[Senate Hearing 113-222]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-222
 
                         STATE EFFICIENCY AND 
                           RENEWABLE PROGRAMS 

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                                   ON

          LESSONS FROM STATE EFFICIENCY AND RENEWABLE PROGRAMS

                               __________

                           FEBRUARY 12, 2014


                       Printed for the use of the
               Committee on Energy and Natural Resources

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                      RON WYDEN, Oregon, Chairman

TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
DEBBIE STABENOW, Michigan            DEAN HELLER, Nevada
MARK UDALL, Colorado                 JEFF FLAKE, Arizona
AL FRANKEN, Minnesota                TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia      LAMAR ALEXANDER, Tennessee
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

Clark, Randall R., Senior Vice President, NORESCO................    32
Franken, Hon. Al, U.S. Senator From Minnesota....................     1
Glick, Mark, State Energy Administrator, Department of Business, 
  Economic Development & Tourism, State of Hawaii, Honolulu, HI..    27
Nadel, Steven, Executive Director, American Council for an 
  Energy-Efficient Economy (ACEEE)...............................     6
Rodgers, William A., Jr., Chief Executive Officer and President, 
  GoodCents Holdings, Inc., Atlanta, GA..........................    36
Rothman, Mike, Commissioner of the Minnesota Department of 
  Commerce.......................................................    21
Schatz, Hon. Brian, U.S. Senator From Hawaii.....................     4
Shaheen, Hon. Jeanne, U.S. Senator From New Hampshire............     1
Taylor, William E., Director, Texas State Energy Conservation 
  Office, Arlington, VA..........................................    15

                                APPENDIX

Responses to additional questions................................    55


                STATE EFFICIENCY AND RENEWABLE PROGRAMS

                              ----------                              


                      WEDNESDAY, FEBRUARY 12, 2014

                               U.S. Senate,
                            Subcommittee on Energy,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:50 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 everybody. The subcommittee 
will come to order.
    My apologies to everyone who expected us to start 20 
minutes ago. We're in the middle of some votes on the Floor. In 
fact, we're going to have to go back to that.
    Everybody knows that this hearing is about what the states 
are doing on energy efficiency and renewable energy. I'm 
pleased that Ranking Member Risch and--is doing this with me. 
But we're going to start off with Senator Jeanne Shaheen who 
has been a leader in this area. In fact there's a bill called 
the Shaheen/Portman bill, maybe some of you have heard of it. 
I'm going to ask Senator Shaheen to deliver her statement and 
then we can move on to the work of the subcommittee.
    Welcome, Senator, to the Energy Committee here.

        STATEMENT OF HON. JEANNE SHAHEEN, U.S. SENATOR 
                       FROM NEW HAMPSHIRE

    Senator Shaheen. Thank you very much, Chairman Franken.
    I like this idea that you and I would do hearings, just the 
2 of us. You know, I bet we could get a lot done in the Energy 
Committee if we did that.
    Senator Franken. We could. We'd probably get stuff passed 
unanimously.
    [Laughter.]
    Senator Shaheen. I think that would be a great idea.
    Senator Franken. OK, done.
    [Gavel bangs.]
    Senator Franken. OK. I'm sorry. I didn't mean to do that.
    Senator Shaheen. All kidding aside, I very much appreciate 
the opportunity to be here this afternoon. The opportunity to 
talk, not just about energy efficiency, but about the Energy 
Efficiency and Industrial Competitiveness Act that Senator Rob 
Portman, who is also on the Energy Committee and I have been 
working on now for over 3 years.
    I know that this hearing is to talk about how state 
practices can inform Federal policies. So I really want to 
begin by pointing out that I got excited about energy 
efficiency as a Governor when I realized we could retrofit 
state buildings in New Hampshire for energy efficiency. We 
could do it through performance contracts and not cost 
taxpayers any money and save, not only significant dollars, but 
also thousands of pounds of pollution in the state.
    We also reached a settlement agreement with our largest 
utility that allowed us to set up a fund to encourage energy 
efficiency in the state. That has, by now, saved consumers over 
a billion dollars. So there are very real savings here. Energy 
efficiency is the cheapest, fastest way to deal with our energy 
needs. It is a win in terms of job creation, a win in terms of 
saving taxpayers money and a win on the environment.
    I believe that's exactly what the Energy Efficiency and 
Industrial Competitiveness Act would provide to the Federal 
Government and to the business community. As I said, it's known 
as Shaheen/Portman. What it would do is really set a national 
energy efficiency strategy.
    We have, today, been endorsed by about 260 different 
businesses and groups. Everything from the U.S. Chamber of 
Commerce to the National Association of Manufacturers, the 
Natural Resources Defense Council, the International Union of 
Painters and Allied Trades, just to name a few of the groups 
that have endorsed the bill.
    According to the American Council for an Energy Efficient 
Economy, Shaheen/Portman, if it were passed this year, by 2025 
would create 136,000 new jobs. By 2030 it would save consumers 
about $14 billion a year. It would lower CO2 
emissions and air pollution by the equivalent of taking 22 
million cars off the road. So it really is a win/win/win.
    There are provisions in the legislation that deal with the 
building sector which uses about 40 percent of our energy, that 
deal with the manufacturing sector which is the largest user of 
energy in terms of any sector of the economy and also the 
Federal Government which, as we all know, is the biggest user 
of energy in the country.
    You may remember that the bill got to the Floor briefly in 
September before the government shutdown. We had to pull it 
because of negotiations around the shutdown. We are now working 
to include a number of amendments that had been cleared by the 
committee, bipartisan amendments, because the bill did pass the 
Energy committee back in September on a very strong bipartisan 
vote, 19 to 3.
    Some of the examples of amendments that we are hoping to 
include in the reintroduced version is one around benchmarking 
that you will recognize since it's your amendment. That would 
require federally leased buildings to disclose their energy use 
data so we can continue to learn more about those buildings.
    There's an amendment that would address Federal data 
centers and the amount of energy that those centers use. That's 
co-sponsored by Senator Risch, who is your ranking member on 
this subcommittee and Senator Udall.
    Then there's another provision called the SAVE Act written 
by Senators Bennet and Isakson to improve the accuracy of 
mortgage underwriting by including energy efficiency as a 
factor in determining the value and affordability of the home.
    Those are just 3 of about 10 amendments that we've been 
looking at to include in the bill. All of which have bipartisan 
support. Most of which have bipartisan sponsors.
    So we believe that we're going to have a bill that's going 
to be even better to re-introduce. The positive thing, I 
believe, about this legislation is not just the savings that it 
would provide on energy, the savings on pollution, the job 
creation, but the fact that there is also a similar bill in the 
House that is supported by Representative McKinley, a 
Republican of West Virginia and Representative Welch, Democrat 
of Vermont. So it's got strong bipartisan support and the House 
leadership has expressed an interest in acting on it.
    So I believe if we can get this legislation through the 
Senate that it has a great chance of passing and can make a 
real difference in terms of our energy use in this country.
    So thank you very much, Mr. Chairman, for the opportunity 
to be here. I'm happy to provide any further information that 
the committee would like and to answer any questions.
    Senator Franken. Thank you, Senator. We are talking, as you 
mentioned, about what is done on the State level and you talked 
about getting excited this as a Governor. You are part of a 
small sorority of women who have been Governor and a United 
States Senator. How big is that sorority?
    Senator Shaheen. That's a group of one. Thank you.
    Senator Franken. Oh, I didn't know that.
    I did. I did.
    [Laughter.]
    Senator Franken. But look, you and Senator Portman have 
done wonderful work on this very important bill, the Energy 
Savings and Industrial Competitiveness Act is exactly the kind 
of legislation that we need to make the energy sector more 
efficient. Obviously, I support the goals of your bill.
    I know that we have some votes. Why don't you, if you want, 
you can go head down there. Tell them I'll be along shortly 
here.
    Senator Shaheen. OK. If I could just add one more, 2 more 
points that I forgot that I think are important. That is that 
the legislation contains no mandates and it also provides no 
additional cost to the Federal Government, both of which, I 
think, are very important as we look to being able to pass this 
bill.
    Senator Franken. Yes and it's bipartisan and bicameral and 
all set to go.
    Thank you, Senator.
    Senator Shaheen. Thank you very much.
    Senator Franken. We--I guess I would like the witnesses to 
come and take their seats.
    Senator Schatz. Mr. Chairman.
    Senator Franken. I would like the Senator from Hawaii to 
introduce one of our guests today.

         STATEMENT OF HON. BRIAN SCHATZ, U.S. SENATOR 
                          FROM HAWAII

    Senator Schatz. Thank you very much, Mr. Chairman. Thank 
you very much to all of the testifiers for making the trek to 
Washington, DC.
    It's my great pleasure to introduce Mark Glick, the 
Administrator of the Hawaii State Energy Office and a good 
friend. Mark has been in this position since 2011 and has 
continued the good work of his predecessors in helping to 
implement and oversee the Hawaii Clean Energy Initiative which 
has some of the most aggressive renewable energy and efficiency 
goals in the Nation. Mark takes a holistic approach to these 
goals working very hard to ensure that the state, the private 
sector and the utility and the not for profit sector all 
benefit from the changes that are made in terms of jobs, 
economic development, environmental protection and energy 
security.
    Mark knows that Hawaii's opportunities and challenges are 
tremendous. But he knows them as well as anyone. We're lucky to 
have him working tirelessly for our state. But he also has 
enormous experience from before he came to us serving as a 
Senior Advisor to the Texas Land Commissioner and working in 
the private sector.
    Mark's testimony today will be a major benefit to the 
committee as it considers the lessons learned by our States in 
their pursuit of clean energy and economic opportunity.
    Mr. Chairman, thank you again for the opportunity to 
introduce and invite Mark. I'm looking forward to this 
excellent and timely hearing that you've convened.
    Senator Franken. Thank you, Senator. Welcome, Mr. Glick.
    We are going to unfortunately take a recess now. So I'm 
glad you all took your seats at the table and may want to visit 
with each other and discuss what you're doing in each of your 
States while we go and vote. I think we'll do the end of one 
vote and the beginning of another and then we'll come back and 
start.
    So thank you, gentlemen.
    [RECESS]
    Senator Franken. The subcommittee will come back to order. 
I will make my opening statement.
    In the United States we produce a lot of energy and we use 
a lot of energy. Our energy consumption is about one fifth of 
the world's total. Although the majority of this energy is 
produced from fossil fuel sources, such as coal and natural 
gas, a rapidly growing portion comes from newly installed 
renewable energy. In fact 37 percent of new energy capacity in 
the U.S. last year came from renewable sources.
    The Federal Government has played a large role in the 
growth of our domestic energy sector. New sources of energy 
including oil and gas in the Bakken region of North Dakota were 
made possible in large part by government support for research 
and development of hydraulic fracturing technology, in the case 
of the Bakken. So investing in research and development is 
critical and that's true for renewables and energy efficiency 
as well, but it's not enough. We also have to put into place 
forward thinking policies that will unleash the Nation's 
potential to deploy efficiency and renewable technologies.
    Unfortunately it's been difficult for Congress to pass 
comprehensive clean energy legislation, even though this is 
prerequisite if we are going to win the global clean energy 
race.
    In the meantime, many States which are really the 
laboratories of our democracy have gone forward with their own 
programs. States have established goals and mandates for 
renewable energy production as well as for increased energy 
efficiency of government and commercial buildings. These 
standards are stimulating the economy and creating new high 
skilled jobs.
    My goal in this hearing is to learn more about some of the 
important energy programs underway in our States and to hear 
about what the Federal Government can do to better support 
them.
    For example, a number of state and local governments have 
adopted policies that require benchmarking of energy and water 
use by large commercial buildings. This allows the owners of 
the buildings to explore ways to save on costs by improving 
energy efficiency. It's not just the owners that benefit. Of 
course this also helps businesses identify new markets and 
opportunities for energy efficiency. That's why we have a 
representative from a major energy service company here today 
to talk about the impact of some of these programs on their 
business model.
    Developing and manufacturing the technology to retrofit 
these buildings will create jobs and contribute to economic 
growth in States across our country. This is something I've 
seen and encouraged in Minnesota. But being more efficient is 
only part of the story.
    States have also supported new sources of renewable energy 
through renewable portfolio standards. These standards found in 
30 States now incentivize renewable energy generation. 
Renewable energy producers and particularly the innovative 
startup companies need certainty for investment. These 
portfolio standards guarantee a market for their products and 
jobs for their employees.
    These are just a few examples of the exciting programs that 
States have developed to grow and develop our energy sector. I 
hope to hear today about these programs so we can learn from 
them and potentially use them as models for Federal policy. I 
also invite the witnesses to talk about challenges that their 
States are facing in implementing these programs so that we may 
be able to identify how the Federal Government can help them 
overcome these challenges.
    As chairman of this subcommittee I want to do everything in 
my power to ensure that the clean energy and energy efficiency 
programs we have across America are working as well as they 
possibly can.
    So I'm very pleased that we have with us such an excellent 
panel of experts. Right now I would like to have you speak to 
the state of energy issues that we're considering today. We'll 
just go from your right to my right as if you're looking from 
the top. Underneath, never mind.
    So with us today we have Steve Nadel, who is Executive 
Director of the American Council for an Energy Efficient 
Economy.
    William E. Taylor, Director of the State Energy 
Conservation Office in Texas.
    Mike Rothman, Commissioner of the Minnesota Department of 
Commerce.
    Mark Glick, who Senator Schatz introduced, Administrator of 
the Department of Business, Economic Development and Tourism in 
the State of Hawaii.
    Randy C. Clark, Senior Vice President and General Manager 
of NORESCO.
    William A. Rodgers, Jr., CEO and President of GoodCents.
    So we will start with you, Mr. Nadel and we'll go down the 
table. I'm going to be here so if any of you has to catch a 
plane or something, let me know, but otherwise, you know, take 
about 5 minutes, but whatever you really want.
    I know you'll have to leave and I know you'll want to hear 
Mr. Glick.
    If you want me to have Mr. Glick go before anybody, let me 
know because he flew in from Hawaii. I don't know if you know 
how far that is.
    [Laughter.]
    Senator Franken. So if you need Mr. Glick to go because I 
know you want you.
    Senator Schatz. Mr. Chairman, we're fine as it is. I'll 
just have to leave before 4.
    Senator Franken. OK.
    Mr. Nadel.

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

    Mr. Nadel. OK. Thank you very much, Chairman Franken and 
assembled staff. We very much appreciate your holding a hearing 
on this important topic.
    As you noted, I'm the Executive Director of the American 
Council for an Energy Efficient Economy. We're a non-profit 
research and education organization that works on energy 
efficiency policies and programs.
    Given the difficulties that we've had here in Washington 
reaching consensus on energy policy States are increasingly 
taking the lead. ACEEE has been working on state policy for 
more than a decade. We have assisted officials and 
organizations in more than half the States with policy and 
program development and implementation and are well known for 
our state energy efficiency policy data base with information 
on energy efficiency policies in each of the 50 States and for 
our annual State energy efficiency scorecard.
    I included a summary of our scorecard, a summary map, on 
page 2 of my written testimony.
    Based on our work with States it is apparent that most 
States are now taking at least some action to help consumers 
and businesses reduce their energy use and their energy bills 
and also to promote economic development through energy 
efficiency.
    My written testimony describes 6 areas where States are 
working. In these brief oral comments I will just discuss 4 of 
them. I will leave the other 2 areas for some of the other 
witnesses, having seen their testimony.
    The first area is utility programs and policies. Electric 
and gas utilities serve nearly every American household. They 
are generally regulated monopolies with an obligation to 
provide quality and reliable services to all customers at 
reasonable rates. Over the past several decades a substantial 
majority of States and utilities have recognized that programs 
that help utility customers to use energy more efficiently are 
less expensive per kilowatt/hour saved than the cost of 
generating a kilowatt/hour from a new power plant.
    This is illustrated in Figure 2 on page 4 of my written 
testimony which shows that energy efficiency is typically half 
to a third of the cost of power from a new power plant.
    Just to give a few examples.
    Vermont is one of the leaders in utility sector energy 
efficiency programs. They have established an energy efficiency 
utility called Efficiency Vermont which operates energy 
efficiency programs in most of the State. Over the past decade 
Efficiency Vermont programs have reduced electricity use by 
about 12 percent, a figure that is increasing about 2 percent 
each year. So this is one of Vermont's largest industry 
resources.
    In 2012 the program has provided the State's consumers and 
businesses with net economic benefits of over $100 million. 
That's the benefits minus the cost, still saving $102 million 
which is quite substantial for a State as small as Vermont. 
Independent study estimated a net gain of about 1900 job from 
those investments.
    Energy efficiency creates jobs because designing, 
installing efficiency measures is generally more labor 
intensive than building and operating new power plants.
    Another recent example of State leadership comes from 
Arkansas where the Public Service Commission established a 
series of rules to provide policy guidance guarding energy 
efficiency programs and how utilities would be paid for this 
work. It began with a set of quick start programs to gain 
experience and have now expanded to a full set of utility run 
programs.
    In 2013 the neighboring States of Mississippi and Louisiana 
decided to begin their utility energy efficiency programs 
following what they called the Arkansas model.
    Now utility regulation is primarily the province of States. 
However the Federal Government does provide technical 
assistance to States through the State and local energy 
efficiency action network which is a joint project of DOE and 
EPA. In addition I would note that utility sector energy 
efficiency programs are likely to be the lowest cost compliance 
option for meeting emission standards EPA is now preparing for 
existing power plants. Furthermore energy efficiency is the 
only compliance option that can save consumers money.
    The second area I wanted to mention was building 
benchmarking disclosure. As we discussed earlier, as Senator 
Shaheen noted, Senator Franken, we thank you very much for the 
bill you've introduced on the topic. We are very glad to see 
that Senator Shaheen just announced that they will be 
incorporating that into their new amendment. So hopefully that 
will allow this to move forward along with some of the other 
important provisions in that bill.
    Just to give a couple of examples.
    The District of Columbia later this year will require all 
commercial and multifamily buildings over 50 thousand square 
feet to report benchmarking data. They will also eventually 
need to report their energy and water use to the district.
    In Kansas, another example. A law was passed in 2003 
requiring the disclosure of energy information for new homes. 
The energy rating law was amended in 2007 to move the time of 
disclosure from the time of closing to the time the house was 
being shown. The State has developed a standard energy 
efficiency checklist to be provided to potential buyers which 
compares the new homes features to the State's energy code 
guidelines. therefore, allows the consumers, the people who are 
buying these homes, to make informed choices.
    We think an excellent way for the Federal Government to 
help the States is through passage of your bill, S. 1206, 
Senator Franken or passage of the new version of the Shaheen/
Portman bill which now incorporates it.
    Turning to a third area. Combined heat and power systems 
produce heat and electricity at the same time. By using the 
same system to produce both forms of energy waste is reduced 
and much higher efficiencies obtained.
    For example with CHP systems combined efficiencies of 60 to 
80 percent can be obtained, much better than the 30 percent 
efficiency of a typical existing power plant, even the 50 
percent efficiency of the very best new plants.
    Some States are leading the way to increase the cost 
effective use of CHP systems. I provide some specific examples 
from Mr. Taylor's State of Texas as well as from New Jersey.
    Fourth and last I wanted to note that about building codes. 
Most States have building codes that specify construction 
practice to protect health and safety, reduce building energy 
use. In the case of energy use, national consensus 
organizations develop model codes and the States then adopt 
them.
    As of this past October 40 States have adopted at least the 
2009 model codes and that includes 14 States with more updated 
codes. So major progress is being made.
    I'd also point out that working to have good implementation 
of the codes is also important. Idaho is an excellent example, 
as referred to my written testimony. Idaho has developed a plan 
that will achieve 90 percent compliance with their code by 2017 
and is working with the Northwest Energy Efficiency Alliance to 
measure compliance in the residential sector. I understand that 
initial results are quite good.
    Idaho also has an energy co-collaborative stakeholder group 
that helps train building officials, builders and other 
contractors.
    The Federal Government has been working with model code 
organizations and there are a number of improvements on how the 
Federal Government can better work with and assist States in 
the Shaheen/Portman bill. So hopefully those will be adopted, 
when and if it reaches the Senate Floor.
    In conclusion, I'd note that States are stepping out and 
leading energy efficiency efforts. It's a way to save energy, 
lower consumer bills and promote economic development. States 
can learn from each other to advance their efforts. The Federal 
Government can help by providing information on best practices, 
technical assistance, matching grants for innovative efforts 
and assistance in setting financing programs which some of the 
other witnesses will discuss.
    The Federal Government can learn from successful State 
efforts and pass legislation such as Shaheen/Portman that 
builds on what States have done so far and helps them to do 
more in the future.
    With that I conclude my testimony and look forward to your 
questions.
    [The prepared statement of Mr. Nadel follows:]

   Prepared Statement of Steven Nadel, Executive Director, American 
            Council for an Energy-Efficient Economy (ACEEE)
Summary
    States are increasingly taking action to help consumers and 
businesses reduce their energy use and costs and promote economic 
development through energy efficiency. In this testimony I describe six 
areas where states are taking action: utility programs and policies, 
building benchmarking and disclosure, financing, state lead-by-example 
efforts, combined heat and power systems, and building codes. Most 
states have some good energy efficiency policies, and I provide 
specific examples in each area. States can learn from the practices of 
other states. The federal government can assist states in a variety of 
ways including sharing best practices, technical assistance, 
facilitating coordination among states, and providing challenge funding 
for innovative efforts. I make specific suggestions in the discussion 
of each program area. In addition, in light of the current propane 
crisis in the upper Midwest and Northeast, I briefly discuss how states 
can use energy efficiency to reduce demand for propane and fuel oil.
    I conclude that states are stepping out and leading energy 
efficiency efforts in the United States. In most cases these have been 
bipartisan measures. The federal government can learn from specific 
state efforts, and perhaps also see that energy efficiency enjoys 
bipartisan support and may be one of the few areas where Congress can 
make progress this year. The Senate Energy Committee reported out the 
Shaheen-Portman Energy Savings and Industrial Competitiveness Act (S. 
1392) on a strong bipartisan vote. Since then a variety of bipartisan 
amendments have been added, including several that build on successful 
state efforts and would help states do more. I hope this spirit of 
bipartisanship will spread to the full Senate and House and that the 
Shaheen-Portman bill will be enacted into law.
Introduction
    My name is Steven Nadel, and I am the executive director of the 
American Council for an Energy-Efficient Economy (ACEEE), a nonprofit 
organization that acts as a catalyst for energy efficiency policies, 
programs, technologies, investments, and behavior. We were formed in 
1980 by energy researchers and now work with an array of researchers, 
businesses, and national, state, and local policymakers. I have been 
personally 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.
    ACEEE has been working on state policy for more than a decade. We 
have assisted officials and organizations in more than half the states 
with policy and program development and implementation. We have an 
online database with detailed information on policies in each of the 
states (http://aceee.org/sector/state-policy). We also publish an 
annual State Energy Efficiency Scorecard that ranks each of the states 
on 26 variables and assigns an overall score.\1\ These rankings have 
motivated many governors--including those at the top and bottom of the 
rankings-to take action to improve their state's rank. To provide just 
one example, at his 2012 Energy Summit, Governor Phil Bryant of 
Mississippi pledged to improve his state's low ranking, and in 2013 
Mississippi was one of the most improved states in our scorecard. A 
summary map from our 2013 state scorecard is provided on the next page. 
Details for each of the states can be found at http://aceee.org/state-
policy/scorecard.
---------------------------------------------------------------------------
    \1\ A. Downs et al., The 2013 State Energy Efficiency Scorecard 
(Washington, DC: American Council for an Energy-Efficient Economy, 
2013). http://aceee.org/research-report/e13k.
---------------------------------------------------------------------------
    Figure 1.* Summary results of ACEEE 2013 State Energy Efficiency 
Scorecard
---------------------------------------------------------------------------
    * All figures have been retained in subcommittee files.
---------------------------------------------------------------------------
    Based on our analysis of state policy over the past decade, we are 
happy to report that the majority of states have taken action to 
promote energy efficiency as a means of saving energy, lowering 
consumer bills, and promoting economic development. Furthermore, we 
find that the number of state energy efficiency programs and policies 
is increasing each year. State action and leadership on energy 
efficiency are particularly important given the difficulties Congress 
has had in reaching consensus on energy policy in recent years.
    In this testimony I discuss six areas where states can lead, and 
have led, on energy efficiency, providing specific examples for each. 
These areas are:

          1. Utility programs and policies
          2. Building benchmarking and disclosure
          3. Financing
          4. State lead-by-example efforts
          5. Combined heat and power systems
          6. Building codes

    In addition, given the propane crisis now facing the upper Midwest, 
I have been asked to briefly discuss strategies for using energy 
efficiency to reduce demand for propane and heating oil.
Areas of State Leadership
            Utility Programs and Policies
    Electric and gas utilities serve nearly every American household. 
They are generally regulated monopolies with an obligation to provide 
quality and reliable services to all customers at reasonable rates. 
Over the past several decades, a substantial majority of states and 
utilities have recognized that programs that help utility customers to 
use energy more efficiently are less expensive per kilowatt hour (kWh) 
saved than the cost of generating a kWh from a new power plant. For 
example, a forthcoming ACEEE report finds that in recent years energy 
efficiency programs have cost utilities on average about 3 cents per 
kWh saved,\2\ which is about one half to one third the cost of power 
from a new power plant as shown in figure 2 below.
---------------------------------------------------------------------------
    \2\ M. Molina, Still the First Fuel: National Review of Energy 
Efficiency Cost of Saved Energy (draft title) (Washington, DC: ACEEE, 
forthcoming April 2014).
---------------------------------------------------------------------------
    In 2012 (the last year for which data are available), American 
utilities invested over $7 billion in energy efficiency programs. 
Annual incremental savings from these programs totaled about 23 billion 
kWh per year, or enough energy to power over 2 million average American 
homes for a year.\3\ These programs save money for consumers and 
businesses in two ways. First, participants in the programs receive a 
direct benefit: lower energy use reduces their energy bills. Second, 
because energy efficiency programs are less expensive per kWh than new 
power plants, all customers benefit from a reduced need for rate 
increases to pay for expensive new plants. In some cases, energy 
efficiency savings can also defer or eliminate the need for 
transmission and distribution upgrades, further reducing the need for 
rate increases.\4\
---------------------------------------------------------------------------
    \3\ Downs et al. 2013. See footnote 1
    \4\ Regulatory Assistance Project, U.S. Experience with Efficiency 
as a Transmission and Distribution Resource (Montpelier, VT: Regulatory 
Assistance Project, 2012). http://raponline.org/document/download/id/
6120
---------------------------------------------------------------------------
    Figure 2. Cost per lifetime kWh of various electric resources. 
High-end range of coal includes 90 percent carbon capture and 
compression. PV stands for photovoltaics. IGCC stands for integrated 
gasification combined cycle, a technology that converts coal into a 
synthesis gas and produces steam. Source: Energy efficiency portfolio 
data from Molina 2014 (see footnote 2); all other data from Lazard 
2013.\5\
---------------------------------------------------------------------------
    \5\ Lazard, Levelized Cost of Energy Analysis Version 7.0. 
(Washington, DC: Lazard, 2013). http://gallery.mailchimp.com/
ce17780900c3d223633ecfa59/files/
Lazard__Levelized__Cost__of__Energy__v7.0.1.pdf
---------------------------------------------------------------------------
    Vermont is a leader in utility-sector energy efficiency programs. 
They have established an energy efficiency utility called Efficiency 
Vermont which operates energy efficiency programs in most of the state. 
Over the past decade, Efficiency Vermont's programs have reduced 
electricity use by about 12 percent, a figure that is increasing by 
about 2 percent each year. In 2012, according to an Efficiency Vermont 
estimate that has been verified by the state regulator, the programs 
provided the state's consumers and businesses with net economic 
benefits of $102 million.\6\ An independent study estimated a net gain 
of about 1,900 job-years from 2012 investments plus spending of the 
money saved as a result of efficiency measures installed in 2012.\7\ 
Energy efficiency creates jobs because designing and installing 
efficiency measures is generally more labor-intensive than building and 
operating new power plants.
---------------------------------------------------------------------------
    \6\ Efficiency Vermont, 2012 Annual Report (Burlington, VT: 
Efficiency Vermont, 2013). http://www.efficiencyvermont.com/docs/
about__efficiency__vermont/annual__reports/Efficiency-Vermont-Annual-
Report-2012.pdf
    \7\ 7 Optimal Energy and Synapse Resource Economics, Economic 
Impacts of Energy Efficiency Investments in Vermont: Final Report 
(Rutland, VT: Optimal Energy, 2011). Appendix 5 in http://
publicservice.vermont.gov/sites/psd/files/Pubs__Plans__Reports/
State__Plans/Comp__Energy__Plan/2011/2011 percent20CEP__Appendixes 
percent5B1 percent5D.pdf. A job year is a full-time-equivalent (FTE) 
job for one year.
---------------------------------------------------------------------------
    Another recent example of state leadership comes from Arkansas 
where the Public Service Commission established a series of rules to 
provide policy guidance regarding energy efficiency programs and how 
utilities would be paid for this work. Arkansas began with a set of 
quick-start programs to gain experience and now has expanded to a full 
set of utility-run programs, with a savings target in 2015 of 0.9 
percent of sales from measures installed in 2015. In 2013, the 
neighboring states of Mississippi and Louisiana decided to begin 
utility energy efficiency programs using the Arkansas model.
    Utility regulation is primarily the province of states. However, 
the federal government does provide technical assistance to states 
through the State and Local Energy Efficiency Action Network (SEE 
Action), a joint project of DOE and EPA. This program conducts studies 
on best practices that all states can use and also provides customized 
assistance when requested by states.
    A more aggressive federal strategy would be to establish federal 
energy-saving targets for utilities. Twenty-six states have set such 
targets.\8\ A forthcoming ACEEE study finds that most of these states 
are either exceeding, meeting, or close to meeting their targets.\9\ 
Based on this record of success, Senator Markey has proposed federal 
targets in S. 1627.
---------------------------------------------------------------------------
    \8\ Downs et al. 2013. See footnote 1. This scorecard lists 25 
states; Connecticut is a more recent addition.
    \9\ A. Downs and C. Cui, EERS Progress Report (draft title) 
(Washington, DC: ACEEE, forthcoming March 2014).
---------------------------------------------------------------------------
                  building benchmarking and disclosure
    A variety of states and cities have established policies to require 
benchmarking buildings' energy performance relative to similar 
buildings; in some cases they also require the disclosure of this 
information to potential purchasers or renters. Some policies apply 
just to public facilities, others to large properties (e.g., buildings 
with a floor area of 50,000 square feet or more), and others more 
broadly. Such policies allow building owners to identify inefficient 
buildings and target them for retrofits. Where disclosure is required, 
knowledge of building operating costs can inform the decisions of 
prospective purchasers and renters.
    The District of Columbia and Kansas provide examples of what states 
can do. In the District of Columbia, by later this year all commercial 
and multifamily buildings over 50,000 square feet will be required to 
report benchmarking data to the District on a yearly basis. The EPA 
ENERGY STAR Portfolio Manager is used to measure a building's energy 
performance. In the District, 266 buildings, representing 90 million 
square feet have taken the next step and been certified with the ENERGY 
STAR label. District buildings of more than 150,000 square feet were 
required to report their 2012 energy and water use to the District 
Department of the Environment prior to April 2013. The scope of the 
policy is set to expand in coming years and will ultimately include all 
commercial and multifamily buildings of more than 50,000 square feet.
    In Kansas, a law was passed in 2003 requiring the disclosure of 
energy efficiency information for new homes (K.S.A. 66-1228). The state 
developed a standard reporting format for builders and sellers in which 
new homes' features are compared to the state's energy code guidelines. 
The energy rating law was amended in 2007 to move the time of 
disclosure from the time of closing to the time the house was being 
shown. A completed energy efficiency checklist must be made available 
to potential buyers.
    The federal government can help state efforts in this area by 
providing technical assistance and perhaps some funding to help states 
and other market players get started. S. 1206, introduced by Senator 
Franken, will encourage and help states to do benchmarking and 
disclosure by (1) conducting a study on benchmarking and disclosure 
best practices, (2) combining existing databases of benchmarking data 
to make it easier to compare and analyze data, and (3) establishing a 
small competitive grant program for utilities and their partners to 
make whole-building data available to building owners and help them 
benchmark the performance of their buildings. My understanding is that 
Senators Shaheen and Portman will be incorporating this bill into their 
larger Energy Savings and Industrial Competitiveness Act (S. 1392). We 
commend Senators Franken, Shaheen, and Portman for their efforts to 
develop this bill and move it forward.
Financing
    Energy efficiency measures generally require an up-front cost but 
then pay back in terms of lower energy bills over several years. While 
some consumers and businesses have access to the capital needed to make 
these investments, consumers who lack the capital need financing to 
undertake energy-saving projects. Some building owners finance 
efficiency upgrades when they refinance their mortgages. While some 
banks are interested in financing specifically for energy efficiency 
upgrades, most are unfamiliar with such upgrades and so are not 
involved in this market. To facilitate the flow of private capital into 
this market, many states have partnered with banks and other lenders in 
a variety of ways to make financing widely available. Other states have 
set up their own financing and/or incentive programs. Two strong 
examples are Pennsylvania and Alaska.
    Pennsylvania has offered the Keystone HELP program since 2006. The 
program is run out of the State Treasurer's office. AFC First 
Financial, an independent financial institution, originates the loans 
and completes the work through a network of approved in-state 
contractors. To date, more than 11,000 loans have been made totaling 
about $75 million. Capital was initially provided through the 
Treasurer. However in 2013 the Treasurer packaged and sold nearly 4,700 
loans to investors, raising $31.3 million to replenish the capital 
available for new loans.
    Alaska uses substantial state appropriations to fund energy 
efficiency incentive programs. The Home Energy Rebate Program uses $160 
million in state funding appropriated in 2008, a major investment 
relative to the state's population, but an important one given the 
state's extreme climate and high heating bills. The program allows 
rebates of up to $10,000 based on improved efficiency and eligible 
receipts. Energy ratings are required before and after the home 
improvements. The program also provides expert advice on energy 
efficiency improvements for consumers and tracks their savings.
    To take a few more examples, Texas has run a very successful 
``LoanStar'' program for more than two decades. Tennessee has partnered 
with Pathway Lending, a small-business lending initiative that has 
grown into a statewide economic development lender, to provide low-
interest energy efficiency loans to businesses. Nebraska has a Dollar 
and Energy Savings Loan program that has financed a range of projects 
covering all sectors. Connecticut's new ``Green Bank'' program is off 
to a good start, particularly with commercial PACE loans. (PACE is an 
acronym for Property Accessed Clean Energy, a financing system where 
the financing charges are included on property tax bills.) Hawaii has 
also started some interesting on-bill financing programs in the past 
few years, but I will let the witness on this panel from the Hawaii 
Energy Office discuss these.
    The federal government can help with technical assistance and 
making capital available. The Federal Housing Administration is 
offering an Energy Savers loan program that some states are promoting. 
The federal government should also study the default rate for energy 
efficiency loans and for mortgages associated with such loans to 
provide improved information on the relative risk of various types of 
energy efficiency financing.
    In addition, several relevant bills are pending before Congress. 
Senators Sanders, Wyden, and Murkowski introduced S. 1200 to expand the 
availability of residential financing. Congress can also make it easier 
to use home mortgages to improve a home's energy efficiency at the time 
of purchase. S. 1106 by Senators Bennet and Isakson introduces a 
variety of reforms in this regard. My understanding is that Senators 
Shaheen and Portman will incorporate this latter bill into S. 1392.
State Lead-by-Example Efforts
    States can make their own buildings, fleets, and other facilities 
more energy efficient and thereby reduce their operating costs. Such 
efforts also set a good example that shows in-state businesses what 
they can do.
    To take one instance, over the past decade Minnesota has shown its 
commitment to sustainable buildings by setting high performance 
standards and implementing integrated programs that design, manage, and 
improve building energy performance. The state has set a long-term goal 
of having a zero-carbon state building stock by 2030, and it offers a 
complementary benchmarking program to track energy use as well as a 
program to help implement retrofits. Minnesota also requires on-road 
vehicles owned by state departments to reduce gasoline consumption by 
50 percent by 2015. Additionally, new on-road vehicles must have a fuel 
efficiency rating that exceeds 30 mpg for city and 35 mpg for highway.
    In Mississippi, the Energy Sustainability and Development Act of 
2013 requires all state agencies to report energy consumption or face 
penalties. Agencies work with the Mississippi Development Authority 
Energy and Natural Resources Division to develop energy management 
plans. The state has also set a goal of achieving 20 percent energy 
savings in public facilities by 2020 and has upgraded its energy codes 
for public and private buildings. Mississippi is also working to 
improve its fleet efficiency, requiring at least 75 percent of state 
vehicles to meet fuel economy standards of at least 40 mpg by mid-2014.
    Likewise, Hawaii's lead-by-example program offers comprehensive 
energy efficiency services to state agencies. Aggressive policies 
underpin the program and include a benchmarking requirement that all 
state agencies evaluate energy efficiency in existing buildings of 
qualifying size and energy characteristics. Each agency sets benchmarks 
for these buildings using ENERGY STAR Portfolio Manager or a similar 
tool, and buildings must be retro-commissioned every five years.\10\ In 
addition, new state buildings must meet LEED Silver standards. As a 
result of Hawaii's lead-by-example program, in 2011 total state agency 
electricity consumption was 4.6 percent below that of the 2005 baseline 
year.
---------------------------------------------------------------------------
    \10\ When a building is new, its various systems need to be tested 
and calibrated so they operate as designed, a process called 
commissioning. But systems get out of calibration and should be 
periodically retro-commissioned.
---------------------------------------------------------------------------
    Oklahoma also stands out in this area. Their lead-by-example 
efforts were a key factor in their being recognized as one of the most 
improved states in the ACEEE 2012 State Energy Efficiency Scorecard.
    The federal government has been a leader in developing Energy 
Savings Performance Contracts (ESPC) that leverage private capital to 
upgrade federal buildings. While quite a few states have used this 
mechanism, some have not. The Department of Energy should step up its 
efforts to help these latter states establish their own ESPC programs.
Combined Heat and Power
    Combined heat and power (CHP) systems produce both heat and 
electricity at the same time. By using the same system to produce both 
forms of energy, waste is reduced and much higher efficiencies can be 
obtained. For example, with CHP systems, combined efficiencies of 60 
percent to 80 percent can be obtained, much better than the 30 percent 
efficiency of an average power plant or even the 50 percent efficiency 
of a new high-efficiency plant.
    The growth of CHP has been slow due to a variety of barriers in 
some states, including overly stringent requirements to hook up to the 
electric grid, high backup power charges, and environmental regulations 
that fail to recognize the higher efficiency of CHP systems.
    Some states are leading the way to increase the use of cost-
effective CHP systems. For example, in May 2013, Texas House Bill 2049 
became law, amending the state Utilities Code to allow owners of CHP 
units to sell excess electric power at retail prices to more than one 
purchaser of the CHP unit's thermal output. Owners of CHP units who do 
this are not subject to regulation as a retail electric utility. This 
new law should make it simpler for CHP operators to sell excess power 
and make investment in CHP more attractive.
    After New Jersey was particularly hard hit by Hurricane Sandy in 
October 2012, the state began to look at CHP as protection against 
future extreme weather events. New Jersey previously had CHP incentive 
programs and had set a target of 1,500 megawatts (MW) of new CHP 
facilities by 2020. Following Sandy, the state decided to prioritize 
facilities such as hospitals, prisons, and wastewater treatment plants 
that would be most in need of power in the event of another Sandy-like 
scenario. New Jersey is now establishing new policies and programs to 
put these plans into effect.\11\
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    \11\ M. Winka, ``New Jersey's Clean Energy Program: Opportunities 
for CHP'' (presentation to NGA Policy Academy on Industrial EE and CHP) 
(Trenton, NJ: New Jersey Board of Public Utilities, 2013). http://
www.nga.org/files/live/sites/NGA/files/pdf/2013/
1303PolicyAcademyWINKA.pdf .
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    The federal government can encourage and help states to adopt 
policies that support cost-effective CHP systems. The joint DOE/EPA SEE 
Action program is one example. Federal tax incentives are also 
available for CHP systems meeting efficiency thresholds, a program 
originally enacted in the Emergency Economic Stabilization Act of 2008.
Building Codes
    Most states have building codes that specify construction practices 
to protect health and safety and reduce building energy use. In the 
case of energy use, national consensus organizations develop model 
codes (e.g., the American Society of Heating, Refrigerating and Air-
Conditioning Engineers [ASHRAE] and the International Energy 
Conservation Code [IECC]). States generally adopt these model codes, 
which are typically updated every three years.
    The American Recovery and Reinvestment Act of 2009 (ARRA) 
encouraged states to adopt the then most recent codes. Forty states 
plus the District of Columbia have either adopted at least one these 
codes or were on a clear path to adoption as of October 2013. Moreover, 
14 states have adopted a code based on model codes published in 2010 or 
their equivalent. Of these, ten states updated both residential and 
commercial codes (California, Connecticut, Illinois, Iowa, Maryland, 
Massachusetts, New York, Rhode Island, Vermont, and Washington), and 
four states updated just commercial codes (Mississippi, North Carolina, 
Oregon, and Utah).
    Working to improve compliance with the codes is also important. 
Idaho is a good example. They have developed a plan to achieve 90 
percent compliance with their code by 2017, and the Idaho Energy Code 
Compliance Database for tracking compliance has been operational since 
June 2012. Idaho is working with the Northwest Energy Efficiency 
Alliance (a regional organization serving four northwestern states) to 
measure compliance in the residential sector, and the initial results 
are quite good. Idaho also has an energy code collaborative stakeholder 
group that trains building officials, builders, and other contractors.
    The federal government has been working with the model code 
organizations and states for many years. DOE could improve these 
efforts by setting targets for new codes through a public process, 
providing increased technical assistance to code-setting organizations, 
and better assisting and encouraging states to adopt the latest codes 
and implement them well. Such provisions are contained in Title I of 
the Energy Savings and Industrial Competiveness Act (S. 1392) which was 
reported out of the full Energy Committee last year. DOE assistance to 
states to help with code development and implementation is underfunded; 
we encourage this committee to work with the Appropriations Committee 
to rectify this situation.
Policies to Reduce Propane Use
    The Energy Information Administration estimates that in 2013, about 
0.50 quadrillion Btu (``quads'') of propane were used in the 
residential sector, 0.15 quads in the commercial sector, and 0.05 quads 
for transportation. Much more was used in industry, but propane is 
combined with other fuels and not broken out.\12\ Given the current 
propane shortage and the likelihood that the events that precipitated 
this shortage could happen again, it makes sense to improve the energy 
efficiency of propane-fired appliances and propane-heated buildings. 
Accelerated efficiency efforts for propane will not solve the current 
crisis, but they can help avert future crises.
---------------------------------------------------------------------------
    \12\ Energy Information Administration (EIA), 2014 Annual Energy 
Review, Early Release (Washington, DC: EIA, 2013). http://www.eia.gov/
forecasts/aeo/er/.
---------------------------------------------------------------------------
    In 2006 ACEEE published a study called Reducing Oil Use through 
Energy Efficiency: Opportunities Beyond Cars and Light Trucks.\13\ As 
most propane comes from oil, this study included many energy efficiency 
opportunities to reduce propane use, including more efficient propane-
fired furnaces and water heaters, and improving the energy efficiency 
of propane-heated homes. For example, we found opportunities to reduce 
propane for home heating by about 38 percent, and opportunities to 
reduce propane for water heating by about 28 percent.
---------------------------------------------------------------------------
    \13\ R.N. Elliott et al., Reducing Oil Use through Energy 
Efficiency: Opportunities Beyond Cars and Light Trucks (Washington, DC: 
ACEEE, 2006). http://aceee.org/research-report/e061.
---------------------------------------------------------------------------
    Many utilities offer energy efficiency programs for homes and 
businesses that use electricity and natural gas. But none offers 
programs for propane and fuel oil, and the fuel dealers are usually too 
small and undercapitalized to offer energy efficiency services. To 
address this gap, several states have begun programs to help residents 
using propane and oil. These programs are most common in the Northeast 
where a higher proportion of homes use oil and propane than in other 
regions.
    For example, in addition to its electric efficiency program, 
Efficiency Vermont spends about $5 million per year on programs to save 
unregulated fuels including propane, oil, and wood. The funds come from 
Efficiency Vermont bids into the ISO-New England forward capacity 
market and from sales of emissions allowances under the regional 
greenhouse gas program. Most of the funds are used for the Home 
Performance with ENERGY STAR residential retrofit service, which 
retrofitted about 1,300 homes using unregulated fuels in 2013. Smaller 
funding amounts serve the small business and commercial sectors.\14\ An 
alternative funding source is illustrated by New York state, which has 
a very small tax on fuel oil. States could use a similar mechanism for 
propane, with the funds benefitting propane users.
---------------------------------------------------------------------------
    \14\ Scott Johnstone, Executive Director, Vermont Energy Investment 
Corp. (which runs Efficiency Vermont), email to Steven Nadel, February 
6, 2014.
---------------------------------------------------------------------------
    The federal government could encourage and assist more states to 
implement energy efficiency programs for unregulated fuels through 
technical assistance, competitive grants, and financing.
Conclusion
    States are stepping out and leading energy efficiency efforts in 
the United States as a way to save energy, lower consumer bills, and 
promote economic development. States can learn from each other to help 
advance their efforts. The federal government can help with information 
on best practices, technical assistance, matching grants for innovative 
efforts, and assistance in setting up financing programs. The federal 
government can also learn from successful state efforts and pass 
legislation such as the Shaheen-Portman bill (S. 1392) that builds on 
what states have done so far to help them do more in the future.
    Good programs and policies are found in the majority of states, 
both blue and red. Energy efficiency has been a bipartisan effort at 
the state level, as it has been in the Senate Energy Committee. I hope 
this spirit of bipartisanship can spread to the full Senate and House.
    This concludes my testimony. Thank you for the opportunity to 
present this information.

    Senator Franken. Thank you, Mr. Nadel.
    We've been joined by the Ranking Member, Senator Risch of 
Idaho of which you were--the State which we just heard about 
the efficiency of your building codes. So thank you for joining 
us. We are--have been talking--we're just beginning the 
testimony because of the votes.
    We started off with Senator Shaheen of Shaheen/Portman fame 
or Portman/Shaheen fame now. We're joined by the esteemed 
Senator from Ohio.
    So I guess we'll continue our testimony with Mr. 
Taylor.Prepared Statement of William E. Taylor, Director, Texas 
State Energy Conservation Office, Arlington, VA

 STATEMENT OF WILLIAM E. TAYLOR, DIRECTOR, TEXAS STATE ENERGY 
               CONSERVATION OFFICE, ARLINGTON, VA

    Mr. Taylor. Chairman Franken and Ranking Member Risch, my 
name is William E. ``Dub'' Taylor. I served as the Director of 
the Texas State Energy Conservation Office. Today I'm 
testifying on behalf of the National Association of State 
Energy Officials, known as NASEO, where I served as Vice 
Chairman.
    I formally served as chairman as NASEO. Our Association 
includes all of the 56 State offices that represent energy 
issues in the State's territories and the District of Columbia. 
I'm pleased to be appearing before this subcommittee to discuss 
the activities within my own State, but also actions around the 
United States and finally how State actions in the energy arena 
can inform Federal policy and legislation.
    You have my full written testimony and from that I would 
like to highlight 2 key areas.
    First of all, select State actions.
    Our Texas LoanSTAR revolving loan program has operated for 
2 decades and has provided public entities over $390 million at 
low cost financing so they can implement energy and water 
efficiency improvements. LoanSTAR, which is also the nickname 
of our State, in this case stands for Loans to Save Taxes and 
Resources, a play on words. This program has made a major 
difference in bringing the utility costs down for public 
facilities thus allowing taxpayer dollars to be utilized for 
priority issues. We have hit our targets. The energy savings of 
$423 million have exceeded the costs and there has never been a 
loan default.
    In addition to our own resources we've added funds from the 
American Recovery and Reinvestment Act to this program and this 
has made a significant difference allowing us to greatly expand 
the program. More recently Texas has begun to implement the 
Property Assessed Clean Energy or PACE Act in Texas which 
permits financing to be provided upfront allowing permanent 
energy and water efficiency improvements to be made by 
commercial and industrial businesses with repayment be a 
voluntary property assessment. To facilitate an orderly, 
consistent State wide approach to PACE design and 
implementation, we are working with a coalition of stakeholders 
including local governments, property owners, lenders, energy 
service companies and others. The results have been very 
positive.
    I also want to highlight some of the actions being--taking 
place in other States.
    Obviously you're also hearing today from Minnesota and 
Hawaii. We at NASEO attempt to work with the individual States 
and on a collective basis to provide good ideas and spread the 
successes.
    Just like our LoanSTAR program almost 40 States have some 
form of energy financing programs.
    In Alaska, for example, they established a $250 million 
Alaska energy efficiency revolving loan fund in 2010. The fund 
is available to finance energy efficiency improvements on 
public facilities throughout the State.
    While most are revolving loan funds, we are beginning to 
see the development of so called green banks in the States.
    In addition to financing, we've also seen a big increase in 
the development of comprehensive energy plans. NASEO has 
studied State actions and shared the best practices with all of 
our colleagues.
    For example, in Idaho, the Governor's Office of Energy 
Resources which is the State Energy Office, coordinates energy 
planning with all State agencies, the Idaho PUC, the 
legislature, local elected officials and other stakeholders. 
Idaho has also participated in regional energy dialogs.
    The second area I wanted to cover is what can the Federal 
Government do?
    NASEO has been very pleased with the increased level of 
cooperation we are seeing from DOE under Secretary Moniz along 
with the new EPSA office led by Melanie Kenderdine, the Office 
of Electricity Delivery and Energy Reliability known as OE and 
the Office of Energy Efficiency and Renewable Energy. 
Coordination on energy emergencies through OE and EPSA has 
continued and has been necessary in light of this winter's 
propane issues and the aftermath of Super Storm Sandy in the 
Northeast. The extraordinary technical and analytical expertise 
of OE combined with the State energy offices emergency 
planning, mitigation and response efforts is a Nation's first 
line of defense in limiting the health and safety impacts of 
energy supply emergencies, big and small that happen every year 
from weather, cyber and other market disruptions.
    NASEO supports the continued next, on behalf of NASEO, I 
want to stress the support of certain legislation and Federal 
actions. NASEO supports the continued and expanded funding of 
the State Energy Program, SEP, and the Weatherization 
Assistance Program. These programs are a critical element of 
the State/Federal partnership. As you move toward FY'15 we hope 
the appropriations process will continue to recognize the 
import of these programs.
    The most recent national laboratory study of SEP showed 
that for every Federal dollar invested almost $11 is leveraged 
from non-Federal sources and over $7 is saved where the State 
energy programs are involved. Senators Coons, Collins and Reed 
have proposed a bipartisan bill, S. 1213 to reauthorize SEP and 
Weatherization. NASEO strongly endorses S. 1213 and we had 
hoped it would have been included in the Shaheen/Portman bill, 
S. 1392.
    Congress and the Administration can also help beyond the 
basic reauthorization by ensuring that the entire SEP 
appropriation go for the basic formula allocation.
    NASEO also believes that the passage of the Energy 
Production Innovation Challenge, originally introduced as S. 
1209 by Senators Warner, Manchin, Tester and Schatz, would be 
another opportunity for State/Federal cooperation. The bill 
would challenge States to develop new ideas and strategies for 
developing energy savings and improving energy productivity.
    NASEO also supports the Sanders/Wyden/Murkowski Residential 
Energy Savings Act introduced as S. 1200. This bill would 
provide specific support in the residential sector by enabling 
people to borrow money at reasonable rates, improve the energy 
efficiency of their homes and pay back the loans.
    These 3 bills would all complement the proposals contained 
in Shaheen/Portman and the McKinley/Welch H.R. 1616 bill in the 
House which NASEO also supports.
    In addition, Chairman Franken's bills on building 
benchmarking, S. 1206 and the Local Energy Supply and 
Resiliency Act, S. 1205, that would encourage waste heat 
recovery systems are both common sense actions.
    We would be happy--I'd be happy to respond to any 
questions. Thank you for the opportunity to testify.
    [The prepared statement of Mr. Taylor follows:]

 Prepared Statement of William E. Taylor, Director, Texas State Energy 
                   Conservation Office, Arlington, VA
    Chairman Franken and Ranking Member Risch, my name is William E. 
``Dub'' Taylor, and I serve as the Director of the Texas State Energy 
Conservation Office. Today, I am testifying on behalf of the National 
Association of State Energy Officials (``NASEO''), where I serve as the 
Vice-Chairman. I formerly served as Chairman of NASEO. Our association 
includes all the 56 energy offices from the states, territories and the 
District of Columbia. Our objective is to operate programs and develop 
and implement policies that improve our nation's energy position, and 
to diversify our energy portfolio. While the state energy offices are 
all in different places in state government, there are a common set of 
activities focused on energy and economic development, sensible energy 
efficiency and renewable energy policies, balanced portfolios and 
coordination with our peers.
    I am pleased to be appearing before this Subcommittee to discuss 
the activities within my own state, but also actions around the United 
States, and finally how state actions in the energy arena can inform 
federal policy and legislation. I am very pleased to be appearing 
before you with my counterparts from Hawaii and Minnesota.
    In my own state of Texas, we obviously have a large resource base 
in the oil and gas area. The shale revolution in my region, centered 
now on the Eagle Ford, has dramatically helped to improve our nation's 
energy position. As part of our commitment to a diverse resource base, 
we have implemented policies to facilitate the development of our Clean 
Renewable Energy Zone (``CREZ'') transmission system upgrades, which 
has led to the multi-billion dollar development of wind resources in 
west Texas and high voltage electric transmission facilities to move 
those resources to the population centers further east. As the 
Subcommittee knows, our intrastate transmission system, ERCOT, is not 
regulated at FERC, but we believe our uniquely Texas system has been 
responding to changes in the energy marketplace. We certainly work 
closely with the large local governments in our state, such as Austin 
and San Antonio, which have helped expand renewable energy and energy 
efficiency opportunities.
    I want to discuss a couple of programs in Texas in more detail. 
First, our LoanSTAR (``Loans to Save Taxes And Resources'') energy and 
water revolving loan program has operated for two decades and has 
provided hundreds of millions of dollars in low-cost financing to 
public facilities to implement energy and water efficiency 
improvements. This program has made a major difference in bringing the 
utility costs down for public facilities, thus allowing taxpayer 
dollars to be utilized for priority issues. We have hit our targets. 
The energy savings have exceeded the costs and there has never been a 
loan default. In addition to our own resources, we added funds from the 
American Recovery and Reinvestment Act (``ARRA''), and this made a 
significant difference, allowing us to greatly expand the program. In 
addition, local governments in Texas have begun to implement a 
Commercial and Industrial PACE program, which permits financing to be 
provided up-front, and energy efficiency improvements to be made by 
businesses, while keeping payments manageable. My office has been 
working closely with the local governments to ensure uniformity and 
avoid needless duplication of tasks. The results have been positive.
    While we proud Texans like to think we are the biggest and the 
best, just last week the state energy officials met in Washington, D.C. 
for our winter meeting. The energy directors all share very good 
information and we love to ``steal'' ideas from each other for good 
programs and policies. Of course, the overlay of the difficult 
situation in the propane market was discussed, and we are hopeful that 
situation will begin to ease, both on price and supply. Interestingly, 
Energy Secretary Moniz spoke to our group and forcefully made the case 
that he wanted better and more expanded partnerships with state and 
local governments. He indicated that he wanted our ideas for the newly 
developing Quadrennial Energy Review (``QER''), and we will be working 
together to supply those ideas to the Secretary. Some of the critical 
issues we discussed at the meeting revolve around interdependencies of 
our energy systems, resiliency, energy policy and environmental 
connections and how the states and the federal government can 
coordinate more effectively. After his speech to NASEO, the Secretary 
headed to Texas for meetings to discuss new developments and see 
firsthand the advances made in clean energy technology deployment, 
smart grid, infrastructure enhancements and responsible development of 
energy resources. He said in many ways, Texas is a perfect example of 
an all-of-the-above energy strategy as it leads the country in oil, gas 
and wind energy production.
    I also want to take the opportunity to discuss some of the actions 
taking place in other states. Obviously, you are also hearing today 
from Minnesota and Hawaii. We at NASEO attempt to work with the 
individual states and on a collective basis to provide good ideas and 
spread the successes.
    We have seen a big increase in the development of comprehensive 
state energy plans. NASEO has studied state actions and shared best 
practices with all of our colleagues. For example, in Idaho the 
Governor's Office of Energy Resources (the state energy office) 
coordinates energy planning with all state agencies, the Idaho PUC, 
legislatures, local elected officials and other stakeholders. Idaho has 
also participated in regional energy dialogues.
    Just like our LoanSTAR program, almost 40 states have some form of 
energy financing programs. While most are revolving loan funds, we are 
beginning to see the development of so-called ``Green Banks.'' 
Connecticut has implemented such a ``Green Bank'' and they are focusing 
on commercial PACE activities. Connecticut used $40 million to attract 
more then $180 million in private investment. Mark Glick and the folks 
in Hawaii have a Green Bank that is developing solar energy programs. 
My colleagues in New York have announced the development and 
implementation of a new Green Bank, which is being capitalized up to $1 
billion. One interesting example is in Nebraska, where they have 
coordinated with the local banks and credit unions on a program that 
has operated for 24 years. The Nebraska Dollar and Energy Savings Loan 
Program has supported 28,100 projects for a total of $301 million. The 
total defaults for that program over 24 years is less than $110,000. 
This program involves a lot of private dollars, but also some funds 
from the oil overcharge refunds and ARRA. Another interesting example 
is in Kansas, where that state has utilized an energy service company 
model and they have implemented energy efficiency measures in over 76 
percent of the state governmental buildings. The Energy Service 
Performance Contracting (``ESPC'') model is certainly being used across 
the country. A big focus on schools has helped in Idaho, where they 
completed 894 K-12 school building audits, followed by HVAC and control 
system tune-ups on 836 buildings and the installation of new energy 
software in 91 buildings. The federal government's ESPC program has 
also been expanding, which is a positive development. Last year in 
Oklahoma, Governor Fallin announced a new effort to increase the energy 
efficiency in state buildings by 20 percent by 2020. We are seeing a 
big expansion in energy financing programs throughout the country, and 
these are successful when they are coupled with public education 
activities so businesses and consumers see the value of actions in this 
area. In Georgia, they have ramped up performance contracting from $4.5 
million to $80 million, just for state facilities. They have also 
lowered loan rates for local efficiency projects at water facilities, 
wastewater plants and landfills.
    In Tennessee the state energy office is working closely with the 
Tennessee Valley Authority in a integrated resource planning process. 
The state has also developed a large, new education and outreach 
initiative to businesses, homeowners and government to expand the use 
of energy efficiency and renewable energy.
    In Alaska, they established a $250 million Alaska Energy Efficiency 
Revolving Loan Fund in 2010. The fund is available to finance energy 
efficiency improvements on public facilities throughout the state. 
First, SEP funds were used to collect benchmarking data on 
approximately 1300 public facilities, plus an additional 100 
university-owned buildings.
    In Arizona, SEP funds have supported energy efficiency improvements 
in 33 school districts across the state. In addition, 57 small school 
districts are being helped to install solar photovoltaic systems.
    In Michigan, over 25 loans and grants have been made through the 
Michigan Clean Energy Advanced Manufacturing program. One example has 
been the company that constructed a pilot scale biomass gasification 
center and an advanced manufacturing rapid prototyping center. They 
have also aggressively moved forward with an energy financing program.
    In New Mexico, in November the utility commission approved a 
``whole home'' energy efficiency program, as well as programs for low-
income New Mexicans and home energy use reporting programs ($22.5 
million).
    In North Dakota, they have worked hard to expand industrial energy 
efficiency activities in partnership with North Dakota State 
University. They have also dramatically expanded educational outreach 
to farmers in order to increase their energy efficiency.
    In Ohio, they have also focused on implementation of an Energy 
Efficiency Program for Manufacturers (``EEPM''), recognizing that 
reducing their costs keeps them more competitive.
    In Louisiana, the state, working with Entergy has invested $14.7 
million in 61 energy efficiency improvements that has resulted in $30 
million in annual fuel savings. The SEP program has also supported 
their Home Energy Rebate Option Program (``HERO''), which has resulted 
in over 1,100 home retrofits and a 30 percent average increase in 
energy efficiency.
    In South Dakota, they have implemented cost-effective energy 
efficiency projects in 55 state-owned building, totaling more than 7.4 
million square feet of building space, saving substantial sums for 
taxpayers.
    In Wisconsin they have implemented a statewide network of trained 
contractors to conduct energy use assessments and install energy 
efficiency products that help small business owners reduce their energy 
costs. They have developed a K-12 energy education program. They have 
also expanded a municipal alternative-fueled vehciles program.
What Can the Federal Government Do?
    The Subcommittee has asked NASEO to provide our thinking on what 
the federal government can do to work with the states and to learn from 
experiences within the states. First of all, NASEO has been very 
pleased with the increased level of cooperation we are seeing from 
Secretary Moniz, the new EPSA Office led by Melanie Kenderdine, Pat 
Hoffman and the Office of Electricity Delivery and Energy Reliability 
(``OE''), David Danielson and the Energy Efficiency and Renewable 
Energy Office, Adam Sieminski at EIA and the Congressional and 
Intergovernmental Affairs Office. Coordination on energy emergencies 
through OE and EPSA has continued, and has been necessary in light of 
this winter's propane issues and the aftermath of Superstorm Sandy in 
the northeast. The extraordinary technical and analytical expertise of 
OE, combined with state energy offices' energy emergency planning, 
mitigation and response efforts, is our nation's first line of defense 
in limiting the health and safety impacts of energy supply 
emergencies--big and small--that happen every year from weather, cyber, 
and other market disruptions. Importantly, more rapid restoration of 
liquid fuel, natural gas, and electricity services also means a faster 
return to normal economic activity, which makes a real difference in 
communities across the country every year. Increasingly, energy supply 
disruptions are impacted by interdependencies among energy 
infrastructure (electric, gasoline, diesel) and other market sectors 
(e.g., rail, water, cyber, food supplies). The state-federal-private 
energy emergency and interdependencies efforts led by DOE and the 
states need your support and increased attention with regard to the 
great value they deliver to consumers and businesses and their 
relevance to the nation's economic and energy security. The states also 
continue to work with EPA on the voluntary Energy Star programs. We are 
working with HUD and DOE on manufactured housing standards and we 
certainly support efforts to incorporate energy costs in the appraisal 
process, both administratively at FHA and through legislation, such as 
the Bennet/Isakson bill (the ``SAVE'' Act). The ``Tenant Star'' bill 
(H.R. 2126) that recently passed the House Energy and Commerce 
Committee is another example of good legislation that would help 
address the split incentives between building owners and lessees. Now 
that the Congress has passed and the President has signed the new 
multi-year Farm bill (H.R. 2642), there is a real opportunity to expand 
such important programs as the Rural Energy for America Program 
(``REAP''), contained in the Energy Title, which would provide $50 
million per year in mandatory funding for energy programs for farmers, 
ranchers and rural small businesses. The $889 million in mandatory 
funding in the Energy Title supports a variety of activities. In 
addition, the financing program for rural electric cooperatives--the 
Energy Efficiency and Loan Conservation Program--based on a South 
Carolina model would permit RUS to support up to $250 million in these 
zero-interest loans. NASEO believes these are all positive steps.
    Continued and expanded funding for the State Energy Program 
``SEP'') ($50 million in FY'14) and the Weatherization Assistance 
Program ($174 million in FY'14) is the first order of business. These 
programs are a critical element of a state-federal partnership. As you 
move towards FY'15, we hope the appropriations process will continue to 
recognize the import of these programs. The most recent national 
laboratory study of SEP showed that for every federal dollar invested, 
almost $11 is leveraged from non-federal sources and over $7 is saved 
where energy efficiency programs are involved. Senators' Coons, Collins 
and Reed have proposed a bipartisan bill (S. 1213) to reauthorize SEP 
and Weatherization. This bill has reduced authorization levels from 
past statutes, recognizes the flexibility provided through SEP and 
would update the Weatherization Program to move towards enhanced 
quality assurance and to permit the development of an innovation 
program which should allow volunteer organizations (such as Habitat for 
Humanity and Rebuilding Together) to expand their role. NASEO strongly 
endorses S. 1213, and we had hoped that it could have been included in 
the Shaheen-Portman bill (S. 1392). Congress and the Administration can 
also help beyond the basic reauthorization by ensuring that the entire 
SEP appropriation of $50 million go for the basic, formula allocation. 
Other proposals, as set forth below, could be used for competitive 
funding. A competitive allocation should not come out of the basic 
formula appropriation.
    NASEO also believes that passage of the Energy Productivity 
Innovation Challenge (``EPIC''), originally introduced as S. 1209 by 
Senators' Warner, Manchin, Tester and Schatz, would be another 
opportunity for state-federal cooperation. The bill would challenge 
states to develop new ideas and strategies for developing energy 
savings and improving energy productivity. An estimate by my fellow 
panelist at ACEEE assumed that $8.40 in energy savings would be 
returned for every dollar invested. This would be a voluntary 
initiative that would allow states to lead the way.
    NASEO also supports the Sanders, Wyden, Murkowski, Residential 
Energy Savings Act (``RESA''), introduced as S. 1200. This bill would 
provide specific support in the residential sector, by enabling people 
to borrow money at reasonable rates, improve the energy efficiency of 
their homes and pay back the loans. The U.S. Treasury would provide 
funds to states who would loan the money out and eventually the 
Treasury would be paid back. Again, it is voluntary and flexible and 
would directly help residential consumers.
    These three bills: a) reauthorization of SEP and WAP, with a new 
innovation fund and quality assurance provisions; b) EPIC; and c) RESA, 
would all complement the proposals contained in Shaheen-Portman (S. 
1392) and the McKinley/Welch (H.R. 1616) bill in the House, which NASEO 
supports. In addition, Chairman Franken's bills on building 
benchmarking (S. 1206) and the Local Energy Supply and Resiliency Act 
(S. 1205), that would encourage waste heat recovery systems, are both 
common sense actions.
    We would be happy to respond to any questions. Thank you for the 
opportunity to testify.

    Senator Franken. Thank you, Mr. Director. Your endorsement 
of my amendments and I'm sure Senator Portman was listening and 
Senator Shaheen will have copies of the testimony and we'll try 
to--I support those as well.
    I'd like to welcome my friend, Mike Rothman, from 
Minnesota, Commissioner of Department of Commerce there. Thank 
you for making the trip. Please go ahead.

   STATEMENT OF MIKE ROTHMAN, COMMISSIONER OF THE MINNESOTA 
                     DEPARTMENT OF COMMERCE

    Mr. Rothman. Chairman Franken, Ranking Member Risch and 
members of the committee, thank you for the opportunity to 
speak on the topic today of lessons from State efficiency and 
renewable programs.
    As the Commissioner of the Minnesota Department of 
Commerce, I am one of the energy regulators for the State of 
Minnesota. With me today is Janet Strath, the Director of our 
State energy office. I want to applaud you, Mr. Chair, for 
holding this hearing. In addition to the written testimony I 
want to supplement and highlight some key important points.
    We in Minnesota are honored to be recognized for our work 
in energy efficiency and renewable energy. I would like to 
repeat a few words of Governor Mark Dayton from his last State 
of the State speech and to say, ``That we will not rest on our 
laurels, but rather we want to use our past achievements as 
springboards for Minnesota's next big leap toward a sustainable 
energy future.''
    Minnesota does not have, as you know, any of its own oil, 
natural gas or coal resources. We, however, do have a 
significant potential to capture energy efficiency and an 
abundance of wind and solar resources. Minnesotans recognize 
the imperative to transform our energy future toward a more 
sustainable, environmentally friendly and reliable energy 
system.
    Today I want to share some of our great success stories.
    Over the past several decades, through our Conservation 
Improvement Program, known as CIP, Minnesota utilities have 
invested hundreds of millions of dollars in improved energy 
efficiency. Minnesota's 2007 Next Generation Act expands upon 
energy efficiency and moved utilities toward an energy savings 
goal of 1.5 percent.
    Energy efficiency is the first option for reducing energy 
use and minimizing related environmental concerns. In real 
terms, Minnesota's energy efficiency programs have avoided the 
need for about two 500 megawatt natural gas combined cycle 
plants.
    In 2007 Minnesota also established the United States most 
aggressive renewable energy standard at the time. The standard 
requires the State's electric utilities obtain 25 percent of 
electric generation from renewable sources by 2025. The largest 
utility, Xcel, must meet a 30 percent standard by 2020.
    I'm pleased to say that all electric utilities are on track 
to meet the goals with current and planned renewable power 
generation projects.
    Minnesota has also established an ambitious statewide 
greenhouse gas reduction goal of 15 percent by 2015, 30 by 2025 
and 80 percent by 2050.
    Now this year Minnesota made several very important steps 
on the pathway of our renewable energy future. Surprisingly 
Minnesota has an abundance of solar energy, even in our 
northern climate. We're proud to point out that Minnesota has 
nearly almost the same solar capacity as Houston. To capitalize 
on this opportunity the State adopted a solar electricity 
standard to obtain 1.5 percent of retail electricity sales from 
solar to electricity by the end of 2020 and a 10-percent goal 
by 2030.
    Minnesota also embarked on developing a value of solar rate 
as an alternative to enhanced distributive generation which is 
meant to achieve for utilities a price that reflects the true 
value of solar to the energy grid. We will be the first State 
in the Nation to implement a value of solar rate. We will be 
creating a model for the country.
    We believe this will be a big leap for Minnesota's solar 
energy market. I can imagine the day when Minnesota has a 
strong solar energy component to diversify and strengthen our 
clean energy resources.
    As background for your legislation.
    Since 2004 all public buildings in Minnesota were evaluated 
using an innovative benchmarking tool. During that time 
sustainable building design guidelines were also developed for 
all public buildings that received a bond funds. In 2008 the 
guidelines expanded to a sustainable buildings 2030 program 
which significantly reduced carbon dioxide emissions. The 66 
buildings designed under this program are predicted to save 
$5.24 million each.
    On your legislation I want to congratulate you on passing 
the Rural Energy for America program. The REAP program is part 
of the Ag bill. It's a significant boost for the Ag community 
and Minnesota.
    The Minnesota Department of Commerce supports your 
benchmarking bill, reflects the need for all building owners to 
easily understand how energy efficient their building are or 
are not.
    We also support the Local Energy Supply and Resilience Act 
that promotes district heating, CHP. Minnesota, as you know, 
has a great success story in the St. Paul District Energy which 
supplies heating and cooling for Minnesota's capital complex as 
well as for much of the St. Paul downtown area.
    I also want to express support for the State Energy Program 
and the Weatherization program. We are hopeful that Congress 
could head toward a more sustainable level for SEP of at least 
$230 million this coming year. The $50 million is certainly an 
important improvement, but a more sustainable level would be 
$75 million this coming year.
    We also strongly support the WAP, Weatherization Assistance 
Program, the WAP program. The $174 million provided for 
Weatherization in fiscal year 2014 is a really good step in the 
right direction.
    If you will indulge me for a minute I'd like to touch on 
the propane crisis in Minnesota.
    Senator Franken. That's a very important crisis right now. 
In fact, we were in near Faribault on a farm doing a roundtable 
or kind of a kitchen table event just this past weekend. So, 
please, I--you know, as much time as you want on that.
    Not as much time, but go ahead.
    Mr. Rothman. I know you all have flights, so I will make it 
as short as possible.
    But thank you, Senator Franken, for your strong leadership 
on the propane emergency.
    Minnesota, like many other States, has been gripped by a 
prolonged shortage of propane. Over 15 percent of homes in 
rural Minnesota are heated with propane and many poultry and 
livestock farmers depend on propane to keep animals from 
freezing to death during our coldest winter in over 30 years. 
That's just as of today.
    As you know, Governor Dayton has taken a number of 
emergency steps and I should say a lot of Governors have as 
well including declaring a state of peace time emergency. 
Minnesota and other States have experienced price shock of 
double and triple the normal retail prices. Dozens of homes 
throughout Minnesota have run out of fuel to heat their homes 
in sub zero weather over the last 2 or 3 years.
    I strongly urge this subcommittee to focus on the causes of 
the propane crisis and to take actions to avert one from 
happening next year and the years after. Governor Dayton has 
written to the Administration and asked for additional funding 
this year for low income heating assistance, urged the Congress 
to take a look at that as well so that Minnesota can supplement 
its program.
    I am pleased to join my colleagues here today. Energy 
efficiency and renewable energy are critical elements of all of 
our programs. It will help us achieve a clean energy future. As 
you indicated at the top to be able to achieve a global, clean 
energy race and win it.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rothman follows:]

   Prepared Statement of Mike Rothman, Commissioner of the Minnesota 
                         Department of Commerce
    Chairman Franken and Members of this Committee, thank you for the 
opportunity to submit this statement for inclusion in the record of the 
hearing by the Senate Energy Subcommittee on February 12, 2014 
entitled, ``Lessons from state efficiency and renewable programs.''
    As the Commissioner of the Minnesota Department of Commerce, I am 
one of the energy regulators for the State of Minnesota. The 
Department's mission is to protect the public interest, advocate for 
Minnesota's consumers and ensure a strong, competitive and fair 
marketplace on a wide range of industries in Minnesota, including 
energy, telecommunications, insurance, banking, and securities, among 
others. The Division of Energy Resources, which includes our state 
energy office, is contained within the Department of Commerce.
    From the outset, I want to applaud Senator Franken for holding this 
hearing and his leadership on energy efficiency and renewable energy. 
Today, I want to share some of Minnesota's successful and innovative 
programs in energy efficiency and renewable energy and how those 
programs relate to energy issues that concern the entire nation.
                           ENERGY EFFICIENCY
                    conservation improvement program
    Energy efficiency is a cost effective means to decrease the amount 
of energy used. Minnesota instituted substantial energy efficiency 
programs through its utilities in the early 1990s. In 2007, the 
Legislature required all electric and natural gas utilities to annually 
save 1.5 percent of their retail sales starting in 2010. While 
individual utility performance has varied, collectively Minnesota 
utilities exceeded the 1.5 percent requirement in 2011, the year of our 
most recent data. Incremental annual electric and gas savings (first 
year savings from newly installed energy efficiency measures) over 2010 
and 2011 totaled approximately 1.8 million megawatt hours and 5.4 
million dekatherms. Combined, these energy savings are equivalent to 
approximately 11.5 million BTUs-enough energy to heat, cool and power 
over 102,000 homes in Minnesota for one year. Energy savings through 
efficiency and conservation also have a sizeable impact on carbon 
emissions. As a result of the savings in 2010-2011, nearly two million 
tons of CO2 emissions were avoided annually--equivalent to 
removing approximately 370,000 cars from the road for one year.
                        buildings--b3 and sb2030
    Minnesotans recognize the importance of understanding how our 
buildings work. Starting in 2004, all public buildings were evaluated 
using an innovative benchmarking tool. During that time, sustainable 
building design guidelines were also developed for all public buildings 
that received bond funds. In 2008, the guidelines expanded to become 
the Sustainable Buildings 2030 program -standards that significantly 
reduce carbon dioxide emissions by lowering energy use in new and 
substantially renovated buildings through cost effective, energy 
efficiency performance standards. The 40 buildings designed to the 
SB2030 Energy Standard so far are predicted to save approximately 250 
million kBTUs per year-saving $3.25 million each year. These buildings 
are being built at the same cost as a building built to code.
    The benchmarking tool-B3-has become the energy management tool used 
by all state agencies, allowing them to gauge which buildings are most 
cost effective to retrofit. Senator Franken's benchmarking bill 
reflects the need for all building owners to easily understand how 
their buildings are working-the Minnesota Department of Commerce 
supports the passage of this bill (S.1206--Benchmarking).
    The Minnesota Department of Commerce also supports Senator 
Franken's bill (S. 1205--Local Energy Supply and Resiliency Act) that 
promotes district heating and cooling-Saint Paul District Energy 
supplies heating and cooling for the Capitol Complex as well as for 
much of the Saint Paul downtown area. In addition, last year the 
Minnesota Legislature passed legislation that allows waste heat 
recovery projects to count in utility efficiency programs.
                            RENEWABLE ENERGY
                     solar electricity standard/res
    In 2013, the state adopted a solar electricity standard to obtain 
1.5 percent of investor-owned utility retail electricity sales from 
solar electricity by the end of 2020. This solar standard is on top of 
Minnesota's Renewable Energy Standard passed in 2008, which requires 
all electric utilities in the state to generate at least 25 percent of 
their electricity from renewable energy resources 2025 and 30 percent 
by 2020 for the state's largest incumbent utility Xcel Energy 
(altogether about 27.5 percent by 2025). This will result in six-to-
seven thousand megawatts of renewable capacity by 2025. All Minnesota 
utilities have complied with the standard to date-18 percent for Xcel 
Energy and 12 percent for all other utilities.
                         value of solar tariff
    The Legislature also directed my agency to establish a Value of 
Solar methodology. The methodology (developed by the Department and 
submitted to the state's Public Utilities Commission (PUC) at the end 
of January) included the value of energy and its delivery, generation 
capacity, transmission capacity, transmission and distribution line 
losses, and environmental value. We expect Value of Solar to provide an 
innovative alternative to net metering by providing fair compensation 
to solar customers while also allowing utilities to recover the 
reasonable costs of grid services. Investor-owned utilities may apply 
to the PUC for a Value of Solar Tariff that compensates customers 
through a credit (i.e., moving the netting from the meter to the bill) 
for the value to the utility, its customers, and the environment for 
operating distributed solar PV systems interconnected to the utility 
and operated by the customer primarily for meeting their own energy 
needs.
                   renewable energy integration study
    Minnesota utilities and transmission companies, in coordination 
with the Midcontinent Independent Transmission Service Operator (MISO) 
are conducting an engineering study on increasing the state's Renewable 
Energy Standard to 40 percent by 2030, and to higher proportions 
thereafter, while maintaining system reliability. The Commerce 
Department is directing the study; we appointed a Technical Review 
Committee comprised of individuals with experience and expertise in 
electric transmission system engineering, electric power system 
operations and renewable energy generation technology to review the 
study's methods, assumptions, ongoing work and preliminary results. The 
study will be completed in November 2014.
                      LINKS WITH FEDERAL PROGRAMS
                          state energy program
    Much of the work that I have described has been completed utilizing 
resources from the U.S. State Energy Program (SEP). This federally-
funded program has been instrumental in the last two decades as 
Minnesota has progressed in the deployment of its energy efficiency and 
renewable energy programs. The State Energy Program has provided the 
opportunity to have technical experts in energy efficiency and 
renewable energy technologies as those technologies have matured in the 
state. For example, these technical experts helped shape the Value of 
Solar tariff and are participating in the Renewable Energy Integration 
Study.
    The State Energy Program also has a history of success working 
across all sectors of the economy and supporting cost-effective energy 
efficiency improvements. The last comprehensive study of the program by 
Oak Ridge National Lab showed that each federal dollar invested in the 
State Energy Program is leveraged by nearly $11 of state and private 
funds and results in more than $7 in annual energy savings. These SEP-
supported projects and programs include a wide-range of activities, 
such as school and public building energy efficiency programs, energy 
efficiency financing activities, industrial and commercial programs, 
and energy efficiency for homeowners, and agricultural projects.
                  energy assurance--propane situation
    State Energy Program staff also leads the Commerce Department's 
energy assurance program, working with Homeland Security staff to 
ensure they have up-to-date information on Minnesota's energy system. 
This has been particularly important these past several weeks as a 
critical propane situation has developed in our state. Minnesota, like 
many other states, has been gripped by a prolonged shortage of propane. 
Over 15 percent of homes in rural Minnesota are heated with propane, 
and many poultry and livestock farmers depend on propane to keep 
animals from freezing during our coldest winter in 30 years.
    Our State Energy Program and state-supported energy assurance 
efforts, in conjunction with the technical and analytical resources of 
DOE are our nation's first line of defense in limiting the health and 
safety impacts of energy supply emergencies-big and small-that happen 
every year from weather, cyber, and other market disruptions. 
Importantly, more rapid restoration of liquid fuel, natural gas, and 
electricity services also means a faster return to normal economic 
activity, which makes a real difference in communities across the 
country every year. Increasingly, energy supply disruptions are 
impacted by interdependencies among energy infrastructure (electric, 
gasoline, and diesel) and other market sectors (e.g., rail, water, 
cyber, food supplies). The state-federal-private energy emergency and 
interdependencies efforts led by DOE and the states need your support 
and elevation with regard to the great value they deliver to consumers 
and businesses and their relevance to the nation's economic and energy 
security.
    In addition, we are doing all we can to provide assistance through 
the Low Income Home Energy Assistance Program (LIHEAP) during this 
emergency, but will need additional funds to get through the rest of 
the winter. Governor Dayton has called on the President to ask Congress 
to make more funding available and I join him in urging the members of 
this Committee to heed his call.
                   weatherization assistance program
    The Weatherization Assistance Program (WAP) has helped low-income 
families, seniors, veterans, and individuals with disabilities make 
lasting and cost-effective energy efficiency improvements to their 
homes and reduce the burden of high energy prices for more than three 
decades. To date, more than 7.4 million homes have been weatherized in 
the nation, providing as much as $450 in savings on a household's 
annual energy bill. Weatherization also supports thousands of high 
quality jobs. The National Association of State Community Services 
Programs estimates that there are approximately 10,000 highly skilled 
jobs in the weatherization network, with countless more supported in 
related businesses including materials suppliers, vendors, and 
manufacturers who make more than 90 percent of the products used in 
weatherization. The Weatherization Assistance Program has helped the 
construction industry and given a boost to American manufacturers and 
small businesses during challenging economic times. In addition, 
electric and gas utilities in many states depend on the WAP delivery 
network to carry out low-income residential efficiency initiatives, 
leveraging scarce resources and measurably increasing the impact of WAP 
in these states. As the program's funding has declined in recent years, 
both the state-level and private sector programs that rely on the WAP 
network and infrastructure have been impaired.
    These two federal programs provide important links to ongoing state 
work. We strongly encourage you to restore funding for the 
Weatherization Assistance Program to pre-Recovery Act levels. The $174 
million provided for Weatherization in FY'14 is a good step in the 
right direction. This equals the FY'11 funding level. We are hopeful 
that Congress could head towards a more sustainable level of at least 
$230 million this coming year. For SEP, the $50 million is certainly an 
improvement, but a more sustainable level, consistent with expanded 
responsibilities, would be $75 million this coming year.
    We also support the Coons (D-DE), Collins (R-ME), Reed (D-RI) bill 
(S.1213) to reauthorize State Energy Program and Weatherization 
Assistance Program-two programs that are essential in helping states 
further energy efficiency and renewable energy at home.
                   ee/re as 111(d) compliance options
    In a letter to EPA Secretary McCarthy on December 16, 2013, 
Minnesota expressed its view on the proposed Greenhouse Gas Rules for 
existing sources that energy efficiency resource standards and 
renewable portfolio standards provide some of the most cost-effective 
options to reduce carbon pollution, reduce electricity costs to 
ratepayers, increase local economic activity, and create jobs. As noted 
above, Minnesota has a target of reducing energy use by 1.5 percent per 
year through energy efficiency measures and requires its electric 
utilities to generate 27.5 percent of their power from renewable 
sources by 2025. Carbon dioxide emissions savings from our Conservation 
Improvement Program have been increasing in recent years, reaching more 
than 800,000 tons in 2010. From 2005-2011, Minnesota reduced overall 
CO2 emissions by 6.9 million tons, lowering its 
CO2 rate by 17.5 percent, even while power generation 
increased slightly. Minnesota is committed to continuing its 
transformation of the generation mix for electric power and look to 
this federal rulemaking to help meet our commitments.
                               conclusion
    Minnesota is a national leader in the areas of energy efficiency 
and renewable energy. We continue to innovate to meet the growing need 
to find alternatives to fossil fuels while maintaining reliable energy 
services at affordable rates. We are eager to work closely with this 
Committee and Congress, as well as the Administration to achieve our 
shared goals.
    Thank you, Chairman Franken and Members of this Committee, for the 
opportunity to submit this written statement.
    I look forward to your questions.

    Senator Franken. Thank you, Mr. Commissioner.
    Let me just make Senator Portman clear. Since I'm chairing 
this I'll ask questions last. I--Senator Schatz has to make a 
flight and Senator Risch has to go to the Floor to make a 
speech. So you're going to be asking the first questions, if 
you can stay.
    I don't know if you're catching a flight.
    Senator Portman. I have to leave about 4:35.
    Senator Franken. Mr. Glick.

STATEMENT OF MARK GLICK, STATE ENERGY ADMINISTRATOR, DEPARTMENT 
 OF BUSINESS, ECONOMIC DEVELOPMENT & TOURISM, STATE OF HAWAII, 
                          HONOLULU, HI

    Mr. Glick. Good afternoon, Chairman Franken, Ranking Member 
Risch, members of the subcommittee and especially to our dear 
friend, Senator Schatz and quite an energy savvy Senator. Thank 
you for inviting me to testify before you today about Hawaii's 
innovative efficiency and renewable energy policies and to 
identify opportunities the Federal Government can take to 
support job creation and innovation at the State and local 
level.
    My written testimony will--goes into more detail about all 
those issues, but and offers others examples of State 
leadership that might inform your deliberations featuring both 
Republican and Democratic State administrations. I'll be happy 
to address any questions you might have afterwards.
    By deploying clean energy and attracting test bedded 
investments and innovation Hawaii is creating a clean energy 
cluster that is the leading source of new construction 
expenditures and green jobs. For example, distributed PV 
insulation accounted for 28.5 percent of all construction 
expenditures in Hawaii in 2012. As we reached second place in 
the Nation for solar PV insulations per capita.
    Now at the heart of our energy and economic transformation 
is a bold policy agenda and coalition of energy stakeholders 
called the Hawaii Clean Energy Initiative starting with a 
partnership between the State and Department of Energy in 2008, 
the Hawaii legislature adopted the Nation's strongest renewable 
portfolio standard, RPS, in 2009 requiring 40 percent of our 
electricity to be generated from renewable sources by 2030.
    Hawaii also adopted an energy efficiency portfolio standard 
in the same year requiring 43 hundred gigawatts of energy by 
2030 to be reduced for power generation, roughly a 40 percent 
reduction in electricity use from 2007 levels.
    Now we've made significant progress. When the 2013 figures 
are released we expect our renewable portfolio standard to be 
at 18 percent which means that we will have surpassed, by 3 
percent, the 2015 interim goals 2 years early. Now in 
efficiency Hawaii has led the Nation for 2 years, consecutive 
years, in the value of our energy savings performance 
contracts.
    I'm pleased to report that Hawaii has recently executed 
$167 million in 2 energy savings performance contracts, one 
that covers 12 airports statewide that will save at least $518 
million over the next 20 years, and is the largest single 
performance contract by any single State agency in the Nation.
    In 2013 Governor Abercrombie proposed and gained passage of 
S. 1087, a measure designed by the Hawaii State Energy Office, 
my office, that combines a rate reduction securitized bond 
structure and on-bill financing to enable broader base of 
utility customers to acquire a renewable energy system or 
energy efficiency device. When it's rolled out by year end, we 
expect the Green Energy Market Securitization, also known as 
GEMS program, to make energy improvements more affordable and 
accessible to Hawaii's underserved markets, such as low and 
moderate income homeowners, renters and non-profits.
    Now for Hawaii connecting our grids is an essential 
ingredient in going beyond 40 percent renewable penetration. 
It's a commitment to exceed our Nation leading RPS made by 
Governor Abercrombie last year. A major policy achievement 
toward that end was passage of S. 2785 establishing a 
regulatory framework and financing structure for inter island 
transmission cable development. Analysis commissioned by the 
Hawaii State Energy Office with SEP funding and U.S. DOE 
support has demonstrated that unifying the Oahu and Maui grids 
with an undersea transmission cable will expand renewable 
penetration, lower electricity rates, enhance grid stability 
and reduce curtailment of renewable energy.
    Now some of our suggestions for Federal action.
    Since 2010 State energy program funding has provided Hawaii 
with $1.2 million helping us move the needle on our key 
metrics, RPS, EEPS, the Energy Efficiency Portfolio Standard 
and job growth. SEP has supported the State energy office's 
capability and leadership and regulatory proceedings, building 
efficiency systems and infrastructure analysis and energy 
assurance planning. It should continue to do so.
    The U.S. State Energy Program is the only program 
administered by the U.S. Department of Energy that delivers 
cost shared formula funding directly to the States and allows 
each State to target funds to meet their needs. That 
flexibility has contributed to the program's long term success.
    In conclusion the State of Hawaii strongly supports SEP. We 
urge Congress to continue your vigorous support for this engine 
of economic transformation.
    Thank you for this opportunity to highlight Hawaii's clean 
energy agenda and offer suggestions on how future SEP funding 
can contribute to economic growth and innovation for Hawaii and 
the Nation.
    [The prepared statement of Mr. Glick follows:]

     Prepared Statement of Mark Glick, State Energy Administrator, 
   Department of Business, Economic Development & Tourism, State of 
                          Hawaii, Honolulu, HI
    Good afternoon, Chairman Franken, and Members of the Subcommittee. 
Thank you for inviting me to testify before you today about Hawaii's 
innovative efficiency and renewable energy policies, and to identify 
opportunities the federal government can take to support job creation 
and innovation at the state and local level. I will also provide some 
other examples of state leadership that might inform your 
deliberations.
    Hawaii's commitment to a clean energy future is propelling Hawaii 
into national leadership for renewable energy installations and energy 
efficiency measures. Energy transformation is a key component of the 
the HI Growth Initiative; our State's economic development strategy to 
create high growth, high wage jobs. By deploying clean energy and 
attracting test bed investments and innovation, Hawaii is creating a 
clean energy cluster that is a leading source of new construction 
expenditures and green jobs. This is growing our economy and 
diversifying our business base away from a heavy reliance on the 
tourism sector. For example, distributed PV installations accounted for 
28.5 percent of all construction expenditures in Hawaii in 2012 as we 
reached second place in the nation for solar PV installations per 
capita. Hawaii is second in the U.S. for cumulative installed PV 
capacity per capita in 2012, according to the Interstate Renewable 
Energy Council, and also second for solar PV capacity installed in 
2012, according to Environment America Research. We happen to be the 
most isolated population center in the world, 2,500 miles from the U.S. 
West Coast, with oil imports accounting for 74 percent of our 
electrical production in 2013 at a cost of $4.5 billion. Averaging 34-
cents per kilowatt hour, Hawaii has the highest electricity rates in 
the nation, more than three times higher than the national average. 
Hawaii's clean energy policies are designed to transform the most oil 
dependent state in the nation to a national model for job creation, 
industrial transformation, environmental compliance, and technological 
innovation.
    At the heart of the transformation is a bold policy agenda and 
coalition of energy stakeholders called the Hawaii Clean Energy 
Initiative. Initiated by a Memorandum of Understanding (``MOU'') 
between the State and the U.S. Department of Energy in 2008, the Hawaii 
Legislature adopted a Renewable Portfolio Standard (``RPS'') in 2009 
requiring 40 percent of our electricity to be generated from renewable 
energy by 2030. Hawaii also adopted an Energy Efficiency Portfolio 
Standard (``EEPS'') in the same year to reduce electricity use by 4,300 
gigawatt-hours (``GWh'') by 2030, roughly a 40 percent reduction in 
electricity use from 2007 levels.
    In the six years since that MOU, we have made significant progress. 
When 2013 figures are released in a couple of months, we expect our 
Renewable Portfolio Standard to be at 18 percent, which means we will 
have surpassed the 2015 interim goal two years early.
    In efficiency, Hawaii has led the nation for two consecutive years 
in the per capita value of our energy performance contracts. Our state 
has committed to the Clinton Global Initiative-CGI America to more than 
double Hawaii's existing energy savings performance contracting 
investments by State and County Agencies by 2015. As a partner in the 
U.S. Department of Energy's Performance Contracting Accelerator 
Program, Hawaii has also pledged to execute an additional $100 million 
in performance contracting projects by the close of 2016. These are not 
empty pledges. I'm pleased to report that Hawaii has recently executed 
$167.4 million in energy savings performance contracts featuring two 
state agencies. One covers 33 buildings that will save $28 million over 
the 20-year contract term. A second contract covers 12 airports 
statewide that will save at least $518 million over the next 20 years 
and is the largest single performance contract by a single state agency 
in the nation.
    In 2013, Governor Neil Abercrombie also established the State's 
first energy policy directives and dedicated the State to move the 
needle even further when he announced that Hawaii is going beyond 40 
percent for renewables at the State's annual energy summit last year, 
the Asia Pacific Clean Energy Summit and Expo. Hawaii's energy policy 
also encourages full use of our diverse, abundant indigenous natural 
resources, such as solar, wind, geothermal, biomass, and hydro, each 
which compete favorably with the avoided cost of oil. Please go to 
energy.hawaii.gov for complete information on Hawaii's energy agenda 
and online clean energy tools.
    Our early success has brought unexpected challenges for our six 
isolated, island grid networks. On Oahu, our major population center, 
25 percent of circuits are beyond the 100 percent of minimum daytime 
load. Hawaii Island has 46 percent renewable penetration and at certain 
times of the day exceeds 100 percent of minimum daytime load. This 
translates to something that mainland interconnected grids rarely 
experience, curtailment of excess renewable energy on a regular basis, 
and in some cases grid instability on a system level.
    We have called upon the most qualified subject matter experts in 
the nation to help us craft unprecedented solutions for unprecedented 
challenges in clean energy deployment. Our mantra is to focus on high 
impact solutions and leverage funding and other resources to build the 
solutions for a new energy ecosystem. States cannot do it alone.
    State Energy Program (``SEP'') funding has provided Hawaii with 
$1.2 million since 2010, helping us move the needle on our key metrics: 
RPS, EEPS, and job growth. SEP has supported the State Energy Office's 
capability and leadership in regulatory proceedings, building 
efficiency, systems and infrastructure analysis, and energy assurance 
planning. Federal collaborations and funding have been and will 
continue to be critical ingredients in our success.
    In 2013, Governor Abercrombie proposed and gained passage of SB 
1087, a measure designed by the Hawaii State Energy Office that 
combines a rate-reduction securitized bond structure and on-bill 
financing to enable a broader base of electric utility customers to 
acquire a renewable energy system or energy efficiency device.
    We call this ``GEMS,'' for Green Energy Market Securitization and 
we're using SEP funding to implement what is potentially a national 
model. When it is rolled out by year end, we expect GEMS to make energy 
improvements more affordable and accessible to Hawaii's underserved 
markets, such as low- to moderate-income homeowners, renters and 
nonprofits.
    SEP can help Hawaii and all other states with our increasing load 
of unfinished business. Building a 21st century grid is a must. In 
stretching the limits of what utilities can and should do, state energy 
offices, often with the coordination of the National Association of 
State Energy Officials (``NASEO''), can provide analysis, planning and 
regulatory support to fill the gaps. Smart technologies, such as 
advanced metering infrastructure and energy storage, are critical near 
term solutions to improving customer choice and widely deploying demand 
response.
    For Hawaii, connecting our grids is an essential ingredient in 
going beyond 40 percent renewable penetration. A major policy 
achievement in 2012 was passage of SB 2785, establishing a regulatory 
framework and financing structure for interisland transmission cable 
development. Analysis commissioned by the Hawaii State Energy Office, 
with SEP and U.S. DOE support, has demonstrated that unifying the Oahu 
and Maui grids with an undersea transmission cable will expand 
renewable penetration, lower rates, enhance grid stability and reduce 
curtailment of renewable energy. This analysis is helping inform 
decisions soon to be made by the Hawaii Public Utilities Commission on 
next steps.
    SEP funding can also be effectively used, as it has been in Hawaii, 
to build and update a suite of online tools that provide developers, 
investors and policy makers with assistance in clean energy project 
permitting, interactive resource data, and GIS mapping. We note that 
competitive SEP funding is useful, but increasing the formula funding 
offers greater flexibility for program design and implementation.
    Clean energy has propelled Hawaii into one of the world's leading 
test beds for energy innovation. Our isolated, island setting has 
attracted entrepreneurs from around the world, looking to develop, test 
and prove emerging technologies and strategies before going to market. 
By leveraging state funding sources with federal SEP, we plan on 
seeding an innovation ecosystem to spur the development of clean energy 
solutions while also creating high-wage jobs and economic opportunities 
for the people of Hawaii.
Other State Examples
    Like my colleagues appearing today from Minnesota and Texas, I am 
pleased to note that all the states have programs that we each learn 
from. We also believe that these examples can assist you as you 
consider options for federal action.
    For example, in Arkansas they have developed a loan-loss reserve 
financing program through the utility bills. This on-bill financing 
program is intended to address the needs of residential customers. Like 
many other states, Arkansas has also targeted multi-family housing for 
energy efficiency services-- low-income homes are a special problem 
since the percentage of their income used for energy costs is so high.
    In California, the voters approved a $2.5 billion California Clean 
Energy Jobs Act, especially targeting schools and other public 
buildings. They have also developed a program for clean transportation 
infrastructure and energy -related R&D investments at a level of $240 
million annually. The state uses their SEP funds in the development and 
implementation of building codes and standards.
    Colorado has instituted large new energy efficiency and renewable 
energy programs in the past few years. They are moving towards their 
targets of 5 percent reduction in peak electricity demand by 2018 and 
30 percent of electricity coming from renewable energy by 2020. The 
state is estimating that this effort will add $4.3 billion to the 
state's economy and 33,000 jobs.
    In Kentucky, they have taken the lead in promoting ``zero net 
energy'' (``ZNE'') schools. They have now constructed 10 schools under 
this program, and they are finding that the initial costs of ZNE 
schools is comparable to less energy-efficient schools. This is really 
a ``no-brainer''.
    In Massachusetts, my colleagues have aggressively promoted energy 
efficiency, solar development and greenhouse gas emission reduction 
targets, while maintaining double digit clean energy industry growth. 
They recently began to implement a $40 million program of community 
self-resilience associated with power outages caused by severe weather 
and climate change.
    In New England, the governors of Connecticut, Massachusetts, Maine, 
New Hampshire, Rhode Island and Vermont signed a regional 
infrastructure statement that commits them to develop a reliable, 
affordable and diverse energy portfolio. Working with the regional 
utilities they are focusing on expanding energy efficiency programs and 
renewable energy use, while also developing new natural gas and 
electric transmission capacity.
    In Oregon, the state has helped fund more than $11 million of 
projects in 60 school districts, including lighting upgrades, window 
replacements, HVAC improvements and biomass boiler installations. They 
are also implementing a program to convert 20 percent of all public and 
private fleets to alternative fuels. Pennsylvania has joined other 
states in promoting alternative fuels.
    Pennsylvania has contributed $20 million in incremental cost 
incentives for the purchase or retrofit of heavy duty natural gas 
vehicles. They have also deployed charging stations at all the rest 
stops on the Pennsylvania Turnpike. Whether utilizing ethanol, 
biodiesel, natural gas or electric vehicles, the states are pushing to 
diversify the fuels used within the transportation sector.
    In Rhode Island they have implemented a partnership to achieve 20 
percent energy use reductions in 100 public facilities by 2016. They 
have also targeted new combined heat and power (``CHP'') incentives 
that has already resulted in a new 12.5 MW project that reduced 
electricity use by 80 percent.
    In Vermont, they have implemented a variety of renewable energy and 
energy efficiency projects for schools, communities and businesses, 
ranging from a biogas cogeneration project, a 12 MW wind plant and a 
300 kW PV system.
    In Washington, the state energy office announced the award of over 
$14 million to financial institutions as seed funding to help 
individuals and companies finance residential and commercial building 
energy efficiency retrofits and renewable energy installations. The 
Governor created 5 clean energy loans funds to stimulate economic 
development in the clean energy sector, and this is the first 
installment.
    In West Virginia they have initiated an extensive energy planning 
process looking at all resources, both on the supply side and the 
demand side. This state is also trying to target the commercial/
industrial sector through partnerships with the West Virginia 
University Industrial Assessment Center and the NIST-supported 
Manufacturing Extension Partnership.
Suggestions for Federal Action
    The U.S. State Energy Program is the only program administered by 
the U.S. Department of Energy that delivers cost-shared, formula 
funding directly to the states, and allows each state to target funds 
to meet their needs. When Congress established SEP, it recognized that 
states were in the best position to understand their energy policy and 
program needs and opportunities. This flexibility is what has resulted 
in the program's track record of success. SEP is used by Hawaii, and 
all the states, to catalyze new energy business opportunities, reduce 
market barriers to energy efficiency and other alternatives, and 
support our governor's and legislature in the kind of energy planning 
and policy development that has transformed the energy sector over the 
past five years. SEP funding provided the seed funding and linkage to 
DOE that made the Hawaii Clean Energy Initiative possible. Similarly, 
the foundation for Hawaii's now successful ESPC program was laid using 
flexible SEP funding to develop public-private partnerships and 
technical assistance over a period of years--unlocking energy savings 
in the public buildings sector. This allowed our state to further 
advance ESPC when we recently partnered with DOE on the ESPC 
accelerator.
Conclusion
    In conclusion, the State of Hawaii strongly supports SEP and we 
urge Congress to continue to provide your vigorous support to this 
engine for economic transformation.
    Thank you for this opportunity to highlight Hawaii's clean energy 
leadership and offer suggestions on how future SEP funding can 
contribute to economic growth and innovation for Hawaii and the nation. 
As noted in Mr. Taylor's testimony, we also support enactment of the 
Shaheen/Portman bill (S. 1392), the SEP/Weatherization reauthorization 
bill (S. 1213), the Energy Productivity Innovation Challenge (S. 1209), 
the Residential Energy Savings Act (S. 1200), as well as Chairman 
Franken's legislation on building benchmarking (S. 1206) and the Local 
Energy Supply and Resiliency Act (S. 1205).

    Senator Franken. Thank you, Mr. Glick. I think as everyone 
realizes Hawaii is a little isolated and renewable energy is a 
big piece of that portfolio. I think your electricity costs are 
about 3 times out of the average, right?
    Mr. Glick. That's correct.
    Senator Franken. So, thank you for your testimony. Thank 
you for mentioning your great work with energy saving 
performance contracts which brings us to Mr. Clark, who is the 
Head--who is the Senior Vice President and General Manager of 
an energy service company.
    Please, Mr. Clark.

 STATEMENT OF RANDALL R. CLARK, SENIOR VICE PRESIDENT, NORESCO

    Mr. Clark. Thank you, Chairman Ranken or Chairman Franken, 
Ranking Member Risch and the subcommittee. Thank you for 
inviting me to testify.
    Senator Franken. I like that, by the way.
    [Laughter.]
    Senator Franken. That was good.
    Mr. Clark. Regarding the role private sector plays in 
advancing State energy efficiency. I am Randy Clark, as you 
mentioned, Senior Vice President of NORESCO, one of the largest 
energy service companies in the United States. We are part of 
United Technologies Corporation, a leading provider to the 
aerospace and building industries employing 220,000 people 
globally and 90 thousand people in the United States.
    NORESCO specializes in developing and implementing energy 
saving performance contracts, also known as ESPCs, for 
government and institutional clients spanning the Federal, 
State and municipal sectors. In my role at NORESCO I manage the 
performance contracting business with State agencies, local 
governments, school districts, universities and health care 
institutions. Today I will discuss how this private sector 
contracting mechanism provides a cost effective pathway toward 
reducing building energy use, lowering costs and reducing 
greenhouse gas emissions.
    Under an ESPC a private sector company like NORESCO 
installs new energy efficient equipment at no upfront capital 
cost to the building owner. At its most basic an ESPC converts 
the money a building owner currently spends on wasted energy 
into a payment stream that finances the energy savings capital 
improvements in the facility. The building owner repays this 
investment over time using the utility savings.
    The energy service company will measure and guarantee these 
savings and private sector financiers provide the capital. 
Under the contract the building owner never pays more than they 
would have paid for utilities if they had not entered into the 
ESPC. States are increasingly turning to ESPCs to achieve cost 
effective energy efficiency.
    In 2011 Minnesota enacted legislation allowing State 
agencies to enter into ESPCs. The State created the Office of 
Guaranteed Energy Savings Programs to help pre-qualify energy 
savings companies on behalf of State agencies and to provide 
technical and financial assistance and oversight in the 
implementation of projects. Over 30 States have authorized ESPC 
programs and the energy service company market is estimated to 
exceed $5 billion annually. Regional benefits include local job 
creation of approximately 95 direct jobs and 114 indirect jobs 
for every $10 millions of investment.
    Despite the benefits of utilizing an ESPC the mechanism is 
under utilized by State and local governments. The barriers to 
increased use are difficult to quantify, but stem from the fact 
that performance contracting is different from traditional 
procurements for government and institutions. Additionally, 
many ESPC projects are financed with long term, tax exempt 
leases or bonds. With increased uncertainty around State and 
local tax revenues since the economic downturn building owners 
are reluctant to incur debt related to building improvements 
even when these building improvements are funded through energy 
savings.
    Some States are taking steps to address these barriers.
    The State of Delaware created the Sustainable Energy 
Utility, the SEU, to create a market for energy efficiency for 
buildings in the State. The SEU issues tax exempt debt on 
behalf of public entities in the State in order to fund the 
investment in building infrastructure. The SEU issued $70 
million of bonds in 2011 and has a number of comprehensive 
energy efficiency projects completed or in the final stages of 
implementation.
    I want to spend a minute discussing a forthcoming Federal 
action that will have a substantial impact on the States. EPA 
is preparing a rule directing States to establish carbon 
dioxide performance standards for existing electricity 
generation units under Section 111(d) of the Clean Air Act. 
This rule is understandably controversial but the bottom line 
is that energy efficiency is the compliance option that can 
dramatically lower the cost of regulation for both utilities 
and consumers while achieving substantial carbon dioxide 
reductions.
    States and utilities have a successful track record 
investing in energy efficiency programs. ESPCs provide an 
additional opportunity to cost effectively reduce energy demand 
and deliver carbon dioxide reductions. To date the 
environmental potential through ESPC projects is far from being 
captured.
    According to a Lawrence Berkeley National Laboratory 
report, ``Barriers to implementing performance contracts remain 
high in private sector, commercial and industrial facilities,'' 
resulting in a penetration rate of less than 10 percent. By 
allowing States to credit these projects EPA can unlock this 
potential while also achieving the rulemakings goal of 
realizing substantial emission reductions at lowest cost.
    In closing ESPCs are a valuable, but underutilized private 
sector financing mechanism that allows governments and building 
owners to increase their energy efficiency, decrease their 
energy costs without upfront capital investment. The savings 
are guaranteed by the contractor.
    Chairman Franken and members of this subcommittee, I stand 
ready to answer any questions you might have.
    [The prepared statement of Mr. Clark follows:]

   Prepared Statement of Randy Clark, Senior Vice President, NORESCO
    Chairman Franken, Ranking Member Risch and members of the 
subcommittee, thank you for inviting me to testify today regarding 
private sector mechanisms and financing available to advance energy 
efficiency in the states.
    I am Randy Clark, Senior Vice President, NORESCO, one of the 
largest energy service companies in the United States utilizing 
performance-based contracting to deliver energy and maintenance savings 
and significant infrastructure upgrades to existing facilities. NORESCO 
is part of UTC Building and Industrial Systems, a unit of United 
Technologies Corporation. United Technologies is a leading provider to 
the aerospace and building systems industries employing 220,000 people, 
including 90,000 in the United States. NORESCO specializes in 
developing and implementing Energy Savings Performance Contracts for 
governmental and institutional clients spanning the Federal, state and 
municipal sectors. In my role at Noresco, I manage the performance 
contracting business with state agencies, local governments, school 
districts, public and private universities, and healthcare 
institutions.
Energy Savings Performance Contracting (ESPCs)
    I am here today to discuss how ESPCs deliver energy and cost 
savings at the state and city level to municipalities, universities, 
school districts and hospitals (commonly referred to as the ``MUSH'' 
market). This same mechanism is also used to deliver cost savings 
through energy efficiency to multi-family housing agencies. 
Specifically, I will discuss how this private sector contracting 
mechanism provides a cost effective pathway toward reducing building 
energy use, lowering costs and reducing greenhouse gas emissions.
    Under an ESPC, a private sector company like Noresco installs new 
energy efficient equipment at no upfront capital cost to the building 
owner. ESPCs are typically used for larger facilities or building 
campuses where there is an opportunity to capture significant energy 
cost savings. At its most basic, an ESPC converts the money a building 
owner currently spends on wasted energy into a payment stream that 
finances energy-saving capital improvements in the facility. The 
building owner repays this investment over time with funds saved on 
utility costs. The energy service company will measure, verify and 
guarantee these energy savings, and private sector financiers provide 
the capital, which today is available at historically low interest 
rates. Under the contract, the building owner never pays more than they 
would have paid for utilities if they had not entered into the ESPC. In 
addition to generating energy and dollar savings, years of deferred 
maintenance at buildings are successfully addressed by ESPC projects at 
no additional cost to the owner. For these reasons, ESPCs have proven 
to be a highly successful means to implement comprehensive energy 
efficiency projects.
    States are increasingly turning to ESPCs to achieve cost effective 
energy efficiency. In 2011, Minnesota enacted enabling legislation 
(16.144/Executive Order 11-12) allowing state agencies to enter into 
ESPC's. Since that time, the Department of Commerce created the Office 
of Guaranteed Energy Savings Programs to help pre-qualify Energy 
Savings Companies (ESCOs) on behalf of state agencies and to provide 
technical and financial assistance and oversight in the implementation 
of projects. There are a number of Minnesota state agency projects 
current under development in this new program.
    Over 30 states have now authorized state ESPC programs and the 
energy service company market is estimated to exceed $5 billion 
annually. ESPCs provide a number of benefits to the facility, which 
include:

   Guaranteed performance and cost
   Enhanced reliability and energy security
   Reduced carbon footprint and emissions
   Improved and modernized infrastructure
   Decreased deferred maintenance burden
   Improved indoor working environments

    Regional benefits also accrue and include:

   Local job creation of approximately 95 direct and 114 
        indirect jobs for every $10 million of investment\1\
---------------------------------------------------------------------------
    \1\ Federal Performance Contracting Coalition, accessed February 
10, 2014 http://federalperformancecontracting.com/WYSIWYGImage/
Job%20Impact%20of%20ESPCs%20chart%20-%20ESPCs.pdf
---------------------------------------------------------------------------
   Engineering, manufacturing and trade labor engagement
   Small, minority-owned, and women-owned business 
        subcontracting opportunities

    Most ESPC contracts range from 12 to 20 years. This allows for the 
bundling of multiple energy conservation measures; that is, the ability 
to pull a comprehensive package of energy saving measures together that 
maximizes energy and cost savings opportunities for the customer. 
Individual energy conservation measures (ECMs) which can make up a 
bundled ESPC project may include lighting, building controls, HVAC, 
boiler or chiller plant improvements, building envelop modifications, 
water savings, refrigeration, renewable energy systems, load shifting 
and others. The ESCO guarantees that savings accrue and is reimbursed 
for their investment over this period.
    The market for building energy efficiency projects is strong. 
According to a 2013 ESCO market survey sponsored by the National 
Association of Energy Services Companies (NAESCO) and conducted by the 
Lawrence Berkeley National Laboratory, the total market potential for 
energy services project investment in non-federal facilities is between 
$66 and $120 billion. Of that, the investment potential for K12 schools 
and state and local buildings alone is between $26 and $45 billion. The 
good news is that the ESCO community is capable of delivering these 
energy savings. According to the 2013 LBNL study, there are more than 
140 companies across the U.S. that characterize themselves and serve 
the marketplace as ESCOs, and 45 of these provide the wide range of 
supply and demand side services that meet the NAESCO definition of an 
ESCO
Challenges and Opportunities
    Despite the associated benefits of utilizing an ESPC, including 
financing critical facility improvements without the need for upfront 
capital, the mechanism is underutilized. The barriers to increased 
usage are difficult to quantify but revolve mostly around the fact that 
performance contracting is different from traditional procurement 
processes for government and institutions. The vast majority of ESPC 
projects for MUSH building owners are financed with long-term tax 
exempt leases or bonds rather than through capital funds or 
appropriations, but these leases and bonds have their own challenges 
especially in light of the increased uncertainty around state and local 
tax revenues since the economic downturn in late 2008. Overall, MUSH 
building owners have been reluctant to incur new or additional debt 
related to building improvements even when the building improvements 
are 100 percent funded from energy and operational savings.
    According to a 2008 LBNL study, the differences in the penetration 
rates of ESPC projects in the surveyed states appear to be related to 
the ability of state governments to overcome policy and programmatic 
barriers to ESPC implementation. The study included among its 
recommendations that State agencies should consider pursuing funding 
and technical assistance available through ratepayer-funded energy 
efficiency programs administered by utilities or third party 
administrators, and possibly integrating these resources with ESCO-
delivered energy efficiency investments to maximize the level of dollar 
and energy savings to be mined from state facilities.
    Some states are taking steps to address these barriers. The State 
of Delaware created the Sustainable Energy Utility (SEU) to assist with 
and encourage energy performance contracting for buildings in the 
State. The SEU issues tax-exempt debt on behalf of public entities in 
the State in order to fund the investment in building infrastructure. 
The SEU issued $70 million of bonds in late 2011 and has a number of 
comprehensive energy efficiency projects completed or in the final 
stages of implementation. The Maryland Clean Energy Center is pursuing 
a similar approach to facilitating the financing of energy efficiency 
projects as is the Chicago Infrastructure Trust. In Massachusetts, a 
project recently completed by NORESCO with the University of 
Massachusetts Dartmouth was supported by $2.7 million of investment 
from the local utility, NSTAR. This project is expected to reduce 
greenhouse gas emissions by 16,000 tons (CO2 equivalent).
ESPCs Provide an Opportunity to Cost Effectively Lower Greenhouse Gas 
        Emissions
    The Environmental Protection Agency (EPA) is preparing to propose a 
rule directing states to establish carbon dioxide performance standards 
for existing electricity generation units under Section 111(d) of the 
Clean Air Act. This rule is understandably controversial and there are 
many perspectives about how EPA might best enable State flexibility in 
giving utilities a menu of cost effective compliance options. The fact 
of the matter is that when this rule is finalized, energy efficiency is 
the compliance option that can dramatically lower the cost of 
regulation for both utilities and consumers while achieving substantial 
carbon dioxide reductions.
    States and utilities have a long, successful track record in 
investing in energy efficiency programs. These programs include demand 
response initiatives, energy efficient appliance rebate programs and 
education efforts. ESPCs provide an additional and largely unrealized 
opportunity to cost effectively reduce energy demand and deliver carbon 
dioxide reductions. In addition, energy service companies are already 
responsible for measuring, verifying and sustaining the energy savings 
over long periods of time, so the emission reductions are real.
    To date, the environmental potential through ESPC projects is far 
from being fully realized. According to a Lawrence Berkeley National 
Laboratory report, ``barriers to implementing performance contracts 
remain high enough in private sector commercial and industrial 
facilities,'' resulting in a penetration rate of less than 10 percent. 
By allowing states to satisfy reduction goals under such carbon dioxide 
performance standards through ESPC projects, EPA can unlock this 
potential while also achieving the rulemaking's goal of realizing 
substantial emission reductions at lowest cost.
    The mechanism for crediting major building energy efficiency 
investments under a Section 111(d) compliance plan can build on widely 
accepted approaches already implemented in the private sector for major 
energy efficiency projects. Therefore, EPA should (1) recognize ESPC 
projects as a favored method towards meeting compliance; (2) require 
States to include measurement, monitoring, verification and reporting 
results for all contractual methods of energy efficiency used to meet 
the EPA compliance requirement; and (3) provide additional procedures 
needed to translate energy savings into creditable emission reductions.
Conclusion
    In summary, ESPCs are a private sector financing mechanism that 
allows governments and building owners to increase their energy 
efficiency, decrease their energy costs without upfront investment and 
the savings are guaranteed by the contractor.
    Chairman Franken and members of this subcommittee, thank you for 
the opportunity to appear before you today. I stand ready to answer any 
questions you might have.

    Senator Franken. Thank you, Mr. Clark.
    That is, what you're talking about is providing 
flexibilities for States to do energy efficiency offsets for 
these new rules on existing coal fired plants, etcetera. So and 
I think that's very, very interesting.
    Finally, Mr. Rodgers.

 STATEMENT OF WILLIAM A. RODGERS, JR., CHIEF EXECUTIVE OFFICER 
      AND PRESIDENT, GOODCENTS HOLDINGS, INC., ATLANTA, GA

    Mr. Rodgers. Right.
    Chairman Franken, Ranking Member Risch, Senator Portman, my 
name is Bill Rodgers and I am the President and CEO of 
GoodCents Holdings which is headquartered in Atlanta, Georgia. 
We provide operations in 22 States as well as Canada and we 
deliver over 85 energy efficiency programs currently.
    I thank you for the opportunity to testify before you today 
on the important topic of energy efficiency and the lessons 
learned from State programs.
    Two years ago I was privileged to testify before this 
committee on an innovative concept using an energy efficiency 
program to supplement new generation capability. The State of 
Indiana, recognizing the need to balance clean air 
considerations with reliable and affordable electricity 
chartered a middle course by enacting long term energy 
efficiency standards. At that time this program was in its 
infancy and now today, it has matured into a broad based energy 
efficiency program covering a full spectrum of services.
    From the initial program design focused on delivery of 
targeted savings to the critical marketing services which 
derive customer education and behavior, to the field 
implementation and last the measurement and verification of the 
program's actual savings. This program provides a template for 
other States grappling with similar concerns and should serve 
as an example for this committee of the type of results can be 
achieved when regulators, power companies, consumers and 
environmental groups all work together toward a common goal.
    Let me explain how we've done this.
    In 2009 the State of Indiana took a firm stance on energy 
conservation and established an aggressive time line to achieve 
annual savings goals over a 10-year period. Through a 
coordination committee of the Utility Regulatory Commission, 
made up of representatives of each of the utilities, 
municipalities and consumer groups in the State, they went to 
the marketplace and selected our company, GoodCents as the 
independent third party administrator for this statewide 
initiative. Branded Energizing Indiana, the initiative is a 
united effort by the State participating utilities, businesses, 
residents and consumer organizations to offer energy efficiency 
programs that will benefit communities all across the State.
    This extensive statewide suite of 6 core energy efficiency 
programs includes commercial and industrial customer projects, 
residential/home energy assessments, income qualified 
weatherization program, residential lighting expansion through 
participating retail locations and energy educational programs 
and building assessments for Indiana schools. As Administrator, 
GoodCents coordinates, manages, implements and reports on this 
core suite of programs to meet the annual energy savings goals 
identified for each participating utility.
    A few accomplishments over the past 2 years, if I may share 
with you.
    First and foremost we created nearly 400 new jobs in the 
State of Indiana.
    We've enrolled over 200,000 residential customers into 
these programs.
    We've worked with almost a thousand retail stores to sell 
an excess of 6 million energy efficient light bulbs.
    We've educated over 155,000 elementary school students 
about energy efficiency.
    We've established a network of over 2,000 nonprofit 
organizations representing over a million members to educate 
and market the programs.
    We've developed a statewide trade ally network that has 
delivered over $450 million in energy savings projects to the 
commercial and industrial sector.
    Most importantly, we've achieved over 900 million kilowatt 
hours of energy savings which is enough to power the residents 
of Boise, Idaho for an entire year.
    GoodCents strongly believes that by consolidating energy 
efficiency programs into one core initiative Energizing Indiana 
has benefited many utility customers including the businesses, 
schools and homeowners. The power of offering an integrated and 
tailored approach most definitely drives increased 
productivity, consistent branding and marketing messages and 
ultimately the highest value, most cost effective program for 
its customers.
    Similar to the driving force behind Indiana many other 
States have established their own standards. Once these have 
been set they develop the proper alignment between all 
stakeholders to drive toward their aggressive goals. This 
allows for the best thinking to be put toward the market based 
program requirements verses establishing Federal prescriptive 
programs that become difficult to realize ultimate success.
    Costs of these programs are market driven and tested as 
well as included into the local rate structures. The market 
forces ultimately drive participation and returns once the 
standards are established. These structures allow for a uniform 
measurement system affording the required transparency of the 
return on investment and energy impact.
    Two years ago the debate in Washington was how to best 
incentivize and grow efficiency programs and what, if any 
impact, would they have on energy use? Today we know that these 
programs not only can thrive, independent of Federal subsidies 
and support, but also that their results can be measured, can 
be verified and that efficiency can deliver savings to rate 
payers and utilities alike.
    We must continue to build on this progress. As Congress and 
the Administration look to balance the seemingly competing need 
for abundant, affordable energy with environmental 
considerations, energy efficiency programs can and must be part 
of the overall systems based solution.
    I thank you for the opportunity to be here with you today 
and look forward to any questions you may have.
    [The prepared statement of Mr. Rodgers follows:]

Prepared Statement of William A. Rodgers, Jr., Chief Executive Officer 
          and President, GoodCents Holdings, Inc., Atlanta, GA
GoodCents Overview
    Mr. Chairman and members of the Committee on Energy and Natural 
Resources, my name is Bill Rodgers and I am the President and CEO of 
GoodCents Holdings, Inc. GoodCents is headquartered in Atlanta, Georgia 
and provides operations in 22 states as well as Canada delivering over 
85 energy efficiency programs. I thank you for the opportunity to 
testify before you today on the important topic of energy efficiency. 
Our company has been in existence for over 34 years and has provided 
multiple types of Demand Side Management and Energy Efficiency programs 
to over 150 Utilities, including Investor-Owned, Co-operatives and 
Municipalities. We have over 600 employees located across North America 
who wake up each and every morning focused on helping both residents 
and businesses learn to utilize their energy in a more efficient and 
smarter fashion, as well as conserving as much energy as possible.
    Our company partners with both electric and gas Utilities to 
deliver the most effective programs targeted at reducing their energy 
footprint. Some of the programs we deliver are:

   Facility Audits (both residential and commercial)
   Income Qualified Weatherization
   Residential and Commercial Rebate Programs

    --Trade Ally Network development and management

   Equipment Efficiency Studies
   Retrofit Programs for Commercial and Industrial

    --Lighting
    --H.V.A.C.

   Equipment (motors, drives, refrigeration etc.)Energy End-Use 
        Studies Our involvement covers the full spectrum of services: 
        From initial program design, focused on the delivery of 
        required or targeted savings; to the critical marketing 
        services which drive customer education and program 
        enrollments; to field implementation; and lastly, the 
        measurement and verification of the program's actual savings 
        which are reported back to the respective regulatory body. 
        Since the purpose of this hearing is to consider lessons 
        learned from state efficiency and renewable programs, I would 
        like to call your attention to the Energizing Indiana program. 
        GoodCents has lead as the Third Party Administrator of this 
        state-wide, multiple-utility program since 2011.
Energizing Indiana Overview
    In 2009, the State of Indiana joined many other states, and since 
that time many others have followed, to establish long-term Energy 
Efficiency Resource Standards (EERS). These standards set forth energy 
savings targets with specific timetables for achievement. Once the EERS 
were established, Indiana undertook an exhaustive review of their 
options for goal achievement. Their model evaluated the need for a true 
partnership of all stakeholders in order to achieve their goals. They 
established a Demand Side Management Coordination Committee (DSMCC) of 
the Indiana Utility Regulatory Commission (IURC) made up of 
representatives of each of the Utilities, municipalities and consumer 
groups in the state. They went to the marketplace to select an 
Independent Third Party Administrator for their statewide initiative. 
GoodCents was selected and entered into a contract targeted at 
aggressive energy savings over the first two contract years of 2012 and 
2013. Branded ``Energizing Indiana,'' the initiative is a united effort 
by the state, participating Utilities, businesses, residents, and 
consumer organizations to offer energy efficiency programs that will 
benefit communities across the state.
    This extensive, state-wide suite of six core energy efficiency 
programs includes: Commercial & Industrial Prescriptive program 
targeting the most energy consuming equipment and process improvements, 
Residential Home Energy Assessments, Income-Qualified Weatherization 
Services, Residential Lighting expansion through participating retail 
locations, Energy Educational Programs and Commercial Building 
Assessments for Indiana Schools.
    As administrator, GoodCents coordinates, manages, implements and 
reports on this core suite of programs to meet the annual energy 
savings goals identified for each participating Utility. A few key and 
central accomplishments over the past two years:

   Created nearly 400 new Indiana jobs
   Enrolled over 200,000 residential customers
   Worked with 960 retail stores to sell over 6,200,000 energy 
        efficient bulbs
   Educated over 155,000 elementary students about energy 
        efficiency within their own homes
   Established a network of over 2,000 non-profit organizations 
        representing over 1,000,000 members to educate and market the 
        programs
   Energy Advisors logged over 4,600,000 miles serving the 
        residents and businesses throughout Indiana
   Installed over 800,000 measures in commercial and industrial 
        facilities
   Achieved over 900,000,000 kWh of energy savings in just the 
        first two years which is enough to power the residents of Salt 
        Lake City, Utah for an entire year.

    In addition, the Utilities also offer other ``Core Plus'' programs 
directed toward expanding to an even greater suite of energy efficiency 
services that GoodCents works to educate the ultimate customers on the 
combined value. GoodCents has built a world-class team of experienced 
professionals from across the state of Indiana and is managing the 
program from offices in Indianapolis, Crown Point, Fort Wayne, and 
Evansville.
    GoodCents strongly believes that by consolidating energy efficiency 
programs into one core initiative, Energizing Indiana has benefitted 
many Utility customers, including industry, businesses, schools, and 
homeowners. The power of offering an integrated and tailored approach 
most definitely drives increased productivity, consistent branding and 
marketing messages, and ultimately the highest value, most cost-
effective programs for customers.
Driving Program Success
    Through our years of experience implementing energy efficiency 
programs like Energizing Indiana we have found that program success is 
driven primarily by two factors:

   Is the program designed to achieve savings; and
   Is it effectively implemented and marketed to reach out to 
        customers to engage, educate and ultimately drive 
        participation.

    Below is a further overview of the Demand Response and Energy 
Efficiency programs currently being successfully delivered by GoodCents 
through our design, marketing and implementation efforts.
Demand Response Programs
    For more than three decades, GoodCents has been a valued partner 
for Utilities implementing and leveraging home area networking, 
advanced metering infrastructure and demand response programs.
    GoodCents combines smart meter deployment, infrastructure component 
installation, proprietary scheduling and routing applications, and 
customer call to ensure the most efficient and successful deployment of 
smart grid programs.
    We utilize decades of experience in implementing and installing 
demand response program equipment such as communicating thermostats, 
water heaters and pool pumps. We also work inside the home to leverage 
the optimal solutions for our customers in establishing the most 
effective home area networks to allow for maximum understanding of 
customers home energy usage. Home area networks connect all aspects of 
the home to best understand how, where and to what degree energy is 
being used.
    GoodCents' demand response portfolio includes programs in 
California, Georgia, Illinois, Indiana, Utah, North Carolina, Ohio, 
South Carolina, Virginia, Nevada, Kentucky, Oklahoma and Washington.
Energy Efficiency Programs
    The goals of the energy efficiency programs offered by GoodCents 
are to provide Utilities and their customers, both residential and 
commercial, with an avenue to reduce energy and demand requirements, 
save money on electric bills, and meet energy reduction goals set forth 
by state legislatures and commissions. The three most popular 
residential programs to be utilized are Income-Qualified
    Weatherization, Rebates, and Home Energy Assessments. In order to 
impact usage on a larger scale, commercial programs such as Commercial/
Industrial Energy Assessments, and Custom and Prescriptive Rebates must 
be leveraged.
            Residential Energy Efficiency
    GoodCents believes that on-site energy assessments provide the best 
opportunity to reshape the energy usage habits of all customers, for 
both Income-Qualified Weatherization and Home Energy Assessment 
programs. Our highly trained and experienced advisors perform detailed 
site surveys and work closely with the customer to install energy 
efficiency measures as determined by the Utility and their customers. 
Our program delivery may include combustion safety testing, blower door 
guided air sealing, arranging for improved attic insulation, providing 
conservation education, and encouraging adoption of energy efficiency 
measures.
    Along with installing measures, we are also capable and equipped to 
conduct in-out testing for implementation-style assessments such as 
weatherization, duct repairs, ceiling insulation and more. We are then 
able to educate the homeowner on the most impactful improvements they 
can make to their home to increase efficiency. Typically these 
improvements are supported through utility-funded Rebate programs. 
GoodCents generally uses six common elements for on-site energy 
efficiency programs: pre-visit and authorization, home health and 
safety, installed measures, energy audit inputs, energy audit analytic 
engine, and homeowner's energy report. Our portfolio includes program 
implementations in Indiana, Ohio, West Virginia, Florida, Virginia, 
Kentucky North and South Carolina.
            Commercial & Industrial Energy Assessments
    GoodCents' Commercial and Industrial programs include energy 
assessments that are supported by prescriptive and custom incentive 
structures that reward participants with monetary incentives based on 
installation of energy efficiency equipment upgrades. Following the 
energy assessment, the customer is educated on the most cost effective 
improvements to implement at their business that will reduce the 
greatest amount of energy. These upgrades include lighting, motors and 
pumps, HVAC, and potentially other equipment such as ENERGY STARr 
transformers and efficient package refrigeration. Incentives are 
provided for one-for-one replacements, retrofits and new installations 
of qualified equipment.
    The objectives of the C&I Prescriptive Program are to:

   Lower electric energy consumption in the C&I market sector.
   Help C&I customers decrease their overall energy costs.
   Build market-based activity that captures near and long-term 
        energy and demand savings.
   Encourage equipment vendors and contractors to actively 
        promote and install energy efficient technologies for their C&I 
        customers.

    Active Programs are being delivered in Indiana, Kentucky, North 
Carolina, Ohio, South Carolina, Virginia and West Virginia.
Customer Engagement and Participation
    Through years of experience, GoodCents has identified a variety of 
tools that are effective in engaging customers and changing their 
behavior, resulting in optimal program enrollment. The key to a 
program's success is establishing a strong marketing campaign that 
spans multiple channels and provides multiple touches to Utility 
customers to increase both awareness and program participation. In 
addition, it is essential to develop an enrollment channel that is easy 
and convenient for customers to use.
    Effective marketing is the key to robust participation. GoodCents 
has a complete array of marketing capabilities including print 
collateral design and production, social marketing programs (community 
engagement programs, social media implementation, local enrichment 
programs, etc.), and electronic communications to include website 
development, landing pages, email campaigns, and online program 
administration. In many programs, incentives are used to drive higher 
response rates through direct mail, trade ally networks, and community 
enrichment.
    GoodCents also works with Utilities to establish program awareness 
through social marketing platforms and pushes to engage local 
newspapers and media channels for additional support. In addition, we 
leverage social media resources such as Facebook, Twitter, and YouTube 
to raise awareness of energy efficiency and demand response programs. 
GoodCents works with the Utility to build a program webpage that 
provides program information and allows the customers to enroll. In 
addition, we leverage some program marketing approaches with many of 
the Utility's current and future media campaigns or marketing efforts.
    When working within the energy efficiency business the key to 
gaining both commercial and residential customer acceptance is in 
educating them as to the benefits of the programs, allowing them to 
understand the financial impact and return on their investment, and 
working to make the participation process simple. Page 14 of 14
Conclusion
    Similar to the driving force behind Energizing Indiana, many other 
states have established their own Energy Efficiency Resource Standards. 
Once these goals and standards have been set they then develop the 
proper alignment between the state, regulators, local communities, 
Utilities, industrial and commercial businesses and residential 
customers to drive towards their aggressive goals. This allows for the 
best thinking to be put towards the market-based program requirements 
versus establishing federal prescriptive programs that become difficult 
to realize ultimate success. Costs of these programs are market driven 
and tested as well as the proper review and inclusion in the local rate 
structures. The market forces ultimately drive the programs, 
participation and returns once the standards are established. These 
structures allow for a standard and common measurement system that 
drives the most consistent and clear understanding of the return on 
investment and energy impact.

    Senator Franken. Thank you, Mr. Rodgers.
    I'm going to go to Senator Portman, but just I love the 
idea of energy efficiency education for kids. I've often 
thought that we should--I'm on the Education Committee, that we 
should reinvent, we should re-establish Home Ec and that home 
economics should include financial literacy. It should include 
nutrition, about how to cook nutritiously and I think it should 
involve how to keep your home energy efficient.
    Let's go to Senator Portman.
    Senator Portman. Thank you. Thank you, Mr. Chairman for 
having this hearing and for the great testimony that you've 
brought before us. I'm really impressed with what you have 
going on in your States and some of the examples we've heard 
from today.
    As you know this Portman/Shaheen bill that the chairman 
called it, is really called Shaheen/Portman, but she's not 
here. So we're going to change the name for this purpose.
    But Jeanne did testify earlier, I understand, correct?
    Senator Franken. She did. It was Shaheen/Portman then.
    Senator Portman. Yes. That doesn't surprise me.
    [Laughter.]
    Senator Portman. She's no longer on the committee so we can 
get away with this now and again.
    But we are hoping to get it up soon. Thank you for all the 
help many of you have provided. I know there have been some 
disappointments we haven't been able to do more in this first 
piece of legislation. But it is really a huge step forward.
    I take the position that we should have an all of the above 
strategy. I think that includes natural gas production in 
States like Ohio, but also energy efficiency, certainly 
renewables, coal in Ohio, oil, nuclear. Our legislation is 
consistent with what you talked about today in the sense that 
as was just stated, I think, well by Mr. Rodgers, you know, it 
doesn't have mandates.
    It does have incentives. It does rely on the market. It 
does have some new provisions and new office funding. I think 
it's the kind of thing that will have a very substantial impact 
on efficiency but without losing the bipartisan support that 
it's had thus far. So that's our hope. I'm hopeful we'll see 
something even in the next month on it on the Floor of the 
Senate.
    We think now on the bill that will be reintroduced probably 
not next week because we're out of session, but the next week 
we'll have a deficit reduction component as well of about $10 
million. We'll also have a lot more savings than that because 
it requires the Federal Government, the largest user of energy 
in the world, to be more efficient and that will save taxpayers 
a lot in the long run. So I think we can argue this is also 
cost effective.
    It does have some good support including the Chamber of 
Commerce, National Association of Manufacturers, the 
Environmental Defense Fund, American Chemistry Council, 
Alliance to Save Energy, among others. Significantly 
distinguished groups represented here today. Like NASEO the 
ACEEE, thank you, and NORESCO have all been great and 
supportive and we appreciate that, again, even when sometimes 
you haven't gotten everything in that you wanted.
    Thanks to the work of Chairman Wyden and Ranking Member 
Murkowski we now have 10 additional bipartisan provisions we're 
adding to the bill to improve energy efficiency to the Federal 
Government, to deal with some of the regulatory barriers to 
private companies looking to save energy. These provisions have 
allowed us to pick up the support now of the American Gas 
Association, the Edison Electric Institute, the National Rural 
Electric Cooperative Association and others. We have about 270 
groups so far.
    One of those amendments is authored by your own Senator, 
Mr. Franken, who happens to be here today. I would have 
mentioned it anyway even if he wasn't.
    Another one of the amendments is actually, Mr. Risch, who 
just left us. I know his staff is still here so they will like 
the fact that I'm calling it Risch/Udall rather than Udall/
Risch.
    We thank Senator Franken.
    Senator Franken. I sense a pattern.
    Senator Portman. Yes.
    But it's good stuff. It got through this committee with a 
19 to 3 vote which is unusual. Now again, we're working to try 
to re-introduce this bill with a lot more amendments included 
in the bill, the base bill, and frankly, therefore some more 
support and some more substance in the legislation.
    I've got 3 quick questions.
    One is for Mr. Rodgers. On your testimony you talked a lot 
about efficiency being best tailored, specifically, to State 
requirements, conditions driven by markets. From your 
experience if a consumer is able to receive a clear picture of 
what the benefits are of a particular energy efficiency 
investment are they likely to make a reasonable decision on 
their own that reduces energy costs and saves them money?
    Mr. Rodgers. Thank you, Senator.
    I think that's probably one of the biggest challenges our 
industry has always faced. That's one of an educational 
component ensuring that the customers truly understand how and 
when energy is being utilized. We have found that when that 
education is put into place and in many cases it's now being 
put in place through technology, they absolutely will behave 
and take the steps necessary on their own to participate in 
energy saving measures.
    It is typically when they are not as aware. I always like 
to use the story of if we all when we go to the grocery store 
only got a bill from the grocery store at the end of the month 
we would have no idea how to best curb the spending there. The 
same thing happens now with the utility bill. We don't have the 
insight and the knowledge. But that technology is continuing to 
be spread across the country which I think is driving that 
proper behavior.
    Senator Portman. I appreciate that experience you bring at 
the end of the day when of the business that you're in. I agree 
with you entirely. Of course, we do have some new amendments in 
the bill along those lines. Bennet and Ayotte establishing a 
voluntary certification recognition program to promote 
efficiency in commercial buildings.
    Senators Isakson and Bennet, as you may know, we have that 
legislation now as part of ours which it's going to be quite 
substantial in its effect, I believe, aimed at encouraging 
residential efficiency investments by allowing the homes 
expected energy cost savings to be factored into its value and 
affordability, part of the mortgage process.
    Then finally, Senator Franken's bill which requires 
federally leased buildings to benchmark energy usage data.
    Those are all, again, included now in the base legislation 
which I think will make consistent with what you're talking 
about.
    To Mr. Taylor, thank you again to you and NASEO for your 
continued support. I know some of the provisions, again, fell 
out of the bill that you had hoped would be part of it. We just 
appreciate the support of the organization. We want to continue 
to work with you on that.
    Mr. Nadel, so many questions but if you can tell us just 
briefly what you have learned in your economic analysis of 
Shaheen/Portman. Maybe you could speak a little bit to some of 
the benefits that you have measured quickly and what kind of 
energy savings we can expect if the bill is enacted into law?
    Mr. Nadel. OK, certainly.
    Senator Portman. I thought you'd be ready for that. I'd 
thought you'd have your paper.
    Mr. Nadel. Oh, OK.
    Senator Shaheen actually summarized the benefits from our 
recent analysis. I did not bring those with you. But they are 
very substantial in terms of large energy savings many, you 
know, more than a hundred thousand jobs.
    I'd be happy to supply those for the record. I didn't bring 
them with me.
    Senator Portman. That would be great.
    Senator Portman. By 2030 energy savings that equal 12 
quads, the equivalent of taking roughly 80 million homes off 
the grid, a cumulative savings amount to $100 billion by 2030. 
As you say, there's also some jobs figures you were able to 
provide us with which we really appreciate. I think it was 130 
thousand, if I'm not mistaken.
    So thank you.
    Maybe for the record, Mr. Chairman, if we could that, that 
would be great.
    Again, thank you all very much for being here today. To the 
Chairman, thank you for your indulgence. We really look forward 
to working with all of you to try to move this legislation 
forward.
    Again, I think even within the next month we have a good 
opportunity.
    Thank you very much.
    Senator Franken. Thank you, Senator, for your great work in 
Shaheen/Portman.
    I guess I've got you all to myself so since I do--and by 
the way Senator Risch's questions will be submitted for the 
record. OK?
    Senator Franken. I do want to talk a little bit about 
propane right at the start. This is on energy efficiency and 
renewables, but I just want to talk a little bit about that.
    We had kind of a perfect storm and we saw the price of 
propane go from under $2 to over $6. Commissioner Rothman and I 
met with some folks at a farm near Faribault, Minnesota this 
weekend. It seems that it is the crisis is the worst, seems to 
be, over hopefully. But we are going to in 8 months be back to 
the drawing season for our corn and our grain and then we'll 
have another winter.
    So, we saw some good things happening, including since we 
have a representative from Texas here, that we saw some propane 
coming up on the pipeline. We saw some trucked up. I just want 
to ask our Minnesota and Texas representatives here what your 
thoughts are on going forward how we can ensure faster delivery 
of propane on pipelines, on rails and on other modes, like 
trucking during emergencies.
    Any thoughts.
    Yes, Mr. Rothman.
    Mr. Rothman. Mr. Chair, thank you.
    The one thing I would like to note, at least for Minnesota 
is that, as you know, the Cochin pipeline coming down from 
Canada is scheduled to reverse flow. So if----
    Senator Franken. That's 40 percent of our propane comes 
from that pipeline. It's reversing for next year, right?
    Mr. Rothman. Exactly.
    So in addition to the weather and the crop issues we have a 
delivery/pipeline problem. We've urged and I think with your 
leadership urging all of the pipelines, the marketers, the 
suppliers, distributors from the reserves that we have, the 
supplies that we have throughout the United States to the home 
in Minnesota needs to be examined very carefully.
    Senator Franken. We will do that either in the subcommittee 
or as the committee as a whole we need to be looking at this in 
anticipation of next year.
    Mr. Rothman. That's great.
    In addition it is part of the things--and Mr. Chair, maybe 
what I'd like to do is just suggest. We were collecting in the 
Administration, some ideas and suggestions for legislation, 
perhaps either for you, things at the State level and then 
things that we see as necessary. You know, off the top, there's 
potential for looking at a propane reserve system for the 
Midwest, just for crisis situation.
    I bumped into a friend over the weekend who said he had 
recently switched off of propane to natural gas for the home 
but used the Federal tax credit as financing to help do that. I 
don't know if that's still in place or not or whatever.
    What I would say is that we'll submit and work with you to 
develop, you know, good alternatives to solve a problem or at 
least mitigate the problem as it goes into next winter and 
appreciate that opportunity.
    Senator Franken. Mr. Taylor, any thoughts? Just I know this 
isn't necessarily your area in Texas, but.
    Mr. Taylor. Thank you, yes.
    From a supply perspective propane, of course, is the 
byproduct of natural gas processing and petroleum refining. So 
where those activities occur you tend to have supplies of 
propane stored in large volumes. In Texas, Mont Belleview is 
the largest storage area and the pricing basis point for 
wholesale supply.
    The challenge with propane is getting it, is moving it from 
those large stores to places where it's consumed. The recent 
FERC action allowing propane to flow north on a priority basis 
certainly helps. But that still takes, in some cases, weeks for 
that product to move through the pipeline.
    Senator Franken. Right.
    Mr. Taylor. The starting process is like that earlier. It's 
certainly important. As a backstop of sorts, moving propane by 
rail, although rail lines are congested with other traffic, but 
by truck is another alternative in moving smaller shipments.
    In our State our Governor initiated a waiver and renewed 
that recently allowing out of State trucks and drivers to come 
into Texas, come to propane terminals, fill their trucks and 
move back north and into the Midwest. So that's certainly an 
action that is allowable under our State law and I assume will 
continue on.
    Senator Franken. The Department of Transportation did a 
waiver on ours as a service for truck drivers. So, but that can 
only last so long.
    [Laughter.]
    Senator Franken. Before you get a different kind of 
problem.
    I like the idea of a propane reserve system for the 
Midwest. It could be similar to a model that already exists for 
heating oil reserve in the Northeast. So we'll look into that.
    Let's segway from heating, keeping people warm in the 
winter to some--to this what we're talking about here which is 
weatherization, the Weatherization Assistance Program.
    This is Mr. Rodgers, Mr. Nadel or any other panelist. What 
can we do at the Federal level to incentivize or to help do 
weatherization?
    Mr. Nadel.
    Mr. Nadel. I can take a stab a little bit at it.
    I think helping to provide good financing for consumers to 
help finance weatherization would be very useful. I would 
particularly note the on bill financing that Hawaii has as well 
as New York, California is starting it. This allows consumers 
to basically get the money through the utility bill, sometimes 
from the utility, sometimes through a third party financer who 
works with the utility and then they make the payment on the 
bill. So it makes it very easy.
    The Federal Government can provide technical assistance and 
help facilitate it. I'm not saying that they'd provide the 
capital, but that would be very useful.
    As Senator Portman said, more education on what people can 
do, more technical assistance working through the States would 
be very helpful as well, obviously if we're talking low income 
weatherization funding for the Weatherization Assistance 
Program.
    Then I'd point out whatever can be done to encourage 
utility sector and energy efficiency programs because the 
utilities are often helping to provide technical assistance and 
other support for weatherization would be very useful.
    A final comment I would make is while the utilities are 
very helpful if we're talking things like propane or oil you 
need these other measures to help it. The utilities are great 
for natural gas and for electricity, but I think all too often 
propane and fuel oil efficiency has not gotten the attention it 
needs. The crisis helps point to the need for that. If we can 
reduce the demand, obviously we're not going to do it this 
winter, but gradually weatherize these homes.
    I've heard reports. We have one person in our office whose 
uncle lives in Minnesota and he's getting like a $10,000 
propane bill this year for not a very large farmhouse. I'm sure 
you've heard many more. But how do we make those homes more----
    Senator Franken. All of our buildings more efficient is one 
of the things that we're talking about. You're talking about 
financing models. I just, but I know Mr. Rodgers has something 
to say.
    But I do want to ask about--it seems that this comes up a 
lot whether we're talking about energy savings, performance 
contracts or whether we're talking about pace. We talk a lot 
about financing mechanisms, but Mr. Rodgers, what were you 
going to say?
    Mr. Rodgers. Mr. Chairman, I think the--what I would add to 
what has already been said is we manage literally thousands of 
weatherization projects a year across the country. These are 
all through the utilities, who I think the utilities do a 
tremendous job in being able to support their customers and 
driving these very important programs.
    But I think I'll play off a little bit of question that 
Senator Portman had asked earlier and that's in the area of 
education. I think that's one thing that all customers need to 
have more of and that is an understanding of how energy is 
being used within their home and what are the things that they 
can do to help prevent rising costs to help prevent leaking/
leakage out of their homes.
    We find, when we go into income qualified communities and 
work with the residents they are incredibly supportive and 
embracing of all of the activities that the utilities are 
providing as long as they understand what the impact is going 
to be on their home. So, I think if we think about it both at 
the Federal level and at the State level an increase in 
education, an increase in knowledge, for these end customers to 
really be able to understand what these various measures will 
do for their home, I think is a critically, critically, 
important element.
    Senator Franken. Mr. Nadel was talking about getting help 
from utilities to do these things. In Minnesota we have an 
energy efficiency standard. Now it's called--you talk about 
having standards, but not mandates, right? That was part of 
your testimony.
    What's the difference really? I mean, if you're saying to 
the utilities this is--you have to improve your customer's 
energy efficiency by 1.5 percent every year. That's a mandate, 
isn't it? That standard is a mandate.
    That incentivizes utilities to help finance weatherization. 
Doesn't it?
    I mean is there something that we're being a little too 
cute when we talk about the difference between saying we need 
standards, but not mandates. Aren't mandates useful?
    Anyone want to take that or Mr. Rodgers, I seem to be 
talking to your----
    Mr. Rodgers. Mr. Chairman, I think when you break down the 
difference in my mind. The standards are setting, you know, 
kind of the goals and objectives as to what you want to 
accomplish within that State. The mandates, as I think about 
mandates, start to become more prescriptive as far as how you 
go about doing that.
    So if we think of those as really higher level goals and 
objectives to allow the market and the utilities within those 
markets to really, you know, reach out and bring the best of 
what companies like ours have to bear to their customers, you 
know, I think they can be viewed as one and the same.
    I think my concern when I talk about mandates are really 
starting to see that those prescriptive requirements are coming 
at a higher level where really we need to allow the market to 
drive what those prescriptive measures would be.
    Senator Franken. Right.
    You can voluntary standards or mandatory standards, but in, 
I think, that in many cases we're talking about a distinction 
without a difference that a standard is a mandate.
    Mr. Rodgers. Right.
    Senator Franken. But it's a mandate that's not so 
prescriptive that it allows the market to figure out how to 
meet that standard.
    Commissioner Rothman.
    Mr. Rothman. Mr. Chair, to your point.
    I think all stakeholders have an opportunity. Utilities, 
consumers, everybody, the environmental community to focus on 
the fact that you can achieve through a standard certainty, 
certainty not just having a goal, but in achieving something 
which results in carbon reduction and efficiency standards. But 
also creates the certainty from the public policy perspective 
that's necessary to lay the foundation so that utilities can 
work with something and understand what that policy is. With 
that certainty you get a better business outcome for them and 
for the States by having the standard.
    So as to whether it's useful, it's absolutely helpful.
    Senator Franken. We have an energy efficiency standard or 
I'm sorry, a renewable portfolio standard in Minnesota of 25 
percent by 2025 for Xcel it's 30 by 20, right?
    Mr. Rothman. Yes.
    Senator Franken. Then we're meeting that, as you said.
    Mr. Rothman. Yes.
    Senator Franken. Mr. Nadel, can you give us a broad 
overview of how these programs and they are mandates, how 
they're working across the country that the States have decided 
to impose upon themselves through their legislature or through 
their Governors?
    Mr. Nadel. Yes. At this point 26 States have established 
energy saving goals that kind of have mandatory nature to them, 
meaning there are rewards for hitting them or perhaps some 
consequences for not. They set these standards based on past 
experience, based on neighboring States, based on studies what 
is cost effective. Nobody sets a standard being a pie in the 
sky. They set them based on what they can achieve.
    We're in the process of coming out with a report probably 
next month on the results of these States and how well they're 
doing. Updating a report we did a couple of years ago. What 
we're finding is the vast majority of States are either 
exceeding their standards, equaling them or coming very close. 
Only in a few cases are they falling a little bit short.
    But when they have these levels they really sharpen their 
pencils and figure out how to do them. They are very flexible. 
So typically, now in Minnesota it's one and a half percent 
savings a year. It doesn't say how much comes from 
weatherization verses commercial lighting etcetera. The 
utilities have a lot of flexibility to do them.
    As someone who used to work in the utility industry and has 
a lot of friends there, I have noticed that these people really 
pay attention to hitting their goals. I had I remember one 
friend telling me that whenever he bumped into the CEO of his 
company, the guy would always ask him, so how are you coming on 
your goals because in that case one, they cared, but 2, they 
actually stood to make more than a million dollars in extra 
shareholder incentives from hitting their goals. We now have 
over 20 States that have type of incentive.
    So I think they can work very well. But they do have a lot 
of flexibility to, you know, they're not highly prescriptive. 
It's achieve these savings the best way you can.
    Senator Franken. Which is what Mr. Rodgers was saying that 
they're flexible not overly prescriptive, but they're all 
learning from each other.
    Mr. Glick, Mr. Rothman, Mr. Taylor, do you want to talk 
about how your--what your successes and challenges in 
implementing your standards have been in your States?
    Mr. Glick. Sure, Chairman Franken.
    In Hawaii what we've noticed is that success has come--has 
raised a lot of challenges. So we have now a number of circuits 
which were overloaded. Hawaiian Electric estimates that 20 or 
30 percent of circuits on Oahu, our population center, are 
overloaded.
    So most of our work today is how do we solve those 
problems? How do we work to create better renewable 
penetration?
    So a lot of our solutions now are looking to short term 
efforts, the things that we can use in the SEP or State energy 
program.
    Senator Franken. When you mean overloaded you mean your 
base load doesn't meet high demand, peak hours or something? Is 
that what you're saying?
    Mr. Glick. Yes, what I'm----
    Senator Franken. OK, I just wanted to make sure I 
understood.
    Mr. Glick. Sure. It means that at certain times of the day 
we may be exceeding peak penetration levels by, you know, we 
may have 120 percent of our capacity. It's overloaded. That 
means we curtail renewable energy because we have too much 
producing at that time.
    We also have reduced demand because of our energy portfolio 
standard and because of conservation efforts. So it's a matter 
of balance.
    Senator Franken. Oh, I'm sorry. Your output is exceeding 
your need.
    Mr. Glick. That's right.
    Senator Franken. Oh, I see what you're saying.
    Now are you doing any kinds of things like storage in order 
to deal with that?
    Mr. Glick. Immediately there are smart inverters that can 
help ease some of the burden. Another technical fixes that can 
happen, either the residential or the utility level, but the 
medium term fixes include a lot of energy storage, pump storage 
strategies that are being pursued in Kauai, Maui, on Oahu.
    Long term combining our grids because we are unique in the 
sense that we have 6 independent grids. Just the combination of 
unifying the Maui and Oahu grids could increase overall 
penetration by another 53 megawatts because of the redundancy 
in the system that it will eliminate.
    Senator Franken. That's laying a cable.
    Mr. Glick. It's an undersea cable.
    Senator Franken. On the ocean floor or?
    Mr. Glick. Basically, yeah, that's right which have been 
done throughout the world.
    Senator Franken. Right.
    Mr. Glick. There's over 50 instances of successful undersea 
cables.
    Senator Franken. OK.
    Either Commissioner Rothman or Director Taylor?
    Mr. Rothman. Chairman, let me address the 3 various 
standards that we have quickly.
    On the Conservation Improvement Program, you know, as Mr. 
Nadel said and suggested, Minnesota has all the utilities file 
and, you know, plans for their CIP. Working with them there's a 
really good dialog. It's a great opportunity.
    Over time many of the low hanging fruit projects, 
obviously, have been taken into account. Continuing those 
successes are important.
    On the RES, the Renewable Energy Standard, I'd say the 
challenge is making sure we have the infrastructure in place, 
the grid technology, to keep unlocking our renewable energy in 
our sector, in Minnesota, as you know.
    Then in the new solar one, I think it's going to be finding 
the best, appropriate solar strategies to meet those challenges 
and how the market will play out over the next 5/10 years where 
we have a bunch of strategies in place and hopefully we'll take 
some lessons from Hawaii and achieve our goals there.
    Mr. Taylor. Mr. Chairman, in Texas in 1999 we passed 
legislation to restructure our electric markets. We have 
competitive retail markets. In the place of what had been 
utility efficiency programs under a regulated, fully 
integrated, investor owned utility model, those transferred 
over to what we know as the Energy Efficiency Portfolio 
Standard. I think it may have been one of the first, if not the 
first, in the country.
    The first, OK.
    [Laughter.]
    Mr. Taylor. Originally that started off as a 10-percent 
offset in growth and demand for electricity customers within 
the investor owned service areas. That has now grown to 20 and 
now 30 percent offset. The utilities have exceeded that goal in 
each of the past several years.
    A few years ago a performance bonus component was added to 
that to incent the utilities to do more. That has performed 
well.
    Outside of the investor owned utilities our municipal 
utilities and electric cooperatives don't have this 
requirement. Yet, they are still moving in that same direction.
    One example, the CPS Energy which is the municipal electric 
and gas provider for San Antonio originally had planned to 
build a new 700 megawatt power plant to address future growth 
and load. Instead they adopted a package of efficiency measures 
across the service territory as well as distributed solar and 
some other renewable activities to achieve the same objective.
    Senator Franken. Mr. Clark, Mr. Rodgers, how do these 
standards impact your business models?
    Mr. Clark. Certainly as part of energy savings performance 
contracts, we've had the good fortune of implementing a number 
of renewable technologies for the Federal Government customers, 
State and local government customers including wind energy 
projects for a Bureau of Prisons facility in Victorville, 
California as well as an offshore Navy base and a considerable 
amount of photovoltaic or PV products both for the State of 
Hawaii, for example, to the Department of Accounting in General 
Services.
    I still think, from our perspective at least, fantastic 
projects, fantastic components to a project, but if evaluated 
on a purely economic basis we still feel that's it's pretty 
compelling that, you know, not using energy is the most 
renewable form of energy all together. That efficiency on a per 
kilowatt/hour or per megawatt/hour investment for our customers 
tends to be the most cost effective solution. But certainly the 
renewable portfolio standards have grown that aspect of our 
business and have grown that portion of energy savings 
performance contracts.
    Senator Franken. Now you were talking about financing 
barriers. I'll go to Mr. Rodgers, but I want to talk about the 
barriers that you have to getting, to making sure there's 
finances there, for Mr. Nadel as well, is talk about how we can 
make sure that there is financing for these kinds of projects.
    Mr. Rodgers. Mr. Chairman, in regards to the impact on 
companies like ours, it really begins to set the overarching, 
you know, standard to allow companies like ours to exist and 
companies like ours to assist our utility customers and our 
utility clients to help their customers.
    A couple of things I think these standards have done is it 
has really brought out the best of what businesses like our do, 
of thinking of new and innovative ways to be able to deliver 
energy savings measures into the commercial, the industrial and 
the residential marketplace.
    But one of the things, I think, that has become a challenge 
to our market and one that we have embraced wholeheartedly, 
especially in our project that I referenced in my comments on 
Indiana and that is of measurement and reporting. We find that 
there is not necessarily a consistent way of looking across the 
entire country at how these programs roll up and what really is 
the return on the investment that's being made in the 
marketplace. So standards like this also drive innovation 
through technology of really trying to take this information 
and the savings that is being provided to the end customers and 
really be able to report it in a meaningful and useable way to 
really bring it back to an economic discussion.
    Senator Franken. Is that important, Mr. Nadel, that the 
idea of establishing data that is that people can count on and 
say we know that this is what this technology does or we know 
this is what our savings will be?
    Mr. Nadel. Having better data to better assure consumers 
how much they will save will be very helpful. You're not going 
to hit it exactly, but to very much narrow the range of 
uncertainty, likewise better data on the performance of 
projects, will be very helpful to the financiers to be able to 
help evaluate the risks of making different loans.
    Senator Franken. Therefore help to get financing and that 
takes me back to Mr. Clark on the barriers to getting 
financing.
    Mr. Clark. It's truthfully, Chairman Franken, it's a 
relatively new barrier. I would say that up until the point 
that there was the economic downturn in 2008 I think that on 
the State and municipal side of the equation, I don't want to 
say financing was abundant. But it was less of an issue.
    I think today as people manage the credit rating of an 
entity whether it be a city or a State and in lieu of events in 
the city of Detroit or the city of Harrisburg where they had 
credit difficulties. I think it's become an increasing concern. 
I think one of the, or several of the things that have helped 
alleviate that have been the creation of these not for profit 
entities for the purpose of investing in energy efficiency.
    I mentioned the sustainable energy utility in Delaware, the 
Maryland Clean Energy Commission, the Chicago Infrastructure 
Trust. So to the extent that these entities for investment in 
energy efficiency are propagated and willing and able to hold 
that financing that will stimulate a market and help a market 
get out of the condition that it has been.
    I'd also say that, you know, a number of tax credits, 
whether it be an investment tax credit associated with 
investments in photovoltaic assets or new market tax credits 
that may be able to finance central planned assets for a design 
builder or build on operate projects. Certainly the 
continuation of and the availability of those tax credits makes 
it a much more cost effective transaction structure for State 
and local governments to do comprehensive infrastructure 
related energy efficiency improvements.
    Senator Franken. You brought up in your testimony the EPA 
which has indicated that it's going to engage States and 
stakeholders and the public to establish carbon pollution 
standards for existing power plants and how that could unleash 
projects for energy efficiency and basically as offsets. I'd 
like to discuss how these regulations could be crafted in such 
a way to do that and give States maximum flexibility to carry 
them out.
    Anybody and I know, Mr. Clark, you have ideas on that. 
Commissioner Rothman.
    Why don't we--we haven't heard from Commissioner Rothman in 
a few minutes. So let's go to him first.
    Mr. Rothman. Sure.
    Senator Franken. Give you a rest.
    Mr. Clark. Give me a rest.
    Senator Franken. Mr. Clark.
    Mr. Rothman. Of course I was a bit of a designated hitter 
on this topic a little bit.
    First of all, Minnesota supports the efforts of Sec. 111(d) 
and the Administration going forward with these, with the 
rulemaking, wants to participate in the partnership and that 
dialog and has actively done so.
    I'll just reference the letter that came out of my sister 
agency, the MPCA, pollution control on December 12, 2013 which 
we can submit for the record as on each of these points.
    The major ones are, as you're indicating, is a topic of 
importance for today on energy efficiency. From our perspective 
in Minnesota we want to make sure that those rules have, the 
rule has flexibility to allow the credit for energy efficiency 
and renewables. Renewables should allow for definitions within 
each of the States. They aren't the same.
    I think the key point in going back to your questioning 
just a minute ago, is that there needs to be key tools for data 
collection and measurement build in so that there can be proper 
credit for those kinds of offsets.
    Then the last part about it that I'd like to say is that 
with respect to that data collection is that there needs to be, 
from Minnesota's perspective, an accommodation for the 
achievement and the successes that we've had already in the 
past so that Minnesota can, in essence, take credit for the 
opportunities we've had.
    Then finally, as we note in our letter, that there needs to 
be some flexibility by the States with the timing. It may take 
more than a year to get all this in place. But we want to have 
that dialog.
    Thank you, Mr. Chair.
    Senator Franken. Ah good.
    Mr. Clark? Then Mr. Nadel, I know that you have a lot of 
thoughts about this. So we'll do that.
    Mr. Clark. Certainly agree with everything that's been said 
on the topic. From our perspective an energy savings 
performance contract in its very design is well suited to 
take--to both measure, verify, quantify, the CO reduction 
achieved in energy efficiency products done outside the utility 
fence. So we believe it's an excellent delivery mechanism.
    Also one of the barriers at times can be the economics of 
an individual project or collection of energy efficiency 
projects. Certainly the ability to monetize a CO2 
reduction or carbon dioxide reduction over a period of time 
could be a catalyst or transformational in the energy 
efficiency market by giving another source of economics or 
savings stream to compel building owners to take action, you 
know, in cooperation and concert with a utility program.
    Senator Franken. Mr. Nadel.
    Mr. Nadel. Yes. We believe that energy efficiency is a 
critical ingredient to make these Sec. 111(d) regulations on 
existing power plants work. It's low cost emissions savings. In 
fact it's savings that help reduce customer bills unlike 
anything else you can do.
    So we do strongly support the flexibility that Mr. Rothman 
talked about to give States to allow them to use various 
mechanisms to incorporate efficiency and renewable. We think 
that efficiency should be considered. We need a system approach 
where you look what can be saved in the whole system, in the 
power plant itself, but also in that larger system outside 
including the end user to get much more emissions reductions 
then.
    We do believe that if done right, flexible and, you know, 
including a lot of efficiencies, can be done in ways that will 
actually help the economy rather than hurt the economy. I know 
there's been a lot of angst here in Congress among some people 
that this will be a job killer or really hurt things. Yes, you 
could do it badly. But if you do it well and really include a 
strong role for efficiency we think it can actually be----
    Senator Franken. Unleash a lot of activity is really what 
Mr. Clark. We see some nodding here. Mr. Rodgers I see.
    Mr. Nadel. Right. The one thing I would add is we are 
actually now doing a study looking at the impacts of including 
significant efficiency in 111(d) for each of the 50 States. We 
hope to have that come out at the end of March.
    I know just this morning I was in a meeting where we were 
reviewing some of the results of Alabama. It happened to be 
yes. The benefits, it creates jobs. It increases State income. 
It looked like it could be quite positive.
    Senator Franken. I've been told that we have to get out of 
here in about 10 minutes. They're having, I think, an arena 
soccer game will be here a little later. We're trying to 
balance our budget here in Congress too and that helps, every 
bit helps it.
    So I just wanted to ask about distributed generation and 
combined heat and power. This is--I'm very glad that my 
benchmarking amendment has been adopted by Shaheen/Portman. I 
like combined heat and power for a lot of different reasons.
    Mr. Rothman talked about something we do in St. Paul where 
they have distributed energy where we really burn the biomass 
that's picked up from our homes in St. Paul. We burn it and it 
does it. It provides the electricity for St. Paul and heats and 
cools about 80 percent of the buildings. Right?
    So Mr. Nadel, I know that you've mentioned it and if you 
could also encourage Mr.--or Senator Portman and Senator 
Shaheen maybe we can get that as part of this too.
    Mr. Nadel. Yes. I mean, CHP is very important and you have 
a bill that would expand that to include district heating 
systems. We do support that. It will be a little bit 
challenging because there are some costs involved in trying to 
get bipartisan support for anything that has--costs money is 
challenging.
    More broadly, I think much can be done by encouraging and 
assisting States to look at the hook up requirements in their 
States, look at the backup power rates to make sure that they 
are fair to the CHP system, to the utility and to all the other 
ratepayers.
    Also looking at some of the environmental permitting 
systems. In many States they do not recognize the higher 
efficiency of combined heat and power. They, therefore, have 
overly strict emissions requirements for them.
    So there are things that can be done to help encourage. 
Your bill is an excellent start, but there's also some other 
things that can be done.
    Senator Franken. The bill's resiliency as well. These 
things operate in island mode or can operate in island mode and 
that can, especially if you're doing things like storing 
important data. It's a security piece too.
    Look, I just want to thank you all for your testimony. We--
I know that Senator Risch is submitting some questions to the 
record and I might as well.
    Senator Franken. But I want to thank you all for the great 
work that you're doing. We're going to try to learn as much as 
we can from this and continue doing this.
    But I just want to thank you for what each of you are doing 
in your States or around the country. I guess by now we'll 
adjourn this hearing.
    [Whereupon, at 5 p.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

      Responses of Mark Glick to Questions From Senator Murkowski
    Question 1. Can you please elaborate on the Memorandum of 
Understanding that Hawaii signed with the Department of Energy in 2008?
    Answer. The January 2008 Memorandum of Understanding (MOU) between 
the U.S. Department of Energy (DOE) and the State of Hawaii established 
the Hawaii Clean Energy Initiative (HCEI), creating a groundbreaking 
partnership between the state, DOE, the military and the public and 
private sectors. The purpose of the MOU was to forge an alliance 
between Hawaii and DOE that would extend to energy stakeholders and 
opinion leaders to pursue strategies to transform Hawaii's energy 
sector to achieve a target of ``70 percent clean energy'' by 2030. In 
2009, the following targets to be achieved by 2030 were set consistent 
with the MOU: 1) a 4,300 GWh reduction of electrical energy consumption 
in the power sector as defined in the Energy Efficiency Portfolio 
Standard of Hawaii Revised Statutes 269-92; 2) 40 percent of Hawaii's 
electrical generation requirements coming from renewable resources as 
defined in the Renewable Portfolio Standard of Hawaii Revised Statutes 
269-92; and 3) a displacement of 385,000 million gallons per year of 
petroleum for ground transportation as a voluntary objective of the 
HCEI Road Map which can be found at energy.hawaii.gov. The HCEI Road 
Map, which was last updated in 2011, established working groups to 
address key sectors of the energy economy--electricity generation, end-
use efficiency, transportation and fuels. Hawaii and DOE are currently 
updating the MOU for execution in the second quarter of 2014 that 
outlines the next phase of HCEI.
    Question 2. Are you meeting the goals for your Energy Efficiency 
Portfolio Standard (EEPS)? If so, how do you know?
    Answer. The State of Hawaii is meeting the EEPS goals. One way the 
Hawaii State Energy Office tracks progress on EEPS is through the 
annual EEPS report by the Hawaii Public Utilities Commission (PUC) to 
the Hawaii Legislature. The most recent report in January of 2014 
stated that `` . . . Hawaii is on track to achieve more than 1,550 GWh 
in savings by 2015, exceeding the interim 2015 EEPS target of 1,375 GWh 
by more than 12 percent.'' This report can be found at http://
puc.hawaii.gov/wp-content/uploads/2013/04/2013-PUC-EEPS-
Report__FINAL.pdf
    Another method of verification is the recent independent evaluation 
released by the PUC on January 15, 2014 of the energy efficiency market 
potential in the State of Hawaii from 2013-2030. This evaluation was 
conducted by EnerNOC Utility Solutions Consulting to assess whether the 
State is on track to meet the overall 2030 EEPS goal. From a baseline 
in 2012, the study presents estimates of potential electricity savings 
for 2013 through 2030. According to the evaluation, the projected 
``cost-effective cumulative energy efficiency potential to be achieved 
by 2030 is 6,210 GWh, or about 144 percent of the current EEPS goal.
    Question 3. It seems from your testimony that you are continuing to 
add renewable power even though you are having grid stability issues. 
How are you maintaining grid stability? What do you use for base load 
power?
    Answer. Adding high degrees of intermittent renewable generation 
resources safely and reliably in Hawaii has been challenging. This has 
necessitated recalibration of our grid reliability standards, specific 
technical solutions pursued by utilities, including customer-sited and 
grid-sited technologies to address any issues related to exceeding or 
increasing the current penetration threshold, and continued reliance on 
fossil-fueled dispatchable generation resources to assure grid 
stability and suitable power quality. Another challenge is the size of 
Hawaii's existing base-load power plants, particularly the AES coal 
plant and the amount of spinning reserve that must be kept running to 
back it up. State policy has encouraged the diversity of dispatchable 
renewable resources available including geothermal, waste-to-energy, 
biomass and biofueled generation resources. Hawaii has more than one 
dozen energy storage projects and the PUC may approve efforts to 
procure additional storage technologies and demand response resources. 
The utilities and the stakeholders of the Hawaii Clean Energy 
Initiative have leveraged federal, state and utility funding to 
commission studies using more sophisticated and accurate models that 
account for the addition of renewable energy resources and their grid 
impacts. Essentially, the utilities are seeking to understand to what 
extent conventional generators can be turned-down to allow for greater 
renewable energy penetration and still maintain grid stability.
    Question 4. How do you partner with private sector companies and 
local businesses to achieve your goals?
    Answer. For efficiency private sector projects, the State Energy 
Office partners with private lending institutions to offer low-interest 
loans supported by an ARRA-funded loan loss reserve.
    In the renewable energy arena, the Hawaii State Energy Office 
reaches out to the private sector to determine which are the most 
pressing issues preventing renewable energy development. Once the 
bottlenecks are identified, we develop and deploy solutions to break-
down these barriers. For example, inefficiencies in permitting 
processes and siting selection were determined to be major roadblocks 
to renewable energy development in Hawaii. Consequently, the State 
Energy Office pooled resources to develop the following tools to 
improve how developers design and deploy renewable energy projects in 
Hawaii:

   Renewable EnerGIS Map provides renewable energy resource and 
        site information for specific Hawaii locations. It is intended 
        to help landowners, developers, and policy makers understand 
        the renewable energy potential of sites statewide.
   Renewable Energy Permitting Wizard was developed to help 
        those proposing renewable energy projects understand the 
        county, state and federal permits that may be required for 
        their individual project. This tool works for projects ranging 
        in size from residential solar installations to large utility-
        scale facilities. It is currently being upgraded to reflect 
        current permitting requirements, improve user functions, and be 
        available in an open source software environment.
   e-Permitting Portal (Department of Health) allows for the 
        electronic processing of DOH environmental health permits.
   Permitting Guidebook provides guidance on the permitting and 
        siting of renewable energy projects in Hawaii. Hence, it better 
        prepares applicants for the permitting processes, which also 
        saves time and resources for the permitting agencies and 
        developers.
   Developer & Investor Center provides guidance and 
        information on all facets of commercial and residential 
        renewable energy development in Hawaii (siting, financing, 
        utility interconnection, taxation, permitting, business 
        registration, other opportunities).

    International Agreements--The Okinawa-Hawaii Clean Energy 
Cooperation agreement was signed by Hawaii, the Japan Ministry of 
Economy, Trade and Industry (METI), the U.S. DOE, and Okinawa 
Prefecture to facilitate policy dialogues to share best practices and 
deploy joint projects in the field of renewable energy and energy 
efficiency including smart grids and smart city systems. Additional 
parties agreed to work with the principals under the framework, 
including the Japan New Energy and Industrial Technology Development 
Organization (NEDO), the Japanese Ministry of Foreign Affairs (MOFA), 
other related organizations and research institutions.
    Among the several significant joint efforts that have emerged from 
this partnership is the Japan-US Smart Grid Demonstration Project. 
Known as JUMPSmart Maui, this innovative smart grid project is being 
funded primarily by NEDO using $37 million provided by Japan's Ministry 
of Economy, Trade and Industry. The US Department of Energy is 
supporting the project by providing access to their experts at three of 
their national laboratories (National Renewable Energy Lab, Sandia 
National Lab, and the Pacific Northwest National Lab). Among the many 
private sector partners are Hitachi, Mizuho, Maui Electric Company and 
Hawaiian Electric Company. This project helps Hawaii achieve R&D 
investment goals of the state's strategic plan for clean energy. By 
investigating system impacts and the means to enable increased levels 
of distributed generation PV, JUMPSmart Maui is a good example of 
Hawaii's emergence as one of the world's leading test beds for proving 
advanced clean energy concepts and early stage technical solutions.
                                 ______
                                 
 Responses of William Rodgers, Jr. to Questions From Senator Murkowski
    Question 1. Please describe how a statewide approach is the best 
solution for Indiana but may not be for other states.
    Answer. A statewide program approach, such as the Indiana statewide 
program, is a great fit for states that do not have strong, established 
and consistently defined efficiency programs that are offered by 
utilities in the state. Starting from the ground up enables the state 
to align program goals, structures and requirements seamlessly. What 
makes the Indiana program successful from a customer and utility 
perspective is that it is the same program offered to all customers 
across the entire state. This uniform approach can easily be applied to 
other states in similar situations. It is typically more challenging to 
modify and streamline existing programs with a longer history offered 
by multiple utilities into a single unified statewide approach.
    Brand awareness, customer education, data management and program 
reporting are the clear advantages of a statewide approach. By aligning 
all of the individual utility goals there is synergy when it comes to 
program participation and overall program evaluation.
    In the case of Indiana, a unique brand called ``Energizing 
Indianar'' was established for the entire suite of programs offered by 
all utilities. By combining all utilities under one brand, GoodCents 
was able to drive customer education and awareness on a much larger 
scale. Additionally statewide program channels allow for consistent 
messaging across multiple service territories which opens additional 
enrollment channels and the ability to leverage large scale branding 
campaigns to educate customers and drive increased cross selling and 
program participation.
    Finally, offering a common program across an entire state through 
multiple utilities promotes economies of scale through a third-party 
administrator. These economies of scale include increased visibility, 
stronger data capture and management, and enhanced reporting 
capabilities across a common platform to provide information to key 
stakeholders. All program activities across all utilities are measured 
and tracked through the same process and with the same system. The 
requirements of program success are clearly laid out, and the data 
needed to back those numbers is collected and reported from the first 
customer interaction through the life of their participation. The 
unification of the program is maximized by the consistency in program 
implementation; data capture and ultimately program reporting.
    Question 2. How have you been able to measure the success of 
Energizing Indiana since its beginning, three years ago? More 
specifically, how to you obtain tangible metrics that let you know if 
your efforts are really working, and how much you have saved consumers? 
Is it possible for you to know exactly what you are paying for? How?
    Answer. As the third-party implementer for Energizing Indiana, 
GoodCents is required to collect, analyze and report on data from every 
aspect of the program. This information is then reported directly to 
the utilities and the Demand Side Management Coordination Committee 
(DSMCC). GoodCents leverages our fully integrated technology platform, 
GoodCents Connectr, to manage the data requirements of all programs for 
each participating utility. The GoodCents Connect technology platform 
supports all of the systems utilized in the delivery of the program and 
enables us to track and report on each part of the customer's lifecycle 
with the Energizing Indiana Program; we track each detail of the 
process from the time they are initially marketed through the 
completion of the program. This approach provides a single platform to 
support all program functionality and minimize the number of 
integrations required to share data, lessening impact to internal and 
external systems.
    By tracking both the data and details of each program transaction 
we can easily measure program success by participation, transaction and 
deemed or measured savings. This information is presented to all 
program stakeholders through the Reporting Portal portion of GoodCents 
Connect which enables the data to be analyzed and program success and 
goals to be tracked in real time. The ability to continuously track a 
program's success and accomplishments allows us to gauge what is 
working and what can be improved to increase program participation or 
results. Unique to a consolidated statewide approach, data can be 
tracked and managed for all utilities in one system which allows us to 
easily monitor and report on the program as a whole, at any given time.
    GoodCents Connect also enables us to increase our reporting ability 
by integrating measure level savings and reporting for improved 
performance accuracy. Knowing the kilowatt hours (kWh) saved by 
transaction, program and utility allows us to easily report and 
calculate total savings. By drilling both transactional and budget data 
down we can easily track dollars spent against program participation. 
This results in the capability to illustrate exactly where program 
dollars are being spent and the savings you are achieving for program 
spend.
                                 ______
                                 
     Responses of Mike Rothman to Questions From Senator Murkowski
    Question 1. How do you partner with private sector companies and 
local businesses to achieve your goals?
    Answer. We partner with companies in three key ways to help them 
succeed. These partnerships inform of us of what they need to succeed 
(Obtain Input); allow us to tailor assistance and polices to best 
address those needs (Provide Technical Assistance); and connect them to 
financial resources best suited to help them grow (Connect to Financial 
Assistance).
Obtain Input
    Partner with businesses to assure that our activities and policy 
recommendations are based on current and leading challenges and 
opportunities for a given sector.

   Actively participate in sector specific (energy efficiency 
        and the production, distribution and use of renewable and non-
        renewable heat, power and fuel) industry meetings and events.
   Subscribe to sector specific trade journals, news services 
        and trade associations.
Provide Technical Assistance
    Partnerships are strengthened by building trust and demonstrating 
integrity through serving as an on-going, unbiased source of 
information and expertise.

   Provide one-on-one, confidential review of an energy 
        company's innovation to best enable them to compete for funding 
        and succeed in the market place.
   Train entrepreneurs on use of a Commercialization Milestone-
        based, decision making process commonly favored by DOE and DOD 
        grant programs.
   Connect business to resources most suited to expedite 
        development including,

    --Formal partnerships with Non-profit commercialization accelerator 
            programs
    --DOE Clean Energy Innovation and Clean Energy Commercialization 
            programs, and federal labs, and
    --Formal partnership with Minnesota Business First Stop--nine state 
            agencies that synchronize assistance and leverage expertise 
            as needed to address concerns common to innovative or 
            complex projects today.
Connect to Financial Assistance
    Strengthen partnerships through serving as a ``go-to'' source of 
information for current financial incentives and funding.

   Promote subscription to our email list server State and 
        Federal Funding Notification Service so businesses can be 
        informed of appropriate solicitations.
   Educate emerging companies on appropriate SBIR/STTR Programs 
        and Venture Capital Networks.
   Educate businesses on federal and state Renewable Energy Tax 
        Exemptions, Minnesota Energy Savings Programs and Rebates for 
        Energy Efficiency.

    Question 2. Regarding your Solar Value Tariff, how much solar power 
has been derived, and how is it valued (at a retail or wholesale rate)? 
How has the program been received by ratepayers?
    Answer. Minnesota's Value of Solar tariff is still in the 
development phase so numbers for solar power derived are not yet 
available. The Department's Value of Solar Methodology is currently 
under review by the Minnesota Public Utilities Commission (PUC). A 
decision from the PUC is due by April 1, 2014. The value of solar rate 
is neither a retail nor wholesale rate-it is a calculation of the real 
value of distributed solar electricity to the utility, ratepayers, and 
society. We are happy to provide further details.
    Question 3. In your testimony, you note ``the value of energy and 
its delivery, generation capacity, transmission capacity, transmission 
and distribution line losses and environmental value.'' How is the term 
``environmental value'' defined? How is it measured?
    Answer. Minnesota's Value of Solar Methodology uses environmental 
values based on existing Minnesota and EPA environmental externality 
costs. CO2 and non-CO2 natural gas emissions 
factors (pounds of pollution per MM BTU of natural gas) are taken from 
the EPA.\1\ Avoided environmental costs are based on the federal social 
cost of carbon values\2\ and the Minnesota PUC-established externality 
costs for non-CO2 emissions.\3\
---------------------------------------------------------------------------
    \1\ See http://www.epa.gov/climatechange/ghgemissions/ind-
assumptions.html and http://www.epa.gov/ttnchie1/ap42/.
    \2\ See http://www.epa.gov/climatechange/EPAactivities/economics/
scc.html, EPA technical document appendix, May 2013.
    \3\ ``Notice of Updated Environmental Externality Values,'' issued 
June 5, 2013, PUC docket numbers E-999/CI-93-583 and E-999/CI-00-1636.
---------------------------------------------------------------------------
    Question 4. Please elaborate on Minnesota's views that the proposed 
Greenhouse Gas Rules for existing sources. Do you believe that 
Minnesota will be able to reach its own targets of a 1.5 percent 
reduction in energy use per year through efficiency measures and 27.5 
percent generation from renewables by 2025? Why or why not? How do you 
believe the rulemaking can be helpful to your efforts?
    Answer. Yes, we do believe that Minnesota will be able to continue 
to reach the goals it has set for itself.
    Minnesota has required electric and gas utility companies to 
deliver energy efficiency to their customers since the early 1980s, but 
the programs have been continually strengthened. Originally, the 
Conservation Improvement Program, or CIP (Minnesota Statutes Sec.  
216B.241) law measured utility spending on efficiency. In 2007, the 
Next Generation Energy Act (NGEA) strengthened CIP to require an annual 
energy savings goal of 1.5 percent of retail sales for electric and 
natural gas utilities, one of the most aggressive standards in the 
country. Although individual utility performance has varied, Minnesota 
electric utilities collectively exceeded the 1.5 percent standard in 
2011, while natural gas utilities collectively achieved the 0.75 
percent and 1.0 percent minimum savings standards. In 2010, CIP 
projects reduced electricity consumption in Minnesota by approximately 
1.3 percent out of an estimated growth rate of 2.3 percent without CIP.
    Energy savings through efficiency and conservation have a sizable 
impact on carbon emissions. On average, each megawatt-hour (MWh) of 
electricity saved in Minnesota avoids 1,823 pounds (0.9 tons) of 
CO2 emitted to the atmosphere, while each MCF of natural gas 
saved avoids 121 pounds (0.1 tons) of CO2.\4\ As a result of 
the electric and natural gas savings achieved through CIP in 2010-2011, 
nearly 2,000,000 tons of CO2 emissions were avoided 
annually, equivalent to removing approximately 370,700 cars from the 
road for one year.\5\
---------------------------------------------------------------------------
    \4\ The electric CO2 emissions rate is provided by the 
Minnesota Pollution Control Agency to the Minnesota Public Utilities 
Commission and Minnesota Department of Commerce in Docket No. E,G999/
CI-00-1343 and was last updated on March 17, 2009. The gas 
CO2 emissions rate of 121 pounds of CO2 per Dth 
is a standard emissions factor for natural gas combustion and assumes a 
properly tuned boiler or furnace such that nearly 100% of fuel carbon 
is converted to CO2.
    \5\ Calculated using the US Environmental Protection Agency's 
Greenhouse Gas Equivalencies Calculator (http://www.epa.gov/
cleanenergy/energy-resources/calculator.html#results), accessed Feb 1, 
2013.
---------------------------------------------------------------------------
    In 2007, Minnesota also enacted one of the nation's most aggressive 
Renewable Energy Standards (RES), requiring Xcel Energy to generate at 
least 30 percent of its electricity from renewable energy sources such 
as wind, solar, and biomass by 2020, and all the state's other 
utilities to generate at least 25 percent of their electricity by 2025 
(altogether about 27.5 percent by 2025). This is roughly equivalent to 
6,000 to 7,000 megawatts of renewable capacity by 2025. All 16 
utilities are on track to meet the 2012 Renewable Energy Standard (RES) 
benchmark goals\6\ of 18 percent (Xcel) and 12 percent (all other 
utilities).
---------------------------------------------------------------------------
    \6\ See ``Progress on Compliance by Electric Utilities with the 
Minnesota Renewable Energy Objective and the Renewable Energy 
Standard,'' which is prepared for the Minnesota Legislature once every 
two years. View the full RES report and more on RES. June 1, 2013 
report to Public Utilities Commission: Docket No. 13-186
---------------------------------------------------------------------------
    Most of the renewable energy generated by the RES will come from 
wind power. Low wind turbine prices and federal tax incentives have 
driven the cost of new wind generation to historically low levels and 
turned wind into a cost-competitive resource option. For some 
utilities, wind is now the least expensive option available to reliably 
satisfy demands for energy-even when the environmental benefits of wind 
power are not included.
    In 2013, Minnesota adopted a solar electricity standard to obtain 
1.5 percent of retail electricity sales from solar electricity by the 
end of 2020; this standard is in addition to the existing Renewable 
Energy Standard. The new law is limited to investor-owned utilities, 
exempting cooperative and municipal utilities. Mining and paper mills, 
some of Minnesota's largest electricity users, are also exempted. There 
is a 10 percent carve out for small scale solar photo-voltaic capacity 
less than 20 kilowatts. The statute also created a goal of obtaining 10 
percent of the entire state's retail electricity sales from solar 
electricity by 2030.
    Minnesota has shown its commitment to reduce Green House Gas (GHG) 
emissions through its strong energy efficiency and renewable energy 
goals. Continued reductions will rely on the successful implementation 
of 111(d) rules. Recognizing that each state is responsible for the 
implementation of a federal program, Minnesota believes that it is 
important that the 111(d) program be flexible in the variety of things 
a state can do (plant retirements, refueling, renewable energy and 
energy efficiency), and that sufficient time is given (one year) to 
develop State 111(d) plans. Also, because of reductions that Minnesota 
has already achieved in emissions, it is important that past actions be 
taken into account when establishing the 111(d) rules.
                                 ______
                                 
   Responses of William E. Taylor to Questions From Senator Murkowski
    Question 1. How do you partner with private sector companies and 
local businesses to achieve your goals?
    Answer. Private sector companies and local businesses are critical 
partners and service providers in achieving Texas' goals of growing 
domestic energy resources, enhancing energy security and leveraging 
related economic opportunities. Specifically, our office engages 
private sector consulting engineers to conduct energy assessments of 
public facilities, which leads to energy and water saving retrofit 
projects financed via our LoanSTAR revolving loan program that are then 
implemented by local mechanical, electrical and plumbing contractors. 
We also provide support to emerging clean energy technology companies 
through a network of university-affiliated business incubators--where 
young companies receive professional consultation on business plans, 
management structure, investment strategies and technology validation.
    Nationally, the 56 State and Territory Energy Offices engage 
private sector companies in most of their work to expand energy 
opportunities. This work ranges from the development of statewide 
energy plans created through public-private stakeholder processes to 
support for energy technology business incubators and demonstration 
projects. In addition to the state activities described in our 
testimony, several other examples include:

   Alaska's public facilities retrofits program includes a $250 
        million Alaska Energy Efficiency Revolving Loan Fund. The fund 
        finances energy efficiency improvements linked to the 
        benchmarking of 1,300 public facilities across the state. The 
        benchmarking effort identifies high-energy use buildings and 
        provides an Investment Grade Audit prior to the retrofit to 
        help determine which improvements are needed.
   Louisiana's Home Energy Rebate Option Program works with 
        private sector providers that link cash rebates for energy 
        retrofits with training and quality control for the energy 
        raters who certify the projects. This approach builds the 
        capabilities of private sector providers to offer retrofit 
        services to a broad range of homeowners. Over 1,100 existing 
        homes were retrofitted, resulting in a 30 percent average 
        increase in energy efficiency.
   Nebraska has operated the Dollar and Energy Saving Loan 
        Program through 394 private banks for more than 22 years. The 
        program finances energy efficient improvements in homes, farms, 
        businesses, industrial facilities, and schools. Over 27,339 
        projects have been completed using more than $258.7 million in 
        low-interest loans made through the state's participating 
        private sector lenders. In it's more than 22 years of 
        operation, this public-private financing program has seen 
        defaults of only $106,000 out of the $258 million in loans.
   North Dakota operates a cost-shared training initiative 
        implemented by North Dakota State University that helps farmers 
        adopt conservation farming practices to lower production cost. 
        To date, 43 workshops have been held with 861 participants.
   Ohio's Energy Efficiency Program for Manufacturers (EEPM) is 
        a multi-phase program that provides assistance to manufacturers 
        to diagnose, plan, and implement cost-effective energy 
        improvements at their facilities. The state estimates ongoing 
        savings of 28,331,432 kwh/year (electric) and 876,349 MMBTU/
        year (gas, oil).
   Washington has partnered with BMW and the SGL Group to 
        launch the construction of a state-of-the-art carbon fiber 
        automotive facility. The $100 million joint venture began in 
        2010. Through the development and construction stages of this 
        process, over 200 jobs were created, and since opening, 
        approximately 80 permanent, full-time positions have been 
        maintained.
   Wisconsin's Smart Fleet initiative aims to evaluate 
        government and business vehicle fleets to identify areas where 
        they can add vehicles that run on alternative fuels like 
        compressed natural gas. The recently launched program has 
        evaluated 29 participating public and private vehicle fleets 
        across the state.

    In addition to working with the private sector on energy programs 
that expand energy opportunities and resources, the State Energy 
Offices also lead energy emergency planning and response, with a 
particular focus on liquid fuels (e.g., gasoline, propane, heating 
oil). There are many great examples of how states have partnered with 
private sector fuel and energy providers to ensure rapid restoration of 
services in support of health, safety, and a return to normal economic 
activity. The response of the Massachusetts energy office to Hurricane 
Sandy is a great illustration of this work. Following the hurricane the 
state convened a workgroup to develop ``outside the box'' emergency 
plans to ensure the state's petroleum needs were met and to assist the 
New York Harbor area with obtaining petroleum product. The resulting 
plan would allow Boston terminals to load petroleum products onto 
barges for shipment to New York.
    Question 2. In your testimony, you describe ``Green Banks,'' and 
say that Connecticut `used $40 million to attract more than $180 
million in private investment'. How exactly does that work? What is the 
return on investment for the private entities?
    Answer. The primary strategy that states are using in the operation 
of ``green banks'' or infrastructure banks is to attract that private 
capital through credit enhancement mechanisms, rather than through 
direct lending to borrowers (although direct loans may be part of other 
state energy financing programs). Credit enhancements allow public 
funds to leverage private capital in the following ways:

   The state commits public funds to support a specific energy 
        purpose, such as loans for home energy efficiency and renewable 
        energy projects.
   The state solicits partner private sector financial 
        institutions to offer loans for that purpose, using the banks' 
        own loan application, underwriting, and payment collection 
        processes.
   The state funds are not used directly for the loans; rather, 
        the state funds serve the purpose of decreasing the banks' 
        exposure to default risk. In addition, this approach can build 
        a track record of successful bank loans in the energy 
        efficiency area selected, which may lead to increasing amounts 
        of private capital for loans and a diminished need for the 
        public funds over time.

    Leverage is calculated based on the ability of the public funds to 
increase the pool of money that is made available from the private 
sector for that specific type of investment. Many state financing 
programs do not go by the term ``green bank'' but have achieved up to 
7:1 leverage ratios, meaning that for each public dollar used for 
financing, banks and credit unions have matched it with another $7 in 
private capital.
    Credit enhancements are usually structured to fit the comfort level 
and return on investment expectations of the partner banks and 
financial institutions. Common strategies include:

   Loan loss reserve (LLR): the state establishes a fund that 
        insures a portion of each loan against loss. Usually the LLR 
        identifies some threshold or event that allows the bank to 
        drawdown on the LLR fund.
   Interest rate buy-down (IRB): the state funds reduce the 
        interest rate on the loans.
   Loan guarantee: the state puts its credit behind the loans, 
        enabling borrowers that would typically not be considered 
        ``creditworthy'' (based on FICO score, income, history of 
        bankruptcy, business size, or other factors) to access loans or 
        lines of credit from private banks.

    The above strategies provide a subsidy, but at a far lower cost to 
the taxpayer than traditional grants. Importantly, they help to 
catalyze actions by the private sector to open new markets and fill 
gaps in traditional lending over time.
    In addition to credit enhancements, states have been working to 
open a secondary market to resell these loans and achieve further 
leverage. For example, home energy efficiency loans in Pennsylvania and 
New York are structured in a ``conforming'' way and have a history of 
good performance and low defaults. This allows these states to package 
and sell those loans to the secondary market and use the revenues from 
the sales to expand the existing loan pool. NASEO has been working with 
the states, CITI Bank and other institutions to expand this approach. 
The idea is to show investors in the secondary market that these types 
of assets have value and can be traded.
    A review of state financing programs was completed by NASEO and is 
available at: http://www.naseo.org/data/sites/1/documents/publications/
Unlocking-Demand.pdf
    Question 3. It is fair to say that the Weatherization Assistance 
Program (WAP) and the Low Income Heating Energy Assistance Program 
(LIHEAP) are helpful to low-income families with high energy bills. 
But, what metrics are used to ensure that this money is being used 
wisely? How do we know that we are getting what we pay for?
    Answer. Federal regulation requires that every energy retrofit 
measure undertaken through the Weatherization Assistance Program (WAP) 
have a positive savings to investment ration, or payback, of at least 
$1 in energy savings for every $1 of installation. In addition, the 
U.S. Department of Energy`s (DOE) Oak Ridge National Laboratory 
completed evaluation of the Weatherization Assistance Program (WAP) in 
2006, which showed an average $437 average annual energy savings for 
each weatherized home. A new WAP evaluation is being completed and will 
be issued in about six months. According to DOE, preliminary results 
from this evaluation provide assurance that WAP continues to provide a 
great value for taxpayers.
    In the case of LIHEAP, approximately 6.9 million of the 115 million 
residential households in the United States are receiving energy 
assistance. This is a reduction from the 8.1 million households served 
in 2010, due to reduced federal funding for the program. Prolonged cold 
weather across much of the nation this winter, as well as extraordinary 
spikes in propane and heating oil costs, mean that the average 
purchasing power of LIHEAP has declined from 47 percent of the cost of 
home heating to 40 percent.
    The National Energy Assistance Directors Association is working 
closely with the U.S. Department of Health and Human Services (HHS) to 
develop a comprehensive program integrity plan. In addition, HHS has 
increased the agency's audits of the program and is in the final stages 
of implementing a performance measures program.
                                 ______
                                 
    Response of Randall R. Clark to Question From Senator Murkowski
    Question 1. Energy Savings Performance Contracts have a solid track 
record. They work to save energy and are financed by the private 
sector, yet they are underutilized, especially in the commercial 
market. In your testimony you discuss what states are trying to do to 
overcome some of the barriers they face. You mentioned EPA's rule, but 
is there a non-regulatory role for the federal government here as well? 
Or are these contracts best handled at the state level?
    Answer. Thank you Ranking Member Murkowski for the question on how 
the federal government can encourage states to increase utilization of 
Energy Savings Performance Contracts (ESPCs).
    As more states enact legislation or create programs to authorize 
ESPCs, the market for these contracts continues to grow. The federal 
government can fill gaps that exist in some state programs by improving 
existing national databases of energy consumption information, 
including the Commercial Buildings Energy Consumption Survey. To 
stimulate the market for purchasers and lessees of commercial buildings 
to utilize ESPCs, the Department of Energy could develop standardized 
tools and methodologies to develop an energy performance score. The 
scores value is to inform those states or localities enacting energy 
disclosure regulations and create an incentive for building owners to 
benchmark buildings and seek opportunities for energy savings. The 
federal government could also send a signal to the commercial and 
residential market by recognizing the value of energy efficiency 
investments through credit support mechanisms, such as property 
assessed clean energy lending and extending those programs to the 
commercial market.