[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


         OVERSIGHT OF THE FEDERAL ENERGY REGULATORY COMMISSION

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            DECEMBER 1, 2015

                               __________

                           Serial No. 114-104
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
GREGG HARPER, Vice Chairman          GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio                   PETER WELCH, Vermont
BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Jerry McNerney, a Representative in Congress from the State 
  of California, opening statement...............................     3
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     4
    Prepared statement...........................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7

                               Witnesses

Norman C. Bay, Chairman, Federal Energy Regulatory Commission....     8
    Prepared statement...........................................    10
    Answers to submitted questions...............................    91
Cheryl A. LaFleur, Commissioner, Federal Energy Regulatory 
  Commission.....................................................    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................   113
Tony Clark, Commissioner, Federal Energy Regulatory Commission...    29
    Prepared statement...........................................    31
    Answers to submitted questions...............................   120
Colette D. Honorable, Commissioner, Federal Energy Regulatory 
  Commission.....................................................    39
    Prepared statement...........................................    41
    Answers to submitted questions...............................   124

                           Submitted Material

Statement of the American Public Power Association...............    84

 
         OVERSIGHT OF THE FEDERAL ENERGY REGULATORY COMMISSION

                              ----------                              


                       TUESDAY, DECEMBER 1, 2015

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Present: Representatives Whitfield, Olson, Shimkus, Pitts, 
Latta, Harper, McKinley, Pompeo, Kinzinger, Griffith, Johnson, 
Long, Ellmers, Flores, Mullin, Hudson, Upton (ex officio), 
McNerney, Tonko, Green, Capps, Doyle, Castor, Sarbanes, Welch, 
Yarmuth, Loebsack, and Pallone (ex officio).
    Also Present: Representative Kennedy.
    Staff Present: Nick Abraham, Legislative Associate, Energy 
and Power; Will Batson, Legislative Clerk, Energy and Power, 
Environment and the Economy; Leighton Brown, Press Assistant; 
Allison Busbee, Policy Coordinator, Energy & Power; Patrick 
Currier, Senior Counsel, Energy & Power; Tom Hassenboehler, 
Chief Counsel, Energy & Power; A.T. Johnston, Senior Policy 
Advisor; David McCarthy, Chief Counsel, Environment and the 
Economy; Tim Pataki, Professional Staff Member; Chris Sarley, 
Policy Coordinator, Environment and the Economy; Dan Schneider, 
Press Secretary; Christine Brennan, Minority Press Secretary; 
Jeff Carroll, Minority Staff Director; Timia Crisp, AAAS 
Fellow; Rick Kessler, Minority Senior Advisor and Staff 
Director, Energy and Environment; and Tim Robinson, Minority 
Chief Counsel.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. I would like to call the hearing to order 
this morning and welcome everyone. Today, we are going to have 
an oversight of the Federal Energy Regulatory Commission, and I 
want to welcome all the commissioners and chairmen. We 
appreciate the four of you being with us. We had one vacancy 
over there, but we appreciate your time. We look forward to the 
dialogue with you on some very important issues. At this time, 
I recognize myself for a 5-minute opening statement.
    America's energy policy is changing rapidly, changing not 
only from the dramatic increases in domestic energy supplies, 
but also from the unprecedented Federal regulatory burdens, and 
a number of other emerging threats. And FERC's responsibility 
places it right at the very center of these changes.
    The rapid rise in domestic natural gas production and the 
increased reliance on it for electricity generation has created 
many challenges for FERC. For one thing, it has increased the 
burden on FERC to make timely decisions on many new natural gas 
pipeline project applications. We see bottlenecks in regions 
like New England, where high natural gas prices and limited 
supplies are harming consumers, destroying jobs and threatening 
wintertime electric reliability, even though natural gas in 
nearby Pennsylvania is plentiful and affordable.
    FERC also plays a central role in the approval of LNG 
export facilities, which hold the potential to create jobs at 
home and help our allies abroad. In fact, on a regular basis, 
we have representatives of foreign European countries coming 
and asking for LNG exports. Both the substance and the timeline 
of FERC's review process for such projects have, justifiably, 
come under review. Challenges also come from the actions of 
other Federal agencies, and particularly, EPA. EPA's Clean 
Power Plan and other regulations pose a significant threat to 
fuel diversity and electric reliability.
    The loss of existing coal-fired capacity, as a consequence 
of new rules, is already a cause for concern, and the number of 
retirements will only grow in the years ahead. At the same 
time, EPA has all but banned the options of new coal-fired 
generation, despite its proven reliability, and it even places 
constraints on natural gas in favor of intermittent renewables 
like wind and solar.
    These and other actions by EPA and their impact on electric 
reliability and affordability, also raise questions about the 
working relationship between EPA and FERC. EPA has leap-frogged 
beyond FERC and granted itself authority over electricity well 
beyond anything set out in the Federal Power Act. There are 
valid concerns that FERC is allowing itself to become a 
bystander as EPA increasingly dominates the electricity sector, 
and does so in ways that serve to exacerbate the very problem 
FERC is supposed to protect consumers against.
    Grid security is another growing concern in FERC's 
jurisdiction. The electricity system faces all the traditional 
risk from severe weather and earthquakes and the like, but we 
also see emerging threats from things like cyber and EMP 
attacks. FERC's role in ensuring the security of the grid is 
more important than ever.
    So in some respects, the energy situation in America is 
better than it has been in decades. But nonetheless, there are 
challenges in the years ahead, and FERC must play a critical 
role and meet its responsibilities as we deal with these 
transitions that we face today.
    So I really look forward to this opportunity to have a 
dialogue with the commissioners, to get their views on these 
important issues, and let you hear some of the concerns that we 
have.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    As we all know, America's energy picture is rapidly 
changing, not only from the dramatic increases in domestic 
energy supplies but also from the unprecedented federal 
regulatory burdens and a number of other emerging threats. The 
work that FERC does often places it at the center of this 
change.
    For example, the rapid rise in domestic natural gas 
production and the increased reliance on it for electricity 
generation has created many challenges for FERC. For one thing, 
it has increased the burden on FERC to make timely decisions on 
many new natural gas pipeline project applications. We see 
bottlenecks in regions like New England, where high natural gas 
prices and limited supplies are harming consumers, destroying 
jobs, and threatening wintertime electric reliability, even 
though natural gas in nearby Pennsylvania is plentiful and 
affordable. FERC also plays a central role in the approval of 
LNG export facilities, which hold the potential to create jobs 
at home and help our allies abroad. Both the substance and the 
timelines of FERC's review process for such projects has 
justifiably come under review.
    Challenges also come from the actions of other federal 
agencies, and particularly EPA. EPA's Clean Power Plan and 
other regulations pose a serious threat to fuel diversity and 
electric reliability. The loss of existing coal-fired capacity 
as a consequence of new rules is already cause for concern, and 
the number of retirements will only grow in the years ahead. At 
the same time, EPA has all but banned the option of new coal-
fired generation, despite its proven reliability, and has even 
placed constraints on natural gas in favor of intermittent 
renewables like wind and solar.
    These and other actions by EPA and their impact on electric 
reliability and affordability also raises questions about the 
working relationship between EPA and FERC. EPA has leapfrogged 
beyond FERC and granted itself authority over electricity well 
beyond anything in the Federal Power Act. There are valid 
concerns that FERC is allowing itself to become a helpless 
bystander as EPA increasingly dominates the electricity sector 
and does so in ways that serve to exacerbate the very problems 
FERC is supposed to protect consumers against.
    Grid security is another growing concern in FERC's 
jurisdiction. The electricity system faces all the traditional 
risks from severe weather and earthquakes and the like, but we 
also see emerging threats from things like cyber and EMP 
attacks. FERC's role in ensuring the security of the grid is 
more important than ever.
    In some respects America's energy situation is better than 
it has been in decades, but nonetheless there are challenges in 
the years ahead and a critical role for FERC in dealing with 
them.

    Mr. Whitfield. At this time, I would like to recognize the 
gentleman from California, Mr. McNerney, for 5 minute opening 
statement.

 OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. McNerney. I thank the chairman. This is an important 
hearing and I am glad that we have all four of our 
commissioners available here this morning. Our Nation's 
electric grid touches all of our lives. FERC's jurisdiction, 
your jurisdiction, and the cooperation with the States and the 
stakeholders throughout the transmission and distribution 
system make it critically important.
    The grid, from both the technological and resource-mix 
standpoint, is evolving, and it is ours and your responsibility 
to ensure that the public and private sectors are prepared and 
working together while maintaining reliability, resiliency, and 
affordability.
    And this is happening at a time when some feel that our 
electrical grid is our Nation's most vulnerable section of 
infrastructure. So we have challenges in front of us. Preparing 
for our future will require significant investments in our 
energy industry infrastructure. Utilities are often the ones 
leading the way on these efforts, but it will require 
cooperation among all stakeholders to maintain and improve our 
current energy and electrical systems. The needs are clear: 
Reduce carbon emissions; increase efficiency; affordability, 
affordable prices for consumers; job creation, reliability; and 
resilience.
    So you know that when you flip on the lights, they will 
turn on. The shift to more natural gas, as well as renewables 
in places such as California, has forced utilities and 
consumers to rethink how they manage electricity. And 
electricity continues to shift to be consumer-driven with 
things like demand response, microgrids and the Internet of 
things. Well, these are positive developments, but ones that 
are still relatively new and will need continued oversight from 
FERC and Congress to analyze what works and what doesn't work. 
There is no shortage of challenges facing our Nation's energy 
system.
    We will hear from the commissioners today. FERC is facing a 
daunting task with a seemingly endless increase in the number 
of your requests. Nearly 2 dozen LNG export facility requests 
now are under FERC consideration; approximately 500 hydropower 
licenses in the coming years; the need for timely investments 
in infrastructure; and the impacts of these and the increased 
physical and cyber threats to the electric grid are tremendous. 
FERC will be at the forefront of each of these, reducing carbon 
emissions while protecting reliability, increasing physical and 
cyber resilience while managing cost for consumers; fostering 
development and implementation of policies and technology that 
supports all grid stakeholders.
    I look forward to your testimony, and I appreciate you 
taking time to be with us today. And with that, Mr. Chairman, I 
yield back.
    Mr. Whitfield. Thank you very much. At this time, I would 
like to recognize the chairman of the full committee, Mr. Upton 
of Michigan, for 5 minutes.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you, Mr. Chairman.
    Quite a few energy-related issues in the news today fall 
under FERC's jurisdiction. So it is important and very timely 
for this subcommittee to hold this oversight hearing.
    FERC plays a key role regulating the transmission, 
reliability and wholesale sale of electricity and interstate 
commerce, the transmission and sale of natural gas for resale 
in the interstate commerce, and the transportation of oil by 
pipeline in interstate commerce as well.
    FERC is responsible for the approval of interstate natural 
gas pipelines, LNG export facilities, and licensing of non-
Federal hydropower projects. America's growing energy abundance 
and its growing role as a global energy superpower has led to 
more infrastructure projects being proposed.
    However, there are problems with the timeliness of FERC 
approvals. If left unaddressed, these delays may cost us lots 
of jobs, raise energy prices, and compromise reliability. H.R. 
8, the North American Energy Security and Infrastructure Act, 
which will be considered by the full House tonight and tomorrow 
and Thursday, contains provisions that help expedite the job-
creating energy infrastructure projects. First, FERC also has 
the responsibility related to the security of the Nation's 
electric grid, including physical and cybersecurity threats, 
geomagnetic disturbances, electromagnetic pulse and severe 
weather. H.R. 8 also includes provisions that seek to 
strengthen our ability to prevent these risks, and minimize the 
impact, when, in fact, they occur.
    FERC and its predecessor agencies have addressed many 
issues since 1920. But over that span, it has never faced a 
rival Federal agency setting policy at odds with FERC's core 
mission. In recent years, the EPA has taken on such a role, 
especially related to electricity. In particular, EPA's so-
called Clean Power Plan, which mirrors the regulatory cap and 
trade scheme that failed to pass in the Democratically-
controlled Congress in 2010, places severe constraints on coal-
fired generation in favor of renewables, jeopardizing 
reliability and giving priority to greenhouse gas reductions 
over cost considerations in setting the generation mix. Whether 
FERC can effectively fight back against EPA's agenda when it 
conflicts with FERC's responsibilities is a matter of 
considerable debate.
    There are serious implications for a State like mine, 
Michigan, where affordable and reliable electricity and 
sufficient supplies of natural gas are vital to making it 
through the long and severe winters. Michigan and other 
industrial States also need affordable and reliable energy for 
manufacturers to remain globally competitive.
    So I look forward to this important debate on FERC's 
current and future role. A better functioning FERC matters to 
jobs and affordable energy. And I yield back the balance of my 
time.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Quite a few energy-related issues in the news today fall 
under the Federal Energy Regulatory Commission's (FERC) 
jurisdiction, so it is important and very timely for the Energy 
and Power Subcommittee to hold this oversight hearing. FERC 
plays a key role regulating the transmission, reliability, and 
wholesale sale of electricity in interstate commerce, the 
transmission and sale of natural gas for resale in interstate 
commerce, and the transportation of oil by pipeline in 
interstate commerce.
    FERC is also responsible for the approval of interstate 
natural gas pipelines, LNG export facilities, and licensing of 
non-federal hydropower projects. America's growing energy 
abundance and its growing role as a global energy superpower 
has led to more infrastructure projects being proposed. 
However, there are problems with the timeliness of FERC 
approvals. If left unaddressed, these delays may cost jobs, 
raise energy prices, and compromise reliability. H.R. 8, the 
North American Energy Security and Infrastructure Act, which 
will be considered by the full House later this week, contains 
provisions to help expedite these job-creating energy 
infrastructure projects.
    FERC also has responsibilities related to the security of 
the nation's electric grid, including physical and 
cybersecurity threats, geomagnetic disturbances, 
electromagnetic pulse, and severe weather. H.R. 8 also includes 
provisions that seek to strengthen our ability to prevent these 
risks and minimize the impact when they do occur.
    FERC and its predecessor agencies have addressed many 
issues since 1920, but over that span it has never faced a 
rival federal agency setting policy at odds with FERC's core 
mission. But in recent years, the EPA has taken on such a role, 
especially related to electricity. In particular, EPA's so-
called Clean Power Plan, which mirrors the regulatory cap-and-
trade scheme that failed to pass a democratically-controlled 
Congress in 2010, places severe constraints on coal-fired 
generation in favor of renewables, jeopardizing reliability and 
giving priority to greenhouse gas reductions over cost 
considerations in setting the generation mix. Whether FERC can 
effectively fight back against EPA's agenda when it conflicts 
with FERC's responsibilities is a matter of considerable 
debate.
    There are serious implications for a state like my home 
state of Michigan, where affordable and reliable electricity 
and sufficient supplies of natural gas are vital to making it 
through the long and severe winters. Michigan and other 
industrial states also need affordable and reliable energy for 
our manufacturers to remain globally competitive. I look 
forward to this important debate on FERC's current and future 
role. A better functioning FERC matters to jobs and affordable 
energy.

    Mr. Whitfield. The gentleman yields back. At this time, the 
chair recognizes the gentleman from New Jersey, Mr. Pallone, 
for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Whitfield. I want to 
welcome the commissioners, particularly Chairman Bay and 
Commissioner Honorable, who are before us for the first time in 
their current roles. Frankly, this hearing is long overdue. I 
believe that we are in a time of great transition and 
uncertainty with regard to those aspects of our Nation's energy 
policy overseen by FERC.
    Ten years ago, we enacted the Energy Policy Act of 2005, 
and that was quickly followed by the Energy Independence and 
Security Act of 2007. Both of these laws made significant 
changes to our Nation's energy policies, particularly in the 
areas regulated by FERC.
    We continue to feel the reverberation of those changes 
today, and the commissioners are, in many ways, front and 
center in having to wrestle with the forces unleashed by those 
laws. In particular, we have seen tremendous expansion in the 
supply transmission and use of natural gas as prices have 
dropped. We have also seen a drop in electricity prices as a 
move towards market has spurred competition and innovation in 
many regions of the country.
    The change is never easy, and with it comes questions, 
problems and new needs. The rise of cheap gas, falling 
renewable energy prices, and tighter competition has really 
called into question old assumptions and boundary lines. It is 
getting close to the time when we will need to consider 
fundamental questions about what areas are best suited for the 
State to regulate and what should be handled by FERC.
    We also need to begin thinking about the diversity of our 
electricity regulations system and whether or not we need to 
have more certainty and conformity rather than the current 
patchwork of regulated and deregulated States and regional 
wholesale markets that might benefit from some common ground 
rules.
    Are these markets providing real benefits to residential 
and other consumers? Are they setting the right price signals 
to developers of generation resources? What is the role and 
efficiency and demand response in the wholesale market? How do 
we prevent bad actors from manipulating the market while 
ensuring the rules are not overly burdensome for those 
suppliers who play by the rules.
    These are but a few of the questions before us and before 
the Commission, and the Commission still has to grapple with 
similar questions regarding the gas and markets and pipeline 
siting, as well as dam safety, hydroelectric licensing, oil 
pipeline pricing, and so many other issues.
    I know that we will hear, we already have heard rhetoric 
about EPA's recent rules on carbon, and not just on the floor 
this afternoon. The truth is that the grid is reliable and no 
clean air regulation has ever resulted in the loss of 
reliability. The system is reliable and it is flexible and will 
adapt to the new carbon rules, just as it has to every previous 
action taken under the Clean Air Act.
    So I hope that today's hearing will move on from the tired 
topic and worn out rhetoric that we continue to hear from the 
other side of the aisle. It is time to start having a real 
dialogue about the areas FERC regulates, about the future of 
our energy markets, natural gas pipeline systems, and 
hydroelectric resources. If we fail to engage soon seriously 
and thoughtfully, we risk harming consumers, the economy and 
the environment.
    Thank you, Mr. Chairman, I yield back.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    I want to thank Chairman Whitfield for holding today's 
oversight hearing on the Federal Energy Regulatory Commission 
(FERC). I also want to welcome the Commissioners, particularly 
Chairman Bay and Commissioner Honorable who are before us for 
the first time in their current roles.
    Frankly, this hearing is long overdue. I believe that we 
are in a time of great transition and uncertainty with regard 
to those aspects of our nation's energy policy overseen by 
FERC.
    Ten years ago, we enacted the Energy Policy Act of 2005 and 
that was quickly followed by the Energy Independence and 
Security Act of 2007. Both of these laws made significant 
changes to our nation's energy policies, particularly in the 
areas regulated by FERC.
    We continue to feel the reverberation of those changes 
today and the Commissioners are, in many ways, front and center 
in having to wrestle with the forces unleashed by those laws.
    In particular, we have seen tremendous expansion in the 
supply, transmission and use of natural gas as prices have 
dropped. We've also seen a drop in electricity prices as the 
move toward markets has spurred competition and innovation in 
many regions of the country.
    But change is never easy and with it comes questions, 
problems and new needs. The rise of cheap gas, falling 
renewable energy prices and tighter competition has really 
called into question old assumptions and boundary lines. It is 
getting closer to the time when we will need to consider 
fundamental questions about what areas are best suited for the 
state to regulate and what should be handled by FERC. We also 
need to begin thinking about the diversity of our electricity 
regulation system and whether or not we need to have more 
certainty and conformity rather than the current patchwork of 
regulated and deregulated states and regional wholesale markets 
that might benefit from some common ground rules. Are these 
markets providing real benefits to residential and other 
consumers? Are they sending the right price signals to 
developers of generation resources? What is the role of 
efficiency and demand response in the wholesale market? How do 
we prevent bad actors from manipulating the market while 
ensuring the rules are not overly burdensome for those 
suppliers who play by the rules?
    These are but a few of the questions before us and before 
the Commission. And, the Commission still has to grapple with 
similar questions regarding the gas markets and pipeline 
siting, as well as dam safety, hydroelectric licensing, oil 
pipeline pricing and so many other issues.
    I know that we will hear rhetoric today about EPA's recent 
rules on carbon--and not just on the floor this afternoon. But 
the truth is that the grid is reliable and no Clean Air Act 
regulation has ever resulted in a loss of reliability. The 
system is reliable and it is flexible and it will adapt to the 
new carbon rules just as it has to every previous action taken 
under the Clean Air Act.
    I hope that today's hearing will move on from that tired 
topic and worn out rhetoric. It's time to start having a real 
dialogue about the areas FERC regulates, about the future of 
our energy markets, natural gas pipeline systems, and 
hydroelectric resources. If we fail to engage soon, seriously 
and thoughtfully, we risk harming consumers, the economy and 
the environment.
    Thank you.

    Mr. Whitfield. The gentleman yields back. And that 
concludes our opening statements, so we will get right to our 
panel. And I am going to introduce each one of you right before 
you give your opening statements.
    So we will start this morning with the Chairman, the 
Honorable Norman Bay, and thank you very much for being with us 
Mr. Bay. We look forward to your testimony. You are recognized 
for 5 minutes.

  STATEMENTS OF HON. NORMAN C. BAY, CHAIRMAN, FEDERAL ENERGY 
 REGULATORY COMMISSION; HON. CHERYL A. LAFLEUR, COMMISSIONER, 
    FEDERAL ENERGY REGULATORY COMMISSION; HON. TONY CLARK, 
 COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION; AND HON. 
 COLETTE D. HONORABLE, COMMISSIONER, FEDERAL ENERGY REGULATORY 
                          COMMISSION.

                STATEMENT OF HON. NORMAN C. BAY

    Mr. Bay. Thank you. Good morning, Chairman Whitfield, 
Ranking Member McNerney and members of the committee. Thank you 
for the opportunity to appear before you to discuss the work of 
the Federal Energy Regulatory Commission. My testimony will 
discuss my priorities in light of the change that is happening 
in the energy space, a change a number of you have alluded to 
this morning.
    Underpinning each of these priorities is a belief that in 
approaching matters that come before the Commission, it is 
essential to be fair, balanced, and pragmatic to decide cases 
on the merits based on the facts and the law and to be 
consensus-oriented.
    My first priority is to focus on the fundamentals in the 
competitive markets, to continue to look for ways to improve 
the efficiency of the markets, and to deliver greater value to 
consumers. The Commission continues to work to promote greater 
efficiency, competition and transparency in the wholesale 
markets, including and reviewing the capacity markets and 
looking at price formation in the energy markets.
    Second, the reliability of the grid is a core 
responsibility for the Commission. This encompasses not only 
the everyday responsibility over reliability standards, 
including physical security and cybersecurity, but it also 
includes gas-electric coordination issues. While the 
Commission's reliability authority is limited, it will continue 
to use what authority it has in a conscientious manner. In my 
view, it is important for utilities to push beyond the 
requirements of the standards to implement best practices on 
cybersecurity.
    Third, I believe that infrastructure continues to be an 
important issue at the Commission. Right now, there is a need 
for more infrastructure in terms of both gas facilities and 
electric transmission, and FERC plays a critical role in 
permitting and incenting the development of that 
infrastructure.
    Finally, to accomplish my priorities, I will need to focus 
on the human capital at the Commission. The work of the 
Commission cannot be done without its outstanding staff. And it 
is important to me that the Commission focus on retaining our 
current highly qualified employees, ensure knowledge transfer 
from those employees who do retire, and recruit highly-skilled 
people to replace any departures while maintaining our status 
as one of the very best places to work in government.
    I am very proud of the fact that the recent Federal 
employee viewpoint survey ranked FERC one of the very best 
agencies in government. We were third overall for employee 
satisfaction among large government agencies. We were fourth in 
terms of employee engagement. The challenge is that in the next 
few years, 30 percent of our workforce is eligible to retire.
    To meet all of these priorities, it is essential to use the 
tools that Congress has given the Commission. I look forward to 
working with you in the future on my priorities, and would be 
happy to answer any questions that you have. Thank you.
    [The prepared statement of Mr. Bay follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you very much, Chairman Bay. Our next 
witness is the Honorable Cheryl LaFleur. We are delighted you 
are back with us, Ms. LaFleur, and look forward to your 
testimony. You are recognized for 5 minutes.

              STATEMENT OF HON. CHERYL A. LAFLEUR

    Ms. LaFleur. Well, thank you very much, Chairman Whitfield, 
Congressman McNerney, and members of the subcommittee. I am 
Cheryl LaFleur, I have been on the Commission since 2010; 
appeared before this committee several times, and was also 
honored to be chairman from November 2013 to April 2015. I 
appreciate your holding this hearing and the opportunity to 
testify.
    Since joining the Commission, my top priority has been 
reliability, focused on the reliability of the Nation's 
electric grid. And I am going to devote my comments this 
morning to two aspects of our work on reliability, the 
reliability standards, and the competitive market.
    The Commission oversees the work of NERC, the North 
American Electric Reliability Corporation, in developing and 
implementing mandatory reliability standards for the bulk 
electric system. And I know the committee is aware this is one 
of the only pieces of critical infrastructure subject to 
mandatory standards, thanks to Congress' work in 2005. The 
standards range from nuts-and-bolts rule to keep the lights on, 
and more forward-looking standards on emerging issues. And on 
the emerging issues, in particular, we have worked hard to try 
to put in place meaningful cost-effective protections, even 
though things are changing and we know our knowledge is 
imperfect.
    In March of last year, the Commission directed NERC to 
develop physical security standards for critical facilities. 
Those done, approved in November and are now in place and being 
implemented.
    Since the beginning of our authority, we have worked on 
cybersecurity, a growing challenge that was recognized 
specifically by Congress in the Energy Policy Act. In late 
2013, we approved a fifth generation of cybersecurity that 
requires that all cyber assets on the bulk electric system 
receive a level of protection commensurate with their impact on 
the system.
    Also in 2013, we directed NERC to develop standards to 
address field magnetic disturbances caused by solar storms. 
This issue is one I have been very personally involved in, 
given--and I am concerned about given the potentially 
catastrophic effects that a GMD event could have on the Nation. 
The first set of standards is already in place, it calls for 
operating procedures: What happens if a storm happens? What 
kind of immediate steps do you take?
    What we are working on right now is a more comprehensive 
set of standards that would require transmission owners to put 
in place mitigation to prepare for, if a GMD event happened, to 
limit its effect on the bulk electric system, and those are 
pending right now.
    Secondly, I want to talk about wholesale electric markets, 
because they also relate to reliability because that is what 
they are for, to ensure reliability at just and reasonable 
rates. Two-thirds of the Nation are served by organized 
wholesale electric markets, although those markets differ in 
what kind of products they work on. The markets have been 
expanding. In recent years, we have seen huge additions to the 
mid-continent ISO, the Southwest Power Pool, and most recently, 
the California ISO with its Energy Imbalance Market.
    The market operators across the Nation are working to adapt 
market structures to big changes in the Nation's generation 
resource mix set, several of you have already referred to. 
These changes are being driven primarily by the increased use 
of domestic natural gas, the growth of renewable generation and 
demand side technologies, and new environmental requirements, 
especially the Mercury and Air Toxic Standards, and the Clean 
Power Plan.
    When so much is changing, and in many places we have a need 
for new investment, it is particularly important that markets 
send accurate price signals, both to existing resources, so 
they can stay in place if needed, and new resources where they 
are needed. We have been focused very hard on making sure the 
markets do just that. In the last year and a half, we approved 
capacity market changes in the eastern RTOs to help the markets 
identify and buy resources that will perform at the time when 
they are both most needed to keep the lights on, because the 
system is under stress, particularly baseload resources.
    We are also examining the energy markets, trying to make 
sure that the energy prices include all the things it takes to 
keep the lights on so they send accurate and transparent price 
signals, and we have been working on price formation and have 
several dockets started in that area.
    Finally, we are focused on gas-electric interdependence, 
due to the increased use the gas for generation. We have put 
out rules to better harmonize scheduling of the gas and 
electric markets, and promote communication between them, that 
are intended to help sustain reliability at a time when the gas 
system is stressed, both by generation and heating load in the 
winter.
    Finally, I know my colleagues are going to discuss it as 
well, but we have been engaged with the Environmental 
Protection Agency for the last several years on the Mercury and 
Air Toxic Standards, as it goes into place in different regions 
of the country, and really just starting our work, or we have 
been involved in it, but the implementing is just starting on 
the Clean Power Plan, which is something we will be very 
focused on in the next several years. Thank you and I look 
forward to your questions.
    [The prepared statement of Ms. LaFleur follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you very much. Our next witness is the 
Honorable Tony Clark. Mr. Clark, welcome back and we look 
forward to your testimony and you are recognized for 5 minutes.

                  STATEMENT OF HON. TONY CLARK

    Mr. Clark. Thank you, Mr. Chairman and members of the 
committee, Mr. Ranking Member, for the invitation to be with 
you here today. My name is Tony Clark, and I am honored to be a 
commissioner on the Federal Regulatory Agency since June of 
2012.
    I don't plan to re-read my testimony verbatim for you, but 
what I would like to draw your attention to a few points, and 
perhaps expand on a few ideas and comments that I made in my 
submitted testimony.
    The nature of my testimony is focused on those areas of 
Commission jurisdiction that relate to infrastructure 
development. The Commission has a lot of impact on 
infrastructure development of all kinds, be it generation, 
electric transmission. But most clearly where we have the 
greatest authority is over those areas where we have not only 
economic jurisdiction, but siting jurisdiction as well, which 
is the case of hydropower and interstate natural gas pipelines. 
So the bulk of my testimony focuses on that, and then 
transitions to the importance of infrastructure in regard to 
EPA's 111(d) regulation.
    On the hydropower side, the Commission has been active in 
implementing the Hydropower Regulatory Efficiency Act of 2013 
that you all passed, and that has been going well.
    I draw your attention to just a couple of things under that 
in the testimony. What I think is really important to folks in 
going forward is what Ranking Member McNerney pointed out, 
which is that we are entering a period in which there are going 
to be a lot of licenses that are coming up for renewal. As all 
of you who are members who have those hydropowered licenses in 
your district know, those can become contentious issues, the 
sorts of things that your constituents want to keep abreast of. 
So it is something that I know FERC will want to be working 
with all of you in terms of getting information out about how 
that process evolved and how it worked. It is going to be a 
great undertaking for the Commission.
    I spent the rest of the bulk of my testimony talking about 
the issue of interstate natural gas pipelines, one of the 
tables that I submitted in there indicates that as of up to 
this point, we are within the historical norm of the number of 
certificates that the Commission has been processing in terms 
of compression, throughput and the number of applications that 
we have been getting.
    Something that I really want to draw your attention to are 
the challenges that the Commission is going to face on a going-
forward basis. This expands upon my testimony here. If you look 
at the number of pending applications that we have, as compared 
to the historical trend, we are truly seeing the impact of low-
cost natural gas, and the environmental regulations which are 
shutting down coal and really requiring utilities to have some 
combination of natural gas and renewables.
    If you look at August of 2014, the Commission had pending 
pipeline projects of about 24 Bcf per day, and about 1,000 
miles of pipe. If you fast forward just about a year later to 
November of this year, the number of pending applications we 
have is 50 Bcf per day capacity, so over a doubling in just 1 
year, and 4,600 miles of pipe. The Commission is very proud 
that up to this point, we have been able to process in 92 
percent of all cases, pipeline applications. Within a year, I 
think it is going to be very difficult to maintain that high 
average when you have this volume of pipelines.
    And this is where I get into the 111(d) regulations, and I 
think it is important for the committee to understand the 
challenge that regulators at all levels are going to be facing, 
Federal level and state, which is, there are tremendous 
infrastructure needs in terms of pipeline development, in terms 
of generation on the state side of things, in terms of 
transmission. But all of this is being done in a time when we 
have heightened opposition to that very infrastructure itself. 
And it is very important to understand that in terms of where 
the 111(d) regulations are going in terms of timing. Although 
the EPA did extend timelines for compliance for states by up to 
2 years. If you remember the timelines on that, in many states, 
utilities won't be receiving the state implementation plans 
until about 2018, compliance timeline begins in 2022. And yet, 
it is quite clear, at least historically, that it takes, for 
major pipeline projects and certainly for interstate electric 
transmission projects, it is a 3 to 5 to 12 years or more 
timeline to develop that infrastructure.
    The concern is, if you make a rapid transition to a new 
electric generation fleet before you have the infrastructure in 
place to accommodate that change, there will be an impact on 
cost and that has been the case just about everywhere that that 
transition has been made, but you don't have the adequate 
infrastructure. So it is going to place a lot of pressure on 
agencies like FERC to ensure that as we go through our 
processes, that we do it right, but it is going to create a 
timeline challenge, I think, potentially a consumer challenge 
as well.
    I finally wrap up my testimony just indicating that where 
we stand on the CPP is often where you sit, and this plan does 
not burden all states equally. So there are certain parts of 
the country, certain states that shoulder a much greater burden 
under this, and will have a much more difficult time meeting it 
than other parts of the country.
    Mr. Chairman, with that, I will be happy to take any 
questions that----
    [The prepared statement of Ms. Clark follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you very much. And our remaining 
witness is the Honorable Colette Honorable. And we appreciate 
your being with us today, and look forward to your testimony. 
You are recognized for 5 minutes.

             STATEMENT OF HON. COLETTE D. HONORABLE

    Ms. Honorable. Thank you, Mr. Chairman, Ranking Member 
McNerney, and members of the subcommittee, good morning. My 
name is Colette Honorable. And as ranking member of the full 
committee, Mr. Pallone referenced, Congressman Pallone 
referenced, this is my first appearance before this 
subcommittee. I am grateful for the opportunity.
    Prior to joining the Federal Energy Regulatory Commission, 
I served as chairman and commissioner at the Arkansas Public 
Service Commission for 7 years, I also served as president of 
the National Association of Regulatory Utility Commissioners, 
and it gave me an opportunity to get to interact with a number 
of states that come from different places, different 
ideologies, and it gave me a great appreciation for the 
diversity in states and regions.
    It also allowed me to continue my focus here in my present 
role on reliability, on infrastructure development, a new focus 
for me, markets, and also continuing to work on workforce 
development issues.
    Our mission at FERC is to regulate the interstate 
transmission of electricity, natural gas and oil. This work is 
especially significant because our economy is increasingly 
dependent upon reliable and affordable energy.
    My written testimony goes into more detail regarding my 
thoughts about reliability and infrastructure development and 
markets, but this morning, I would like to focus on something 
you want to hear about, and that is our interaction with the 
EPA concerning the Clean Power Plan.
    Our focus on the EPA's Clean Power Plan finalized in August 
has involved engagement, collaboration and outreach with a 
diverse group of stakeholders. In early 2015, the Commission 
hosted four technical conferences on whether and how the plan 
would impact reliability of the bulk power system. We heard 
from state regulators, from utilities, from regional system 
operators, from environmental groups, and consumer 
organizations.
    These conferences raised a host of issues that informed the 
Commission's advice and counsel in a letter we sent to the EPA 
in May of 2015. In this unanimous document, we advised the EPA 
to consider revising its interim compliance timeline in the 
draft plan to ensure flexibility in the early years of 
compliance. We also encouraged the EPA to consider including 
both a reliability safety valve, which would allow the 
Commission to work with the EPA to address temporary unexpected 
impacts on reliability, and a forward-thinking process to 
provide for ongoing reliability, monitoring an assistance which 
would rely upon existing planning procedures in States and 
regions to initially review State plans for potential 
reliability concerns. The EPA accepted our recommendations in 
the final rule.
    Going forward, FERC stands ready to support the work of the 
states, the regions and NERC, and other reliability entities. 
The Commission has offered to review analyses or requests 
additional assessments as necessary. We continue holding 
technical conferences or other workshops as states and 
utilities will begin complying with the rule, and pursuant to a 
joint staff-working document that informs our interagency work, 
we will continue participating in future discussions with the 
EPA and the Department of Energy, and others as necessary.
    Since the issuance of the Clean Power Plan, I have 
continued my engagement with diverse groups. For instance, in 
October, I participated in a workshop hosted by the bipartisan 
policy center in the Great Plains Institute, which focused on 
compliance in the Midwest. Although most of these states are 
challenging the rule in court, many are also working on 
compliance plans should the plan be upheld.
    For example, agencies in my home State of Arkansas are 
evaluating compliance options, even though the State has joined 
the litigation. And 13 other states have reportedly indicated 
that they will follow a similar path. I mention this to say 
that many states are on a dual path.
    A number of studies indicate that if the rule is upheld, 
fully contemplated compliance plans will have considerable 
potential to reduce compliance costs, particularly those 
undertaken in regional efforts. In the Midwest, both the 
Southwest Power Pool and the Midcontinent Independent System 
Operator has released studies completing that regional 
compliance with the Clean Power Plan is more efficient, less 
costly, and, therefore, better for consumers. It is imperative 
that all effective stakeholders engage and work collaboratively 
to maintain reliability, while minimizing any potential cost 
impacts of plan implementation.
    I would like to take this opportunity to show my 
appreciation for our staff, which have worked very hard in this 
regard, and also to support the ongoing work in the sector by 
industry, regulators and other stakeholders, which is vital for 
a thriving economy. We take our job seriously, and I am proud 
to be a member of the Commission at this time. I am also 
appreciative and grateful for the important oversight work of 
the Energy and Power Subcommittee. I look forward to working 
with you throughout my tenure, and I stand ready to answer my 
questions you may have. Thank you.
    [The prepared statement of Ms. Honorable follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Well, thank you for your testimony. And we 
appreciate all of you for your opening comments. At this time, 
we will open it up for questions from the members of the 
subcommittee. And I would like to recognize myself for 5 
minutes to begin with.
    We all recognize we have different political philosophies 
in different regions of the country that we come from, and as a 
result of that, we have a lot of different views on a lot of 
these key issues. But the Federal Power Act was very explicit 
that interstate electricity transmission authority was given to 
FERC, wholesale prices issues were given to FERC. And the 
states maintain control over electricity generation in intra-
state distribution, and yet the clean energy plan gives EPA a 
lot of authority, in fact, immense authority on what has 
traditionally been a state responsibility.
    And this was done without any legislation being involved; 
it was done by regulation. And we heard EPA talk a lot about 
how they worked extensively with the states; they want to give 
the states maximum flexibility. And yet, 27 states have filed 
lawsuits on this as well as a multitude of other entities. And 
then one of the surprising things for many of us, and Mr. Clark 
touched on this, was these timelines, in trying to make this 
transition with the infrastructure needs that we have, EPA 
frequently, on major regulations, to give states up to 3 years. 
And yet in this instance, they are giving them until September 
of 2016. So--and Ms. Honorable, you came from Arkansas, and you 
were on the public service commission there, I believe, and 
your state has filed a lawsuit as well.
    So it is one thing for EPA, as a regulatory body in order 
to implement the President's Clean Energy Plan, to come with 
this unprecedented regulation. And I understand people say, Oh, 
it is all the about politics, but it is more about politics; it 
is about existing laws; it is about customary ways that we do 
business in the country. And that is why I think you see so 
many lawsuits. But I would like for you, Mr. Clark, just to 
expand a little bit on this timeline issue that you touched on, 
and just give us some practical insight into that just from the 
standpoint of, say, North Dakota.
    Mr. Clark. Sure, thank for the question, Mr. Chairman. My 
concern about the timeline that, say, you have the 2016 
timeline, you have the possibility for states to push that out 
if they request from EPA to about 2018 for the State 
Implementation Plan, should they decide to go that route.
    The compliance targets begin in 2022, some of them are 
quite steep for certain states, will be challenging to me. For 
example, a State like North Dakota, whose target emissions 
reduction went from 11 percent in the draft to 45 percent in 
the final rule.
    Mr. Whitfield. Kentucky went from 18 to 41. And all of 
those caps were set by EPA.
    Mr. Clark. It is the math, every state is impacted 
differently by the math, and the manner in which the historical 
generation plate is operated. So for some states, it is a bit 
of a non event for some states, depending on the vintage and 
type of fleet that they have. It will be much more of an event.
    The concern with the timeline is, for a pipeline project, 
any sort of major pipeline project, 3 to 5 years is probably a 
conservative timeframe implement--from engineering and 
permitting to construction and in service states.
    Electric transmission lines typically are even more 
difficult than that. Five years to 10 might be a little bit 
more average. Heaven forbid, you cross any Federal land as 
happens out west. It could be 12, 15 years to get all the 
permits that you need to do for a major electric transmission 
line.
    And so that is the concern. If you are going to change 
dramatically the generation fleet and you need to have a lot 
more renewables, which really only work over a larger 
geographic area, and you will need a lot more natural gas to 
back up those renewables or to replace baseload coal that may 
be going off-line. It is going to require some major 
infrastructure projects. We are starting to see it on the gas 
transmission side, likely happen on the electric transmission 
side. These are not projects that are conceived of, permitted 
and built within a very short timeframe. And the concern is, if 
you change that generation fleet, it could end up costing 
consumers.
    Mr. Whitfield. Well, thank you very much. I had a couple of 
other questions, and my time has already expired. So, Mr. 
McNerney, you are recognized for 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman. Again, I thank the 
commissioners for coming today. I got a lot out of all of your 
testimony, so thank you for your work. And this is an area that 
I care a lot about. I spent 20 years in the energy industry 
before coming to Congress.
    Mr. Chairman, do you have a mission statement, or does the 
Commission have a mission statement? Could you sort of 
paraphrase what that statement is?
    Mr. Bay. Yes. FERC does have a mission statement. And it is 
to provide efficient, reliable, and sustainable energy to 
consumers. That has been our mission statement for some time 
now.
    Mr. McNerney. Sustainable, hmm, that is a whole different 
subject. Now, considering reliability, that is one of your 
primary missions is reliability. Do you feel, Mr. Chairman, 
that Clean Power Plan threatens the reliability of our 
electrical infrastructure or any of our energy infrastructure?
    Mr. Bay. So reliability is one of our core 
responsibilities, and Congress gave us that responsibility in 
the Energy Policy Act of 2005. As Commissioner Honorable noted, 
FERC held a series of technical conferences. On reliability and 
the Clean Power Plan, I am pleased to say that the EPA sent 
someone to each one of those technical conferences, and they 
had a high-level official appear before us and testify.
    We later sent a letter to the EPA with certain 
recommendations. I am pleased to say that all five members of 
the Commission at the time signed that letter. And then the EPA 
issued its final rule. And I think it is noteworthy to focus on 
certain aspects of the EPA's final rule. One thing it did was 
to push back the initial compliance date from 2020 to 2022. So 
it allowed industry to have, in the states, to have 2 more 
years. It implemented a reliability assurance mechanism in that 
it required state plans to be reviewed by reliability 
authority, whether it is NERC, a regional reliability 
authority, and RTO or ISO, or someone else.
    The EPA also recognized the reliability safety valve, which 
Commissioner Honorable noted as well. In addition, the EPA 
glide path towards compliance, so that the period 2022 to 2030 
is broken up into 3-year periods, where if a state fails to hit 
its target in one year, it underachieved in one year, it 
overachieved in the next, that can still help make its 
requirements, meet its requirements.
    Finally, of course, the EPA built in a lot of flexibility. 
One of the things that they did in the rule to ensure that 
reliability issues could be addressed was that they allowed 
states to consider using emissions credits as a means of 
achieving compliance.
    The other thing that we have done at FERC is we have 
entered into an agreement with the EPA and the Department of 
Energy to meet on a quarterly basis at the staff level to 
discuss any potential reliability issues. I am pleased to say 
that staff has held its first meeting with the EPA and DOE. So 
this is something we are going to be watching very closely.
    In my view, while it will take a lot of hard work, 
communication and collaboration between FERC, the EPA, DOE, the 
states, NERC, the RTOs, ISOs, and industry, I believe that any 
potential reliability challenges can be addressed.
    Mr. McNerney. Thank you. Honorable LaFleur, do you feel the 
cyber threats and geo threats are more significant threats to 
reliability than the Clean Power Plan?
    Ms. LaFleur. Well, there are different kinds of threats, 
but I would say they are more significant because they are 
systemic, where the Clean Power Plan could have, as several of 
my colleagues have referred to, different impacts in different 
areas. Solar storm could have an impact over a larger part of 
the United States. They are both things we need to obviously 
focus on.
    Mr. McNerney. Thank you. Mr. Clark, you mentioned the 
number of pending applications. What would help, how could 
Congress facilitate your response, the increasing number of 
applications?
    Mr. Clark. I think one of the things that Congress could 
help with would be to encourage other agencies that inform the 
FERC siting process, whether it be through LNG siting, whether 
it be through the LNG side of things, whether it be on the 
pipeline side of things. There are a lot of different agencies 
that inform our process to the degree that they can do their 
work in a timely manner, to inform our process. That would be 
helpful from a timing standpoint.
    Mr. McNerney. Thank you. Mr. Chairman.
    Mr. Whitfield. Yes, sir. At this time, I recognize the 
gentleman from Texas, Mr. Olson, for 5 minutes.
    Mr. Olson. I thank my friend from Kentucky. And welcome to 
our friends from FERC. You-all's good morning gets even better, 
because my own State of Texas, it is a fact that fellow Texans 
take care of our own grid for 90 percent of our State. So we 
don't get impacted but what you do in many cases, but, they are 
very important to our State. Critically important to our home 
State of Texas.
    My first question is for you, Mr. Chairman, and 
Commissioner Clark. Chairman Bay, you have talked about the 
importance of building gas-electric infrastructure for quite 
some time. It was one of the key things listed in your Senate 
confirmation hearing. Obviously, when it comes from an energy 
state like I do, I want to know how resources get to market. 
And Commissioner Clark, your comments about these supposed 
pipeline application in the future and your testimony talked 
about how much more dramatic opposition to energy projects is 
becoming. It is out of control. We are going from a ``not in my 
backyard,'' to a ``not in anybody's backyard.'' So my question 
to both of you all is, can we speak for a moment on the LNG 
energy infrastructure, and whether you see any trends on 
efforts to block development? The range is clear, fire at will, 
no agency is spared. Chairman Bay.
    Mr. Bay. Congressman Olson, I think at FERC, we have 
clearly seen increased opposition to infrastructure. One of the 
things that has happened at FERC over the last--at this point, 
it has probably been 15 months or so--is that our open meetings 
have been disrupted by protesters who will suddenly stand up 
during our meeting and try to interfere with our meeting.
    So we are clearly seeing that, and even in the field when 
we are holding scoping hearings, it is not uncommon for the 
staff who do those hearings to report back that there seems to 
be a great deal of opposition in many communities to the 
construction of more infrastructure.
    Mr. Olson. Commissioner Clark, your comments, sir, on a 
``not in anybody's backyard'' attitude in America right now?
    Mr. Clark. Sure. Thank you, Congressman, for the question. 
I reference this in my testimony that, for years, the 
Commission has always taken testimony from, say, affected 
landowners, who might prefer that a particular pipeline go on 
this piece of their property as opposed to that piece of the 
property, or maybe on someone else's property, but it is very 
specific to the line itself. We have seen a bit of a 
transition, a type of intervention that has appeared before the 
Commission, which is--my testimony, I call it ``just say no'' 
intervention, which is no infrastructure anywhere. The 
challenge is that that causes all kinds of reliability and cost 
impacts to consumers if all energy infrastructure is blocked.
    The Commission has a very important job in balancing the 
interest of all intervenors. The goal of our process is to 
ensure that the Natural Gas Act is faithfully implemented and 
that the orders that we get out are ultimately upheld by a 
judge who can review it and see if the Commission made a recent 
determination, and we have very a fairly good track record in 
that regard.
    Mr. Olson. Chairman Bay, as you know, the cost of carbon is 
being discussed in Paris right now at the U.N. Convention on 
Climate Change. And as a former naval aviator, it seems to me 
that some world leaders are writing, proposing checks that they 
can't cash. I want to dive down on the cost of carbon, the 
social cost of carbon. FERC has said recently that the cost of 
carbon ``calculator'' isn't appropriate for individual LNG 
projects. You said so in a past decision back in June.
    You gave me a long answer in writing. But very shortly, can 
you tell me why it isn't appropriate to use the cost of carbon 
for individual projects, why it doesn't work, sir?
    Mr. Bay. I would have to review that particular order, 
Congressman Olson. To my knowledge, FERC has not tried to 
calculate the social cost of carbon. It is true that when we 
are reviewing an infrastructure application, under NEPA, we 
were required to give a ``hard look'' at what the courts 
require of us, a hard look at environmental look at claims that 
have been raised. So it may be that someone who was protesting 
the construction of that facility raised a claim tying into the 
cost of carbon. I do know that at the end of the day, the 
Commission did end up permitting that facility, the certificate 
was granted, as you know.
    Mr. Olson. One final question for you, Chairman Bay. Former 
Chairman Wellinghoff made it his mission to clear a path for 
energy efficiency, he focused on things, like demand response. 
As you took over as the chairmanship, there were some people 
who said they didn't know what your number one priority would 
be. What is your number one priority as the chairman of FERC?
    Mr. Bay. I thank you for that question, Congressman Olson. 
I have tried to take a very balanced approach to my role as 
chairman. As many of the members have noted this morning, we 
are going through this period of tremendous change in energy 
space. So I think it is important for FERC to use the statutory 
authorities that Congress has given FERC to help the markets, 
market participants and industry adapt to that change while 
maintaining reliability and just reasonable rates.
    And so, I have been looking at what I have been calling the 
basic, the fundamentals, and that includes authority over 
wholesale markets, and thus, we have been engaged in this price 
formation of rulemaking proceeding. We have looked at 
reliability, and as Commissioner LaFluer noted, we have engaged 
in looking at GMD, and we are continuing to work on 
cybersecurity, gas-electric coordination issues. And then, of 
course, there is infrastructure. And that is always going to be 
an important part of what FERC does.
    Mr. Olson. Thank you. I yield back.
    Mr. Whitfield. This time the chair recognizes the gentleman 
from Texas, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, chair and ranking member, for holding 
the hearings. And following up my colleague and neighbor from 
Texas, I would hope my concern is electricity and reliability, 
I hope your goal is to make sure that the lights can turn on, 
and in August in Texas, we can still have air conditioning. I 
know FERC's responsibility to maintain the reliability of the 
grid, but you also have a lot of other responsibilities with 
pipelines, LNG facilities, or pipeline rates to name a few.
    Chairman Bay, in your testimony, you cite the many 
responsibilities FERC is tasked with, including reliability, 
security and infrastructure.
    Can you provide additional details on FERC staffing and 
work products? Does FERC have the resources and personnel 
necessary to meet the increasing demands placed on the 
Commission? If you could just briefly, because we only have 5 
minutes.
    Mr. Bay. That is a very important question that you raise, 
Congressman Green, in light of the workload that Commissioner 
Clark alluded to, and that workload is real. One of ways that 
we responded to it administratively is that we have added 
resources to the Office of Energy Projects, and they are going 
to need more resources. At some point, we may update our budget 
to Congress; I hope you look favorably upon that. But we are 
trying to respond by adding resources to the offices that need 
them.
    Mr. Green. With the growth and natural and implementation 
of the Clean Power Plan, what types of resources does FERC 
anticipate needing in the future to ensure projects and plants 
can still stay on schedule? Is that being built into the 
request to the appropriations process?
    Mr. Bay. It certainly will be, and we are responding to 
that now, which is why we added resources to that particular 
office.
    Mr. Green. I still have this concern about permitting 
approval of LNG export facilities. We spent considerable time 
working on these issues, and want to ensure our country's 
benefits for the nearly 389 trillion cubic feet of gas reserves 
we possess. Can you provide an overview of the current 
permitting regimen, and have you encountered any delays that 
would slow these important projects?
    Mr. Bay. I think the main thing about those projects is 
that that they are complex projects, there has to be a review 
by staff. We worked closely with staff, and we work well as a 
Commission, to review those project applications. As 
Commissioner Clark noted, basically about 90 percent-plus of 
the projects that we receive are certificated within one year 
after the application is filed with FERC.
    So we understand the importance of these projects and doing 
a thorough and timely review, and we are certainly very 
committed to doing that. But clearly, there is a high volume of 
work now than in the past, which is why we are trying to 
address that by adding more resources.
    Mr. Green. I have one port in the State of Texas, actually 
had five pieces, tracks that were set aside for five different 
LNG export facilities. I think there is effort to do one in 
that particular port.
    Chairman Bay, as director of enforcement, your office is 
responsible for violations and inquiries in the market 
manipulation. Unlike other Federal agencies, FERC does not have 
an office of compliance or any other resources to regulate 
community to address questions or answers. This week, the House 
will take up H.R. 8 that contains provisions relating to the 
FERC transparency. Do you believe an office of compliance would 
be of benefit to the regulatory community?
    Mr. Bay. In my view, that office is not necessary. 
Certainly, if Congress creates that office, we will do 
everything that we can to implement congressional intent, but 
if I could, I would just like to explain, Congressman Green, 
the different avenues that an entity can pursue with FERC to 
get guidance. First, there is informal outreach where the 
company, or the entity, can seek a meeting with staff, or even 
with the Commission, at least if there is not an investigation.
    Second, there is a compliance help desk, so an entity can 
call staff to get guidance. Then there is the no-action letter 
process. So if they want something more than that, they can 
seek a no-action letter from the Commission. And then, of 
course, an entity has ability to seek a petition for 
declaratory order from the Commission if it seeks greater 
regulatory certainty. So no-action letter comes from staff, the 
petition from declaratory order comes from the Commission 
itself. My own view is that given that many avenues an entity 
can use, can pursue to seek guidance from FERC, that it would 
not be necessary to create that office. I would also add that 
years ago, Congress created an Office of Consumer Advocate at 
FERC, but has never sought to fund that office.
    Mr. Green. Well, I would hope that if we do create an 
Office of Compliance, we would fund it. It seems like some of 
things you are talking about would be rolled into an Office of 
Compliance. Mr. Chairman, I know I am out of time and thank you 
for your courtesies.
    Mr. Whitfield. Thank you. At this time the gentleman from 
Illinois, Mr. Shimkus, is recognized for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman, and welcome. I am 
going to get a little parochial. MISO released an issue 
statement acknowledging that no forward planning process exists 
to ensure long-term reliability in southern Illinois. And that 
reform to its capacity market process may be required to 
sustain existing investment and drive future investments and 
help ensure a reliable electricity supply for consumers. Of 
course, I am in southern Illinois, and we have talked about 
some of the concerns on the most recent auction. But so this is 
kind of a jump off for whoever wants it. How does the 
Commission plan to ensure sufficient existing and new 
generation resources are in place for MISO zone 4?
    Ms. LaFleur. Well, thank you, Congressman Shimkus. As you 
know, we can't specifically discuss zone 4, because there are 
several complaints, including from the state of Illinois, 
pending before us now----
    Mr. Shimkus. But you don't need to talk about the 
adjudication. This is just a generic question on the question.
    Ms. LaFleur. Yes. I think the primary thing we have been 
doing is looking very closely at the way the capacity markets 
actually define the product and what they call for to make sure 
that they properly pay for what it really takes to keep the 
lights on. In both PJM and ISO New England, they have set up 
structures where they create performance requirements and hold 
generators to them that are, in many cases, baseload generation 
are the ones that will be needed because they can be there at 
any time when they are needed. I think those are the sorts of 
things that have promised to make sure that I think there has 
been a concern whether there is something about baseload 
generation as being not properly valued, and we have to look 
closely at the market----
    Mr. Shimkus. This follows up on my question. MISO has 
conceded with your endorsement, the FERC endorsement, to 
largely leave control of resource adequacy to the states. Is 
that appropriate?
    Ms. LaFleur. That is different in different parts of the 
country. In the----
    Mr. Shimkus. I am worried about southern Illinois right 
now.
    Ms. LaFleur. Well, Illinois is in a somewhat unique 
situation because it deregulated generation, has merchant 
generation, like the Eastern markets do. Yet it is in the mid-
continent ISO where the other states don't have that system. I 
think that there will be choices to make of both how MISO 
accommodates the states so different from the rest of them, and 
how Illinois does it.
    Mr. Shimkus. Well, please keep an eye on this. Similarly, 
Chairman Bay, because we know we have decommissioning of coal-
fired power plants because of the war on coal, and that is 
accepted. You all have basically said that. We also are 
concerned about the decommissioning of nuclear power plants now 
in Illinois because of just what Commissioner LaFleur just 
mentioned. So the question is, should baseload generation be 
compensated for other benefits they provide, such as reliable 
power, providing essential reliable services, and fuel 
diversity that they bring to the market, including on-site fuel 
availability?
    Mr. Bay. One of the things that the Commission has done to 
try to address in a general way that particular concern, 
Congressman Shimkus, is to work on price formation in the 
energy market itself. And so for that reason, the Commission 
has held a series of technical conferences, and in September, 
issued a rulemaking that seeks to align the settlement periods 
and dispatch intervals in a real time market and then to allow 
a shortage pricing to be triggered when shortages occur. Those 
sound very complicated. The basic premise is simple, and that 
is, that resources should be compensated for the value they 
provide when they provide it. So that certainly will help 
baseload resources that can steadily produce power at many 
different times of the day. And so the hope is that with more 
effective price formation, that that can send better signals to 
different kinds of resources, including the kinds of baseload 
resources that you noted.
    In addition, the Commission is doing more than that. In 
November, we issued an order that seeks to gain greater 
transparency into the causes of uplift and uplift drivers in 
the RTO/ISO markets. And we have also signaled that we are 
going to look at the offer price caps in the organized markets 
as well as mitigation issues. So we are doing a whole host of 
things that are seeking to improve the efficiency of the 
wholesale markets.
    Mr. Shimkus. So should this occur in an organized wholesale 
capacity and energy markets subject to your jurisdiction?
    Ms. LaFleur. Well, in Midwest and the southern Illinois as 
part of the mid-continent ISO does not have a mandatory 
capacity market. Just 2 weeks ago, we denied rehearing on an 
order allowing MISO to continue to have a voluntary capacity 
market. That would be a major change if they went to a 
mandatory capacity market as the eastern states have. So right 
now, Illinois does have the resource adequacy control because 
they are not required to participate in the mandatory market.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Whitfield. At this time, the chair recognizes the 
gentlelady from California, Mrs. Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman, for holding this 
hearing. And I thank Chairman Bay and all the commissioners for 
your testimony today. You have covered the many and varied 
tasks that FERC is responsible for and how these activities 
directly impact the provision, the transport, and reliability 
of energy from a variety of sources.
    However, it is also clear that as we better understand the 
ramifications of our energy use, we have a greater 
responsibility to minimize the negative impacts that are 
associated with our actions. And part of this responsibility is 
to ensure that appropriate sources of energy are utilized to 
minimize harmful emissions through the integration of 
renewables. But we also must look at the impact of transporting 
these dirty fuels. And that is where I would like to focus my 
questions today.
    While this committee has recently been focused on the work 
of the Pipeline and Hazardous Material Safety Administration, 
or PHMSA, FERC also has jurisdiction over certain pipeline 
regulations. Pipelines are ubiquitous in this country. Whether 
transporting oil or natural gas, these pipelines crisscross the 
entire country, transporting fuels, both within and between 
states. And depending on the particulars of the pipelines, they 
are regulated by local, state, or Federal groups and agencies. 
It is also clear that transporting fuels and pipelines may have 
many risks associated with them. In my district, we witnessed 
this danger firsthand when the Plains pipeline ruptured and 
spilled full across the land and into the ocean this past May.
    My first question is for Commissioner Tony Clark. Several 
agencies are responsible for regulating both oil and gas 
pipelines in various stages of siting construction operations. 
Can you please explain and elaborate on the responsibility of 
FERC in regard to both oil and natural gas pipelines?
    Mr. Clark. Sure. Thank you for the question, Congresswoman. 
With regard to oil and liquid pipelines, the Commission's 
jurisdiction comes from the Interstate Commerce Act, and is 
primarily associated with economic regulation of the pipeline 
and nondiscriminatory access to the pipeline, common carrier-
type regulations, but does not include safety or the siting of 
pipelines, things like that, which would be either under PHMSA 
or some combination of PHMSA and state and local government.
    In the case of interstate natural gas pipelines, the 
Commission has a much greater degree of oversight of the 
interstate natural gas pipeline. So in addition to the economic 
regulation, the Commission also oversees the physical siting of 
the project itself, again, with regard to safety, although some 
of those safety costs work their way into FERC jurisdictional 
tariffs and rates, the actual safety regulations themselves 
would not be FERC jurisdictional. It, again, would be----
    Mrs. Capps. As a follow-up, could you please describe how 
FERC ensures that sensitive environments like those in coastal 
regions of my district are not negatively impacted by the 
siting and construction of natural gas pipelines?
    Mr. Clark. Sure. Thank you, again, for the question. The 
way that FERC ensures environmental protection is through being 
the lead agency for NEPA reviews on any interstate natural gas 
pipeline. And so FERC basically plays a role ensuring that all 
of the other agencies that might wish to comment, public which 
might wish to comment, and are able to do so in a way that we 
have a fully-developed record in front of us to ensure that we 
are meeting the environmental standards that are set up, both 
in the Natural Gas Act, but also those requirements that are 
set forward through NEPA.
    Mrs. Capps. Thank you.
    For Chairman Bay, while FERC has jurisdiction over some 
aspects of pipelines, as Commissioner Clark has just outlined, 
FERC is just one of several agencies with pipeline 
jurisdiction. After the Plains oil spill in my district earlier 
this year, we dealt extensively with both the EPA and PHMSA. 
But it is clear that our communities are relying on many 
agencies and their cooperation, or lack of, to protect our 
local lands.
    So, Mr. Chairman, does FERC work with other agencies to 
ensure that the siting and operations of pipelines is done in a 
way to maximize safety and minimize risks? And how does this 
happen?
    Mr. Bay. Yes. Thank you for the question, Congresswoman 
Capps. During the application process in which a pipeline is 
seeking to receive a certificate from FERC, as Commissioner 
Clark noted, we have to do a NEPA review. And as part of that 
NEPA review, we have to work with many other agencies; state 
agencies, but Federal agencies as well. And the Federal 
agencies include EPA and PHMSA. And so we work with them. We 
also work with state authorities. And if there is an aspect 
about the proposed pipeline route that is problematic, 
certainly we have the authority to tell the pipeline to reroute 
the line. During the application process, pipelines will 
provide alternative routes as well for FERC to consider. And 
then we have to do an analysis about what which pipeline route 
seems to be more prudent.
    Mrs. Capps. Thank you. I am out of time, Mr. Chairman, but 
I had a follow-up question that I wish I could get a written 
reply to, and that is, the collaboration between FERC and 
agencies like EPA and PHMSA. Are they successful in working 
together to mitigate negative impacts? Or are there 
opportunities to improve the level of collaboration and 
communication? And, these pipelines make a very complex 
intersection around the country. So if we could get that back 
in writing, I would appreciate it.
    Mr. Whitfield. Absolutely. So we will note that. And we 
hope you can get back to us on that.
    At this time, the chair recognizes the gentleman from Ohio, 
Mr. Latta, for 5 minutes.
    Mr. Latta. Thank you, Mir. Chairman. And to the 
commissioners today, we greatly appreciate you being here for 
your testimony. I am going to kind of follow up on the 
gentlelady from California on questions that she has. It is 
FERC's responsibility to make information available and notify 
the public about a project's status and its schedule. FERC 
staff testified in support of bringing this information 
together in one location on FERC's Web site. And this is 
addressed to the chairman and Commissioner Clark. Do you 
support the concept of a project dashboard where the public can 
see the schedule established by FERC and the list of actions 
required by each applicable agency to complete permitting? 
Chairman?
    Mr. Bay. Thank you, Congressman Latta. I think that is an 
interesting idea. And certainly, I share the goal of providing 
transparency into the project applications that FERC is 
considering. Currently, that information is available through 
eLibrary, where all the filings relating to a project are 
placed and where they are accessible to the public. It can be 
harder, I think, for a member of the public, however, to find 
the right document.
    So the idea that you presented is an interesting one. And I 
would like to talk to staff some more, as well as my colleagues 
on the Commission, to get their views. Certainly, though, we 
support the idea providing transparency into the work that we 
do.
    Mr. Latta. Thank you. Commissioner Clark?
    Mr. Clark. Congressman Latta, I think it is an absolutely 
worthy goal. The issue of transparency into exactly how 
commission processes work is very important in terms of--
especially a land owner who, for example, may be being 
contacted by an infrastructure development company, a pipeline 
company, and doesn't know where to turn to next. And for those 
of us who live and breathe the world of regulation every day, 
sometimes it can seem simple to maneuver our processes. To 
someone who has never seen the FERC Web page before, they might 
not be quite so simple. So a look at that with fresh eyes is 
probably something that makes a lot of sense.
    Mr. Latta. Thank you. And, again, both to Commissioner 
Clark but also to the chairman, based on hearing from my 
constituents' reviews of such as route planning and safety 
coordination would be important to include in this project 
dashboard to make the information more easily accessible to the 
public. Would these kinds of ideas be included? Chairman?
    Mr. Bay. I am certainly happy to consider those ideas, 
Congressman Latta. One thing I would note is that FERC actually 
has a toll free number for landowners who have questions or 
concerns. We receive hundreds of calls each year from 
landowners. The calls go to our dispute resolution service. And 
I am pleased to say that they oftentimes can provide helpful 
information and guidance to landowners who have some sort of 
concern.
    Mr. Clark. I would concur with the chairman's comments. I 
would also add that one of the things that I have talked about 
with FERC staff is, as we go out into the public and have 
scoping meetings and public meetings and things like that as we 
have talked about before, there is a lot more interest in these 
hearings than we have had in the past. Sometimes it is from 
interveners and folks who just simply don't want infrastructure 
at all. But what is, I think, very important is that we ensure, 
from a staff standpoint, that we continue to ensure that the 
actual landowner who is affected when they walk into that room 
has that opportunity to speak on the record so that they can 
have their views known about a particular infrastructure 
project that is directly affecting them. And it is getting to 
be more of a challenge because the hearings--there are a 
certain number of hours, and there is a lot of people that show 
up. But we need to make sure that we have those avenues for 
people who are directly impacted by the infrastructure.
    Mr. Latta. Thank you. And, Commissioner Clark, I understand 
that under the Clean Power Plan, municipal electrics and a 
rural electric cooperative that are not currently regulated by 
State public utility commissions would be required to come 
under State regulatory jurisdiction for purposes of the Clean 
Power Plan compliance. In your experience, is this a dramatic 
change? And how will this impact the ways munies and co-ops do 
business in the future?
    Mr. Clark. Congressman Latta, I think depending on the 
state, and how the state decides to go about an implementation 
plan, or a Federal implementation plan, it could be a big 
change. I know in my home State of North Dakota it would be. 
The issue is that you are effectively requiring a state to come 
up with a sort of carbon integrated resource plan for the state 
as a whole. Obviously municipals and co-ops are a big player in 
certain states, but traditionally have not been regulated in an 
integrated resource plan way that traditional utilities have 
been. So depending on the state, it could be a big change.
    Mr. Latta. Thank you very much.
    And, Mr. Chairman, my time is about to expire. And I yield 
back.
    Mr. Whitfield. Gentleman yields back.
    At this time, the Chair recognizes the gentleman from 
Pennsylvania, Mr. Doyle, for 5 minutes.
    Mr. Doyle. Thank you, Mr. Chairman. And Chairman Bay and 
members of the Commission, welcome. And thank you for appearing 
before the committee today.
    Commissioner Honorable, welcome to your first hearing. In 
your testimony, you mention reliability measures in the final 
rules of the Clean Power Plan. And one of the concerns that I 
have voiced repeatedly in these hearings is that the Clean 
Power Plan may jeopardize our fuel diversity. And in 
particular, that we could lose baseload power like coal and 
nuclear. Do you share these concerns? And if so, what do we do 
about that?
    Ms. Honorable. Thank you for the question, Congressman 
Doyle, and thank you for the welcome. I, indeed, share your 
concerns, even hearkening back to my days as a state regulator. 
I believe that fuel diversity is really key in ensuring 
reliability in going forward, even in these dynamic times. Even 
aside from the implementation of the Clean Power Plan, industry 
and states are already moving toward cleaner and more efficient 
energy portfolios. And so, it is imperative that we protect 
fuel diversity. I believe we need it all, and we especially 
will going forward.
    Mr. Doyle. Thank you. Commissioner LaFleur, in your 
testimony, you highlight the recent shift in resources used to 
generate power. And you go on to highlight FERC's oversight of 
capacity and where it could change to ensure reliability as 
properly valued and sustained. So given the pressure from 
markets and rules like the new Clean Power Plan that shift away 
from traditional baseload sources of power, what is FERC doing 
to ensure our constituents that we can turn on the lights when 
they are needed most?
    Ms. LaFleur. Well, thank you, Congressman Doyle. I think we 
are really working on several fronts. First of all, in the 
markets, we are trying to make sure that the markets properly 
and transparently value the reliability, including the 
reliability that baseload provides. And that has resulted in 
changes in the capacity market and ongoing work that may lead 
to changes in the energy market to make sure that those 
resources, especially the existing resources, are fairly paid 
for what they contribute. Secondly, the reliability standards 
have a role in making sure that essential reliability services, 
things like Black start and voltage support, that some of those 
big plans provide are properly accounted for and required. And 
there is a lot of work going on under the auspices of NERC to 
adapt the standards to changes in power supply.
    And finally, I think we need to work closely with the EPA 
as we did on MATS so that as implementation starts, we keep an 
eye on regions of the country that may have an issue and be 
there early enough to intervene if we need to.
    Mr. Doyle. I know in light of the polar vortex at PJM 
included additional capacity performance standards in their 
markets. Do you think that they properly value baseload power?
    Ms. LaFleur. Well, we do have a rehearing pending, but I 
voted for the order and strongly supported the early order 
because I thought that it was a fuel-neutral way to define what 
reliability meant in a way that, yes, it has an impact on 
baseload power, but it was defined in a neutral and fair way. 
So I supported that order. Now we are starting to see the 
results, and we will be looking very closely as it is 
implemented.
    Mr. Doyle. And since the adoption of those reforms, have 
you seen any adverse effect on renewables, demand response, 
energy efficiency, or any other non-baseload products in PJM?
    Ms. LaFleur. Well, there has only been one transitional 
auction run so far, but no.
    Mr. Doyle. I want to talk briefly, too, about 
cybersecurity, because I believe that is very important, too. 
And, Commissioner, you have mentioned the growing importance of 
that and how this presents a relatively new challenge for FERC. 
You said that these issues present different challenges and 
continue to say, in many cases, we don't have the benefit of 
decades of experience to draw upon. Well,
    I am proud to point out that we do have decades of 
experience in Western Pennsylvania, particularly at Carnegie 
Mellon University CyLab, which is a global leader in this 
field. And to what extent can FERC grow and develop 
relationships with institutions like CyLab to ensure our grid 
remains secure?
    Ms. LaFleur. Well, institutes like Carnegie Mellon are 
doing critically important work. And we do have an office of 
energy infrastructure security. They don't work on standards, 
but they work on collaborative relationships with universities, 
industry, and other agencies. And we would welcome more 
engagement with Carnegie Mellon. One of the things that is 
going on at the university level that I think is so critical 
right now is designing parts of the grid to build in more 
resilience on the front end. So we will get away from standards 
and retrofitting and really building the grid better. That is 
where the future lies.
    Mr. Doyle. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Gentleman yields back.
    At this time, the chair recognizes the gentleman from 
Mississippi, Mr. Harper, for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman. And thanks to each of 
you for being here and the work that you are doing. Chairman 
Bay, if I may ask you, many retail tariffs allow net metering 
of consumption of electric power by end use customers against 
on-site generating sources. In particular, we are seeing a 
proliferation of these on-site rooftop solar arrays by 
commercial and residential retail customers. The cost of 
distribution grid and transmission grid are interconnected, and 
both constitute the stream of interstate commerce. Should FERC 
exert jurisdiction over net metering arrangements in any 
respect?
    Mr. Bay. The Commission issued an order in 2009, 
Congressman Harper, called Sun Edison, in which the Commission 
ruled that rooftop solar was not subject to FERC's jurisdiction 
over wholesale markets as long as, during the relevant billing 
period, the person who owned the rooftop facility or unit was a 
net user, not a net seller of energy. And so that has been the 
line that FERC has drawn in its order. And I think it is 
important to note that that order, as a result, respects 
traditional state authority in this area. One concern that I 
think some would have were FERC to go further, would be a 
fairly dramatic preemption of state authority by FERC. And so, 
I think that poses some real questions about where you want to 
draw that line regarding the allocation of authority between a 
Federal Government and the states.
    Mr. Harper. Yes, sir. You know, of course, technically, you 
could argue that these net metering arrangements constitute a 
wholesale sale. And wholesale sales are expressly identified in 
the Federal Power Act as being FERC jurisdictional. So with 
that, why isn't FERC exerting jurisdiction over them?
    Mr. Bay. Well, as I said, there is that decision from 2009, 
Sun Edison, which is the controlling FERC precedent now.
    Mr. Harper. Right. Has there been any thought on revisiting 
that?
    Mr. Bay. Well, certainly, I have heard rumors that we may 
be receiving a complaint from different entities in industry 
regarding this very issue. But when you look at the Federal 
Power Act, the purpose of it, when Congress passed it decades 
ago, was to ensure competition in the markets, and to ensure 
that rates remain just and reasonable. And so, to my mind, it 
is not clear that when Congress passed this law, it intended 
some individual who has a rooftop solar unit to be viewed as a 
utility within the meaning of the Federal Power Act, and to be 
subject to Federal regulation.
    And I think the further argument can be made that those 
kinds of units, far from impeding competition, are actually 
furthering it. So I think that there are a number of arguments 
there, not only based on the language and the history of the 
Act, but also based on a traditional recognition of state 
sovereignty in the area.
    Mr. Harper. Chairman Bay, I appreciate your insight on 
that. But, while a companion memorandum of understanding to the 
final Clean Power Plan rule outlines conferencing powers 
between the EPA, FERC, and DOE, neither that Memorandum of 
Understanding nor the final rule provide for a formal role or 
process for the Commission to carry out its statutory duty to 
maintain reliability. As a practical matter, how will the 
Commission actually ensure reliability as the CPP is 
implemented? And what will the Commission's role be in the 
event reliability and environmental regulations conflict?
    Mr. Bay. Thank you for the question, Congressman Harper. 
One of our core responsibilities is reliability. And we are 
going to remain very engaged on reliability issues and any 
potential reliability issues relating to the Clean Power Plan. 
So we have already entered into this agreement with the DOE and 
EPA to have staff meet on a quarterly basis. As I indicated, 
staff has already met. And we are going to be monitoring what 
happens during the process. And also a potential resource, if 
States have questions of us, with respect to their plans. And 
as Commissioner Honorable noted, if necessary, we will hold 
technical conferences and do other follow-up. But I want to 
assure you that we are very engaged on this issue.
    Mr. Harper. Do you think reliability may become subject to 
litigated outcomes?
    Mr. Bay. Not clear to me since there is a reliability 
safety valve, and there is basically this glide path towards 
compliance. So we will have to see what happens.
    Mr. Harper. Thank you. And I appreciate that very much, 
Chairman Bay, and I yield back.
    Mr. Whitfield. The gentleman yields back. At this time, the 
chair recognizes the gentleman from New York, Mr. Tonko, for 5 
minutes.
    Mr. Tonko. Thank you, Mr. Chair. I know numerous Members of 
the House and Senate have expressed their concerns with the 
pipeline permitting process. And, Mr. Chair, your testimony 
states that there is a need for more natural gas pipeline 
infrastructure. I don't necessarily disagree, but I do know 
many communities to which these pipelines pass have legitimate 
concerns about safety, noise, and air and water pollution from 
construction and the operation of those associated facilities.
    And I know Commissioner Clark's testimony mentions a ``just 
say no'' attitude to any new project. That might be the case 
for some, but there are many, many people that have legitimate 
concerns and believe the public has been shut out of the 
process. So, Mr. Chair, can you explain FERC's public comment 
process for pipeline siting?
    Mr. Bay. Thank you for the question, Congressman Tonko. 
FERC tries to provide a tremendous amount of process to 
stakeholders who could have an interest in a pipeline project. 
And so, throughout the process, whether it is pre-filing when 
scoping meetings are being held, or even after a filing has 
been made by the project developer, we welcome comments from 
the public. And so, there are many ways that people can get 
those comments to us. They can get those comments to us at the 
meetings, the scoping meetings that are held. But they can also 
send us written comments as well. And those comments will be 
made part of the record.
    But it is very important for us to hear from members of the 
public who have an interest in the project, whether they are 
for it or against it, and for us to consider those comments 
when we evaluate the project.
    Mr. Tonko. And just specifically, how does FERC proactively 
conduct its outreach to affected communities?
    Mr. Bay. One thing that we do is to provide notice of the 
scoping meetings that we hold. And so those notices go out to 
communities along the path of the pipeline. They typically last 
for several hours. There is a court reporter there. The meeting 
can be transcribed. So that is one of the ways we get notice to 
the public. But certainly, throughout this process, staff tries 
to make clear to the public that their comments are welcomed, 
and that they can submit those comments to FERC for FERC's 
consideration.
    Mr. Tonko. And then how are comments from Federal, state, 
and local officials, as well as the general public considered, 
particularly concerning the request to extend those deadlines 
that are associated with the review process?
    Mr. Bay. So we certainly consider the requests of other 
officials as well, including state officials; and we then 
decide, when we get those requests, whether or not more time is 
warranted. I should note that even if a formal window has 
closed with respect to some stage of the processing of an 
application, if a member of the public submits a comment, that 
can still be made part of the record. So it is not like the 
door is slammed shut on someone.
    Mr. Tonko. And have you found engaging local stakeholders 
to be productive in determining the appropriateness of a 
project or its scope?
    Mr. Bay. I think it is critical that we engage with local 
stakeholders. And one of the things that we have also done is 
to publish a best practices manual for pipelines. And one of 
the things that we do in this manual is to encourage them to do 
the outreach to the communities along the path of the pipeline. 
That it is very important, in other words, for the pipeline to 
start to develop a relationship with the members of the public 
who could be impacted by the infrastructure.
    Mr. Tonko. And when a project is changed, such as being 
rerouted to pass through different communities, does FERC make 
an effort to extend the public comment period and engage newly 
impacted people?
    Mr. Bay. It probably depends upon the stage of the process 
when that change is occurring. Many changes can actually occur 
during a pre-filing process. And so there might be an 
opportunity there for the public to provide comment. I might 
have to talk to staff and get back to you on that one, 
Congressman Tonko, so that I can explain in a more specific way 
how the record can be developed. So I would be happy to do 
that. I can tell you, though, that even when we issue a 
certificate, there are dozens of conditions that are attached 
to the certificate. And these conditions are intended to 
remediate any potential impact from the pipeline.
    Mr. Tonko. And when any of that new information is released 
late in the scoping process, do you believe it warrants more 
time for public comments and analysis?
    Mr. Bay. I think it depends upon what the development is. 
But certainly, again, we welcome comments from affected 
stakeholders.
    Mr. Tonko. I thank you, Mr. Chair. I yield back, Mr. Chair.
    Mr. Whitfield. The chair, at this time, recognizes the 
gentleman from West Virginia, Mr. McKinley, for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. I guess to 
understand FERC, you have to understand how we got here, what 
are the issues that you have to face. And I am looking back on 
just globally with what has been said over the years, and 
certainly being said in Paris today and in the next few weeks. 
Because all of this sets the tone for the issues that you have 
to face. And I look back at some of the quotes that have been 
used over the years. People have said things like that the 
IPCC, one of the lead authors said, on energy, he said that, We 
must clearly, must redistribute, de facto, the world's wealth 
by climate policy. Then you have a former Canadian minister who 
said that, that no matter, this science of global warming is 
all phony. Climate change provides the greatest opportunity to 
bring about justice and equality in the world.
    Or then we go to, at the Earth Climate Summit down in Rio 
is that, we may get to a point where the only way of saving the 
world will be for the industrialized civilization to collapse.
    That sets the stage, then, for this administration and the 
EPA to be emboldened to enact a lot of regulations because they 
are drinking the Kool-Aid. So what we have here is they have 
moved on this. And as a result, I feel sorry for you at FERC 
because, I think primarily, you are just cleaning up after 
someone else. It doesn't come across to me as you have a seat 
at the table on our national energy policy. You are just having 
to implement what someone else has done, how they have been 
influenced by the global community. You remind me of Captain 
Smith on the Titanic, just managing a sinking ship. So I am 
wondering, given that that is the attitude all these 
regulations, and I can remember sitting here just a few years 
ago when Commissioner Moeller made the remark that if we don't 
do something to replace the coal-fired power plants that have 
been shut down across America, his quote was, ``The new Federal 
environmental regulations could lead to rolling blackouts in 
Midwest by the summer of 2016, unless action is taken to boost 
reserve generating capacity.''
    I don't think we are doing anything on that. And 2016 is 
just around the corner. And then I look at your own policy 
statement that says that you are to regulate reasonable cost, 
at reasonable cost. I live in a state that 98 percent of the 
power is generated from coal. And because of the regulations 
and the closure of seven power plants, and ultimately more 
gigawatts of power, we are already experiencing a 47 percent 
rate hike on utilities. How is that reasonable? I think you 
failed. But maybe you failed, because I don't know that you 
have a seat at the table.
    So I guess it would go back to, Commissioner Clark, how 
would you respond? Where are we building the coal-fired power 
plants? How are we going to reject this globalization that is 
going on and the attitude that has got us to the point that we 
are afraid to burn coal, we are afraid to burn gas?
    Mr. Clark.  Congressman, as I indicated in my testimony, I 
think the Clean Power Plan 111(d) regulations certainly put 
regulators at both the State and Federal level in a very 
precarious position, which is that while it is not being 
promulgated by FERC or by a state public utility commission, 
most of the potential negative outcomes that could be related 
to it, whether it is matter of affordability or reliability in 
that state, all directly fall on our shoulders because those 
are the areas that we have responsibility over. And we know if 
the lights go out, or if costs are to spiral out of control, it 
will be public utility commissions at the state level, and FERC 
at the Federal level that will be answering those questions. So 
certainly, it creates challenges for us.
    With regard to the concern about cost, I think in certain 
states, it is something that is a very real concern to have. It 
is one that I have as a North Dakotan. I indicated in my 
testimony that our state health department who is putting 
together our CIP estimates that if we were to enter a carbon 
credit trading program in North Dakota, it would be a $400 to 
$450 million annual tag. It is an estimate. It could be more; 
it could be less. But that is the figure that they are using in 
a state of about 750,000 people. That is, obviously, a huge 
impact. So these are all concerns that are legitimate.
    Mr. McKinley. OK. Mr. Chairman, in the time I have left, 
what are we doing? What is FERC doing about authorizing more 
power plants to be constructed or was Moeller wrong?
    Mr. Bay. Under the Federal Power Act, we don't have the 
authority to order the construction of new power plants. And 
under the Federal Power Act, FERC has always taken the position 
that it has to be resource neutral. But what we have tried to 
do is to improve the efficiency of the energy markets and the 
capacity markets so that they send the right signal to 
resources. And so that is where we have focused our attention, 
while also, always making reliability a priority. Mr. 
Whitfield. The gentleman's time has expired.
    At this time, we recognize the gentlelady from Florida, Ms. 
Castor, for 5 minutes.
    Ms. Castor. Thank you very much, Mr. Chairman. And good 
morning and thank you all for being here.
    The former FERC Chair, John Wellinghoff, recently raised a 
concern over the very significant investments in natural gas 
resources by utilities. He said that these huge investments are 
happening at a time when battery storage and renewable 
resources appear to be growing. And that such significant, 
maybe even unbalanced investments in gas resources could put 
customers at risk, the folks we represent back home, for 
future--our neighbors could be on the hook for these 
investments.
    You can't argue with the fact natural gas prices have 
remained very low. This has been a benefit. But Mr. Wellinghoff 
warned that the falling cost of renewable energy and energy 
storage could outpace cheap gas in the future. He called it 
very risky for consumers. And some utility leaders have echoed 
this concern. Chairman Bay, you just talked about how FERC has 
a responsibility to look at the energy markets. What is FERC's 
view, especially now with the incentives of the Clean Power 
Plan to reduce carbon pollution?
    Mr. Bay. FERC has relied upon economic signals from the 
market to determine whether or not additional gas 
infrastructure is needed. And one of the ways we evaluate that 
is when a project developer holds an open season, we look to 
see whether or not the capacity that would be provided by the 
pipeline is subscribed, whether there are precedent agreements.
    And so that can be a pretty clear signal as to whether or 
not the market thinks that that capacity is necessary. But it 
is important to note that it is the market that is driving 
these decisions. So it is not like ratepayers are necessarily 
on the hook for the contracts that might be entered into with 
the gas pipelines. And so that does, I think, provide some 
protection to consumers. And if the payoff time is quick enough 
on this pipeline, and the investment, I think that that 
investment in the pipeline can be a benefit to consumers. It 
really depends upon the capacity constraints in a given region 
in the country.
    Ms. Castor. And furthermore, on consumer protection and 
demand response, traditionally, demand response was viewed as 
applicable to retail electricity policies and, therefore, 
within the jurisdiction of the state public utility 
commissions. However, as electricity markets evolved in the 
wake of the Energy Policy Act of 2005, demand response began to 
evolve into a wholesale issue, and, accordingly, FERC issued 
Order 745 which attempted to deal with compensation for demand 
response offered at wholesale. If you are a consumer out there, 
the benefits are quite robust. And for states now under Clean 
Power Plan, reduced short-term electricity costs, avoid the 
need for more investments in generation transmission of very 
expensive plants, you have to build, and bring environmental 
benefits.
    Now, the order was challenged. It was argued before the 
U.S. Supreme Court. Chairman Bay, you have a very distinguished 
legal career. Did you attend the oral argument at the Supreme 
Court?
    Mr. Bay. Yes, I did, Congresswoman Castor. Actually, I 
think every member of the----
    Ms. Castor. Ah, everyone did. Isn't it interesting to--you 
should do that if you are ever here in Washington. Please go to 
an oral argument. It is fascinating. But can you read the tea 
leaves for us and give us what the outlook is? I know one 
Justice had to recuse himself. So what is your expert analysis 
of the Court?
    Mr. Bay. You are right. Justice Alito recused himself. 
Eight members of the court will be deciding the issue. If there 
is a tie, then the decision of the D.C. Circuit stands. I think 
it is really impossible to read the tea leaves. I have to 
confess----
    Ms. Castor. I knew you were going to say that.
    Mr. Bay. I have to confess to you, though, Congresswoman 
Castor, that every time I have ever tried to read the tea 
leaves, I get it wrong. So probably, if I ventured an opinion 
today, you would do well to bet on exactly----
    Ms. Castor. So could you go through--there are a couple of 
potential outcomes. Could you run through those quickly? I 
mean, the awful thing would be if FERC does not have--if we 
don't continue to promote demand response.
    Mr. Bay. I think there are a number of possible outcomes. 
The Court could say that FERC does have jurisdiction. And it 
could also affirm the compensation that Order 745 allowed for 
demand response. So that is at one end of the spectrum. At the 
other end of the spectrum, the Court could either deadlock, 
which means the decision of the D.C. Circuit stands. Or the 
Court, a majority of the court, could decide that FERC lacks 
jurisdiction, in which case it doesn't reach the compensation 
issue.
    Somewhere in between, the Court could say that FERC has 
jurisdiction but that its compensation scheme was not 
sufficiently explained and could remand on that particular 
issue. So there are a range of possible outcomes. My colleague, 
Commissioner LaFleur, likes to cite to Yogi Berra for that 
famous saying that the difficulty with predicting the future is 
that it hasn't yet happened, and I have to confess to sharing 
Yogi Berra's sentiment in that regard.
    Ms. Castor. Thank you very much.
    Mr. Whitfield. Gentlelady's time has expired. At this time, 
recognize the gentleman from Illinois, Mr. Kinzinger, for 5 
minutes.
    Mr. Kinzinger. Thank you, Mr. Chairman. And thank you all 
for being here today and spending your morning with us. I am 
sure it is exciting.
    Chairman Bay, as part of FERC's responsibility to oversee 
the reliability of the bulk power system, you recently approved 
new critical infrastructure protection standards to address 
physical threats and weaknesses of the grid. These standards 
are designed to enhance the grid's physical security, and 
reduce areas of vulnerability. In your mind, what more can and 
should be done to ensure the physical security and reliability 
of the grid?
    Mr. Bay. Thank you for the question, Congressman. I have to 
say that Commissioner LaFleur and Commissioner Clark deserve a 
lot of credit for the physical security standard because they 
were on the Commission at the time that the Commission adopted 
it. And under Commissioner LaFleur's leadership, that standard 
was adopted. So I think that is a very important start. In 
addition, there are critical infrastructure protection 
standards that have been in place for some time now. We are up 
to version 5. The Commission is considering version 6. One of 
the things that we are looking at with respect to the CIP 
standards is GMD, the second stage of that particular standard, 
which would create a benchmark event, require utilities to 
assess their system against that benchmark event, and then come 
up with strategies to deal with any potential problems. So that 
is certainly something that we are looking at.
    Another aspect of cybersecurity that we are looking at 
deals with the supply chain, and whether or not there should be 
a standard in that area. We had issued a notice of proposed 
rulemaking. And we have decided to do a technical conference on 
that issue. So we will be bringing in industry and we will be 
getting their views.
    Mr. Kinzinger. OK. I might have to cut you off because I 
have two more quick questions, if you don't mind.
    And in regards to the EPA's Clean Power Plan, what position 
would FERC take if it were asked to issue a declaratory order 
related to the reliability impacts of state plans and requests 
for the exercise of the reliability safety valve?
    Mr. Bay. I guess I would want to know what the specific 
details were with that particular proposal. Under MATS, the EPA 
can request a technical opinion from FERC relating to the 
reliability issue that would be posed if a unit closed down. 
Under the reliability safety valve currently contemplated by 
the EPA's Clean Power Plan, there is no mechanism, no formal 
mechanism, requiring FERC input, although certainly we are 
happy to provide it if the EPA requests our views.
    Mr. Kinzinger. So if you were asked to make a declaratory 
order, you would be willing to, or be open to working with them 
on that?
    Mr. Bay. Yeah. I don't know that I would call it a 
declaratory order, but certainly, we could provide them with 
our technical views.
    Mr. Kinzinger. OK. And then, Mr. Clark, recently you spoke 
on efforts at the state level to support nuclear power. 
Specifically, you pointed out that states that encourage the 
growth of nuclear power are going to end up with two different 
regulatory regimes that don't fit together very well. And that 
this is going to impact FERC and negatively impact how prices 
are formed in wholesale markets. If you want to expand on that, 
and also, doesn't a two-tier system basically already exist 
since all clean resources, other than nuclear, have out-of-
market payment subsidies and everything that impact their bid 
price?
    Mr. Clark. Thank you for the question. It is an excellent 
one. It often comes into play with regard to nuclear power, and 
it especially becomes a question and an issue with regard to 
the Clean Power Plan being out there because remember, the grid 
operates on a regional basis in terms of market signals that 
are sent, but states, state by state, have to meet their in-
state requirements or will should the Clean Power Plan be 
upheld. So they are managing their fleet in a way that is sort 
of agnostic of the market itself. The concern with nuclear 
power is right now if you present a scenario where you have a 
restructured state, so it is a merchant generation state, you 
have high state renewable portfolio mandates, you have low cost 
natural gas that is the marginal unit and you have big nuclear 
investments, it is very difficult for that plant to stay open 
in that regard. So what it will cause states to do that have 
restructured is to probably, in some way, if they want to keep 
that nuclear plant open to meet their Clean Power Plan goals, 
it will probably cause them to, in some way, soft re-regulate 
utilities that they had previously restructured.
    The concern is, if you end up in a market that, from a 
wholesale standpoint, has been set up to allow pure price 
signals to determine where investment dollars go and where 
investment decisions get made, you can reach a tipping point 
where there are so many out-of-market solutions that are being 
imposed on the market, that the market isn't creating the 
proper price signals that are needed.
    Mr. Kinzinger. OK. Thank you. And from my district with 
four nuclear power plants, it is very important. So I yield 
back, Mr. Chairman.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Iowa, Mr. Loebsack, for 5 
minutes.
    Mr. Loebsack. Thank you, Mr. Chair. This has been an 
enlightening hearing. I really appreciate all of you being here 
today. The poor folks who are still here, they get to hear me 
talk about Iowa all the time, and how much wind energy we have 
in the State of Iowa. The last report was 28 \1/2\ percent of 
our electricity comes from wind. It will probably be 30 or more 
by the end of this year. And we are pretty proud of that, I 
have to say.
    I really think we have to move not only toward wind but 
solar, and go as far in that direction as we possibly can, 
recognizing that it is going to take some time, obviously, to 
get to a portfolio that I think would be more sustainable, be 
cleaner, be better for our environment, no question about it, 
and also would provide a lot of jobs, and has, in my state, and 
other states. But I have a question about reliability. I know 
we have all been talking about that today. And that seems to be 
the big issue out there in moving from fossil fuels to more 
sustainable energy. What specifically can we do? What measures 
have been taken, can be taken, as we make that transition, 
assuming, you know, that the Clean Power Plan, it is now, in 
fact, there and that we do implement that? What specifically 
can we do, Chairman Bay, when it comes to reliability?
    And what specifically is being done at the present time? 
Mr. Bay. I think the main thing that we can do is to work 
closely, we at FERC, to work closely with the EPA, DOE, state 
regulators, NERC, the regional reliability entities, the RTOs, 
ISOs, industry. I think we just have to work very closely 
together, and to monitor the situation to see whether or not 
there are any potential reliability issues. And if so, what 
needs to be done to address them. I don't think that you 
necessarily need a new reliability standard or anything like 
that, but I think you take the standards that you do have and 
you make sure that they are being followed, and you make sure 
that you work well with others.
    Mr. Loebsack. Did you want to say something, ma'am? I do 
have a question for you, Ms. LaFleur. Yeah. When we were 
talking about the grid, I have a real concern about the 
physical protection of the grid. Cyber is one thing, but actual 
physical protection of the grid is another thing entirely.We 
are a big country. It is very, very difficult, obviously, to 
protect the grid from some kind of attacks from someone abroad, 
domestic, whatever the case may be. But can you address that 
question?
    Ms. LaFleur. Yes. I think the physical security of the grid 
is very important. I think the most frightening thing would be 
some kind of coordinated attack that was a physical attack or a 
systemic attack on different parts of the grid. I think that 
the standards that we have put in place, which require every 
transmission owner to identify the most critical facilities and 
then protect them are an important step. But I think beyond 
that, a lot of the protection has to come from how we build the 
grid. Building in more redundancy, so we kind of decriticalize 
those places so that a physical attack won't cause as much 
damage. And building in more standardization, so if something 
goes wrong, we can share transformers more rather than having 
to build a custom one in every place.
    Mr. Loebsack. You are kind of answering my next question, 
which was building the grid better, that is what you mentioned 
earlier, that, specifically, is the kinds of things that you 
are talking about when you say building the grid better?
    Ms. LaFleur. Yes. I think that is really the future, is to 
think about how do we build a more robust grid in a world where 
there are so many more security issues?
    Mr. Loebsack. Right. Does anybody else want to weigh in on 
that particular issue on the grid? Did you want to say 
anything, Mr. Clark?
    Mr. Clark. I would second everything that Chairman Bay and 
Commissioner LaFleur have indicated. One of the--it occurred to 
me during one of the questions, something that I think the 
Commission can do in terms of reliability and integrating the 
renewables that you talked about is something that the 
Commission recently had a series of presentations on at one of 
our recent meetings, which is the issue of energy storage. If 
renewables are to be brought on in a way that really makes 
sense and makes them even more valuable, energy storage as a 
means of compensating for their inherent intermittency, is 
something that could be very important. So the Commission has 
been studying that.
    Mr. Loebsack. I think that is a great idea. Thank you very 
much. Thank you, Mr. Chair. I yield back.
    Mr. Whitfield. The gentleman's time has expired. At this 
time recognize the gentleman from Missouri, Mr. Long, for 5 
minutes.
    Mr. Long. Thank you, Mr. Chairman. And I figured you were 
going to ask me where I am going after this hearing. And where 
I am going is down to the Rayburn Foyer to sign cards for our 
troops for the American Red Cross. And I would like to remind 
our other members of the committee that they can join me down 
there. So you just looked like you wanted to ask that question, 
Mr. Chairman.
    Mr. Whitfield. I really appreciate your letting us know 
about that. Thank you.
    Mr. Long. Commissioner Clark, in referring to the EPA's 
carbon regulations, you mention in your testimony that there is 
a potential tension between the 111(d) rules and 
infrastructure, especially in the timeline for compliance and 
in potential for a large generation resource shift away from 
coal in order to comply. In my State of Missouri, for instance, 
we rely on 83 percent coal for our energy generation. My 
question is: What is FERC doing to help ensure that the 
reliability resource adequacy is maintained during this period 
of transition given the length of time needed to develop and 
implement infrastructure projects?
    Mr. Clark. Sure, Congressman. Thank you for the question. I 
think it comes forward in a number of different ways. As I 
indicated, the infrastructure challenge is a key one. So FERC 
needs to continue to do its work in terms of how we process 
those applications that are in front of us. In terms of the 
Clean Power Plan, I think it is going to be critically 
important for FERC to be actively involved with other 
stakeholders. Sometimes it is with the markets in a region that 
is very market-oriented; sometimes it is going to be close 
collaboration with states since those states have chosen to 
remain fully vertically integrated. But collaboration with 
those stakeholders is going to be absolute key.
    I think we are going to need to do a lot of work with 
entities like NERC, who have technical expertise in terms of 
the operations of the grid. It needs to be under constant 
assessment, and we need to do that assessment as soon as we 
know what these those State Implementation plans look like, 
because until we know what the State Implementation plans and 
Federal Implementation Plans for those states that chose to go 
that route, until we know what they look like, we are kind of 
shooting in the dark here because we can't really model 
scenarios that are that open ended.
    So I think after we begin to see what those look like, we 
will be able to do more substantive work. But I think it is 
something that we absolutely have to have a voice in given our 
technical expertise in both markets and reliability at FERC.
    Mr. Long. OK. Thank you. I found something else real 
interesting in your testimony. You also state that intervention 
in regulatory proceedings is trending towards ``just say no,'' 
which is designed to block entire classes of infrastructure 
projects through a strategy of outright denial, or defeat 
through delay. Can you expand on that?
    Mr. Clark. Sure, Congressman. What I was noting is 
something we have talked a little bit about here this morning, 
which is the trend towards intervention that we typically 
didn't have in the past, which is that certain resources, in 
and of themselves, you have intervenor groups that wish to 
block the entire development of that resource; not that they 
believe that there is a particular problem with a particular 
line, it is that they have a concern with all infrastructure 
and would like to see it blocked. But the challenge becomes in 
an era where it is quite clear, in my mind, that to meet 
environmental regulations, and where the market is going, in 
some cases, in an affordable, reliable manner, you are going to 
have to have the infrastructure. Dealing with that tension is 
going to be a challenge for Commissions at both the state and 
Federal level going forward. We want to ensure----
    Mr. Long. What kind of impact will it have on the 
Commissions?
    Mr. Clark. Well, from one standpoint, I think the 
Commissions, and we have seen this here at FERC, I think you 
probably have seen it at the state level as well, you have a 
lot more applications that are being put forward in terms of 
infrastructure needs. So you have more pending dockets. At the 
same time, you have more intervention and opposition to those 
dockets. It creates a challenge for commissions. Ultimately, if 
the infrastructure is blocked in total, it creates challenges 
for consumers because you don't have access to the otherwise 
affordable energy that you might have.
    Mr. Long. What type of projects are you talking about 
that----
    Mr. Clark. In the case, Congressman, of the electric 
sector, it can be transmission lines which are sited at the 
state level, although FERC has a lot of authority over 
interstate transmission, we don't site it. But the interstate 
transmission lines are often put up to accommodate renewables 
that have seen significant growth. In the case of interstate 
natural gas pipelines, it is because you have coal plants that 
are going off. And as of right now, the market signals indicate 
that in most cases you are building natural gas to replace the 
coal. So you need to hook up the new natural gas plant.
    Sometimes it is because you have to have peaker units that 
tend to be natural gas, because they pair well with renewables, 
because they have fast ramping resources. So everywhere where 
there has been a transition to higher intermittent resources 
and more natural gas units, but you don't have the electric 
transmission lines and pipelines in place at the time that that 
transition is made, you end up with very high costs for 
consumers. It has been the case across the world where that has 
happened. It has been the case in certain regions of the 
country, as the chairman noted in his opening statement.
    Mr. Long. OK. I see my time has expired, Mr. Chairman. I 
yield back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Vermont, Mr. Welch, for 5 
minutes.
    Mr. Welch. Thank you very much, Mr. Chairman. I have got 
two questions, one relating to renewables, and then the other 
about how we pay for natural gas infrastructure. By the way, 
what you were just saying about the ``just say no,'' I mean, it 
really does sort of have an element of public participation, 
whether it is about coal plants or it is even about solar. So 
we in Vermont, have a lot of renewables. But the siting issues 
are oftentimes very, very controversial. So it is something 
that we have to wrestle with independent of what that power 
source is.
    And the chairman indicated in his opening statement that 
the whole array of power sources, from coal to renewables, is a 
big deal. And depending on what your State mixes, it really has 
a significant impact on what you think is the proper approach 
on infrastructure.
    In Vermont, we have had a long tradition of utility-
supported renewables. In fact, Green Mountain Power, our major 
utility, has been the leader in this. Efficiency has played a 
major role, again, with the support of our major utilities, and 
demand response, obviously.
    So I will ask first, Mr. Bay and Mr. Clark, in respect to 
infrastructure planning, where does that fit in to your scheme? 
Because the decisions that are made about an infrastructure 
decision really do have an impact on the power that can be 
deployed with the benefit of that. I will start with you, Mr. 
Bay. And just quickly on it, because we don't have much time.
    Mr. Bay. Sure. I think that is an important question, 
Congressman Welch. States obviously engage in integrated 
resource planning. FERC itself does not. And FERC has always 
taken the position that it should be resource neutral under the 
Federal Power Act. So as a matter of choice, we have not tried 
to evaluate or to pick which resources should prevail in a 
market.
    Mr. Welch. Right. But there is a practical issue. This is 
something we are debating in Vermont. If you put in a major 
infrastructure item, it is going to then drive power decisions 
to that. So how do you find that balance? By the way, I want to 
say thank you to Member Honorable for coming to Vermont. We 
were delighted to have you up there. I mean, can you comment on 
that?
    Ms. Honorable. Certainly. And great to see you again, 
Congressman Welch. It goes back to our embracing fuel diversity 
while we recognize we need to move toward a cleaner and more 
efficient energy infrastructure, for all of the reasons that 
have been discussed, to ensure reliability, diversity, energy 
security.
    Mr. Welch. Go ahead. I only have a couple minutes. I didn't 
mean to interrupt, but thank you.
    Let me get to financing of natural gas infrastructure by 
electric ratepayers. We have had a lot of discussion in New 
England about natural gas supplies. Traditionally, it has been 
addressed and paid for by the merchant generators. Now there is 
a move among some to suggest that be spread out across all 
electric rate customers.
    Obviously that would have a significant impact on energy 
markets. What is FERC's view on this? I will ask you, Mr. 
Clark, first. And thank you all for your work and your 
testimony.
    Mr. Clark. Sure, Congressman. Thank you for the question. I 
understand this has undergone a great deal of debate in New 
England, as you have certain states especially that have a 
concern for getting more natural gas access to natural gas 
infrastructure. As I understand it, the New England states 
originally had through NEPKA or NESCOE, the State council, some 
thoughts about potentially building into ISO New England 
tariffs the cost of the buildout of natural gas. They came in 
and talked with each of us individually about that--well, I 
didn't prejudge any matter. I think that there are probably 
some challenges to that type of approach. I understand in 
recent months, New England governors have gone back, taken a 
relook at that, and are now not planning that particular 
approach, but are looking at potentially financing pipelines 
through the state authority that each of the states still 
retain over their load-serving entities.
    I am interested in seeing how that plays out, in addition 
to their authority that they have over the natural gas 
distribution companies. So it is a little bit different 
approach. It hasn't been presented to the Commission yet. I am 
interested in learning about it. I think that that stateside 
approach probably has more opportunity to be successful than 
what----
    Mr. Welch. Commissioner LaFleur, do you have anything to 
add? And then my time is up. So you get the last word.
    Ms. LaFleur. I agree with what Commissioner Clark said. 
This has arisen in New England, as you know, because there is 
tremendous pipeline constraints there. And the way the markets 
are structured, it is difficult for any merchant generator to 
commit to firm capacity. I believe the issue is raised 
indirectly in the Kinder Morgan pipeline that has been filed. 
And there is another one that is in pre-filing that will raise 
it more directly. While not prejudging it, I would seek to be 
as flexible as we can under our authority to try to find a way 
to accommodate something a region is trying to do, but it would 
have to be lawful. That is why the transmission solution has 
been turned away from.
    Mr. Whitfield. At this time, the chair recognizes the 
gentlelady from North Caroline, Mrs. Ellmers, for 5 minutes.
    Mrs. Ellmers. Thank you, Mr. Chairman and Ranking Member 
Rush, for holding this hearing today so that we can continue 
our oversight. And thank you, panel. Commissioners, thank you 
so much for being with us today. As co-chair of the Grid 
Innovation Caucus, I look forward to hearing from each of you 
regarding the threats that the Clean Power Plan poses to 
affordable and reliable electricity, as well as the path 
forward to securing our grid, as well as modernizing our 
Nation's infrastructure, energy infrastructure.
    Chairman Bay, I would like to start with you. I have a 
question regarding cybersecurity. Currently, the electric 
sector has mandatory cyber asset and incident reporting 
requirements through FERC, NRC, and DOE regulations. Chairman 
Bay, do you think FERC has sufficient authority over 
cybersecurity?
    Mr. Bay. I think we do at this time, while recognizing that 
there is always more work to be done. So we are up to CIP 
version 5, and we are considering CIP version 6. There are 
additional standards that we are examining right now. A lot of 
work has happened, but there will always be more work that we 
have to do given the nature of the threat.
    Mrs. Ellmers. Do you believe that FERC needs help with your 
statutory mandate to protect the bulk power system with cyber 
threats and harm?
    Mr. Bay. I should note one caveat. There should be 
emergency cyber authority. So thank you for that follow-up 
question. I understand that the House is addressing this very 
issue. That emergency authority does not need to reside with 
FERC. It could reside elsewhere in the Federal Government, but 
someone needs to have it.
    The other suggestion I would make, and again, the House 
legislation considers this issue, is whether or not FOIA rules 
should apply to information that is shared between industry and 
government and vice versa. I think a fix there could be very 
helpful as well.
    Mrs. Ellmers. Thank you very much, sir.
    Commissioner Honorable, I have a question for you. Last 
year, NARUC approved a resolution seeking to ``preserve states' 
authority to decide the type, amount, and timing of new or 
existing generation facilities that will be constructed or 
maintained within the state to achieve legitimate state policy 
objectives.'' Then it goes on to say ``to safeguard and 
guarantee states' continued right to operate programs to 
procure new generation or maintain existing generation for 
reliability, affordability, and environmental purposes.''
    Does the EPA's Clean Power Plan impact any of these areas 
which NARUC has expressly resolved to preserve?
    Ms. Honorable. Thank you for the question, Congresswoman. I 
certainly think this will play out. Clearly, the EPA endeavored 
to provide the states with flexibility. I served as NARUC 
president during that time that the resolution evolved, and 
that was very important and continues to be very important that 
the states maintain control, and I support that, even in my 
current role.
    I do believe that the states have the ability to plan their 
own resources. There is certainly a lot of opportunity to 
ensure fuel diversity and reliability as we move forward to a 
cleaner energy infrastructure.
    Mrs. Ellmers. Thank you so much. My last question is for 
Commissioner Clark, this has to do with some of the EPA 
rulemaking, and I am going to use an example. The reliability 
safety valve, though very well intended, is really only useful 
after the rule has gone into effect. Is this correct?
    Mr. Clark. Congresswoman, that is correct.
    Mrs. Ellmers. And that is wonderful, and we are happy that 
that safety net is there, except it is kind of after the fact, 
it is an afterthought. And these decisions are already being 
made by many of these companies in our states having to 
prepare. So in your opinion, do you believe that as far as the 
rulemaking for EPA goes, FERC should have a much earlier and 
much more formal role in the rulemaking process?
    Mr. Clark. Congresswoman, there is contemplated in what EPA 
issued, as a final rule, some sort of consultative process with 
regional planning authorities. I think FERC needs to ensure 
that we have a robust part in that particular project that will 
be undergone. So that would be answer number one. I think there 
is a second related part of your question that I might address 
which is this: There is a concern in states that will need to 
be moving forward potentially if this is upheld, that they get 
going on it rather soon. The problem is, I hope we don't end up 
with a MATS-type situation, a mercury and air toxic standard 
situation, where you may have certain States make enormous 
investments in meeting a rule that ultimately, 3 of 5 years 
down the line, is vacated by the Supreme Court. I would, either 
through legislation or through litigation, that there at least 
be a pause in this so it doesn't go into effect, and we don't 
start having some of these large investments being made and 
then have the states find out that the rule itself wasn't 
valid. I think that is a concern.
    Mrs. Ellmers. Thank you, sir, and I agree, and I have gone 
over my time. Thank you, Mr. Chairman, and thank you to our 
panel.
    Mr. Whitfield. Thank you. At this time, the chair 
recognizes the gentleman from Maryland, Mr. Sarbanes, for 5 
minutes.
    Mr. Sarbanes. Thank you, Mr. Chairman. I want to thank the 
commissioners for being here today. Your testimony has been 
very helpful. Commissioner Bay, it is a pretty straightforward 
question. There is, I think, bipartisan interest on this 
committee already reflected in some of the hearings we have 
held, and some of the markups on how to continue to increase 
the intelligence of our grid, if you will, kind of smart grid 
technologies, how we stimulate more thinking in that regard and 
advance those technologies.
    And there is a recognition, obviously, that there is a 
major role to play in that on the part of states, also 
ratepayers can become a part of the equation, the private 
sector for sure, and that that advances all of our goals in 
terms of dealing with resilience and cybersecurity and 
distributed energy resources, giving customers more choice in 
how they relate to the grid, obviously going forward.
    I am interested as well, and I know there are others on the 
committee; I think Congresswoman Ellmers and Congressman 
McNerney share this perspective in what, for example, the 
Department of Energy might be able to do by establishing some 
sort of grant opportunities, programs, collaborative 
initiatives that they could initiate with the states, and with 
other partners that come together.
    So for example, utilities partnering with entities such as 
National Labs and universities, state and local governments 
where they are developing some of these advanced smart grid 
technologies, and benefiting with some support from the 
Department of Energy. I want to ask you to speak to whether 
that would be helpful and useful in continuing to push forward 
that effort on the smart grid?
    Mr. Bay. Thank you for the question, Congressman Sarbanes. 
I think that is an important question that you are raising.Many 
of these developments, as you know, are very exciting and they 
are happening at the distribution level. And so I do think it 
is very important for Federal agencies, including the DOE and 
FERC, to work with state agencies and state authorities to see 
where we can be helpful.
    My sense is that DOE will be more helpful than FERC in the 
sense that DOE does a lot of research and development, but FERC 
certainly can be helpful in incenting some of those 
technologies as well, not at the distribution level, but at the 
transmission level because of incentives that we can offer 
under section 219 of the Federal Power Act. But as Commissioner 
Clark noted, we just did a panel recently on energy storage, 
and a lot of exciting things are happening there with some 
analysts predicting that costs will drop another 50 percent 
over the next 5 years from 2015 to 2019. So, I guess, that is 
actually 4 years. So a lot of things are happening, and 
ultimately, they will impact both the transmission network as 
well as the distribution system.
    Mr. Sarbanes. Thank you. Actually, President Obama this 
morning, at his press conference in Paris, spoke about how 
goals were set on where the cost of certain kinds of power 
generation would be. And 2, 3 years ago, we set these targets 
and we have already exceeded them. It shows what happens when 
you get these synergies in place, and I think you are right to 
point to the opportunity for a number of different Federal 
agencies, like the Department of Energy and like FERC and 
others to collaborate in helping to stimulate that in 
partnership with states, with ratepayers, with the private 
sectors, so I appreciate your answer. Thank you very much and I 
yield back.
    Mr. Whitfield. This time the chair recognizes the gentleman 
from Oklahoma, Mr. Mullin, for 5 minutes.
    Mr. Mullin. Thank you, Mr. Chairman. And commissioners, 
first of all, I want to thank you for your thorough review of 
the Grand Lake Dam Authority, GRDA, for granting the variance. 
It was very important to Oklahoma and to that area, so thank 
you. I really do appreciate that.
    I would like to first start with an issue going on with the 
nuclear plants. Several nuclear plants that operate in the 
wholesale competitive markets have recently announced premature 
retirements for economic reasons. These plants tend to be 
highly reliable. Is FERC concerned about potential impacts of 
reliability of the electrical grid due to these retirements? 
Commissioner Bay, I might start with you on that.
    Mr. Bay. So this is something that we are monitoring very 
closely. Certainly, we are aware of the news of some of the 
retirements of those plants, and, again, one of the things that 
we are doing is using our authority over the wholesale market 
to see whether or not more effective or efficient price signals 
can be sent, and that is both in the capacity market as well as 
in the energy market.
    So that has been where we have been focusing our efforts. 
We can't--as I said, we don't pick winners in the energy 
markets. We try very hard to be resource-neutral. I believe we 
have to be under the Federal Power Act. With that being said, 
improved price signals, improved transparency can be helpful to 
all efficient resources.
    Mr. Mullin. One of the things that is going on, obviously, 
is with the coal-fired power plants coming down too; now we 
have nuclear plants coming down. And one area that we are 
lacking in is the ability to build new gas pipelines, too, to 
get some of these plants. We find, through the industry, very 
difficult to get the permits that are needed. And so, I will 
stick with you, Chairman Bay, for a little bit. Does FERC have 
the needed resources to handle these permitting issues? I mean, 
considering the reliability, we can only take so much off the 
grid before reliability becomes an issue. And being that we are 
already concerned with the alarming amount of electricity 
leaving our grid, surely there is a way that we can speed up 
this process.
    Mr. Bay. So we are very much focusing on the issue of the 
resources that we have, that we devote to infrastructure 
project reviews. And one of the things that we have done in 
this past year is to increase the number of staff who are 
assigned to the division that does that particular work. So 
this is something that we are watching very carefully.
    Mr. Mullin. Watching, Chairman, no offense here, but 
watching isn't actually engaging. We are going to speed this 
process up of the amount of electricity hitting our grid going 
backwards at a very alarming rate. And so watching it is 
watching a crash happen. I would like to try to use the word of 
being proactive and not reactive. And if I am hearing you 
correctly, what you are going to end up being is reactive.
    Mr. Bay. I probably was not clear enough. We added more 
resources, so we created an additional branch of staff who are 
doing project reviews in the Office of Energy Projects. Having 
added those additional resources, we are continuing to monitor 
what happens, and as Commissioner Clark's testimony noted, 
actually more than 90 percent-plus of the projects that we 
receive are certificated within 1 year after receiving the 
application. So it is important for us not only to do our work 
in a thorough way, but also a timely way, and we are very much 
aware of that.
    Mr. Mullin. Is there a way that we can help you with this? 
Is there a resource that we can help you streamline? Is there a 
process that we can help engage in? I say ``we'' as those 
sitting up here on the committee.
    Mr. Bay. I certainly would be interested in hearing the 
views of my colleagues on that particular question. But one 
thing we may be coming to you with for our next budget request 
is a request for more resources.
    Mr. Mullin. Money?
    Mr. Bay. I think you could characterize it in that way in 
as far as the money results in our ability to hire more people.
    Mr. Mullin. I think all of that would come, too, with the 
idea of making sure we are being very responsible with the 
resources we have, that has already been given to FERC under 
the current circumstances. My time has run out, and Chairman, 
thank you so much for allowing me to ask these questions, and 
Chairman Bay, thank you for being very thoughtful with your 
answers.
    Mr. Whitfield. At this time, the chair recognizes the 
gentleman from Virginia, Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I 
appreciate what you all do. I know it is a tough job. I will 
say we have some natural gas pipelines coming through my area, 
and earlier, Commissioner Clark indicated, and I think some of 
you all have touched on it as well, that there are folks who 
are saying that they just want to slow everything down in order 
to stop gas pipelines and other things. But I have a situation 
where I have got folks who may feel that way, but I have got a 
lot of folks who just want answers to questions, and while, in 
regard to the Mountain Valley Pipeline, certainly some of those 
issues were raised by the Mountain Valley Pipeline not 
contacting folks like the Roanoke County Board of Supervisors 
before announcing they were coming into the community and 
starting to do work.
    But likewise, the Roanoke and New River Valley has a 
population of roughly 300,000, you have a pipeline coming 
through. West Virginia, they had four hearings; in Virginia, we 
had two. Only one was in the Roanoke Valley, New River Valley 
area directly. And so as a result of that, the Roanoke County 
Board of Supervisors requested an additional hearing.
    I am not saying it would have been fun for your folks, but 
it would have been helpful, and likewise, because both 
Congressman Goodlatte and I thought that it was appropriate. We 
sent a letter saying we agree with them, and we would ask you 
to hold additional hearing. You signed the letter, 
Commissioner, saying yes, we can't do that. I think that does, 
sometimes, makes the problem a little bit worse. I know it is 
not easy, I know, as you just said to my colleague, you may 
need more resources because of what is going on. But a lot of 
my folks are reasonable people, but when they feel like they 
are not getting answers, they become more aggressive, and as a 
result of that, both Craig County and Roanoke County, and I am 
sure there were other factors, but one of the factors they both 
intervened in the process because they felt like this a was the 
only way they could keep a finger on what was happening.
    So I don't know there is anything you can comment on in 
that specific case, I just pointed out as a note.
    I have got a lot to get over and not as much time as I 
would like, of course. The first regulations currently require 
the Agency to consider the use of existing right-of-ways, 
Commissioner Bay, Chairman Bay. What do you all do to make sure 
they actually look at existing right-of-ways, because we 
recently had a factory that brought in natural gas, and now, 
here we have another gas pipeline coming through generally the 
same area of Giles County, and then that is where the factory 
was.
    What do you all do to make sure that they actually did look 
at using co-location possibilities, particularly when you are 
looking at--we have--my district has a lot of natural forest 
and the Appalachian Trail. So what do you all do in that 
regard? And if you could be quick, I would appreciate it.
    Mr. Bay. Sure. During our review process, we examined the 
impact of the proposed route, but also alternatives. And so, if 
there is an existing right-of-way that is feasible, that can be 
very helpful, both to the company and to FERC in making a 
decision about whether or not to certificate the project. So it 
certainly is a factor we take into account.
    Mr. Griffith. So if folks in Roanoke County, Giles County, 
Craig County think that there is a better path that would be 
co-located, they should let you know, is that what you are 
telling us?
    Mr. Bay. I should say that that is an option to be 
considered. In some cases, it is not easy to co-locate two 
pipelines where they are side by side, that can present its own 
challenges.
    Mr. Griffith. And I recognize that and appreciate that. I 
am going to switch gears on you. I am concerned with grid 
reliability; I am concerned with the problems we had with MATS, 
when several facilities in my district were closed down just 
before the Supreme Court ruled that they didn't do it right at 
the EPA. I am concerned that you all don't get noticed under 
the Clean Power Plan for interaction about what is going to 
happen when the plants close down. These are great concerns. 
But I have one that may not seem as big, but a number of my 
colleagues have touched on the grid reliability issues, and 
that is the shore issues related to lakes where there are 
hydropower facilities and plants.
    And I am concerned about private property rights. And I 
can't speak for any other State, but I have several of these 
located in or near my district, and as many of the members of 
the committee know, I am a recovering attorney, I used to be a 
small-town country lawyer, and I have looked at the deeds. So 
one of things I have that I don't know that you all take into 
consideration, not only do I think folks ought to be able to 
use the lakes for recreational purposes, but I think there may 
actually be a taking that you all are unaware of, because in 
some of those deeds that I had occasion to look at over the 
course of 28 years of private practice, the power company 
didn't get the land under the water. They only got the right to 
flood. And in that case, under Virginia law, you extend those 
property lines out.
    So if you come in and you say somebody can't build a dock, 
you are actually telling them they can't build a dock on their 
property, which I would think is a taking. I don't know if you 
all are aware of that. I don't expect an answer today, but 
could you look into that for me and see if you all are aware of 
that issue, and whether or not--how that impacts your 
requirements on the shoreline, because that is where people are 
very, very concerned, and I am concerned that there may be some 
liability for the Federal Government there that people aren't 
really aware of. I have seen the deeds written three different 
ways, two of them you all are in control, one of them you 
aren't.
    So I just raise that for your attention. Let's go back to 
grid reliability now that I have raised that issue in regard to 
the shore, and I think it is very important people be able to 
access big money generator in our area where we are losing lots 
of jobs. I am already over. I thought I had 30 more seconds. 
Thank you, Mr. Chairman. I appreciate that and I yield back.
    Mr. Whitfield. Thank you, Mr. Griffith. At this time, we 
recognize the gentleman from Ohio, Mr. Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. And I want to thank 
the members of the panel for being with us today. Chairman Bay, 
or Commissioner LaFleur, consumers in our economy need reliable 
power, but some feel that FERC-approved market constructs may 
not be adequately compensating baseload power plants for the 
reliability attributes they bring to the grid. Therefore, some 
States in competitive markets, Ohio, New York and Illinois, for 
example, have begun to look at ways to consider options to 
preserve those baseload plants. So the question is, why do you 
think that these states find it necessary to step in to try and 
prevent the loss of these resources? Mr. Chairman.
    Mr. Bay. States have the authority to engage in integrated 
resource planning, and as part of that planning, they often 
look at the generation next within the state. And if, in the 
competitive marketplace, certain resources are not doing well, 
then the state may feel a need to support certain kinds of 
units. One of the things that is happening right now is that 
gas is very, very cheap, in part, because of gas production in 
states like Ohio and Pennsylvania, and many other states around 
the United States. Last night I checked the futures contract 
price for natural gas on NYMEX, it is, like, $2.22 going into 
January, which is the heart of the heating season. It was at 
the $2.20 range throughout the rest of the winter. And so, I 
think that is putting a lot of pressure on different resources 
across the United States.
    The difficulty for FERC is that in markets, signals are 
being sent, right? And FERC does not view itself as having the 
authority under the FPA to pick the winners and losers for a 
marketplace.
    Mr. Johnson. OK. Commissioner LaFleur, do you have a 
response?
    Ms. LaFleur. I think that the biggest thing that we are 
doing is trying to work on the markets and make sure they 
compensate what it takes to keep light on for customers, 
including what baseload brings. And I believe the markets will 
protect reliability. It is difficult any time a power plant 
closes, and I used to work for a company that owned them, they 
had their huge economic drivers in their communities and all, 
and I think it is natural that a state would be concerned, but 
we are trying to do our job to make sure that where the power 
plants that are needed for reliability they don't close, 
because they are fairly paid.
    Mr. Johnson. OK. Well, if reliability attributes and 
essential reliability services are being adequately compensated 
under current market rules, why do we see units that are 
essential to maintaining reliability leaving the market?
    Ms. LaFleur. Well, it is a little bit of a circle, if they 
are essential to maintain reliability, and we still have 
reliability, they should not be closing. Some of the rules----
    Mr. Johnson. But they are.
    Ms. LaFleur. Well, some of the rules that we put in place 
are fairly new, and we just started to run the first couple of 
auctions, and I think we will see impacts. We did see baseload 
plants that previously didn't clear the auctions clear in new 
auctions under the new rules.
    Mr. Johnson. Uh-huh. Commissioner Clark, I understand that 
under the Clean Power Plan, traditional state-based, least-cost 
resource planning will need to be replaced with carbon resource 
planning. What are the implications of such a shift? Would this 
environmental dispatch be more expensive than traditional 
economic dispatch, and if so, how so?
    Mr. Clark. It depends on how each of those states decide to 
implement their plans, it could be through some sort of credit 
trading program. It could be through some sort of, perhaps, 
environmental dispatch, which really would conflict with the 
market. So we don't know exactly how they will all be proposing 
to meet their standards. It probably does mean, in certain 
states, significant increased cost. I would say another 
impact--a similar question of what you asked Chairman Bay and 
Commissioner LaFleur is, I think 111(d) regulation, the 
potential of that is having an impact on some of these states 
that have restructured their marketplaces. They see nuclear 
units closed, even if they may not be needed for 
``reliability'' in order to meet the Clean Power Plan they may 
be needed because it is very difficult to replace a large 
baseload unit that emits no carbon.
    So, I think it is causing some of the states to go back to, 
as I said earlier, some form of soft reregulation of their 
marketplace, simply to keep that plan open in the state, not 
for market efficiencies or for reliability, but to meet the 
constricts of the Clean Power Plan.
    Mr. Johnson. OK. Well, thank you, Mr. Chairman. My time has 
expired.
    Mr. Whitfield. The gentleman's time has expired.
    That concludes the questions from the members. I want to 
thank the commissioners. Once again, we appreciate you being 
here with us, we look forward to continue to work with you.
    Just one follow-up question I had, Chairman Bay. How many 
people are in your legal department? Do you know that number?
    Mr. Bay. I believe there are about 180 people in the Office 
of General Counsel.
    Mr. Whitfield. Do you know how many pending lawsuits are 
against FERC in which FERC is a defendant?
    Mr. Bay. Do you mean in a regulatory context or----
    Mr. Whitfield. I mean, the regulatory context has been 
exhausted and now we are in Federal court or Court of Appeals 
or Supreme Court.
    Mr. Bay. I know that there are two matters pending before 
the Supreme Court. I can probably get this information for you. 
I don't know it off the top of my head. Certainly, every year 
there are commission orders that are appealed to the Court of 
Appeals.
    Mr. Whitfield. Right.
    Mr. Bay. And then there are some other matters that are 
being litigated at the district court level.
    Mr. Whitfield. Ms. LaFleur?
    Ms. LaFleur. Well, just to chime in, most of those 180 
lawyers work on generating commission orders that are outgoing 
for the 6,000 cases we do a year, including there are ones that 
work on projects and ones that work on regs. There may be 10 to 
20 people that work on our cases in the courts of appeal, 
something like a dozen. It is small group.
    Mr. Whitfield. And what is the total budget for FERC at 
this time?
    Mr. Bay. I believe FERC's total budget is a little over 
$300 million.
    Mr. Whitfield. OK, oK. Do you have anything else?
    Mr. McNerney. No.
    Mr. Whitfield. Thank you all so much. We look forward to 
working with you and the hearing is adjourned. The record will 
be kept open for 10 days for additional materials. And thank 
you all once again.
    [Whereupon, at 12:33 p.m., the subcommittee was adjourned.]
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