faith 
in which he or she does not believe. In addition, these funds would 
risk government entanglement with religion, from which neither party 
benefits. With government money come government rules and regulations, 
which threaten the prophetic voice and autonomy that are central to our 
country's diverse religious institutions.
    The Reform Movement is deeply committed to putting our nation and 
our world on the path to a clean, sustainable, and equitable climate 
and energy future. In doing so, however, we must not compromise the 
wall separating church and state, which has been a bedrock of democracy 
and the foundation of religious liberty in our country for over two 
hundred years.
                                 ______
                                 
                   The Jewish Federations of North America,
                                     Washington, DC, June 20, 2013.
Hon. Al Franken
Chairman, Senate Subcommittee on Energy, Washington, DC.
Hon. .James E. Risch,
Ranking Member, Senate Subcommittee on Energy, Washington, DC.
    Dear Chairman Franken and Ranking Member Risch:
    We understand that the Subcommittee will be conducting an oversight 
hearing on June 25, 2013, pertaining to pending energy efficiency 
legislation, including the bi-partisan Klobuchar-Hoeven Nonprofit 
Energy Efficiency Act (S. 717). On behalf of The Jewish Federations of 
North America (JFNA), I want to share our strong support for S. 717, 
for the following reasons:

          JFNA has a long history of public private partnerships, and 
        with working with Congress to promote innovations and 
        efficiencies in nonprofit human services delivery. In this 
        regard, we endorse S. 717 as a timely and necessary pilot 
        program to assist nonprofits to become more energy efficient 
        and environmentally responsible.
          JFNA represents one of the largest philanthropic health and 
        social services systems in North America. We are comprised of 
        153 Jewish Federations and 300 independent Jewish communities. 
        Within our umbrella, we support and operate thousands of 
        agencies (i.e., schools, community centers, hospitals, health 
        centers, day care facilities, and more) that serve millions of 
        individuals and families within most major population centers 
        across the country. Many of our institutions are several 
        decades old, and some more than a century. Their needs to 
        upgrade and retrofit antiquated and unreliable operating 
        systems are great.
          We know only too well the importance of creating energy 
        efficiencies to our bottom line-- to ensure that we maximize 
        the use of philanthropic dollars to best serve the most 
        vulnerable populations and to maintain healthy and vibrant 
        communities across the country. We also know the power and 
        opportunity that is created through congressionally-derived 
        pilot projects. They help to shed needed light on issues of 
        importance to the country. They help to galvanize support for 
        needed public policy shifts. They help to bolster and promote 
        positive change within the nonprofit sector. In this regard, S. 
        717 would provide an important catalyst for energy improvements 
        and modernization within the nonprofit sector.

    Comprehensive energy efficiency reform cannot succeed without 
Congress also addressing the issues facing the nonprofit sector. Senate 
inclusion of S. 717 within the greater Shaheen-Portman Energy Savings 
and Industrial Competitiveness Act would be a non-controversial, bi-
partisan improvement to the bill.
    We commend you for holding this important hearing and thank you for 
your consideration of our strong support for S. 717
            Sincerely,
                                        Robert B. Goldberg,
                              Senior Director, Legislative Affairs.
                                 ______
                                 
                                                  The YMCA,
                                        Chicago, IL, June 21, 2013.
Hon. Al Franken,
Chairman, Senate Subcommittee on Energy Washington DC.,
    Dear Chairman Franken and Ranking Member Risch:
    The YMCA of the USA is the national resource office for the 2,700 
YMCAs across the U.S. The nation's YMCAs engage 21 million men, women 
and children--of all ages, incomes and backgrounds--with a focus on 
strengthening communities in youth development, healthy living, and 
social responsibility.
    We understand that the Subcommittee will hold an oversight hearing 
on June 25 on the pending energy efficiency legislation, including the 
bi-partisan Klobuchar-Hoeven Nonprofit Energy Efficiency Act (S. 717). 
The YMCA of the USA strongly supports S. 717.
    This is a timely and necessary pilot program to assist nonprofits 
to become more energy efficient and environmentally responsible.
    Many of our Ys are several decades old, and some even older. Their 
need to upgrade and retrofit antiquated and unreliable operating 
systems is great.
    We want to ensure that we maximize the use of philanthropic dollars 
to best serve the most vulnerable populations and to maintain healthy 
and vibrant communities across the country.
    S. 717 would provide an important catalyst for energy improvements 
and modernization within the nonprofit sector.
    Comprehensive energy efficiency reform cannot succeed without 
Congress also addressing the issues facing the nonprofit sector. Senate 
inclusion of S. 717 within the greater Shaheen-Portman Energy Savings 
and Industrial Competitiveness Act would be a non-controversial, bi-
partisan improvement to the bill.
    We commend you for holding this important hearing and thank you for 
your consideration of our strong support for S. 717.
            Sincerely,
                                               Neal Denton,
        Senior Vice President and Chief Government Affairs Officer.

      
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