[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




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                       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
               
                                ______

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               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

                              ----------                              

                           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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