[Senate Hearing 114-166]
[From the U.S. Government Publishing Office]
S. Hrg. 114-166
ENERGY EFFICIENCY LEGISLATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
ENERGY EFFICIENCY LEGISLATION
----------
APRIL 30, 2015
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
S. Hrg. 114-166
ENERGY EFFICIENCY LEGISLATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
ENERGY EFFICIENCY LEGISLATION
__________
APRIL 30, 2015
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
______
U.S. GOVERNMENT PUBLISHING OFFICE
95-273 WASHINGTON : 2016
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Washington, DC 20402-0001
COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado MARTIN HEINRICH, New Mexico
ROB PORTMAN, Ohio MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee ELIZABETH WARREN, Massachusetts
SHELLEY MOORE CAPITO, West Virginia
Karen K. Billups, Staff Director
Patrick J. McCormick III, Chief Counsel
Catherine Cahill, Congressional Fellow
Angela Becker-Dippmann, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Allen Stayman, Democratic Professional Staff Member
C O N T E N T S
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OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska... 1
Cantwell, Hon. Maria, Ranking Member, and a U.S. Senator from
Washington..................................................... 2
Portman, Hon. Rob, a U.S. Senator from Ohio...................... 11
Hoeven, Hon. John, a U.S. Senator from North Dakota.............. 16
Gardner, Hon. Cory, a U.S. Senator from Colorado................. 17
Stabenow, Hon. Debbie, a U.S. Senator from Michigan.............. 17
WITNESSES
Collins, Hon. Susan M., a U.S. Senator from Maine................ 5
Coons, Hon. Christopher A., a U.S. Senator from Delaware......... 7
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire.......... 9
Schatz, Hon. Brian, a U.S. Senator from Hawaii................... 12
Klobuchar, Hon. Amy, a U.S. Senator from Minnesota............... 14
Hogan, Dr. Kathleen B., Deputy Assistant Secretary for Energy
Efficiency, Office of Energy Efficiency and Renewable Energy,
U.S. Department of Energy...................................... 18
Crasi, Tony, on behalf of the National Association of Home
Builders and Owner and Founder, The Crasi Company, Inc......... 34
Gayer, Dr. Ted, Vice President and Director of Economic Studies,
Joseph A. Pechman Senior Fellow, The Brookings Institution..... 73
Nadel, Steven, Executive Director, American Council for an
Energy-Efficient Economy....................................... 77
Therriault, Hon. Gene, Vice-Chairman, National Association of
State Energy Officials, and Deputy Director, Energy Policy and
Outreach, Alaska Energy Authority.............................. 94
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Alaska Native Tribal Health Consortium:
Letter for the Record........................................ 156
Alexander, Hon. Lamar:
Statement for the Record..................................... 242
Alliance to Save Energy & the American Council for an Energy-
Efficient Economy:
Letter for the Record........................................ 243
American Chemistry Council:
Statement for the Record..................................... 245
American Gas Association regarding S. 1029 and S. 869:
Statement for the Record..................................... 247
American Gas Association, et al., regarding S. 1029:
Letter for the Record........................................ 252
American Gas Association, et al., regarding S. 869:
Letter for the Record........................................ 254
American Institute of Architects:
Letter for the Record........................................ 256
American Public Gas Association:
Statement for the Record..................................... 263
ASHRAE:
Statement for the Record..................................... 271
Association of Art Museum Directors:
Letter for the Record........................................ 280
Association of Home Appliance Manufacturers:
Statement for the Record..................................... 281
Big Ass Solutions:
Letter for the Record........................................ 285
Bristol Bay Native Corporation and CCI Group, LLC:
Letter for the Record........................................ 287
Business Council for Sustainable Energy:
Statement for the Record..................................... 290
Callahan, Kateri, President, The Alliance to Save Energy:
Statement for the Record..................................... 295
Cantwell, Hon. Maria
Opening Statement............................................ 2
CenterPoint Energy:
Letter for the Record........................................ 301
Chamber of Commerce of the United States of America:
Letter for the Record........................................ 304
Coca-Cola Company:
Statement for the Record..................................... 305
Collins, Hon. Susan M.:
Opening Statement............................................ 5
Consumer Federation of America and National Consumer Law Center:
Letter for the Record........................................ 308
Consumers Union:
Letter for the Record........................................ 310
Coons, Hon. Christopher A.:
Opening Statement............................................ 7
Crasi, Tony:
Opening Statement............................................ 34
Written Testimony............................................ 36
Responses to Questions for the Record........................ 142
DNV-GL:
Statement for the Record..................................... 313
Efficiency First and Home Performance Coalition:
Statement for the Record..................................... 321
Energy Efficiency Business Group:
Letter for the Record........................................ 326
Enterprise Community Partners, et al.:
Letter for the Record........................................ 329
Environmental Defense Fund:
Statement for the Record..................................... 331
Federal Performance Contracting Coalition:
Statement for the Record..................................... 333
Gardner, Hon. Cory:
Opening Statement............................................ 17
Gayer, Dr. Ted:
Opening Statement............................................ 73
Written Testimony............................................ 75
Responses to Questions for the Record........................ 146
Geothermal Exchange Organization:
Statement for the Record..................................... 341
GoodCents Holdings, Inc.:
Statement for the Record..................................... 342
Habitat for Humanity:
Statement for the Record..................................... 348
Hoeven, Hon. John:
Opening Statement............................................ 16
Hogan, Dr. Kathleen B.:
Opening Statement............................................ 18
Written Testimony............................................ 21
Responses to Questions for the Record........................ 128
Information Technology Industry Council:
Statement for the Record..................................... 352
Institute for Market Transformation:
Letter for the Record........................................ 356
Insulation Contractors Association of America:
Statement for the Record..................................... 359
Jewish Federation of North America:
Letter for the Record........................................ 360
Klobuchar, Hon. Amy:
Opening Statement............................................ 14
Leading Builders of America:
Statement for the Record..................................... 361
Markey, Hon. Edward J.:
Statement for the Record..................................... 365
Murkowski, Hon. Lisa:
Opening Statement............................................ 1
Nadel, Steven:
Opening Statement............................................ 77
Written Testimony............................................ 79
Responses to Questions for the Record........................ 148
NAIOP (Commercial Real Estate Development Association):
Letter for the Record........................................ 366
NAIOP (Commercial Real Estate Development Association) regarding
S. 1052:
Letter for the Record........................................ 367
National Association of Energy Service Companies:
Letter for the Record........................................ 369
National Association of Manufacturers:
Letter for the Record........................................ 372
National Association of Realtors:
Letter for the Record........................................ 374
National Electrical Manufacturers Association:
Letter for the Record........................................ 375
National Ground Water Association:
Statement for the Record..................................... 382
National Housing Trust:
Letter for the Record........................................ 383
National Insulation Association:
Statement for the Record..................................... 386
National Propane Gas Association:
Letter for the Record........................................ 390
NiSource, Inc.:
Statement for the Record..................................... 393
Portland Cement Association:
Memorandum for the Record.................................... 396
Portman, Hon. Rob:
Opening Statement............................................ 11
Public Citizen:
Statement for the Record..................................... 398
Puget Sound Energy:
Letter for the Record........................................ 400
Real Estate and Construction Industry:
Statement for the Record..................................... 402
Retail Industry Leaders Association:
Letter for the Record........................................ 407
Sanders, Hon. Bernard:
Statement for the Record..................................... 408
SAVE Act Coalition:
Letter for the Record........................................ 412
Schatz, Hon. Brian:
Opening Statement............................................ 12
Shaheen, Hon. Jeanne:
Opening Statement............................................ 9
Stabenow, Hon. Debbie:
Opening Statement............................................ 17
Therriault, Hon. Gene:
Opening Statement............................................ 94
Written Testimony............................................ 96
Responses to Questions for the Record........................ 150
Union of Orthodox Jewish Congregations of America:
Statement for the Record..................................... 415
United States Conference of Mayors:
Statement for the Record..................................... 419
Vermont Energy Investment Corporation:
Statement for the Record..................................... 436
Vermont Public Service Department:
Letter for the Record........................................ 439
----------
The text for each of the bills which were addressed in this hearing can
be found on the committee's website at: http://www.energy.senate.gov/
public/index.cfm/hearings-and-business-meetings?ID=a7ea3045-7029-4e1e-
abeb-edf57628ab47.
ENERGY EFFICIENCY LEGISLATION
----------
THURSDAY, APRIL 30, 2015
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Lisa
Murkowski, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
ALASKA
The Chairman. Good morning. We will call to order the
Energy Committee this morning. We are here today to consider a
whole host of bills pertaining to energy efficiency. We will
have two panels this morning before the Committee.
One, a panel of Senators who wish to speak about their
legislation, and one of subject matter experts who can speak
both to the bills that we are considering today and the broader
topic of energy efficiency overall.
So thank you all for coming and helping us understand the
impact of the various bills that we have before us.
This hearing is also an important next step in the
development of the Energy Committee's very broad-based energy
bill. This is the first of four legislative hearings that we
will hold in the next month. There will be one hearing for each
title we will be considering.
We had a success last week with the Energy Efficiency
Improvement Act. It was good to see that that has now moved
forward through the process, and unanimous passage of that
legislation, I think, indicates the level of support for energy
efficiency. It also indicates the Senate is really capable of
coming together to pass efficiency legislation that saves both
energy and money. It is good for the consumers. It is good for
all.
This issue, the issue of energy efficiency, I think, is a
good, bipartisan place to start our discussions when we are
talking about Federal energy policy. We have 22 bills before us
today. I think that is some measure of the interest that we
have in this. Some of the measures are very well vetted. We
have seen them before. We have Senator Portman and Senator
Shaheen's Energy Savings and Industrial Competitiveness Act. We
have some new ones such as the Smart Building Acceleration Act
and some like the PREPARE Act which encourages collaboration
across many levels of government and stakeholders. Others are
targeted towards a more specific need. For example, the ceiling
fan fix. How much more specific could we be than ceiling fans?
Several reauthorize established programs and several others
require new standards and programs. Some are voluntary in
nature while some are mandatory. Still others seek to make the
Federal Government more effective in financing and implementing
efficiency projects.
Taken as a whole the bills before us cover a wide variety
of efficiency ideas. They offer the potential to reduce energy
usage and costs across our country and throughout our economy.
They put forward methods to enhance our leadership on
efficiency technologies and to develop a cadre of professionals
to work within the field. They also seek to protect consumers,
manufacturers and the environment from unintended consequences
of new or revised standards.
I am pleased that we have witnesses here who can speak to
these many bills as well as the impacts they will have on the
government, not only the Federal Government, but our state
governments, consumers, the economy and front line project
implementers.
It should be an interesting, pretty far-ranging discussion
this morning, but I think it is, again, important that we
consider how we can work to build an energy efficiency title
that works for all.
In the interest of efficiency and in light of the measures
that we are going to be considering this morning, I will
conclude my comments and turn to the Ranking Member for her
comments this morning. Welcome to our fellow colleagues who
have taken time out of their very busy mornings to come before
the Committee, and we look forward to your comments as well.
Senator Cantwell.
STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Madam Chair, and thank you for
holding this first of several legislative hearings on a process
to move us forward on energy policy. Hopefully we will be
building a record here for important steps in crafting
legislation that we can successfully move through both the
House and the Senate.
I also want to thank our witnesses today. We are going to
hear from several of our colleagues, and I certainly appreciate
Senators Collins and Coons being here and for their leadership
on a variety of issues related to energy efficiency and
continued focus in this area.
I know our colleague, Senator Klobuchar, is joining us as
well. Yesterday she shared a round table discussion with many
energy efficiency leaders, so we thank her for that as well.
Today we are here to discuss energy efficiency which is, in
some ways, the most obvious of energy sources. Why is that?
Well, it is pretty simple. It is just the math. It is
compelling economics. Energy efficiency costs less than half of
what it costs for new energy production. The Lawrence Berkeley
National Laboratory has estimated the cost of energy efficiency
is 4.5 cents per kilowatt compared to 12 cents per kilowatt for
new production.
In short, energy efficiency as a resource is larger,
cheaper, a better job creator and carries lower environmental
impacts than the alternatives. Not only does it save consumers,
but it strengthens the economy, builds flexibility in our grid
and reduces carbon pollution.
Let me say just a few words about the economic benefits.
From 2007 to 2014 national energy use fell 2.4 percent while
GDP grew eight percent. In other words, we experienced an
energy productivity increase of 11 percent in eight years. That
means for every electron or molecule of energy consumed in the
U.S., we are getting more and more economic production.
A handful of programs at the U.S. Department of Energy or
DOE are important contributors to this dynamic. DOE's Building
Code program, for example, will help put more than $7.4 billion
back into consumers' pockets in 2020 and up to $230 billion by
2040. This program's original cost was about $100 million from
1992 to 2012. So, basically that is a ratio of $400 in savings
for every dollar spent. I think that is a pretty impressive
ROI.
Similarly the Appliance and Equipment Standard programs
cost the nation $40 million annually and on average has reduced
our nation's electricity consumption by seven percent below
what it would otherwise have been. In a typical household,
energy costs are about $500 a year less than they would have
been if there had not been this National Appliance Efficiency
Standard Program.
So when we discuss these initiatives I think it is
important for my colleagues to remember that it is often the
case that successful Federal programs have been built on the
hard work and leadership of a number of states. The drive
towards energy efficiency, at the time policy makers called it
conservation, really began with efforts on the West Coast.
California's energy efficiency efforts have helped the
state avoid the need for at least 30 power plants, saved
consumers $65 billion and eliminated carbon pollution
equivalent to 5,000,000 cars off the road.
The Northwest Power Planning Act, which originated in this
Committee, was enacted in 1980 and made conservation the
resource of first resort in our regional power plans and even
gave rise to some of the nation's first models of conservation
code efforts.
Today, some 24 states have laws on their books on energy
efficiency resource standards--binding saving targets for
utilities or similar activities. Once again, I think it is fair
to say that the resources that cost consumers less, make our
economy more competitive and reduce environmental impacts are
always a good thing for our nation.
So the question before us today is what more can be done to
drive energy efficiency into our economy?
The U.S. economy in the advent of the distributed
generation, dozens of opportunities exist across residential,
commercial, industrial and agriculture and government sectors.
I think we should consider a number of approaches to fully
leverage these opportunities.
First, we need the right framework and incentives for
utilities to fully embrace the least cost resource. Senator
Franken's legislation that we are going to hear about today,
the Federal Energy Efficiency Resource Standard, is one method
to drive this outcome. So I look forward to that topic today.
In my state, Seattle City Light used a variety of
efficiency measures to reduce its load annually by 1.3
megawatts per year which is the equivalent of a 150 megawatt
power plant. So we need to create similar conditions.
Second, we need a robust Federal commitment to research and
development of new technologies that will continue to lead the
way on energy. Technology innovation is one of the key ways to
create continuous cycles of efficiency, and one example of this
is the opportunity of R and D on high performance buildings.
We have major employers that are aggregating and analyzing
business data on their corporate campuses in order to learn
where costs can be cut and to help achieve a carbon reduction
goal. I have introduced legislation to help accelerate this
transition to smart buildings by supporting research on data,
on software, and on communication systems.
We also cannot forget the opportunities of efficiency in
the transmission and distribution grid. On Tuesday Secretary
Moniz was here to discuss on the Quadrennial Energy Review, and
he outlined several recommendations to create more flexibility,
more resilience and increase energy efficiency.
Third, we must be committed to the network partnership
between Federal, state and local institutions. Manufacturers,
utilities, consumers and stakeholders, they all play a role in
this. The issue is that we have to have Federal leadership with
respect to things like the appliance standards and continue to
lessen regulatory burdens and be a platform for demonstration.
Most people will tell you that the demonstrations we show then
enable the private sector to implement them across many
different businesses.
There is a lot to be done in driving these outcomes, but I
look forward to working with Chairwoman Murkowski and members
of this Committee, who all have great ideas on putting a good
energy efficiency title in an energy bill.
Thank you.
The Chairman. Thank you, Senator Cantwell.
Let's start with our good ideas.
We will hear from our colleagues who have taken time from
their busy morning to come before the Committee to present some
of the areas where they feel we can make some headway when it
comes to efficiencies whether it is within our schools, through
weatherization programs or the approach that Senators Portman
and Shaheen have brought to the table, clearly leading on this
area, a critically important area of energy efficiency
throughout our economies.
We will start this morning with you, Senator Collins, as
you speak to your legislation about retrofitting our schools
and the energy savings that we can find there. This was
something that we considered during the budget process, and I
think you enjoyed good, strong, bipartisan support.
I believe Senator Coons was a co-sponsor of that as were
many of us, so thank you for your leadership and if you would
like to lead off this morning? Welcome.
STATEMENT OF HON. SUSAN M. COLLINS, U.S. SENATOR FROM MAINE
Senator Collins. Thank you very much, Madam Chairman,
Ranking Member Cantwell, members of this distinguished
Committee.
First let me commend you for holding this hearing this
morning to examine so many legislative proposals having to do
with the energy efficiency. I have always thought of energy
efficiency as being the low hanging fruit when it comes to
reducing energy costs and having other benefits such as both
the Chairman and the Ranking Member outlined in your opening
remarks. Encouraging the adoption of energy efficiency measures
is one of the easiest, yet most effective mechanisms for
reducing energy consumption, lessening pollution and ultimately
saving families, businesses, communities and governments at all
levels, money.
I appreciate the opportunity to speak about a bill that I
have sponsored, along with the distinguished Senator from
Virginia, Senator Warner, to streamline the available Federal
energy efficiency programs and financing to improve efficiency
and lower energy costs for our nation's schools.
Before I describe our bill, Senate bill 523, in greater
detail, I would like to very briefly note my strong support for
two other bills that are on your agenda both of which I have
co-sponsored and both of which happen to have the chief
sponsors here today which was not planned in advance.
The first is the Energy Savings and Industrial
Competitiveness Act which is sponsored by Senators Portman and
Shaheen which proposes cost effective mechanisms to support the
adoption of off the shelf technology for buildings,
manufacturers and the Federal Government.
The second is the Weatherization Enhancement in Local
Energy Efficiency Investment and Accountability Act sponsored
by Senator Coons which would reauthorize and enhance two
successful and long standing Federal energy programs, the
Weatherization Assistance Program and the State Energy Program.
I am proud to be a co-sponsor of both of these important
initiatives.
With regard to energy efficiency in schools there are a
number of Federal initiatives already available to schools to
help them become more efficient, but in many cases schools are
not taking advantage of these programs. So I set out to find
out why.
Well, the answer is that we need to do a better job of
helping school officials learn more easily about what Federal
programs and incentives are available to improve energy
efficiency and lower costs. By providing a streamlined
coordinating structured led by the Department of Energy our
bill would help schools navigate the available Federal programs
and financing without authorizing new programs or funding.
Decisions about how best to meet the energy needs of their
schools would appropriately remain in the hands of states,
school boards and local officials.
Specifically our bill establishes the Department of Energy
as the lead agency for coordinating and disseminating
information on these programs. That is going to make a big
difference, particularly to rural schools that do not have the
grant writers, the staff, to go and survey the entire Federal
Government until they stumble upon one of these programs.
Our bill would require DOE to review the existing Federal
programs which are scattered at the Departments of Agriculture,
Energy, Education, Treasury, the IRS, EPA. No wonder schools
are having difficulty in finding how whether these programs
exist and how to access them.
It would also streamline communication and outreach to the
states, local education agencies and schools to help them
facilitate partnerships to support the initiation of these
projects.
The Department would also provide technical assistance to
help schools navigate project financing and development to
better ensure their successful applications.
Assisting our nation's schools, many of which are very old
and in need of energy efficiency upgrades, in tapping into
existing Federal programs to lower energy usage and save money
is just common sense.
Finally let me note, I see this as the first step. As we
have this coordinating structure we may well decide that some
of these programs should be moved to a central agency. GAO has
done a little bit of work on this, but I believe by
establishing this coordinating mechanism that it will enable us
to do a better job of helping schools access these programs.
Thank you very much.
The Chairman. Thank you, Senator Collins.
Senator King. Madam Chair?
The Chairman. Senator King.
Senator King. Unfortunately I have to return to a hearing
on the Ukraine in the Armed Services Committee, but I wanted to
commend to the Committee the principle that I followed since
arriving here which is do what she says. [Laughter.]
Senator Collins. Thank you, my thanks to the Senator from
Maine.
The Chairman. Wise words from the Junior Senator from
Maine. We appreciate that, and we appreciate all of your
interest in these issues, Senator King, and your involvement in
the Committee.
Senator Collins, thank you for not only being persistent in
this area, but also reminding us that we do have considerable
programs scattered throughout our agencies that are there to
help, but so much of it is knowing how to access.
I think Senator Coons, you know, very keenly, that when we
are talking about the issue of weatherization, we have
weatherization programs scattered all throughout. How we can
better collate them so that we can access them and be more
efficient than with what has already been established is key.
So, we appreciate your leadership in this area and look forward
to your comments on Senate bill 703.
Senator Collins, I am sure you have places to go, so if you
want to excuse yourself we appreciate you coming by the
Committee this morning.
Senator Coons.
STATEMENT OF HON. CHRISTOPHER A. COONS, U.S. SENATOR FROM
DELAWARE
Senator Coons. Thank you, Chairman Murkowski and Ranking
Member Cantwell for the opportunity to testify, and thank you
for holding this hearing on a broad menu of legislation that
focuses on utilizing energy efficiency to help households,
businesses and taxpayers to save money on their energy needs. I
am pleased to be in the company of two such experienced and
effective and engaged advocates for energy efficiency as
Senators Shaheen and Senator Collins.
It is, after all, an area that can unite Democrats and
Republicans. Encouraging the use of energy efficiency policies
is just common sense. It saves money, enhances our national
security, spurs innovation, creates jobs for local contractors,
reduces waste and improves business opportunities. So I am glad
to join the conversation today.
There are a lot of great energy efficiency bills on your
agenda. I would like to speak about four of them briefly, if I
might.
The first is a bipartisan bill that I introduced in the
last Congress and have reintroduced in this Congress with
Senators Collins, Reed of Rhode Island and Shaheen of New
Hampshire. It is the Weatherization Enhancement and Local
Energy Efficiency Investment and Accountability Act, otherwise
known as S. 703. This bill reauthorizes two critical energy
programs for five more years, the Weatherization Assistance
Program and the State Energy Program. Both programs have been
at work in all of our states for decades. These programs link
national, state and local interests together in a critical way.
They create highly effective public/private partnerships that
have delivered measureable results.
For every dollar invested the Weatherization Assistance
Program returns $2.51 in household savings and has served 7.4
million families including more than a million in just the last
four years.
The results are similarly impressive for the State Energy
Program where for every Federal dollar invested there is an
annual energy cost savings of more than $7 and nearly $11 in
non-Federal funds have been leveraged. Our bill is not just
about reauthorization. It is also about modernization. First,
we have cut the authorization levels by more than half from the
2007 Energy bill. Second, we are proposing a complementary,
competitive grant program to bring in new partners, new
approaches and new ideas to ensure that more homes can be
weatherized and that the weatherization being done is being
done more efficiently. All told S. 703 supports both base
programs and enhances them with new ideas and ultimately
ensures their long term viability so we can continue making a
difference in our states and communities.
Another key piece of the energy efficiency puzzle is
ensuring the Federal Government better uses energy efficiency
and cleaner energy. This can be done through the use of Energy
Savings Performance Contracts or ESPCs, well known to many of
this Committee. ESPCs provide valuable ways for public agencies
to make investments in energy efficiency at no cost to the
taxpayer.
I have been working with a steadfast advocate of ESPCs,
Senator Cory Gardner of Colorado, to advance the energy savings
through Public/Private Partnerships Act.
As a related issue, as many of you know, we also need to
fix CBO's scoring treatment of ESPCs and several of us here
today have been working to fix that scoring hurdle through this
year's budget. If successful, this bill, along with other
policy ideas, can be advanced without running into that
artificial hurdle to bring about many benefits for Federal
facilities and programs. It is through efforts like ESPCs that
we can put more American electricians and plumbers and local
building contractors to work.
Now the bill that has really been one of the most
significant pieces of energy efficiency legislation offered in
Congress in many years is one with which we are all familiar
and to which Senator Shaheen will speak momentarily, S. 720,
the Energy Savings and Industrial Competiveness Act. I am proud
to have been a co-sponsor. Senators Portman and Shaheen have
diligently worked to get several of their provisions recently
passed into law, but it is critical we continue to pass, press
for passage, of the entire bill.
Senator Gardner, I was just speaking about our ESPC bill a
moment ago.
Last, while energy efficiency is one crucial part of our
larger energy challenge, I would briefly like to mention a bill
related to the bigger energy picture. The Administration, as
you well know, just released its Quadrennial Energy Review
report which provides a valuable snapshot of our energy
infrastructure needs. I'm glad this Committee held a hearing on
the QER just last Tuesday and we should ensure that this and
future Administrations continue to carry out such reviews to
inform the national energy discussion. That is why I recently
introduced S. 1033 with Senator Alexander to ensure that QERs
become codified into law so that each successive Administration
follows through on this important audit of our nation's energy
policies and needs.
Madam Chair, Ranking Member, members of the Committee, I
would just like to thank you for your leadership and your
attention to the important opportunity that energy efficiency
holds for our country. I am glad energy efficiency continues to
be an important, valuable and bipartisan issue that owes, in no
small part, to your leadership and the collective efforts of
many colleagues present today.
Our energy challenges may be great, but I fervently believe
we can meet them by working together on sound, common sense
policies such as the bills discussed today.
Thank you, Madam Chair.
The Chairman. Thank you, Senator Coons. Know that we look
forward to working with you, not only on the weatherization
enhancement but also the other measures that you are clearly
engaged on. You have been a cooperative, willing and engaging
partner, and we look forward to continuing that.
Next let's go to Senator Shaheen for your comments on the
Energy Savings and Industrial Competitiveness Act, an act that
you and Senator Portman have led for years now. As has been
noted, there have been incremental pieces that we have advanced
through the process. I think it is fair to say that when we had
these initial discussions about how you move forward on
Shaheen/Portman we all thought that we were going to be
pursuing the low hanging fruit. We all thought that this was
going to be the easy energy bill that we move forward.
Unfortunately, due to a host of varying and complicating
factors, that did not prove to be so, but I still believe, very
strongly, that this should be that area where regardless of
where you're coming from on fossil verses renewables verses how
we build out our capacity that when it comes to energy
efficiency we ought to be able to figure out a positive and a
constructive path forward.
I thank you both for your diligence and your continued
efforts to remind us of the opportunities that we have within
efficiency. I look to you, truly, as the leaders.
Senator Shaheen, we will lead off with you and then I would
like to turn to you, Senator Portman, for your comments on your
legislation after which we will move down the line to listen to
the other measures that we have in front of us.
Senator Shaheen.
STATEMENT OF HON. JEANNE SHAHEEN, U.S. SENATOR FROM NEW
HAMPSHIRE
Senator Shaheen. Thank you, Madam Chair and thank you and
Ranking Member Cantwell for holding this hearing this morning,
to the members of the Committee for all of the great work
that's going on. I am very excited that you are talking about a
comprehensive energy bill that is going to start with energy
efficiency because it is, as you both said so eloquently, the
cheapest, fastest way to deal with our energy needs.
I want to just salute my partner in this effort to pass the
Energy Efficiency and Industrial Competitiveness Act, Rob
Portman. He actually had dark hair when we started on this
initiative. [Laughter.]
We are both getting older while this is going on. This is
legislation that I sometimes call Shaheen/Portman. He calls it
Portman/Shaheen. [Laughter.]
But whatever you want to call it, it is a big step toward a
smart, energy policy for this country. And I just want to thank
Senator Portman for his very productive partnership in this
effort.
As you pointed out, Madam Chair, earlier this year with the
Committee's assistance and I want to recognize Senator Hoeven,
Senator Klobuchar, and Senator Franken for their effort to help
us pass a targeted version, a mini version of energy efficiency
that included three provisions that passed by a voice vote. The
House followed suit last week, and the President is going to
sign it into law. It will be the first energy bill that has
passed Congress this year. So I think, hopefully, that bodes
well for the opportunity to do more in energy efficiency.
I do not want to spend a lot of time talking about the
legislation that Senators Coons, Schatz and Collins are all
here also to address, but I just have to say I think there are
some terrific ideas. I am proud to co-sponsor a number of
those.
I do want to highlight, as Senator Coons did, the bill that
he and Senator Gardner are working on because I think there is
tremendous opportunity for us in the Federal Government to save
money through energy savings performance contracts. They are no
brainers, I think, as we look at how we can save money.
And as, again, everyone has said so eloquently, energy
efficiency is something that we can all get behind. This brings
us together on a bipartisan, bicameral basis.
Now, since the early 70s we have, through efficiency, saved
about or reduced our energy use in this country by about 60
percent. I think it shows what could be done if we can pass
Portman/Shaheen in this session of Congress.
By 2030 if we pass the legislation the bill would create
almost 200,000 jobs, cut carbon emissions by the equivalent of
taking 22,000,000 cars off the road and save consumers over $16
billion a year. So this is a win/win/win.
As the Chair alluded we introduced this bill first in the
112th Congress, then the 113th Congress. So I'm hoping the
third time is a charm. It has tremendous support from all
sectors, people who do not usually all support the same bill,
environmental groups, business groups from the U.S. Chamber to
the American Chemistry Council, to labor organizations because
it creates jobs, it reduces costs to consumers and it is good
for saving on pollution.
So, Madam Chair, as the Committee is thinking about moving
this comprehensive energy bill, I hope you will think about the
opportunity to mark up and move separately the Energy Savings
and Industrial Competitiveness Act because it has already been
vetted, because this Committee has had a chance to look at it
in the last two Congresses. I'm hoping that you will agree with
me that it deserves a separate examination that is outside of
the comprehensive energy legislation and then if the Committee
feels that you need to put it back in, I certainly understand
that. But I hope that given all of the work that has been done
that you might be willing to consider this as a separate bill
outside of the efficiency title in the legislation.
So, again, I thank you for the opportunity to be here, and
I look forward to seeing the great work that's going to come
out of this Committee on a comprehensive energy bill, including
efficiency. Thanks.
The Chairman. Thank you, Senator Shaheen, and know how
carefully we are reviewing all of this. I think it is worth
noting the three of you at the table here this morning are all
former members of this Committee and have all contributed
significantly in the area of energy. So it is nice to know that
you have not lost that interest just because you moved on out
of this Committee room. I would like to ask----
Senator Cantwell. Madam Chair, if I could just add to that
point.
It is certainly a loss when we lose members from this
Committee, but the fact that so many of them go on to the
Appropriations Committee we will make sure we are keeping in
contact with them [Laughter] as it comes to the funding of
various energy programs. Thank you.
The Chairman. Duly noted.
Senator Portman, as truly a leader for years in this area
and continuing to be so, I would like to invite your comments
on the Energy Savings and Industrial Competitiveness Act. It is
hard for me to say that because we just referred to it as
Shaheen/Portman or Portman/Shaheen and recognize you and your
leadership with it.
STATEMENT OF HON. ROB PORTMAN, U.S. SENATOR FROM OHIO
Senator Portman. Great.
Well, thank you and thanks Madam Chair, not just for your
willingness to hold this hearing today and this is going to be
a good opportunity for us to hear about a lot of great ideas in
energy efficiency, but importantly to me, your personal
commitment to this representing a state that produces a lot of
energy your motto has been let's produce more but let's also
use what we produce more efficiently.
I think that is exactly where most Americans are. And what
we can and should do, there is so much potential for us to
become more competitive, to help the environment and create
more jobs by doing so.
Second, thank you for your support of this legislation.
From the start you were one of our original co-sponsors. You
have been working with us. It has been on the Floor twice, as
you know, and for really unrelated reasons was not able to get
it through. We have continued to improve the legislation.
I think about, listening to my colleague, Senator Shaheen,
talk about it, we added, I think, ten additional bipartisan
provisions the last go round in the last Congress which not
only got us more co-sponsors, but a lot more support from the
outside. And we continue to refine the measure. We have now
reintroduced it, I think, with a good, broad, bipartisan
support of members but again, importantly taking in great
ideas. One, by the way, we would love to include is ESPCs. And
the problem with ESPCs in the past has been we have not been
able to get a score that really is consistent with the reality
of the savings that can occur from these contracts.
And I am on the Budget Committee. As the Ranking Member was
saying, it is good to have members on other Committees, and we
were able to get in language in the budget to have CBO
properly, I would view, score these.
So this helps us in terms of our costs because as you know
Portman/Shaheen, Shaheen/Portman, we will call it S. 720, does
not have a cost. We eliminate some authorizations at the
Department of Energy. We have no mandates in it. I mean, we
have been very careful to keep this group together by not
having this be a fiscal problem. With this new ESPC language we
will be able to include, I believe, some additional elements
there.
By the way, it only applies to the Senate not the House
which could make matters interesting going forward in terms of
the ESPC scoring mechanism, but I am glad we had that little
victory and I appreciate Senator Coons coming today and talking
about that.
Also, Senator Collins talked about the coordination of
retrofitting schools, great idea.
I am a co-sponsor of Senator Coons' bill but also a co-
sponsor of her bill. Her bill is part of the Portman/Shaheen
bill, and we think that is one of the great opportunities here
with regard to the building side and specifically our school
buildings.
We are really interested in moving this bill forward,
getting it to the Floor, this time. The third time is a charm
having the ability to have a substantive discussion and to
allow people to offer amendments, but also to allow us to
actually get something done that we think can be, not just
bipartisan, but bicameral.
Cory Gardner, who just left the House, is here, and he was
one of our leaders in the House. Hopefully he left some folks
behind who understand the importance of this legislation, but
we do have support on both sides of the aisle in the House.
I just want to thank Senator Shaheen. We have worked on
this for three and a half, maybe four years now. As she said, I
had dark hair when this started. [Laughter.] Senator Gardner
says that my hair is lighter because it reflects the sun better
which is more energy efficient. [Laughter.] But that was not
purposeful.
Senator Shaheen has been a stalwart. Frankly, both of us
have had to work with both of our caucuses on moving this
forward because it is a consensus bill. Again, it is a bill
that can actually, in my view, get through to the President for
his signature.
We really appreciate your willingness, Madam Chair, to push
that through. I know that you have a personal commitment to
this, but you are also willing to recognize three and a half
years of hard work and over 270 organizations and trade
associations and the fact that this would make a big difference
to the equivalent of energy savings that would take 80,000,000
homes off the grid by 2030, cumulative savings, about $100
billion, 190,000 jobs created.
It does a lot of good things. Reducing emissions, cutting
carbon emissions equivalent to taking 22,000,000 homes or
22,000,000 cars off the road by 2030. It is cost effective, and
it adds jobs in places like my home state of Ohio. The
manufacturers are really excited about it.
We hope this is proof that bipartisanship is not dead on
Capitol Hill because it passed the Committee last Congress with
a strong bipartisan vote of 19 to 3, and I am hopeful we can do
that again this year, get this moving quickly, get that strong
show of support in the Committee which will help us to get it
through the Floor and make this good idea a reality.
Thank you, Madam Chair.
The Chairman. This is all about taking good ideas and
turning them into law. It is a good thing.
Senator Schatz, you have been very engaged in several
different initiatives. This morning you are going to speak to
us about the Utility Energy Services Contract Improvement Act
as well as the PREPARE Act, Promoting Regional Energy
Partnerships for Advancing Resilient Energy Systems Act.
Again, we appreciate your leadership here on the Committee
and know that you are taking that interest to the other
Committees you currently serve on. So, welcome back and we are
looking forward to hear your comments this morning.
STATEMENT OF HON. BRIAN SCHATZ, U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you. Good morning, Chair Murkowski,
members of the Committee, I miss you. [Laughter.]
I want to thank you for the chance to address the Committee
and thank you for undertaking this effort to assemble
comprehensive energy legislation in a bipartisan manner. I am
especially grateful that you are beginning this effort with a
look at energy efficiency which we all know is the least
expensive, most effective way to reduce energy costs.
I am going to take some time to talk about two bills I have
introduced that focus on energy efficiency and grid
modernization.
The first bill, S. 723, the Utility Energy Service
Contracts Improvement Act of 2015, provides parity between two
types of energy savings contracts with Federal agencies. Co-
sponsored by Senators Alexander, Coats and Coons, it is
endorsed by the Edison Electric Institute and the Bristol Bay
Native Corporation which has a subsidiary that does a
significant amount of work with UESCs.
UESCs are similar to ESPCs. Both are financing vehicles
that allow Federal agencies to invest in efficiency
improvements and energy conservation measures to reduce energy
use and save money. The primary difference is that UESCs allow
the client to work directly with the utility, an existing
relationship, while ESPCs are offered by energy service
companies, ESCOs.
Under the current law Federal agencies can enter into
energy savings performance contracts for up to 25 years;
however, Congress does not specify guidelines for UESCs leaving
the contract terms up to interpretation. Several agency
interpretations have limited UESCs to only ten years and this
has resulted in lost opportunity and significant
underutilization and a potential loss of energy and financial
savings to the Federal Government.
Our bipartisan bill does one simple thing. It clarifies
that Federal agencies may enter into UESCs of up to 25 years
just like ESPCs provided that the energy savings are measured
and guaranteed. It is a simple, common sense bill.
My second bill on the agenda is S. 888, promoting Regional
Energy Partnerships for Advancing Resilient Energy Systems Act,
the PREPARE Act. The PREPARE Act is co-sponsored by Senator
Heinrich and has the endorsement of the National Association of
State Energy Offices.
U.S. energy systems and infrastructure are currently in a
period of significant change. The majority of energy assets are
ready for retirement or replacement. Decisions made today will
have lasting impacts over the next 40 to 50 years, and I know
Chair Murkowski knows that as important as national policy is,
it is often times public utilities commissions, local
utilities, local energy companies, that make the driving
difference in terms of our energy future.
The PREPARE Act recognizes this reality and leverages the
DOE and the national labs to provide direct financial and
technical assistance to states and regions that want to
strengthen and streamline their energy systems. The bill
directs DOE to act as a sort of consultant to the states,
working with key stakeholders to ensure that planning efforts
have the necessary resources and focus.
The PREPARE Act draws on the experience of two successful
energy partnership programs. One is the Hawaii Clean Energy
Initiative initiated by Republican Governor Lingle and
President Bush in 2008. It is underpinned by an agreement
between DOE and the Hawaii State Energy Office. The second is
the DOE State Energy Program which provides funding and
technical assistance to state energy offices to prepare state
energy plans and implement energy efficiency programs. Since
its creation in '96 it has delivered energy cost savings of
over $250 million a year, and this legislation is agnostic on
the direction that individual states and regions should take
with respect to their energy futures. It simply directs the DOE
to utilize its resources to assist in a planning process so
that we modernize our grid and that we have the most efficient
and effective energy systems that work for our individual
states. It creates a voluntary program and recognizes the need
for long term, holistic planning.
I want to thank Chair Murkowski for assembling such a good,
bipartisan group and for considering this and other excellent
pieces of legislation.
The Chairman. Thank you, Senator Schatz.
You know, as I listened to your comments and that of the
other members that we have heard so much of this, yes, it is
about efficiency. It is also about us doing a good job of
understanding what is out there within our agencies, how we can
be more efficient from just an oversight perspective. Knowing
what we have and utilizing it to its best advantage.
This kind of ties in with what our fourth title in this
energy, overall, energy legislation will be which is
accountability, making sure that what we have in place actually
makes sense. What you have laid out in front of us today is
good stuff, and we will look forward to working with you as
well.
Senator Schatz. Thank you.
The Chairman. Thank you for coming back to the Committee.
And now, let's go up north a little bit to Minnesota. Our
colleague, Senator Klobuchar, is here to talk about energy
efficiency retrofits and how we can best utilize them to gain
efficiencies.
Welcome to the Committee, Senator Klobuchar.
STATEMENT OF HON. AMY KLOBUCHAR, U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Well, thank you so much, Madam Chair and
thank you to Ranking Member Cantwell and all the members.
I was sitting here hearing about how everyone used to serve
on this Committee. I did not, but I have friends and neighbors
on the Committee including my colleague, Senator Franken, and
then also, of course, my neighbor, Senator Hoeven, who has been
the lead Republican on this bill.
The two of us were also excited to be part of the Shaheen/
Portman Energy Efficiency bill that passed at the end with our
water heater provision that was supported by a lot of the
energy groups on energy efficiency, environmental groups as
well as the rural electrics. We were really glad that is being
signed into law today as part of that package.
I want to thank Senator Stabenow, our Ranking Member on
Agriculture, as well as Senator Risch for co-sponsoring this
bill. I know they are both members of this Committee as well as
Senator Blunt and Senator Schatz.
The Non-Profit Energy Efficiency Act provides assistance to
nonprofit organizations to help them make their buildings more
energy efficient. I think we all know that these organizations
are the heart of our country. They are places like schools and
hospitals, faith-based organizations, youth centers, nonprofit
entities, just the kind of entities that would be interested in
having their buildings be more energy efficient. We all know it
will help them save money as they help other people.
They also tend to be located in older buildings, thus many
of these nonprofits are faced with a difficult choice regarding
investments in energy efficiency. They are often the first to
forego energy efficiency measures that would save money for
them in the long haul because of their costly, up front,
capital investments which divert their scarce resources away
from the services they are trying to provide. They really are
perfect for these kinds of grant programs, and because of their
tax exempt status nonprofits are currently unable to utilize
the existing tax credit or rebate programs even though they
would benefit from them.
So what our bill does is it establishes a pilot program at
the U.S. Department of Energy. Grants can be used for up to
$200,000 per building. The costs of it are offset by other
Department of Energy grants and would be subject to a 50
percent local match requirement.
The bill includes provisions to ensure that the projects
achieve significant amounts of energy savings and are completed
in a cost effective way.
It is also important to note that the bill would not score
and that the funds, again, are a carve out of existing
resources that are used for commercial buildings yet we have
all these older buildings that the nonprofits have been using
where they have not been able to retrofit them.
The legislation is supported by a broad coalition of
organizations including the National Council of Churches, as
well as the Union of Orthodox Jewish Congregations of America,
the Interfaith Power and Light, YMCA and there are a number of
other faith-based organizations that are big supporters of
this.
The bill has a bipartisan House companion. It is being
introduced today by Representative Cartwright, a Democrat from
Pennsylvania, and Representative Dold, a Republican from
Illinois, and I think this is an area that has long been
overlooked, the ability of nonprofits to utilize tax credits to
retrofit.
I want to thank this Committee for the bipartisan work that
you've done in this area. I think it is actually a very
exciting area for us to move on. We did a few weeks ago, but
also to move even further with some of the bills that are out
there, including Senator Portman, Senator Shaheen, the other
one discussed today and all the work of the Committee members.
Thank you very much.
The Chairman. Senator Klobuchar, thank you. We all want to
make sure that our nonprofits have what they need, particularly
in times of tough budgets both at the Federal and state levels
and the ways that you can save money is with efficiency, with
your energy, so working with you on this is something that we
look forward to doing.
Senator Hoeven. Madam Chairman, if I may?
The Chairman. Senator Hoeven, yes.
STATEMENT OF HON. JOHN HOEVEN, U.S. SENATOR FROM NORTH DAKOTA
Senator Hoeven. I just want to express my thanks to the
good Senator from Minnesota for sponsoring this bill. I am very
pleased to co-sponsor it with her, and of course, the good
Senator from Michigan and others who are on this legislation.
It is bipartisan, and I think it is something that would be
very helpful. We have heard a lot from the nonprofit groups
that this is something they would use. This is one of those
programs that they say, this is what we want. We will use it.
That is important because sometimes we pass legislation, it
sets up programs and they are not used. But this is one that, I
think, will be very much in demand.
I just want to read some of the organizations. Senator
Klobuchar mentioned just a couple, but if I could mention a few
more. I think she mentioned the Union of Orthodox Jewish
Congregations of America, but we also have the U.S. Conference
of Catholic Bishops, the Association of Art Museum Directors,
the Evangelical Lutheran Church in America, the General
Conference of Seventh Day Adventists, Friends of Committee on
National Legislation, Jewish Federation.
Particularly nonprofit religious groups, have really lined
up and said this is something, you know, for our church, our
temples, whatever it is. This is something that can make a big
difference for us.
It is not a huge amount when we say up to $200,000. Of
course, they will have to put in matching dollars, but it is
one that really, I think, would have a big impact and would be
used.
And so, again, I want to thank and commend Senator
Klobuchar and ask the Committee for their support on this
legislation.
Senator Franken. Madam Chair.
The Chairman. Thank you, Senator Hoeven. It is important
and something that we would like to include.
I know that members have a great deal of interest in so
many of these bills. I want to give us all a chance to either
speak to either Senator Klobuchar and Hoeven's bill or others,
but I also recognize that we do have a second panel that we
want to get to.
Senator Franken. Sure.
The Chairman. Senator Franken.
Senator Franken. I just wanted to clarify when he says the
good Senator from Minnesota that he was not saying in contrast.
Senator Klobuchar. No, it is not like the Good Witch and
the Bad Witch.
Senator Franken. Yeah. Okay, okay.
Senator Klobuchar. We, no, no, not our friend from North
Dakota, no.
Senator Franken. That was it. That was all.
Senator Klobuchar Alright.
The Chairman. Okay.
I thought you were going to share something really erudite
on this great, great legislation. [Laughter.]
Senator Klobuchar. He can call me Glinda.
Senator Franken. What would the chances of that be?
[Laughter.]
The Chairman. Well, all I was thinking was that every
church that I go into is always cold. So I know they are saving
energy. [Laughter.] But we warm it up.
Again, to the members of the Committee, I know that each of
us have many pieces of good legislation that are, perhaps, part
of the 22 bills that we are considering today. If you would
care to make brief comments now before the Committee or submit
something for the record, we are certainly happy to allow for
that.
Senator Gardner.
STATEMENT OF HON. CORY GARDNER, U.S. SENATOR FROM COLORADO
Senator Gardner. Thank you, Madam Chair, and thank you for
this hearing today. I think we are doing some great work, and
obviously Senator Coons mentioned some of the work that we are
doing together. I commend him for his leadership when I was in
the House and now in the Senate together on Energy Savings
Performance Contracts.
The Federal Government is the largest office holder in the
country, somewhere around two billion square feet of office
space. We have got $20 billion worth of potential opportunities
when it comes to savings from energy savings performance
contracts, reducing emissions, creating thousands of private
sector jobs, saving the taxpayer money. This is that win/win/
win/ trifecta that we do not often get to talk about.
So, again, thank you for your opportunity today. Senate
bill 858, we are still looking for co-sponsors. Anybody can
join this. We are excited to work on energy savings performance
contracts, U.S. goes to the utility side as well as we continue
the good work that we are pursuing right now on energy
efficiency and savings.
The Chairman. Fabulous, we look forward to that.
I still think we can deal with the air conditioning here in
this building and save a lot of money. That is going to be my
next pitch.
Senator Stabenow.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM MICHIGAN
Senator Stabenow. Thank you, Madam Chair.
And on the Floor there.
The Chairman. Yes.
Senator Stabenow. It gets a little free.
I just want to say thank you for holding the hearing, and
we look forward to our second panel.
But you know, for years we have talked about vehicle
efficiencies which are critical in terms of mileage
efficiencies and so on. It is so important I think to stress
that about 30 percent of our energy use is in transportation,
very, very important. We have made great headway there.
But 40 percent is in buildings. And so when we talk about
this and the fact is, as has been said before, at least
22,000,000 vehicles could be taken off the road by 2030 if we,
the equivalent of that, in terms of energy efficiency in
buildings. I want those vehicles actually on the road,
purchased vehicles in Michigan.
But when you look at the capacity to save energy and reduce
carbon from addressing these issues, I really hope this will be
at the top of our list. I think it is really important.
Thank you.
The Chairman. Thank you, Senator Stabenow.
Thank you Senator Klobuchar for joining us this morning
before the Committee.
Let's now go to our second panel and hear from them this
morning on these various measures that are before the
Committee.
At this time I would ask Dr. Kathleen Hogan to join us.
Dr. Hogan is the Deputy Assistant Secretary for Energy
Efficiency at the Office of Energy Efficiency and Renewable
Energy at DOE. Next to her we have Mr. Tony Crasi, who is here
on behalf of the National Association of Home Builders, and he
is the owner of the Crasi Company Incorporated. We also have
Dr. Ted Gayer with us. Mr. Gayer is the Vice President and
Director of Economic Studies at the Brookings Institute. So
welcome to you this morning. We have Mr. Steven Nadel, who is
the Executive Director for the American Council for an Energy
Efficient Economy. He has been before the Committee before.
Welcome back. And we have a friend of mine and fellow Alaskan,
Mr. Gene Therriault, who is with us, who is the Vice Chairman
of the National Association of State Energy Officials as well
as the Deputy Director of the Energy Policy and Outreach for
the Alaska Energy Authority. He has come a long way to be with
us, but his insight on not only those Alaska related issues,
but national issues is greatly appreciated and respected. So,
welcome to the Committee this morning.
We will begin with you, Dr. Hogan. If you would give us
five minutes or less, know that your full statement will be
included as part of the record, but we look forward to your
comments this morning.
STATEMENT OF DR. KATHLEEN B. HOGAN, DEPUTY ASSISTANT SECRETARY
FOR ENERGY EFFICIENCY, OFFICE OF ENERGY EFFICIENCY AND
RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY
Dr. Hogan. Thank you and good morning, Madam Chairman
Murkowski, Ranking Member Cantwell and members of the
Committee. And thank you for the opportunity to testify today
on behalf of the Department of Energy's Office of Energy
Efficiency and Renewable Energy, also known as EERE.
As the Deputy Assistant Secretary for Energy Efficiency at
EERE, I oversee DOE's portfolio of energy efficiency
activities, building technologies, advanced manufacturing,
weatherization and intergovernmental programs and Federal
energy management program offices, develop and help businesses,
consumers and government agencies with innovative, cost
effective, energy saving solutions to improve their energy
efficiency. And this ranges from higher efficiency products to
new ways of designing homes and buildings to new ways of
improving the energy intensity and competitiveness of American
manufacturers.
We have all spoken to energy efficiency, being a large, low
cost and underutilized U.S. energy resource. Increased energy
efficiency offers savings on energy bills, opportunities for
more jobs, improved industrial competitiveness and lower air
pollution. And I am very pleased to be here today and look
forward to working with Congress and this Committee in
particular to talk about how we can expand the use of energy
efficiency to help address our nation's energy challenges.
I've been asked to testify on 22 energy efficiency bills
currently before the Committee. While the Administration is
still reviewing these bills we certainly do want to express our
support for the ongoing bipartisan efforts to promote energy
efficiency. And we do look forward to continuing to work with
the Committee with the range of bill sponsors.
So the Administration does continue its support for the
underlying goals of S. 720, the Energy Savings and Industrial
Competitiveness Act of 2015 as many of the sections of S. 720
match those in a similar bill the Administration supported in
2013. Many of the provisions of S. 720 would support
Administration's efforts to strengthen U.S. competitiveness
through significant research and development investments in
manufacturing, innovation and productivity such as the
Department of Energy's Clean Energy Manufacturing Initiative.
And it would complement other Administration energy efficiency
initiatives for our homes, buildings, and industries.
The Department continues to review the changes in S. 720
and again, looks forward to working with the bill's sponsors
and this Committee to cut energy waste, save money and reduce
pollution.
The additional bills on the docket today address many
important aspects of energy efficiency today including but not
limited to, the Federal use of energy savings performance
contracts, utility energy savings contracts and Federal energy
efficiency efforts more broadly, all of which contribute to
reducing the energy intensity of Federal facilities, lowering
bills and providing environmental benefits.
They also address energy efficiency for commercial and
residential buildings which, as we've heard, consume more than
40 percent of the nation's total energy and actually more than
73 percent of its electrical energy and of course, continue to
represent significant opportunities for energy and cost
savings.
The bills address appliance efficiency standards which are
currently saving consumers more than $50 billion annually, and
we know that there are opportunities for additional savings
there.
They address reauthorization of the critical Weatherization
Assistance Program and state energy program which help low
income households benefit from cost savings as among other
benefits, and they assist states in establishing and
implementing programs to reduce energy costs, enhance economic
competiveness and improve the environment.
And they look for opportunities, new opportunities, for
energy efficiency activities at the local and municipal levels
which is also something the Administration seeks to address in
our budget request through something called the Local Energy
Program.
So EERE's program offices are implementing a variety of
strategies to improve the efficiency of our homes, buildings
and manufacturers similar to the activities highlighted in the
legislation before the Committee today. And expanding R and D
to breaking down persistent market barriers that I think we all
recognize limit the use of cost effective measures.
And I am proud to report that we are making great progress
on energy efficiency, reducing reliance on oil and saving
American families and businesses money and reducing pollution.
I have many more examples in my written testimony, but I think
we can all agree that there is much more that can be done.
So let me just reiterate my appreciation for the ongoing
bipartisan efforts and our continuing interest to work with the
Committee on the range of bills and the sponsors of them as
this legislation continues to work its way through Congress.
I am happy to answer any questions today.
[The prepared statement of Dr. Hogan follows:]
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The Chairman. Thank you, Dr. Hogan. Know that we will be
turning to you and your team as we work through the issues, not
only on these 22 different bills, but other matters in the
efficiency realm. We look forward to working with you.
Let's next go to Mr. Tony Crasi. Welcome to the Committee.
Good morning.
STATEMENT OF TONY CRASI, ON BEHALF OF THE NATIONAL ASSOCIATION
OF HOME BUILDERS, AND OWNER AND FOUNDER, THE CRASI COMPANY,
INC.
Mr. Crasi. Thank you.
Chairman Murkowski, Ranking Member Cantwell and members of
the Committee, I am pleased to appear before you today on
behalf of the 140,000 members of the National Association of
Home Builders and to share our views on the Energy Savings and
Industrial Competiveness Act of 2015, S. 720.
My name is Tony Crasi. I am the founder and owner of Crasi
Company, and I have been designing and building custom homes in
the Akron, Ohio area for the past 31 years.
I also serve on the board of the Urban Neighborhood
Development Corporation, a nonprofit organization which seeks
to improve the availability of new homes for moderate and
middle income families in urban areas.
As a long time leader in a drive to make new and existing
homes more energy efficient while prioritizing housing
affordability, NAHB is uniquely positioned to analyze the
impact of legislation on the home building, remodeling and
rental housing industries. NAHB supports many of the goals of
the Energy Savings and Industrial Competitiveness Act of 2015
and seeks to ensure that it encourages meaningful energy
savings for residential construction and that are achievable
and cost effective. To that end, NAHB has four specific
recommendations for S. 720 or any comprehensive energy package.
First, the Department of Energy can be an effective
participant in the development of modern building energy codes
which established the minimum standards for energy efficiency
by providing technical assistance such as needed building
science, research and energy modeling and analysis.
NAHB is concerned that DOE has crossed the line into
advocacy. S. 720 improves this process by setting home--setting
some of the guidelines by which DOE operates in this context
and requiring DOE to publish energy saving targets and
supporting analysis in the Federal Register. This will go a
long way towards increasing transparency and ensuring that the
public is heard.
NAHB believes that traditional safeguards are necessary to
prevent DOE from advocating for specific products or
technologies.
Next consumers deserve a reasonable return on their
investment when it comes to required energy efficiency
improvements. The 2012 residential code added thousands of
dollars in construction costs. For every one thousand dollars
increase in price of a home, 246,000 households will be priced
out of a mortgage. Failure to consider the true economic cost
of energy use reductions and establish a reasonable feedback
period for these investments will result in fewer families
being able to achieve the American Dream.
S. 720 improves the cost effectiveness of this code by
requiring DOE to take into account economic considerations.
NAHB specifically supports energy codes that have a ten year
payback or less. Incentive programs such as the SAVE Act
encourage homeowners to invest in energy efficiency and should
be included in any final energy package.
Originally introduced by Senators Isakson and Bennet, this
is a voluntary program that will improve the accuracy of
mortgage underwriting and appraisals by ensuring that they
reflect the savings and operating costs in green homes.
Finally, NAHB would like to see S. 1029 which addresses a
flawed DOE rule on non-weatherized gas furnaces included in any
final legislation. This legislation introduced by Senators
Hoeven and Alexander would require DOE to convene a
representative advisory group of interested stakeholders to
help analyze the impacts of the proposed rule and determine
whether it is technically feasible and economically justified
and if not, participate in a negotiated rulemaking.
This legislation is needed because the rule would eliminate
the availability of non-condensing furnaces. Replacing these
with condensing furnaces would require remodeling to reroute
the exhaust system costing hundreds, if not thousands of
dollars. This may be impossible in some multifamily structures.
Additionally, DOE used a national nationwide cost benefit
analysis to justify this rule which neglects a significantly
lower energy savings that would be achieved in the south.
NAHB would like to thank Chairman Murkowski, Ranking Member
Cantwell and specifically, Senator Portman and Shaheen, for
being welcomed as a key stakeholder in the energy efficiency
policy discussions for the opportunity to continue to work on
this important legislation.
Thank you, and I would invite any questions.
[The prepared statement of Mr. Crasi follows:]
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The Chairman. Thank you, Mr. Crasi, and thank you for your
very specific suggestions here this morning.
Let's go to Dr. Ted Gayer. Welcome.
STATEMENT OF DR. TED GAYER, VICE PRESIDENT AND DIRECTOR OF
ECONOMIC STUDIES, JOSEPH A. PECHMAN SENIOR FELLOW, THE
BROOKINGS INSTITUTION
Dr. Gayer. Thank you and good morning, Chairman Murkowski,
Senator Cantwell and members of the Committee. I very much
appreciate the opportunity to be here today to discuss energy
efficiency legislation.
Many of the points I make come from articles I've co-
authored with Kip Viscusi of Vanderbilt University, who
couldn't be here today.
I will offer four main points that suggest we should take a
cautionary approach to applying overly prescriptive mandates
for energy efficiency levels. My comments are directed at the
broader question of mandates, not the specific proponents of
the 22 bills you are considering today, but I do hope they can
offer useful, general guidance considering government's role in
regulating energy and reducing pollution.
My first point is that market prices for energy and energy
intensive products provide important information about both the
strength of consumer demand and the scarcity of supply, but the
prices can be misleading to the extent that they do not account
for the associated pollution costs. In the market for
appliances, for example, prices reflect how much consumers
value certain features such as energy efficiency and
convenience and they also reflect constraints on production
such as the state of technology. The problem arises if the
price that shows up on a consumer's electricity bill does not
account for the environmental damage caused by the energies.
This leads to my second point. The best way to address
environmental damage caused by energy use is for the government
to charge a price for these pollution costs. By pricing
pollution consumers and businesses would face the full cost of
their energy use which would then create incentives to reduce
pollution as cheaply as possible through some combination of
new technologies, alternative fuels and conservation.
There are a number of reasons why mandates in particular do
not work as well as the pricing approach.
First, the one size fits all mandate ignores a substantial
diversity of preferences, financial resources and personal
situations that consumers and businesses must consider.
Second, by lowering the energy costs of using a product a
mandate provides an incentive for using these products more
rather than less. Moreover mandates apply only to new products
which can create an incentive for consumers and businesses to
retain older, less environmentally friendly goods.
Mandates might be preferable to pricing approach when
measuring pollution is costly or infeasible or when those
choosing the technology do not pay for their energy costs. But
this is typically, although not always, the case when it comes
to energy use and greenhouse gases.
My third point is that for the recent mandates that Kip
Viscusi and I examined we found that although they are
frequently advertised as greenhouse gas initiatives in truth
their environmental benefits are quite small and are frequently
outweighed by the cost they impose. We found this result in our
examination of a number of mandates for consumer goods such as
clothes dryers and room air conditioners and others.
The question then is how are these mandates justified if
they yield environmental benefits that are outweighed by their
costs? This leads to my final point.
In order to justify these mandates the agencies assert that
consumers and businesses are irrational when buying energy
intensive goods and thus receive massive benefits if the
government restricts their choices. The agencies invoke broad
references to the behavioral economics literature to support
the claims of consumer rationality but they present little or
no concrete evidence.
They also ignore what I think is the key policy implication
of behavioral economics which I think is appropriate for the
legislation that you are considering today which is that it is
more effective to address poor decision making by consumers and
firms through softer regulatory nudges such as providing
clearer information to consumers and encouraging voluntary
measures rather than going straight to using costly mandates
that restrict choice.
Given the unpopularity of levying a revenue neutral tax on
pollution I fear we are instead opting for mandates that are
advertised as environmental protection but are justified by
weak claims of consumer protection. In other words we are
shifting our regulatory priorities from the goal of reducing
the harm individuals impose on others through pollution towards
the more nebulous non-supported goal of reducing our
individuals cost to themselves by purchasing reportedly
uneconomic products.
This shifts results in a host of costly mandates that are
less effective than a government policy that simply sets a
price on pollution.
To summarize, to the extent that energy prices fail to
incorporate the environmental cost of energy use, I believe the
most sensible approach is to price those costs directly.
Mandates are inferior policies but still may be better than
doing nothing if the benefits exceed the costs.
Unfortunately by the agency's own estimates many of the
mandates frequently lead to minimal environmental benefits that
are less than the estimated cost. But in an effort to justify
these uneconomic regulations the agencies have deviated from,
what I believe, are well established economic tenants by
asserting that consumers and businesses are irrational and that
they therefore benefit from government mandates that restrict
choice.
I believe the evidence for this view is weak, and assuming
that citizens are not capable of making sensible decisions that
affect their own pocketbooks is not the right way for us to
advance the important goal of enhancing the quality of our
environment.
Thank you.
[The prepared statement of Dr. Gayer follows:]
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The Chairman. Mr. Nadel, welcome to the Committee. Good
morning.
STATEMENT OF STEVEN NADEL, EXECUTIVE DIRECTOR, AMERICAN COUNCIL
FOR AN ENERGY-EFFICIENT ECONOMY
Mr. Nadel. Okay, good morning.
And Madam Chair, it is good to see you in a new Chair since
the last time I testified, and I look forward to your questions
and working with all the other members of the Committee.
As a number of the witnesses have noted the United States
has made substantial progress in reducing energy waste and
improving energy efficiency in all sectors of our economy, but
there is some potential to do much more. Our studies at ACEEE
find that cost effective energy efficiency measures can reduce
U.S. energy use by 40 percent or more.
Continued efforts to promote energy efficiency will reduce
consumer and business energy costs, strengthen our economy,
help improve the security and resiliency of our energy systems
and protect the environment.
Passage of S. 535 early this month was a great start, but
there is much more that the 114th Congress can do including
enacting any of the bills before us today.
As we know today's hearing is on 22 different efficiency
bills. We appreciate that the Committee is focusing a hearing
on energy efficiency and that the Chairwoman has indicated that
a forthcoming comprehensive energy bill will include a specific
title on energy efficiency.
It has been eight years since Congress last passed a major
piece of energy legislation. We have had a few smaller bills,
but we look forward to hopefully completing a major piece this
year.
History indicates that such legislation can only be enacted
with broad, bipartisan support. Highly politicized issues are
unlikely to receive the 60 votes that are needed in the Senate,
and even if a bill passes in the Senate, getting a more
conservative House and a more liberal President to accept the
legislation will require sticking to provisions with broad,
bipartisan support.
Based on these principles in my written testimony I divide
the bills before us into seven categories. Now I am just going
to discuss a few of those categories.
The first category and the one that should be the
centerpiece of this legislation is bills that already have
strong, bipartisan support.
The Shaheen/Portman, Portman/Shaheen bill is the leading
example of a bill in this category. It contains more than a
dozen useful provisions.
In 2013 we estimated the energy savings from this bill and
found that on a cumulative basis it would save about 12
quadrillion BTUs of energy. That is about how much energy Texas
uses in a year. And Texas is, by far, our largest energy
consumer.
Most of the energy savings in this bill come from the
building code and mortgage underwriting sections. So those are
particularly important.
As Senator Portman noted our 2013 analysis also found that
this bill would support about 190,000 jobs by 2030.
There are a number of other bills, though, that are also in
this first category of demonstrated bipartisan support such as
S. 600, that Senator Klobuchar talked about earlier and Senator
Hoeven, dealing with retrofits to nonprofit buildings.
S. 623, dealing with utility energy service contracts that
Senator Schatz talked about.
And S. 858, dealing with the energy savings through public/
private partnerships that a number of Senators both here and in
the previous panel discussed.
So, that, I believe, should be at the heart of the bill.
There are also many bills that were introduced more
recently and haven't had an opportunity to get that strong,
bipartisan support. We see six of these bills as potentially
falling into this category.
The Smart Building Acceleration Act that Senator Cantwell
has introduced.
The Commercial Building Benchmarking bill that Senator
Franken has introduced that goes a little bit farther than
what's already in S. 535.
There's the Energy Star Integrity Act that Senator Risch
did.
There's Senator Udall's Energy and Water Efficiency Act.
Senator Markey's Access to Consumer Energy Information Act
as well as Senator Franken's bill on alternative fuel vehicles.
We'd also note there are a couple of other bills that are
not in the hearing today that may fall into this category.
I would also note that there is one bill that we do support
that we are unsure if it will have the bipartisan support.
This is the Energy Efficiency Resource Standard bill that
Senator Franken introduced and that Senator Cantwell mentioned
before. This would establish energy saving targets that
electric and natural gas utilities must meet, the target slowly
rising over time. Presently 24 states have such targets and
they've proven to be very effective at both saving energy and
doing so at low cost.
We estimate the energy savings from this bill is about
three times what the Portman/Shaheen bill would do. Ideally we
do them both, but we see that as an important marker about what
could be accomplished with Federal legislation.
Finally I'd note that there are a few bills that we have
concerns about as written in current form.
This would be S. 1047 which reviews rulemaking proceedings
and the bills on ceiling fans and furnaces. We think they are
well intentioned but are poorly written and could cause some
significant, adverse consequences in their current form. I have
some specific written comments about particular problems with
these bills, and I'm happy to answer further questions about
them.
So with that, I'll conclude my testimony and look forward
to your questions.
[The prepared statement of Mr. Nadel follows:]
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The Chairman. Thank you, we appreciate that, and we will
soon turn to questions after we hear from Mr. Therriault.
Welcome to the Committee, Gene.
STATEMENT OF HON. GENE THERRIAULT, VICE-CHAIRMAN, NATIONAL
ASSOCIATION OF STATE ENERGY OFFICIALS, AND DEPUTY DIRECTOR,
ENERGY POLICY AND OUTREACH, ALASKA ENERGY AUTHORITY
Mr. Therriault. Thank you, Madam Chairman. I wanted to
thank you and members of the Committee.
I am Gene Therriault, Deputy Director of state-wide energy
policy development with the Alaska Energy Authority and Vice
Chairman of the National Association of State Energy Officials.
I'd like to thank you, Madam Chairman, for the opportunity to
speak today and I would ask that my entire written testimony be
included in the record.
I am testifying today on behalf of NASEO, whose membership
includes the nation's 56 governor-designated state and
territory energy offices. Across the nation the energy offices
are focused on economic development and balanced energy
policies. Energy efficiency is certainly included in that mix
of policies and programs.
NASEO applauds the Committee for holding this hearing on a
large number of energy efficiency legislative items. Our
written testimony discusses the bills in greater detail and
sets forth examples of state programs that have achieved
tremendous success. These programs could be expanded if a
number of the bills you are considering today were to be passed
into law.
Specifically, NASEO endorses the Weatherization Enhancement
and Local Energy Efficiency Investment and Accountability Act.
That is Senate bill 703 which would reauthorize the
appropriations for the state energy programs and reauthorize
the weatherization assistance program. This bill is sponsored
by Senators Coons, Collins, Reed and Shaheen and recognizes the
value of this longstanding partnership between the states and
the Federal Government. It helps real Americans every day. The
state energy program provides formula funding for the states to
support a range of activities for energy efficiency and energy
emergency preparedness, and the flexibility that is involved in
that piece of legislation or those programs is very key for
states.
Weatherization has helped make the homes of 7.4 million
families across the nation more energy efficient thus helping
the poor, elderly, disabled and veterans every single day. For
example, the $7 billion per year energy services performance
contracting industry is an example of state energy offices
working with the private sector to save taxpayer dollars.
NASEO also supports the energy savings and Industrial
Competitiveness Act, Senate bill 720, the Shaheen/Portman bill,
also the Energy Savings Through Public/Private Partnership Act
which is S. 858, the Energy Productivity Innovative Challenges
Act which is S. 893, the Residential Energy Savings Act, S.
878, the PREPARE Act which is S. 888 and the Energy
Retrofitting Assistance to Schools, which you've heard about
previously, which is S. 523.
The NASEO members and leadership are still reviewing the
other bills that have been brought before the Committee and we
may have further comments as you continue your proceedings on
the energy legislation.
In Alaska, like other states, we leverage our state energy
program dollars to address important energy needs. Again, it is
a partnership between the states and the Federal Government and
is a rare program because of the degree of flexibility that is
given to each state under the funding that is provided. Across
the nation every Federal dollar in this program leverages
almost 11 other dollars that come in from different sources and
saves over seven dollars for every Federal dollar spent.
My colleagues and I at different state energy offices work
every day to break down barriers and assist businesses and
homeowners. While the states represent a wide range of
political views, we all see the value of these programs since
the production and efficient use of energy is critical to our
local and state economic prosperity.
I would also be remiss if I did not briefly comment on the
Quadrennial Energy Review, the QER.
You had Secretary Moniz before the Committee on the 28th of
this month, and the Secretary and his staff have been very open
to states with regard to the QER and solicited input from the
states.
There are a number of opportunities for addressing our
critical infrastructure, energy infrastructure, needs and to
address our energy challenges including energy efficiency. The
QER is a positive step in understanding the current status of
our energy, nation's energy, programs and infrastructure.
However, NASEO wants to encourage the maximum collaboration
with states as this program continues to progress.
For example, the process could benefit from a closer
collaboration with the State of Alaska that takes full
advantage of decades of investment in innovation in serving
energy needs in the Arctic.
We look forward to working with the Committee and the DOE
in implementing many of the recommendations contained in the
QER.
And with that, that concludes my formal oral statements. I
do want to thank you, Madam Chairman, and the rest of your
colleagues in all your efforts to get successful passage of
Senate bill 535.
Thank you.
[The prepared statement of Mr. Therriault follows:]
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The Chairman. Thank you, Mr. Therriault, I appreciate your
comments and your good work not only in the state but on behalf
of the Association of State Energy Officials. Appreciate the
work.
I think we recognize that we have no shortage of programs
out there that are designed to address some of the efficiencies
whether it is on the state side or whether it is on the Federal
side. I think this has been some of the concern we have heard
is how do you know even where to access? You mentioned
collaboration. We need to streamline. I think these are areas
where we would all agree we have got some work to do.
Some of the bills that we are looking at, such as the
proposals to impose a national energy efficiency resource
standard, would result in Federal programs that resemble,
somewhat, what we have in place at the state level. So this is
a question to anyone who would care to engage.
If the states are successfully implementing these types of
programs should we, at the Federal level, be duplicating or
overruling their efforts or decisions with a Federal overlay?
We talk a lot about giving flexibility to the states, and
certainly we want to do what we can from a broader perspective
to encourage these efficiencies, but are we in a situation now
where we are not giving the flexibility to the states that we
need? And instead working at your end of the spectrum, Dr.
Hogan, in an overlay of Federal policies that may just further
complicate matters?
I will ask both you, Dr. Hogan and you, Mr. Therriault,
from the states' perspective and the Federal perspective. How
do we deal with this? Because I think this is part of our
required review of not only what we have with these 22 bills,
but how we bring about efficiency within our processes so that
we make sure that the programs are working.
Dr. Hogan, why don't you begin?
Dr. Hogan. So I think there is, clearly, a lot more
opportunity for what we can do with energy efficiency. As you
point out it does require, sort of, an effective collaboration
across the Federal, state and local entities as well as
engagement with the private sector.
I think your question was specifically around, sort of,
energy efficiency resource standards as one tool to do that,
and you were pointing out that many states are doing this.
And I think what's interesting is when you look at the
states that are doing this the benefits that they are getting
from their approaches are quite significant. And they are
showing that they can do it quite cost effectively. And then at
the same time when you look around the country you see that
other states have a similar opportunity for energy efficiency
but really haven't figured out how to get organized in a way to
go and capture as much of it as the states that are pursuing
the energy efficiency resource standards are.
The Chairman. But then if we require that then we lose some
of the flexibility that Mr. Therriault has suggested is
imperative. Can you speak to that?
Mr. Therriault. Yes. First of all, NASEO, the organization
has not taken an official stance on energy efficiency resource
standards.
I think to the general comment or the question, we
certainly do not want the Federal programs structured that
duplicate the state efforts. We really are looking for
legislation that has a partnership with states.
In the State of Alaska the work that's being done by the
Cold Climate Housing Resource Center, the Alaska Center for
Energy and Power, have done a lot of work and quite often there
is a little bit of a dance that goes on between those state
entities and the Federal entities to encourage them to partner
with the state entities to maybe take the work to the next
standard. There may be a need to assist and partner with the
Federal, the state agencies, to achieve more.
But anything that you can do to prevent the Federal
legislation from just being a duplication of what's going on in
so many of the states would be most welcome.
The Chairman. It is going to require critical review.
Mr. Nadel.
Mr. Nadel. Yes, just briefly.
The bill, the EERS bill, actually does call for the states
to administer them. There are quite a few provisions in there
to let the states have quite a bit of flexibility in terms of
interpretation. I think it is an example of a bill where
sometimes something one or in this case half the states are
doing that could benefit the country. And therefore, I'd
recommend considering it while recognizing some of the concerns
that you are expressing.
The Chairman. Understood. I appreciate it.
Senator Cantwell.
Senator Cantwell. Thank you, Madam Chair.
There are a lot of companies from the northwest, I think
some of them are here today, Itron, Microsoft, Ellstrom,
McKinstry, who are leaders in smart building acceleration. And
so I wanted to ask you, Mr. Nadel and you, Dr. Hogan, about do
you see new monitoring and control technologies as another step
in incremental improvements in energy efficiency or are they
likely to be game changers, you know, on a whole, in a sense of
a whole new set of opportunities?
Second, much of the technology needed to make buildings
smarter is commercially available but development is slow. What
do you think are some of the barriers to increasing that level
of deployment?
Either you, Mr. Nadel, or Dr. Hogan.
Mr. Nadel. Okay, I will start. I would lean towards saying
that smart building technology is also smart manufacturing
technologies are more game changers. They take advantage of the
information communication technologies that we all know and now
carry in our pockets and have all throughout our homes and get
information to us or to automatic controls to really, much
better, recognize energy waste in real time and control it.
We're finding energy savings of 15 to even 50 percent,
depending on the application people are using. So it is much
more than incremental.
I'd also note that it makes possible a new set of programs
where you can start much better monitoring the energy savings
in real time and pay for performance rather than just pay as a
percent of how much it costs or what you think it may get. So I
do see these as game changers.
I think, to pick up on your second question, consumers are
not investing in these yet. They're relatively new. They do not
know about them. They're improving. They're not sure they trust
them.
So I appreciate the fact that your bill, S. 1046, would set
up a number of programs, do case studies, work with the Federal
Government so we can both save energy, but use the Federal case
studies to demonstrate to other people what is possible would
help leverage other programs such as DOE's Better Building
Challenge to help promote smart building technologies as well
as leverage our national labs and have them do applied R and D
where it is needed to address particular barriers.
So these are the types of things that need to happen with
any good energy saving measure, but smart buildings included.
Senator Cantwell. Dr. Hogan?
Dr. Hogan. And at the Department we look at the
opportunities for smart buildings and I'll take the opportunity
to extend that to smart manufacturing as well as game changers.
Sort of a new generation of low cost sensors that give you the
opportunity to take advantage of the equipment that you may
already have and really make it work at optimum performance
offers huge opportunities for energy savings in a very low cost
way.
And certainly we are doing a lot of that work through a
number of the national laboratories right now including up in
the Pacific Northwest. And we are very excited about what is
going on.
I think some of the barriers include that we need a next
step in some of the low cost sensors, really making them as low
cost as they can be as well as some improvements in the
communication protocols and, sort of, the interoperability of
things. And again, road maps that we are working to develop at
the Department and really look forward to putting to work and
would look forward to working with you on a bill that can
really help make this happen.
Senator Cantwell. Thank you.
Mr. Crasi, you look like you had something to say and, Mr.
Therriault, I do not know if you have any thoughts about
building performance issues or particular projects that you
think might be targets for this kind of thing?
Mr. Crasi.
Mr. Crasi. Yes, Ma'am. Thanks for the opportunity.
Here in Washington with the National Association of Home
Builders, I've been involved with the technology of home
automation and the progression I've watched over the last, say,
six or seven years. And what we find is one of the most sought
after items in technology is a smart home that controls your
heating, cooling, your energy output.
And I think it is a wonderful opportunity and it doesn't
need to be expensive. And you had asked about the barriers and
that's what caught my attention is one of the big barriers are,
is, the lack of a consistent platform across all the different
manufacturers. And once you solve that problem all the systems
start to talk to each other because there's a huge reluctance.
Somebody had just mentioned the reluctance of consumers to
jump in it is because what happens is you have conflicts
between the different systems. And they get frustrated and they
stop using them.
But we, I am part of a nonprofit that produces very
affordable housing. And to prove a point, I got one of the
national guys involved and he put in, for $1,500, he put in an
entire system in a $100,000 home that controlled the heating,
it controlled the lighting. It controlled security, everything.
Just to prove a point, it can be done. But if you ask about
those barriers, one of the biggest barriers is getting those
platforms to work with each other.
Senator Cantwell. Well, we would like to see that house,
but interoperability is a big issue. The reason I am asking
this question is because 40 percent of our energy use is in
buildings and so if you key in on this then you can get some of
these savings that you are talking about, 15 to 50 percent.
That is pretty big.
I know our time is expired, but maybe you could, for the
record, tell us some of the things that might be helpful in
Alaska.
Mr. Therriault. Certainly, through the Chair.
Certainly in Alaska where the space heat really is the
critically energy demand on a yearly basis for commercial
buildings and residential. And so being able to have the
systems in any building work with each other to get maximum
efficiency is ideal.
I think, Madam Chairman, that's one of the areas that,
again, the Cold Climate Housing Research Center at the
University of Alaska is looking at ways to bring the latest
technology into the northern application and make it work as
best as possible.
One of the things that we have to continually keep a focus
on though is making it as simple as possible. When you are
talking about taking technology and putting it out into a very
small village and having it where it can be maintained,
understood, fully utilized, it has to be not only cost
effective, but also something that is easily understood. And so
that's one of the things that I think, again, some of our local
research would be good information back to the industry that is
developing this to make it so that it is really inherently
useable in a situation like the State of Alaska.
The Chairman. Senator Flake.
Senator Flake. Thank you. Thank you for the testimony.
Let me begin talking about a bill that I have introduced
with Senator Booker. It is S. 939. It responds to the GAO
study, a recommendation that Federal agencies evaluate the 94
green building programs that span 11 Federal agencies to try to
determine if there are opportunities for consolidation and
reducing duplication.
I want to thank Senator Portman for joining me in an
amendment that we had through budget resolution, amendment
number 822 which also provides for a reduction in duplicative
programs.
I think when GAO, which is obviously a nonpartisan,
independent agency, provides a recommendation on how government
can become more efficient we ought to take heed and we need to
look hard at these recommendations. In this case GAO made the
recommendation in 2012. This legislation I have introduced with
Senator Booker would make just a very modest step to ensure
that these recommendations are considered.
But to Dr. Hogan, can you talk a little about DOE's
capability to evaluate these green building programs and to
identify areas that might--areas for consolidation or
improvement?
Dr. Hogan. Certainly.
The Department of Energy has capabilities to look at
programs. I think the Administration, sort of, more broadly has
approaches to ensure that the programs across the Federal
Government are well coordinated.
I mean, I think I can also speak to the programs that we
run at the Department. I think most of the ones that are in
your amendment that are within the Department actually reside
under me. So I think I can speak quite well to how well and how
committed we are to ensure these are effectively coordinated
and that they do have separate but complementary missions that
are all doing what it is they are supposed to do with the
Federal taxpayer dollar.
Senator Flake. 94 green building programs scattered across
11 agencies. My guess is that GAO is right that we need to
consolidate and eliminate duplication here.
Dr. Hogan. Well, what I would love to do is first, perhaps,
start with the Department's programs and come up and show you
and/or your staff, sort of how we are strategically orienting
the programs that we have to meet sort of the missions they
have and how they complement each other.
Senator Flake. Well, thank you. We would appreciate that.
And do you have any thoughts on the other agencies? Are they as
proactive as you are? I know most of them reside under your
agency, but----
Dr. Hogan. I think I do not know the number. It sort of
depends on how you count here.
You know, a fair number of them are under the Department of
Energy. But certainly there are programs.
But, you know, I am happy to engage in a conversation with
everything that we know with you and your staff about the
programs as we look at that GAO chart and how they complement
each other.
Senator Flake. Alright, I appreciate that.
Mr. Nadel, I want to ask you about Section 433 of S. 720.
In this section the HUD Secretary is directed to issue
underwriting guidelines to require banks to adjust the mortgage
applicant's income and artificially increase the appraised
value of the property based on the predicted energy cost
savings, the so called SAVE Act. Especially in light of the
financial crisis we had in 2008 which was partly a result, I
think, of us trying to meddle in underwriting standards.
Do you have some concerns about this? Do we really
understand the mortgage markets enough to try to mandate and
artificially increase or increase appraisal values when the
market isn't doing it?
Mr. Nadel. Okay. Yes, we do support this bill. I noticed
that NAHB also noted that they support this bill. We think
there is a lot of good data indicating that if you reduce the
energy use and therefore if you have more money in the
homeowner's pocket, they can afford a larger mortgage. There,
in fact, are a number of independent studies showing that the
default rates are lower for highly efficient homes than less
efficient homes.
We certainly recognize you have to be very careful with the
underwriting standard, and we are only supporting this bill and
advocating it along with NAHB and the realtors and others
because there is a good, firm basis of empirical evidence that
this can work.
Senator Flake. Well, you were referencing one study. I know
there is one study that indicates the default risks are lower
in energy efficient homes. This was conducted by the Institute
for Market Transformation, a DC-based, nonprofit, dedicated at
promoting energy efficiency.
I am not entirely sure that we ought to rely on one study
like this when the markets, I mean, we are basically saying the
markets are not recognizing this. We are going to tell the
markets what to recognize. I always get scared when government
does that. I think there is history, that cautions us in doing
that. Does anybody have any caution there?
Mr. Gayer, you are an economist or do you dabble in that
kind of area? Do you have any caution there?
Dr. Gayer. Caution on what in particular?
Senator Flake. In terms of telling the agencies that deal
with these home loans to artificially increase the appraisal
value of the house or change the underwriting standards to
account for more energy efficient homes.
Dr. Gayer. I do not know the specifics of it, but certainly
when you are changing the appraisal and underwriting we've all
learned the lessons of what weak underwriting can accomplish
for the economy since 2008.
Senator Flake. Well, that is my concern as well, and I hope
we will be careful moving ahead and base this on more than just
a study by a one nonprofit organization. I think the markets
are typically smarter than we are here, and if they do not
recognize the value, we need to be careful in trying to assign
a value to this. So that is my concern. Thank you.
The Chairman. Thank you, Senator.
Senator Franken.
Senator Franken. Thank you, Madam Chair.
I want to revisit the energy efficiency resource standard
because I think it is the way that we can most effectively
reduce our energy use. 24 states, including my state of
Minnesota, have already adopted the Energy Efficiency Resource
Standards which require electricity and natural gas utilities
become a little more efficient each year. That is 24 states.
Scientists tell us that is almost half our states. [Laughter.]
If we adopt a similar standard at the Federal level we
would unleash the manufacturing and deployment of all kinds of
energy efficient products throughout the economy and that would
reduce not only our energy use, but also people's electricity
bills across the country. I am a supporter and co-sponsor of
Shaheen/Portman, but since the Committee is now looking to do a
comprehensive energy bill we need to have a conversation about
what comprehensive energy efficiency looks like, and I believe
that a central piece of that is the energy efficiency resource
standard. I want to thank the Ranking Member for mentioning it
and thank the Chair for bringing it up for discussion in her
questions.
Mr. Nadel, it is actually kind of remarkable that while
Congress has been sitting on the sidelines about half our
states have implemented energy efficiency standards. Can you
give us a broad overview of how these programs are working
across the nation?
Mr. Nadel. They generally are working very well. Basically
the states have set their goals. They typically increase
gradually over time. The utilities then offer energy efficiency
programs to their customers whether they are homeowners or
businesses to help them to improve energy efficiency.
It's technical assistance. It's helping to improve stocking
of efficient products. Sometimes it will be financial
incentives to pay a small portion of the cost to make it more
attractive so the customers then buy those measures.
But we've done an evaluation of those studies. And on
average all of the states are exceeding the targets. Many times
they are saving more than the target's mandate, and they are
doing so very cost effectively. Typically benefit cost ratio
for these utility programs are two to one or even three to one.
Senator Franken. To me this is a perfect example of the
states as laboratories, as the founders really envisioned. And
the laboratory has got a positive. [Laughter.]
You know, eureka, they were saying on all these states.
Dr. Hogan, would you agree that these are working at the
states, the state level?
Dr. Hogan. Yes, from everything we have looked at we see
great results coming from the efforts of the states in this
area.
Senator Franken. So and your organization has estimated the
energy savings. What would we see if this were adopted as
outlined in my new bill, S. 1063, as they compare to all of
Shaheen or Portman/Shaheen?
Mr. Nadel. Right. We analyzed both of them in 2013. In 2013
we found the savings from your bill, the ERS was about three
times what Shaheen/Portman would save. We would like them both.
We like the total of----
Senator Franken. So instead of 22,000,000 cars off the
road, with this there would be 88 together?
Mr. Nadel. Yes, about. And very large financial savings, we
estimate net savings to consumers and businesses would be over
$125 billion as a result of this.
Senator Franken. So as happy as we are when we are
celebratory and dancing around as celebrating ourselves on
Shaheen/Portman or Portman/Shaheen. Whoopee, yea, yea, yea,
22,000,000 cars. Think about 88,000,000. Wow.
Anyway. [Laughter.]
I do not have enough time to really bring up my
benchmarking bill, but we have done that on leasing Federal
buildings or buildings leased by the Federal Government. Now I
am talking about commercial buildings. Everybody think that is
a good idea? Is there anyone who does not? Okay, benchmarking
is good. That is a good idea.
I am out of time, so I won't talk about my energy service
performance contracts on alternative vehicles except, as I am
talking now, and going over my time. [Laughter.]
I think it is a splendid idea, but I am out of time, so I
will not continue to talk about it. [Laughter.]
The Chairman. Thank you very much, Senator Franken.
Senator Franken. Thank you.
The Chairman. I appreciate that.
Senator Warren.
Senator Warren. Thank you, Madam Chairman.
Energy efficiency technologies can be a pretty good deal. I
was thinking about this. It seems to me they are a three-fer.
They protect the environment. They fight climate change. They
save money for consumers.
Actually maybe I should say it is a four-fer because the
energy efficiency industry is creating a lot of new jobs, good
jobs, in Massachusetts and elsewhere across the country.
Last Congress Senator Crapo and I introduced legislation to
encourage the use of technologies that allow businesses to
operate their buildings and their equipment in the most
effective way and energy efficient ways, from light sensors
that turn off lights when nobody is in the room to software
that optimizes a company's shipping routes. Businesses can
reduce their costs and protect the environment simultaneously.
Now we know that these programs work, but without a
definitive study quantifying cost savings, businesses have had
a hard time weighing the costs against the benefits. Without
good data they have been slow to embrace some of these tools.
So I will soon be introducing a bill to direct the Department
of Energy to conduct a study showing exactly how much money
businesses and governments can save by adopting various
technologies.
I wanted to start though by asking you, Dr. Hogan, can you
talk about how quantifying the cost savings from energy
efficiency technologies can encourage more businesses to adopt
practices while protecting the environment?
Dr. Hogan. Certainly. I think being able to demonstrate
packages of technologies from what they cost and the savings
they deliver over time is one of the key tools that we have to
demonstrate to the private sector the types of things that are
there that are working and that they can go on and embrace. So
very effective.
Senator Warren. Good. Can I just ask you, Mr. Nadel, do you
believe that proof of the bottom line benefits of these
operational efficiency, energy efficiency, technologies would
encourage more businesses to adopt them?
Mr. Nadel. Absolutely. Many businesses are leery of new
unproven things. They are very busy, and you really need to
show them concrete evidence this will work in their application
for them to get comfortable.
Senator Warren. Good. Thank you. And Mr. Therriault, can
you talk about the importance of quantifiable benefits in your
work to encourage the adoption of energy efficient
technologies?
Mr. Therriault. I think across the nation and in different
states and certainly in the State of Alaska, when it comes to
energy efficiency improvements in residential structures and
also as we've actually teed up legislation in our legislature
this year for PACE financing which is a mechanism to help
businesses implement energy efficiency at their businesses.
In all of those the effort starts with an audit of the
house or an audit of the business, and then an estimation or
showing that there's a business plan that the savings would be
enough to make the payment and hopefully, actually, result in
positive cash flow immediately for the business. And then
there, in the PACE legislation that we introduced this year,
Governor Walker introduced this year, is patterned after a
Texas bill which passed about a year and a half ago. There is
then a follow up audit to make sure that the technology was
installed correctly, is operating correctly and the savings
actually are being achieved.
Hopefully those efforts then, along with any kind of
information from the national labs that show the technology and
the use of technology and the success of technology starts to
build on itself.
And in the State of Alaska I know with our residential work
our Alaska Housing Finance Corporation is the one that gathers
all that data, is able then to present it back to the national
and first national programs and also to our state legislature
to show that we are achieving the goals. And that word starts
to spread. It really starts to snowball.
We have seen it happen with residential energy efficiency
improvements, and we believe we are on the precipice of kicking
it off for businesses.
Senator Warren. Well, thank you Mr. Therriault, you speak
to the heart of someone who is a data nerd.
Energy efficiency programs, I think we all agree, are
critical to reducing carbon emissions and fighting global
climate change. We have the technology that can reduce carbon
emissions while simultaneously driving down costs for
businesses and consumers.
It seems to me this is a place where the Federal Government
can make a real difference, not by regulation, not by spending
money, but providing data for evaluating the dollars and cents
benefits of different technologies.
I look forward to working with all of you to finding ways
to improve energy efficiency, save money and preserve our
heritage.
Thank you, Madam Chairman.
The Chairman. Thank you, Senator Warren. Senator Hoeven.
Senator Hoeven. Thank you, Madam Chairman, and thank you to
all of our witnesses who are here today. Thanks for holding
this hearing on energy efficiency.
I have introduced two bills and co-sponsored a third with
Senator Klobuchar aimed at addressing common sense energy
efficiency reforms. We had an opportunity, Senator Klobuchar
was here earlier, to talk about that bill which I appreciate
very much. And we have a lot of support from a lot of nonprofit
organizations. We believe it would be a very helpful piece of
legislation for us to pass.
The other two that I want to mention, briefly, is first the
Federal Building Energy Efficiency bill. Essentially this goes
to Section 433 which is a requirement that the use of fossil
fuels be phased out in all Federal buildings. The legislation I
have submitted is bipartisan legislation. Co-sponsors include
Senator Joe Manchin and Senator Donnelly of Indiana. This
legislation would essentially allow us to continue to use
fossil fuels in Federal buildings, but we keep the goal of
energy efficiency. So what we say is that you could use
whatever source of fuel, but you still need to meet these
energy efficiency targets. It accomplishes the purpose of the
legislation but it just says, you know, you can use whatever
fuel source to get there as long as you are still meeting these
efficiency goals. I think that is why we have bipartisan
support. I think it is very common sense legislation and hope
to get, like I say, good bipartisan support to pass it.
So I ask for unanimous consent to add a support letter from
22 energy efficiency organizations to the record.
The Chairman. So noted.
Senator Hoeven. These include the Alliance to Save Energy,
the National Rural Electric Cooperative Association, Fuel Cell
and Hydrogen Energy Association. And like I say, many others.
So if I could ask you to add that to the record which you have
agreed to, I appreciate it very much.
The second bill I would like to mention and then I will
turn to Mr. Crasi for comment, is the Furnace Fix bill. I have
introduced this with Senator Lamar Alexander of Tennessee which
would address concerns regarding the DOE's recently proposed
regulations on furnace energy efficiency.
What it deals with is this new requirement that DOE is
putting forth that you can't vent a furnace out the top of the
roof or the chimney. You have to essentially vent to the side.
This is a piece of legislation that would address that
regulation they are imposing, again, in a way, that I think is
common sense.
So I ask for unanimous consent to add a support letter from
six national organizations including the National Association
of Home Builders, the America Public Gas Association, ACCA, the
Indoor Environment and Refrigeration Institute and others to
the record.
The Chairman. They will be included as part of the record.
Senator Hoeven. Thank you, Madam Chairman.
I would now like to turn to Mr. Crasi. In regard to this
legislation, Mr. Crasi, how will the Energy Department's
proposed furnace regulation affect home builders like yourself?
Mr. Crasi. It is a very good question. As a new home
builder there's virtually no impact because we design around a
new system. We haven't installed an 80 plus furnace, I can't
remember the last time we've installed one. But the challenge
comes with the unintended consequences.
Senator Murkowski, you mentioned in the beginning, is that
in a retrofit, especially in a townhome situation where you
might have a slab on grade type of a unit, maybe sandwiched
between three other units. In a slab on grade generally what's
happening is that the heating unit is usually in the center of
the unit, and then in many cases you have vaulted ceilings.
What happens is that the question becomes if you can't go
up anymore how do you replace that system and go out because
there's no way to do it.
I can give you a real life example. My first home was a
three family, 1863 home. When I started to learn about
efficiency, when I first bought it we put an 80 plus furnace
in. It was 1980 something. And when I went to retrofit this
about two years ago with a 90 plus furnace I said well, there's
no way I am going to put an 80 plus back in there.
And then I looked, I go, well how am I going to vent this
now? Knowing what I know about paybacks and so forth I did do
that, but it cost me an additional $800 to redo my bathroom. I
had to rebuild a shower because it was the only way to get it
out.
So what happens is that the payback literally doubled. So
instead of a six or seven year payback it became a 12 to a 14
year payback, and then if you go down south where there's
virtually no payback it becomes very challenging.
So I would say that the unintended consequences to be very
cautious in that bill or I should say, be very cautious of that
particular rule.
Senator Hoeven. So it is a rule that could pose significant
expenses, particularly on low income individuals that they
would never be able to recoup?
Mr. Crasi. Absolutely.
Senator Hoeven. Okay. Thank you, Mr. Crasi, I appreciate
you being here and I appreciate your testimony.
Thank you, Madam Chairman.
The Chairman. Thank you, Senator Hoeven.
It goes to a point that I think there is a lot of
discussion and talk about well, I want to do more. I would like
to have an upgrade to the appliances or just weatherization,
but it is the upfront cost and that is what seems to stop
people, seems to stop so many from going further with that.
As we deal with some of these issues and do the cost
benefit analysis we can say well, okay, that payback time may
be a little bit longer for me. I know that I should do it, but
I do not have the resources available today and particularly
for those lower income families, those middle income families
who, quite honestly, look at their utility bills and want to be
able to drive this down.
Former Senator Therriault and I grew up in a town where
energy costs in Fairbanks, Alaska are extraordinarily high
right now. If you tell people that they can reduce their
heating costs, their energy costs, they say sign me up today.
But it is this upfront commitment that I think stalls out so
many from these newer technologies.
So questions to you and I guess I will throw it out to you,
Mr. Therriault. From the state side we have a few programs that
can help. Obviously within the weatherization programs we have
the Weatherization Assistance Program. We have got LIHEAP that
is there to help low income families with their high energy
bills. But in terms of those programs that can really help
families get into these new technologies, what do we have out
there on state side and on Federal side?
Mr. Therriault. Well, Madam Chairman, I know that in the
State of Alaska some of the LIHEAP money, sometimes, is
utilized to help upgrade furnace technology in a home. It can
be used that way, so that is beneficial.
I think that just with reference to the issue of the
venting of the furnaces certainly in a state where space heat
is such a critical part of the overall energy picture on a
yearly basis. We're going to get full utilization out of that
furnace and going to be able to amortize that additional cost
of the venting. But certainly as a state, a northern state, we
represent, understand that other states, the southern states
that that payback would be very long term and actually, may be,
a deterrent from the home or even, you know, upgrading or it
could actually encourage them to switch to electric heat which
could be a less efficient form of energy in the first place.
So that issue of unintended consequences, I think, really
does have to be taken into consideration.
And I am sorry, I got off here. Your main question?
The Chairman. Well, I was speaking to where a homeowner can
go. Where do you go for that level of assistance to help with
some of these upfront costs?
Mr. Nadel, ACEEE looks at all of this energy efficiency,
these measures that are out there to look at the cost benefit
to the various efforts. I do not know, do you look as you are
doing a cost benefit analysis? Do you look to what that upfront
cost is and how much of a hindrance that is to even moving
forward?
Mr. Nadel. Yes, we definitely do, and we are strong
proponents of energy efficiency financing, create financing to
help homeowners and businesses address this upfront cost
because most people do not have, you know, five thousand, ten
thousand just sitting around ready for an upgrade.
But Mr. Therriault mentioned PACE. Quite a few states have
been implementing commercial PACE laws to address this. There's
also an opportunity for residential PACE.
And in California they are doing an experiment where the
state is putting up money to make sure that it doesn't have
adverse impacts on mortgage repayment rates. And as a result,
get lots of data. If it has adverse impacts the State of
California will pay, end of subject. If it actually pays and
hopefully there are some information here that other states can
be using. On bill finance is another approach.
So there's a lot of very creative approaches. Our
organization actually sponsored an annual energy efficiency
finance conference to bring together the financiers, utilities,
the retrofitters, etcetera, to figure out how best to work it.
But I agree with you, it is extremely important.
Mr. Therriault. Madam Chairman?
The Chairman. Mr. Therriault, and then we will go to Dr.
Hogan.
Mr. Therriault. Yes, just on the issue. Certainly being
from Fairbanks, Alaska and still having family in Fairbanks,
you know the issue there, and we are really confronted with
that upfront cost. Trying to encourage people in that community
to switch over to natural gas as the state has got this program
to bring a larger source, make more natural gas available and
really build out, rapidly, a gas distribution system.
We're trying to take the second largest metropolitan area
and really change them over to natural gas as quickly as
possible, but that upfront cost for an individual home can be
ten or eleven thousand dollars. And so we have looked across
the nation to other programs that states have used.
That is why PACE legislation was introduced this year where
you can help businesses convert to natural gas because that
conversion, because natural gas appliances are so much more
energy efficient than the fuel oil, does qualify as an energy
efficiency step. And so we are putting PACE, we've teed up PACE
as a financing mechanism to be put into place. No cost to the
state.
It is a tool basically for local governments to use
involving local lenders, and it is voluntary for the
businesses. But we believe it is an attractive enough mechanism
that it helps those businesses get over that initial hurdle.
For residential situations, on bill financing, allowing
that for the utility to help finance the individual residential
conversion is a tremendous tool. We have done surveys and focus
groups and found out that the benefits that are provided
through on bill financing are very attractive to consumers much
more so which is surprising then the actual interest rate
that's charged on the financing.
So we have looked across the nation. We're learning from
other states, what other states have done, so we can apply
those different mechanisms, hopefully at very low cost to the
state government or no cost. But I think there is a potential
rule where some dollars can come through, they might be state
energy program dollars that could actually provide a loan loss
guarantee on some of those loan mechanisms that could be very
meaningful.
So again, there are things that can be done and believe
you, me, we are looking at all of them in the State of Alaska.
The Chairman. Yes, I appreciate that.
My time has expired. Let me turn to Senator Cantwell.
Senator Cantwell. Thank you, Madam Chair, and I am sorry I
had to step out for a few minutes.
Mr. Crasi, I wanted to ask you about part of your testimony
in Section 443.
Well, first, Mr. Gayer, do you support the Shaheen/Portman
bill?
Dr. Gayer. Yeah.
Senator Cantwell. Okay. Part of that Shaheen/Portman bill,
the SAVE Act, would direct HUD to issue updated underwriting
guidelines to allow borrowers to voluntarily submit home energy
reports on their home. These reports could then be used to
adjust the mortgage account for a home's energy use. Wouldn't
this proposed voluntary policy of accounting for energy
efficiency increase the interest of homeowners and home buyers
in efficiency?
Mr. Crasi. Absolutely, it would. In any situation where you
can incentivize a homeowner to do better rather than mandating
it, as Dr. Gayer was saying, okay, you are going to get buy in.
And a typical homeowner, a consumer is pretty smart. They know
what they can afford. They know what their budgets are.
And with the SAVE Act if you incentivize by allowing banks
to take into account the lower utility bills, there's part of
your answer in how you afford. How do you offset some of that
upfront cost? You do not necessarily have to raise the cost of
the home or increase the cost of the loan. But if somehow the
banks were allowed to reduce the payment based on utility
prices, you've got built in savings.
I think it is a very good idea because that's what's
missing if you look at the 2012 code. It is not been adopted
across the country because of cost effectiveness. And so what
happens is that you have a code that, in its sense is a good
code, but people look at it and say it looks just too
expensive.
So if you start to incentivize rather than mandate, I think
you'll get better buy-in and ultimately what you end up with is
a more efficient use of energy in this country.
Senator Cantwell. Well, Mr. Nadel, do you think there is a
sweet spot here between energy efficiency and housing
affordability or is it all good across the board?
Mr. Nadel. No, there probably is a sweet spot. We have to
pay attention to what is affordable. I think the key issue,
particularly when it comes to building codes and building new
construction is, since basically everybody finances their new
home through a mortgage, you need to look at if you increase
the cost for energy efficiency how much will that increase the
mortgage payment and make sure that the monthly energy savings
are greater than that.
Current mortgage rates that will work out to be in the
current code, the 2012 or even the 2015 code is quite cost
effective. Pacific Northwest Lab in Richland, Washington did
that detailed study and found that in general the first year
mortgage costs are going to be less than the energy bill
savings. So I think that's the sweet spot.
Senator Cantwell. Thank you.
Thank you, Madam Chair.
The Chairman. Thank you.
Senator Portman.
Senator Portman. Thank you, Senator Murkowski.
And again, I appreciate your willingness to hold a hearing
and also your personal commitment to this issue from the start
and your strong support for the legislation that has been to
the Floor a couple times now and got to this Committee with a
19 to 3 vote last time. I think it is a demonstration of how
much bipartisanship there is around at least some of these
issues and specifically S. 270.
Senator Shaheen talked about it in detail earlier, so I
won't go into detail except to say that some of the things we
heard about today, the ESPCs, certainly, the nonprofits, you
know, we would like to include in the legislation. We are
working on some of the ESPC issues in terms of the cost. The
CBO scoring now helps us, the nonprofits.
I appreciate the fact that Senators have been willing to
work on lowering some of the costs there and being sure we have
offsets that we can defend as we do with the other offsets
because the legislation does not have a cost. It does not have
mandates, and that's one of the reasons we've been able to get
these big votes and get it to the Floor a couple times. So,
again, I really appreciate the support of that legislation.
The legislation, we now have almost 300 groups and trade
associations supporting it. I was glad when Senator Cantwell,
who has been a great supporter of energy efficiency, asked Dr.
Gayer whether he supported it or not because I was not sure.
When you said, yes, I was like, okay, now I know everybody on
this panel supports it. [Laughter.]
But----
Senator Cantwell. It is a love fest today.
Senator Portman. Yeah, but thank you for asking him because
I did not have the guts to do it. [Laughter.]
But ACEEE, Steve, you guys have been unbelievable in
providing data around this because it is easy to talk about
this in general terms. It is harder to get specificity, and
that has been very helpful.
And NASEO, Gene, you guys have been at this for four years
now, supporting the legislation. I know you would like to see
even more in some areas, and some of the stuff you are doing in
the state that you just talked to Senator Murkowski about is
very exciting.
We appreciate that, and we are going to need all the
support we can get. It is not easy to get things done around
this place, but if you have that kind of momentum, I think it
can really work.
Tony, thank you for coming back again. You are a glutton
for punishment getting into this issue. I know it is not always
easy, but you have been a great partner for us. As you said, we
brought you in as a stakeholder, and you improved the
legislation. We made some major changes to the legislation
based on your input. I appreciate your strong support of the
SAVE Act. I think that has helped the legislation, not just
gain support, but actually have a bigger impact in terms of 40
percent of our energy going into buildings and this notion that
Steve and Ted have talked about in terms of the homeowner and
how do you make this not a mandate, but makes this an incentive
to be able to do the right thing. And incentives are certainly
out there.
To Dr. Hogan, you guys supported S. 270 last Congress. I
appreciate your looking at the legislation again. You will like
it even more, trust me. Just say yes. No. [Laughter.]
But really, you guys have been terrific partners in this,
and we have made some changes, as you know, based on some of
the things that you want to do administratively. I do think it
is fair to say and you tell me, but that we are trying to
codify some things you would otherwise like to do in terms of
coordination and streamlining. Is that accurate?
Dr. Hogan. The devil is in the details, but I think, yes,
that's accurate.
Senator Portman. Yeah. I mean we did talk earlier about the
fact that there is a need for more coordination and of some of
your programs and the advanced manufacturing provisions, for
instance, I think you all support because of that. So we will
continue to work with you, of course, on that.
Today we do have this one bill, 535, that is being signed
into law. Again, Tony, thank you for your support of that
legislation. It does help in the Tenant Star program, and I
think has great potential in the commercial building side.
The one question I guess I would have for Mr. Nadel in
terms of the analysis of the impact of this bill. You mentioned
190,000 jobs. Can you tell us how you got to that estimate of
the legislation and maybe tell us a little more how we should
describe that?
Mr. Nadel. Okay.
Yes, that's--our analysis of the 2013 legislation with some
adjustments. We are planning as soon as this Committee marks up
their bills, to do an updated analysis on all of these bills so
they will be probably some changes.
But in terms of the jobs, we do, we have a detailed input/
output analysis model of the U.S. economy. So we look at what
the costs are at each of the sectors, what the benefits are of
each sector and how that works through in terms of the overall
economy.
Our estimate is net jobs, meaning how much do you--jobs are
created as a result of the savings, but minus the fact that if
you use a little less energy, you are costing some jobs. So
those are net jobs, and we feel very importantly that you
really have to look at it in a net basis. Some of the studies
just look at one side and forget the other side, but it is a
detailed model of the U.S. economy and detailed analysis of
each provision in terms of how much it will save in cost each
year.
Senator Portman. Great. Well, we would appreciate the
additional analysis based on whatever new legislation there is
and specifically giving us all the background so we can
describe better to our colleagues, frankly, why this is not
just about fewer emissions and helping in terms of the energy
side. It is actually a jobs bill, and it will create more
activity.
The one thing I think your analysis does not fully
appreciate and can't easily do is just the impact on
competitiveness. I hear this in Ohio constantly, that these
companies are competing with companies in Japan and Germany and
elsewhere that, for years, have focused more on efficiency
because they have had higher energy prices, frankly.
Now we have the opportunity to be able to provide some
technologies that we enable them in part through the DOE to
work with a competitive advantage.
So again, thank you, Madam Chair, I really appreciate it.
I will repeat what Senator Shaheen said, we really want to
mark up our bill again, and we have done it twice. It is gotten
to the Floor twice. We know that we have the formula. We have
these 300 groups behind us. We want to include whatever good
legislative ideas there are, but we also want to keep this as a
bipartisan measure and one where we can find common ground.
Thank you.
The Chairman. Thank you, Senator Portman.
Senator Franken.
Senator Franken. Thank you, Madam Chair.
I agree, Mr. Nadel, your data is very, very appreciated.
How much, again, would the energy efficiency resource standards
help save in regard to taking, say, cars off the road in
relation to the previous Shaheen/Portman or the Shaheen/Portman
as it existed before?
Mr. Nadel. Alright. Just to reiterate as I said before we
very much support Shaheen/Portman.
Senator Franken. Yes.
Mr. Nadel. And we'd like to take Shaheen/Portman and add to
it the savings from the EERS bill. But the savings from the
EERS bill are about three times. I have not checked the car
calculations right here.
Senator Franken. Okay.
Mr. Nadel. But it is, I would add about three times.
Senator Franken. I was just trying to make a point.
Benchmarking is essential for improving energy efficiency in
our buildings unless we really know how much energy their
buildings are using we cannot be sure how much energy will be
saved from using energy efficiency technologies.
I am proud that my benchmarking bill was included in the
Energy Efficiency Improvement Act which the President is
signing later today. That bill will require commercial
buildings that are leased by the Federal Government to
benchmark and disclose their energy use, and this energy data
will help the Federal Government identify the most cost
effective ways to reduce its energy use.
But today I want to talk about a new bill which you
mentioned, S. 1052, which would support policies and incentives
at the state level to encourage more commercial buildings to
participate in benchmarking programs. We have adopted this in
Minneapolis. Some other cities around the country have already
started commercial building benchmarking programs. Mr. Nadel,
can you talk about how well these programs are working?
Mr. Nadel. Yes, these programs are working very well.
There's about a dozen cities that are making data available to
building owners so they can identify their worst performing
buildings and target their efforts. In many of the cities they
make the data available so energy performance contractors can
see which are the less efficient buildings and target them for
marketing.
There's also useful data for would be purchasers or renters
so that they know what the energy bills may be because to over
generalize on average, you know, the mortgage cost is typically
the number one cost. But energy costs are right up there with
taxes as number two, varying very much from building to
building jurisdiction to jurisdiction. So this would help.
I would point out that the bill that is being signed today
in addition to Federal buildings also has Department of Energy
conducting a study on benchmarking disclosure best practices.
So that will provide some very useful information to other
cities. Atlanta and Portland, Oregon just in the last two weeks
have adopted similar laws but hopefully this will be useful for
others.
What I like about your new bill is it includes two
additional provisions. One of which was also in Shaheen/Portman
but got left out by the House, the other of which is new, the
one that has small matching grants available to utilities and
utility regulators to figure out ways to better aggregate
energy use data so that a building owner can get the full
energy use of the building. Now they can get the energy use on
their meters, but they have no idea how much is used by the
tenants. Aggregation allows the utilities to combine them all
together, protecting privacy, but you get the total of your
hundred apartments or your eight different tenants. That would
help.
Senator Franken. I just want to move on. You mentioned
ESCOs, and we were talking and Mr. Therriault talked about
PACE.
All of these different financing models that are really, I
think, just revolutionalizing the way we do this because that
way you can finance. Because we were talking about upfront
costs, well if you can get an ESCO to do an energy service
performance contract you can, we can, do this without an
upfront cost, right? That is the whole point of this.
I am running out of time, but I want to tout my ESPCs for
alternative vehicles, and can I take a few seconds on this?
Assistant Secretary Hogan, can you talk about some of the
efforts in your office to develop and deploy more efficient
vehicles and how much energy savings you think are possible
with alternative vehicles? The reason I am bringing this up is
what my bill would do is allow the government to buy fleets of
new, energy efficient vehicles using energy service performance
contracts.
Dr. Hogan. Yeah, certainly we have got a number of goals
that we are trying to achieve in the Federal sector to improve
the efficiency of our Federal fleets in addition to the work we
are doing with buildings and facilities. We do have challenges
with the mechanisms that we have in the Federal fleet's world,
so I think being able to explore new mechanisms that can allow
us to look at those and more and bring in more efficient
vehicles and get the financing as help to do that would be a
great thing to examine.
Senator Franken. Because vehicles and equipment account for
over 60 percent of the Federal Government's energy use and over
70 percent of its energy expenditures. So if we could do this,
this would be a great way of cutting energy costs for the
government.
Thank you. Thank you for this hearing and for all your
support for energy efficiency both to the Chair and the Ranking
Member.
The Chairman. Thank you, Senator Franken, Senator Cantwell,
and all the members who have clearly not only engaged today but
have been engaging for a long period of time.
I think we have a great deal of common ground here that we
can explore as we move forward in this first title of our
energy bill. But some of the priorities that have been placed
in front of us, not only with the legislation that is under
consideration, but just some of the good work that has been in
place in our states as those laboratories or has been
suggested. And working through individuals with really great
ideas about how we can really make a difference when it comes
to providing for a level of efficiency that is common sense
that people want to participate in, that helps with jobs, it
helps with the economy, it helps with the environment.
As I say, it is all good when it comes to our energy, and
energy efficiency is that first energy source that we need to
be looking to for a level of common sense.
So thank you for your respective leadership in different
areas here, and know that we will be looking to you for further
comments as we build out these titles.
And with that, we stand adjourned.
[Whereupon, at 12:26 p.m. the hearing was adjourned.]
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