[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
LEGISLATION ADDRESSING LNG EXPORTS AND PURPA MODERNIZATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 19, 2018
__________
Serial No. 115-94
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
29-817 PDF WASHINGTON : 2019
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan7
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
ROBERT E. LATTA, Ohio GENE GREEN, Texas
GREGG HARPER, Mississippi MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia KATHY CASTOR, Florida
ADAM KINZINGER, Illinois JOHN P. SARBANES, Maryland
H. MORGAN GRIFFITH, Virginia PETER WELCH, Vermont
BILL JOHNSON, Ohio PAUL TONKO, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina G.K. BUTTERFIELD, North Carolina
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
TIM WALBERG, Michigan officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Prepared statement........................................... 2
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 3
Prepared statement........................................... 4
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Prepared statement........................................... 8
Witnesses
Steven Winberg, Assistant Secretary for Fossil Energy, Department
of Energy...................................................... 10
Prepared statement........................................... 12
Answers to submitted questions \1\........................... 190
James Danly, General Counsel, Federal Energy Regulatory
Commission..................................................... 16
Prepared statement........................................... 18
Answers to submitted questions............................... 192
Travis Kavulla, Vice Chairman, Montana Public Service Commission. 54
Prepared statement........................................... 56
Answers to submitted questions............................... 206
Timothy J. Sparks, Vice President of Electric Grid Integration,
Consumers Energy............................................... 67
Prepared statement........................................... 69
Answers to submitted questions............................... 216
Karl R. Rabago, Executive Director, Pace Energy and Climate
Center......................................................... 77
Prepared statement........................................... 79
Answers to submitted questions............................... 234
Paul N. Cicio, President, Industrial Energy Consumers of America. 101
Prepared statement........................................... 103
Answers to submitted questions............................... 242
Charlie Riedl, Executive Director, Center for Liquefied Natural
Gas............................................................ 121
Prepared statement........................................... 123
Submitted Material
H.R. 4476, the PURPA Modernization Act of 2017, submitted by Mr.
Upton.......................................................... 146
H.R. 4605, the Unlocking Our Domestic LNG Potential Act,
submitted by Mr. Upton......................................... 152
H.R. 4606, the Ensuring Small Scale LNG Certainty and Access Act,
submitted by Mr. Upton......................................... 155
Letter of November 30, 2017, from Terry Kouba, Vice President
Operations-Iowa, Alliant Energy, to Mr. Walberg, submitted by
Mr. Olson...................................................... 157
Letter of December 6, 2017, from Susan N. Kelly, President and
CEO, American Public Power Association, to Mr. Walberg,
submitted by Mr. Olson......................................... 159
Letter of November 29, 2017, from Barbara Lockwood, Vice
President of Regulation, Arizona Public Service, to Mr.
Walberg, submitted by Mr. Olson................................ 161
----------
\1\ Mr. Winberg did not answer submitted questions for the record by
the time of printing.
Letter of December 22, 2017, from Paul Sukut, CEO and General
Manager, Basin Electric Power Cooperative, to Mr. Walberg,
submitted by Mr. Olson......................................... 163
Letter of November 29, 2017, from Patrick Reiten, Senior Vice
President, Berkshire Hathaway Energy, to Mr. Walberg, submitted
by Mr. Olson................................................... 165
Letter of November 29, 2017, from Patricia K. Poppe, President
and CEO, CMS Energy and Consumers Energy, to Mr. Walberg,
submitted by Mr. Olson......................................... 167
Letter of January 18, 2018, from Paula Soos, Vice President,
Government Relations, Covanta, to Mr. Walberg, submitted by Mr.
Olson.......................................................... 168
Letter of November 29, 2017, from Gerard M. Anderson, Chairman
and CEO, DTE Energy, to Mr. Walberg, submitted by Mr. Olson.... 170
Letter of December 15, 2017, from Diane V. Denton, Managing
Director, Federal Policy, Duke Energy, to Mr. Walberg,
submitted by Mr. Olson......................................... 171
Letter of November 29, 2017, from Thomas R. Kuhn, President,
Edison Electric Institute, to Mr. Walberg, submitted by Mr.
Olson.......................................................... 172
Letter of December 6, 2017, from John P. Hughes, President and
Chief Executive Officer, Electricity Consumers Resource
Council, to Mr. Walberg, submitted by Mr. Olson................ 174
Letter of January 18, 2018, from the Environmental Law & Policy
Center, et al., to Mr. Upton and Mr. Rush, submitted by Mr.
Olson.......................................................... 175
Letter of November 29, 2017, from Jeff Malmen, Senior Vice
President, Public Affairs, Idaho Power Company, to Mr. Walberg
submitted by Mr. Olson......................................... 177
Letter of January 19, 2018, from the Independent Power Producers
Coalition of Michigan to Mr. Walberg, submitted by Mr. Olson... 180
Letter of January 17, 2018, from Nina Plaushin, Vice President
Regulatory, Federal Affairs, and Communications, ITC Holdings
Corporation, to Mr. Walberg, submitted by Mr. Olson............ 182
Letter of December 19, 2017, from Greg White, Executive Director,
National Association of Regulatory Utility Commissioners, to
Mr. Walberg, submitted by Mr. Olson............................ 184
Letter of November 29, 2017, from Jim Matheson, Chief Executive
Officer, National Rural Electric Cooperative Association, to
Mr. Walberg, submitted by Mr. Olson............................ 185
Letter of November 29, 2017, from Paul Renfrow, Vice President,
Corporate Affairs, OGE Energy Corporation, to Mr. Walberg,
submitted by Mr. Olson......................................... 187
Letter of December 12, 2017, from Sania Radcliffe, Director of
Government Affairs and Environmental Policy, Portland General
Electric Company, to Mr. Walberg, submitted by Mr. Olson....... 188
Letter of November 29, 2017, from Frank P. Prager, Vice
President, Policy and Federal Affairs, Xcel Energy, to Mr.
Walberg, submitted by Mr. Olson................................ 189
LEGISLATION ADDRESSING LNG EXPORTS AND PURPA MODERNIZATION
----------
FRIDAY, JANUARY 19, 2018
House of Representatives,
Subcommittee on Energy,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:15 a.m., in
room 2322, Rayburn House Office Building, Hon. Fred Upton
(chairman of the subcommittee) presiding.
Members present: Representatives Upton, Olson, Barton,
Shimkus, Latta, McKinley, Griffith, Johnson, Long, Bucshon,
Flores, Mullin, Hudson, Cramer, Walberg, Duncan, Walden (ex
officio), Rush, McNerney, Peters, Green, Tonko, Loebsack,
Schrader, Kennedy, Pallone (ex officio).
Staff present: Ray Baum, Staff Director; Allie Bury,
Legislative Clerk, Energy/Environment; Wyatt Ellertson,
Professional Staff Member, Energy/Environment; Margaret Tucker
Fogarty, Staff Assistant; Adam Fromm, Director of Outreach and
Coalitions; Jordan Haverly, Policy Coordinator, Environment;
A.T. Johnston, Senior Policy Advisor, Energy; Ben Lieberman,
Senior Counsel, Energy; Mary Martin, Chief Counsel, Energy/
Environment; Katie McKeogh, Press Assistant; Brandon Mooney,
Deputy Chief Counsel, Energy; Mark Ratner, Policy Coordinator;
Annelise Rickert, Counsel, Energy; Dan Schneider, Press
Secretary; Jason Stanek, Senior Counsel, Energy; Madeline Vey,
Policy Coordinator, Digital Commerce and Consumer Protection;
Hamlin Wade, Special Advisor for External Affairs; Andy Zach,
Senior Professional Staff Member, Environment; Priscilla
Barbour, Minority Energy Fellow; Evan Gilbert, Minority Press
Assistant; Caitlin Haberman, Minority Professional Staff
Member; Rick Kessler, Minority Senior Advisor and Staff
Director, Energy and Environment; John Marshall, Minority
Policy Coordinator; Alexander Ratner, Minority Policy Analyst;
Tim Robinson, Minority Chief Counsel; and Tuley Wright,
Minority Energy and Environment Policy Advisor.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Good morning.
Today's legislative hearing is going to focus on three
bills: two bipartisan bills addressing LNG exports introduced
by Mr. Johnson and a bill introduced by Mr. Walberg to
modernize the Public Utility Regulatory Policies Act of 1978,
also called PURPA.
I want to thank our witnesses for appearing before us today
to give their views so that we could work to perfect these
bills.
On the first panel, we are going to hear testimony from the
Department of Energy on two LNG bills, H.R. 4605, the Unlocking
Our Domestic LNG Potential Act, and H.R. 4606, the Ensuring
Small Scale LNG Certainty and Access Act. And we will also
receive testimony from FERC on H.R. 4476, the PURPA
Modernization Act.
We also have a second panel of witnesses today so we can
hear from industry and State regulators to better understand
the impact of the legislation.
As we consider this legislation, I am reflecting on our
bipartisan codel to Puerto Rico and the Virgin Islands last
month. It is hard to put into words the devastation and loss,
and it is hard to fathom that it has been more than 100 days
since the hurricane struck and yet hundreds of thousands of
folks are still without power.
As we learned on our trip, Puerto Rico's grid was in a very
rough shape to begin with, and many of their power plants were
so outdated they were still burning petroleum. I believe there
is a real potential for Puerto Rico to expand their use of
natural gas in these bills, especially the Small Scale LNG bill
can be part of that solution.
So I think I speak for all those who joined with me on the
codel when I say that we are going to continue to stay focused
to ensure that the territories and the people receive the
assistance that they deservedly need.
With that, I would like to thank this panel of
distinguished witnesses for appearing today. I look forward to
your testimony.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Today's legislative hearing will focus on three bills--two
bipartisan bills addressing LNG exports introduced by Mr.
Johnson, and a bill introduced by Mr. Walberg to modernize the
Public Utility Regulatory Policies Act of 1978. I want to thank
our witnesses for appearing before us today to give their views
so we can work to perfect the bills.
On the first panel, we'll hear testimony from the
Department of Energy on the two LNG bills--H.R. 4605, the
``Unlocking our Domestic LNG Potential Act'' and H.R. 4606, the
``Ensuring Small Scale LNG Certainty and Access Act.'' We'll
also receive testimony from FERC on H.R. 4476, the ``PURPA
Modernization Act.'' We also have a second panel of witnesses
today, so we can hear from industry and State regulators to
better understand the impact of the legislation.
As we consider this legislation, I'm reflecting on our
bipartisan CODEL to Puerto Rico and the Virgin Islands back in
December. It is hard to put into words the devastation and
loss, and it's hard to fathom that it has been more than 100
days since the hurricane struck and hundreds of thousands of
people are still without power. As we learned on our trip,
Puerto Rico's grid was in very rough shape to begin with and
many of their power plants were so outdated they were still
burning petroleum. I believe there is real potential for Puerto
Rico to expand their use of natural gas, and these bills--
especially the small-scale LNG bill--can be part of the
solution. I think I speak for all those who joined me on the
CODEL when I say that we will continue to stay focused to
ensure that the territories and their people receive the
assistance they need.
With that, I'd like to thank this panel of distinguished
witnesses for appearing today and I look forward to your
testimony.
Mr. Upton. And I was going to yield to Mr. Walberg for a
minute or so.
Mr. Walberg.
Mr. Walberg. Mr. Chairman, thank you for holding this
hearing today. I want to also thank your staff for being a part
of this process. They have been terrific to work with.
I would like to quickly point out that this legislation
that aims to bring a 40-year-old law into the 21st century is
an important aspect to deal with. It is time that my
constituents see the advancements made in the electricity
sector reflected in their utility bill.
H.R. 4476 aims to lower electricity bills for American
families, to stop the gaming of a Federal law at the expense of
my constituents.
I am willing to work with all interested stakeholders
moving forward to make changes to this legislation to ensure we
bring real benefits to hardworking Michiganders and others all
around the United States.
I look forward to this hearing and yield back my time.
Mr. Upton. The gentleman yields back.
I yield now to the ranking member of the Energy
Subcommittee, Mr. Rush, for an opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. I want to thank you, Mr. Chairman.
Today we will be examining legislation addressing LNG
exports and PURPA modernization. I must say, Mr. Chairman, and
announce I do have concerns with all three bills that are
before us today. It is my hope that the majority will work with
our side to address each of these issues as we move through the
committee process.
To begin with, Mr. Chairman, H.R. 4476 would make sweeping
changes to PURPA--changes, Mr. Chairman, that will
fundamentally alter both its objective and its effectiveness.
For the past 40 years, this policy has helped to promote
wholesale distribution of electric energy while increasing
energy efficiency and ensuring that energy consumers receive
fair retail rates.
PURPA's effectiveness, Mr. Chairman, has come from its
unique role in facilitating competition in the electricity
sector, and I am concerned that some of the proposed changes
under H.R. 4476 will hamper the law's ability to achieve its
original objective.
Specifically, section 4 of H.R. 4476 would essentially
strip away PURPA's requirement that utilities must purchase
from certain qualified renewable energy projects, small power
production, and cogeneration facilities.
As you know, Mr. Chairman, under current law, there is
already an exemption from must-buy provision if FERC determines
that a qualifying facility has nondiscriminatory access to
specific marked-related conditions.
However, H.R. 4476 would give certain utilities the ability
to refuse to purchase energy from small power producers or
provide services to a QF if that utility determines that it has
no need to purchase such power or the utility secures long-term
generation resources through a competitive process and uses
integrated resource planning, or IRPs.
Mr. Chairman, H.R. 4476 provides little to no insight for
nonregulated electric utilities or for those operating in
States that do not require IRPs. My concern is that the changes
in H.R. 4476 would replace a system that currently works well
in ensuring a competitive environment for smaller, privately
owned energy producers with one that severely reduces
competition.
Mr. Chairman, if it ain't broke, it don't need a fix.
Additionally, I also have concerns regarding both H.R. 4605
and H.R. 4606, both of which address the exportation of LNG,
and neither of which is really, in the final analysis,
necessary.
While H.R. 4506 appears to be some sort of a sweetheart
deal, my issues with H.R. 4605 surround its elimination of the
section prohibiting the import or export of natural gas without
prior DOE approval, while also removing longstanding consumer
protections.
So, Mr. Chairman, I look forward to today's hearing, and I
look forward to concentrating a very robust discussion around
these important issues.
And with that, I yield back the balance of my time.
[The prepared statement of Mr. Rush follows:]
Prepared statement of Hon. Bobby L. Rush
Mr. Chairman, today we will be examining legislation
addressing LNG exports and PURPA modernization.
Mr. Chairman, I must say at the outset that I do have
concerns with all three bills before us today.
It is my hope that the majority will work with our side to
address each of these issues as we move through the legislative
process.
To begin with, Mr. Chairman, H.R. 4476 would make sweeping
changes to the Public Utility Regulatory Policies Act, or
PURPA, that would fundamentally alter both its objective and
effectiveness.
For the past 40 years this policy has helped to promote the
wholesale distribution of electric energy, while increasing
energy efficiency, and ensuring that energy consumers receive
fair retail rates.
Mr. Chairman, PURPA's effectiveness has come from its
unique role in facilitating competition in the electricity
sector and I am concerned that some of the proposed changes
under H.R. 4476 would hamper the law's ability to achieve its
original objectives.
Specifically, Section 4 of H.R. 4476 would essentially
strip away PURPA's requirement that utilities must purchase
power from certain qualifying renewable energy projects, small
power production, and cogeneration facilities.
Mr. Chairman, as you know, under current law there is
already an exemption from the must-buy provision if FERC
determines that a qualifying facility, or QF, has
``nondiscriminatory access to'' specific market-related
conditions.
However, H.R. 4476 would give certain utilities the ability
to refuse to purchase energy from small power producers or
provide services to a QF if that utility determines it has no
need to purchase such power or the utility procures long-term
generation resources through a competitive process and uses
integrated resource planning, or IRPs.
Mr. Chairman, H.R. 4476 provides little to no oversight for
non-regulated electric utilities or for those operating in
States that do not require IRPs.
My concern is that the changes in H.R. 4476 would replace a
system that currently works well in ensuring a competitive
environment for smaller, privately owned energy producers with
one that severely reduces competition.
Additionally, Mr. Chairman, I also have concerns regarding
both H.R. 4605 and H.R. 4606, both of which address the
exportation of LNG, and neither of which is really necessary.
While H.R. 4506 appears to be some sort of sweetheart deal,
my issues with H.R. 4605 surround its elimination of the
section prohibiting the import or export of natural gas without
prior DOE approval, while also removing longstanding consumer
protections.
H.R. 4605 would also prevent DOE from ensuring that exports
of LNG to non-Free Trade Agreement countries are consistent
with the public interest.
Mr. Chairman, under this bill information regarding LNG
exports would be concealed from the American people, denying
them the opportunity to provide input or even know exactly
which countries would be receiving this vital product.
It remains unclear, Mr. Chairman, what effect this bill
would have on our national security, our domestic natural gas
consumers, our manufacturing competitiveness, or American jobs.
So I look forward to engaging today's witnesses to dig
deeper on these important issues and with that I yield the
balance of my time.
Mr. Upton. The gentleman yields back.
The Chair would recognize the chair of the full committee,
the gentleman from Oregon, Mr. Walden.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I thank the gentleman from Michigan. I welcome
our witnesses.
Today the committee will examine legislation that will
encourage and streamline the process for approving liquefied
natural gas exports and modernize the Public Utility Regulatory
Policies Act of 1978, also known as PURPA. For some of us, 1978
doesn't seem that far back. For others, it may seem like
ancient history.
Under my chairmanship, I have encouraged our Members to put
consumers first and focus on ways to grow our economy. To do
this effectively, we need to look to see where we can update
our laws and regulatory policies for the 21st century.
I want to thank Mr. Johnson and Mr. Walberg for their hard
work on these bipartisan bills. I would also like to thank the
witnesses for appearing before us today and providing their
views on these two important pieces of legislation.
You know, the United States is the world's number one
producer of oil and gas and our reserves are so large they are
predicted to meet domestic demand for a century or more. Who
would have thought? Up until the shale revolution, our supplies
were dwindling. We were importing natural gas. As you would
expect, our laws reflected that reality.
However, we are in a completely different situation today,
and for the first time ever we are net exporters of natural
gas. Now, to capitalize on this incredible opportunity, we need
to update our laws to remove unnecessary barriers to innovation
and growth.
As dozens of studies have shown, including those sponsored
by the Department of Energy, LNG exports provide wide-ranging
net benefits to consumers and the economy.
Mr. Johnson's legislation would remove unnecessary
restrictions on these exports which date back to the 1930s.
These changes would help create more open, transparent, and
competitive markets for natural gas, encourage more production
in the U.S., create thousands of jobs, and spur further
economic development, all good things for America.
It should not be overlooked that LNG exports also
strengthen our diplomatic hand when dealing with countries like
Russia that like to use their energy resources as weapons.
Encouraging the use of clean-burning natural gas around the
world also helps to reduce greenhouse gas emissions and improve
the environment. Exports are truly a win-win for all sides in
America.
Today we are also examining legislation to modernize PURPA.
This is a law that was enacted to encourage the use of domestic
energy in response to the Arab oil embargo.
Since PURPA's passage, the Nation's power sector has
undergone remarkable changes in the ways that electricity is
supplied to consumers. So Mr. Walberg's legislation recognizes
these changes and updates a 40-year-old law to ensure that it
serves the interests of consumers and power suppliers for years
to come.
Now, most notably, the PURPA modernization bill will
address the concern that certain facility developers are
successfully evading the intent of FERC's One-Mile Rule. At
last year's oversight hearing on PURPA, we heard examples of
project developers building power-producing facilities just far
enough from each other so they could avoid PURPA's 80-megawatt
threshold, thus allowing them to receive the benefits that are
intended for small power producers.
H.R. 4476 offers a specific fix to address this concern,
and I will be interested to hear FERC's thoughts on this issue
today.
As I have said before, the Energy and Commerce Committee
strives to focus on the needs and interests of American
consumers. We are putting them first.
With that, I look forward to our witnesses' testimony and
discussion among the committee members on the proposals to
revise the LNG policies and to modernize PURPA for the 21st
century.
With that, Mr. Chairman, I am delighted you are chairing
this hearing. I look forward to the testimony as we move this
legislation forward. And I yield back the balance of my time.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Today, the committee will examine legislation to encourage
and streamline the process for approving liquefied natural gas
exports and modernize the Public Utility Regulatory Policies
Act of 1978 also known as PURPA. Under my chairmanship, I've
encouraged our Members to put consumers first and focus on ways
to grow our economy. To do this effectively, we need to look to
see where we can update our laws and regulatory policies for
the 21st Century. I want to thank Mr. Johnson and Mr. Walberg
for their hard work on these bi-partisan bills. I'd also like
to thank the witnesses for appearing before us today and
providing their views on the legislation.
The United States is the world's number one producer of oil
and gas and our reserves are so large that they are predicted
to meet domestic demand for a century or more. Up until the
shale revolution, our supplies were dwindling, and we were
importing natural gas. As you would expect, our laws reflected
that reality. However, we're in a completely different
situation today--for the first time ever, we are net exporters
of natural gas. Now, to capitalize on this incredible
opportunity, we need to update our laws to remove unnecessary
barriers to innovation and growth.
As dozens of studies have shown, including those sponsored
by the Department of Energy, LNG exports provide wide-ranging
net benefits to consumers and the economy. Mr. Johnson's
legislation would remove unnecessary restrictions on these
exports--which date back to the 1930's. These changes would
help create more open, transparent, and competitive markets for
natural gas, encouraging more production in the U.S., creating
thousands of jobs, and spurring further economic development.
It shouldn't be overlooked that LNG exports also strengthen our
diplomatic hand when dealing with countries like Russia that
like to use energy resources as a weapon. Encouraging the use
of clean burning natural gas around the world also helps to
reduce GHG emissions and improve the environment. Exports are
truly a win-win for all sides.
Today, we're also examining legislation to modernize PURPA,
a law enacted to encourage the use of domestic energy in
response to the Arab Oil Embargo. Since PURPA's passage, the
Nation's power sector has undergone remarkable changes in the
ways that electricity is supplied to consumers. Mr. Walberg's
legislation recognizes these changes and updates this 40-year-
old law to ensure that it serves the interests of consumers and
power suppliers for years to come. Most notably, the PURPA
modernization bill will address the concern that certain
facility developers are successfully evading the intent of
FERC's ``one-mile rule''. At last year's oversight hearing on
PURPA, we heard examples of project developers building power-
producing facilities just far enough from each other, so they
can avoid PURPA's 80-megawatt threshold, thus allowing them to
receive benefits that are intended for small power producers.
H.R. 4476 offers a specific fix to address this concern and I'd
be interested to hear FERC's thoughts today.
As I said before, the Energy and Commerce Committee strives
to focus on the needs and interests of American consumers. With
that, I look forward to our witness testimony and discussion on
the proposals to revise our LNG policies and to modernize PURPA
for the 21st century.
Mr. Upton. The gentleman yields back.
The Chair would recognize the ranking member of the full
committee, Mr. Pallone, for an opening statement,
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Today we will be examining legislation addressing natural
gas exports and changes to the Public Utility Regulatory
Policies Act, or PURPA.
While I am pleased we are taking the time to examine these
bills, I fail to see the need for almost any of the policy
changes that they propose.
First, we have H.R. 4605, the Unlocking Our Domestic LNG
Potential Act. The bill does away with the Natural Gas Act's
prohibition on the import or export of natural gas without
prior approval from the Department of Energy. It removes
longstanding consumer protections and prevents DOE from
ensuring exports of liquefied natural gas to nonfree trade
agreement countries are consistent with the public interest.
As a result, the public would not have an opportunity to
know about or provide input on natural gas exports to any
country at any level.
Furthermore, we must have a mechanism for the Federal
Government to know the source and destination of gas imports
and exports, something that is critical for our natural
security.
DOE's process for reviewing and approving gas export
applications is working efficiently and effectively, so I fail
to see a reason to alter it, let alone do away with it
completely as proposed by this bill. I am particularly
concerned that the unrestricted export policy included in this
bill could significantly impact domestic natural gas prices and
adversely affect American consumers and manufacturers.
Furthermore, unfettered exports could be even worse for
climate change. The policy incentivizes widespread fossil fuel
extraction with virtually no environmental protections, adds
more fossil fuels to the electricity mix rather than replacing
dirtier sources, and artificially props up the coal industry.
H.R. 4606 appears to be an attempt to codify the Trump
administration's recently proposed rule to expedite the
approval of small-scale natural gas exports, and that rule
would deem certain lower volume exports to non-FTA countries in
the public interest so long as DOE's approval of the
application does not require an environmental review under the
National Environmental Policy Act.
And I have concerns about this rule, but it is a model of
restraint compared to this legislation, which would keep DOE's
volume limit but completely jettison the requirement that
applications qualify for a categorical exclusion from NEPA.
It speaks volumes that this bill has even fewer
environmental safeguards than a Trump administration proposal.
The bill also fails to prevent applicants from using this new
process to evade the public interest determinations required
for large-scale exports by segmenting a large volume gas export
into a series of smaller proposals.
Mr. Chairman, perhaps even more troubling is that,
according to the Congressional Research Service, only one
project currently meets the capacity requirements of the
administration's small-scale LNG rule but does not qualify for
a categorical exclusion, and that is a project in development
by Eagle LNG Partners in Jacksonville, Florida.
Since the bill does not include a categorical exclusion
provision, the Jacksonville facility would be the only project
to benefit from this new expedited process. That sounds to me
suspiciously like the kind of legislative earmark that I
thought my Republican colleagues opposed. And I look forward to
hearing my colleagues' views on that matter and why this bill
is even necessary at all.
And finally there is H.R. 4476, the PURPA Modernization Act
of 2017, which significantly alters section 210 of PURPA. This
provision has long ensured beneficial competition for
generating resources, save consumers money, and further the
growth of renewables and cogeneration.
This committee, under the leadership of former Chairman
Barton, struck the right balance when it significantly updated
PURPA in the Energy Policy Act of 2005. In contrast, this bill
lacks that balance, with two of the three main components of
H.R. 4476 representing a direct assault on PURPA that would
solidify the monopoly power of utilities in areas without
competitive wholesale or retail markets.
And having that said, I am not completely opposed to
updating PURPA. The part of Mr. Walberg's bill dealing with the
so-called One-Mile Rule, which many claim has encouraged the
segmentation of PURPA projects that would otherwise not qualify
under the law, that merits attention. It is certainly a topic
that we would be willing to try to address in a bipartisan
fashion. But overall, these bills really are not in the public
interest.
So I thank you. And I yield back the balance of my time,
Mr. Chairman.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Today we will be examining legislation addressing natural
gas exports and changes to the Public Utilities Regulatory
Policies Act (PURPA). While I am pleased we are taking the time
to examine these bills, I fail to see the need for almost any
of the policy changes they propose.
First, we have H.R. 4605, the ``Unlocking Our Domestic LNG
Potential Act.'' The bill does away with the Natural Gas Act's
prohibition on the import or export of natural gas without
prior approval from the Department of Energy (DOE). It removes
longstanding consumer protections, and prevents DOE from
ensuring exports of liquefied natural gas (LNG) to non- Free
Trade Agreement (FTA) countries are consistent with the public
interest. As a result,the public would not have an opportunity
to know about, or provide input on, natural gas exports to any
country at any level. Furthermore, we must have a mechanism for
the Federal Government to know the source and destination of
gas imports and exports, something that is critical for our
national security.
DOE's process for reviewing and approving gas export
applications is working efficiently and effectively, so I fail
to see a reason to alter it, let alone do away with it
completely as proposed by this bill. I am particularly
concerned that the unrestricted export policy included in this
bill could significantly impact domestic natural gas prices and
adversely affect American consumers and manufacturers.
Furthermore, unfettered exports could be even worse for climate
change. The policy incentivizes widespread fossil fuel
extraction with virtually no environmental protections, adds
more fossil fuels to the electricity mix rather than replacing
dirtier sources, and artificially props up the coal industry.
H.R. 4606 appears to be an attempt to codify the Trump
administration's recently proposed rule to expedite the
approval of ``small-scale natural gas exports.'' That rule
would deem certain lower volume exports to non-FTA countries in
the public interest, so long as DOE's approval of the
application does not require an environmental review under the
National Environmental Policy Act (NEPA). I have concerns about
this rule, but it is a model of restraint compared to this
legislation, which would keep DOE's volume limit, but
completely jettison the requirement that applications qualify
for a categorical exclusion from NEPA. It speaks volumes that
this bill has even fewer environmental safeguards than a Trump
administration proposal. The bill also fails to prevent
applicants from using this new process to evade the public
interest determinations required for large-scale exports by
segmenting a large volume gas export into a series of smaller
proposals.
Perhaps even more troubling is that, according to the
Congressional Research Service, only one project currently
meets the capacity requirements of the administration's small-
scale LNG rule but does not qualify for a categorical
exclusion: a project in development by Eagle LNG Partners in
Jacksonville, Florida. Since the bill does not include a
categorical exclusion provision, the Jacksonville facility
would be the only project to benefit from this newexpedited
process. That sounds suspiciously like the kind of legislative
earmark I thought my Republican colleagues opposed. I look
forward to hearing my colleagues' views on that matter, and why
this bill is even necessary at all.
Finally, there is H.R. 4476, the ``PURPA Modernization Act
of 2017,'' which significantly alters section 210 of PURPA.
This provision has long ensured beneficial competition for
generating resources, saved consumers money, and furthered the
growth of renewables and cogeneration. This committee, under
the leadership of former Chairman Barton, struck the right
balance when it significantly updated PURPA in the Energy
Policy Act of 2005. In contrast, this bill lacks that balance,
with two of the three main components of H.R. 4476 representing
a direct assault on PURPA that would solidify the monopoly
power of utilities in areas without competitive wholesale or
retail markets.
Having said that, I am not completely opposed to updating
PURPA. The part of Mr. Walberg's bill dealing with the so-
called ``one mile rule''--which many claim has encouraged the
segmentation of PURPA projects that would otherwise not qualify
under the law-- merits attention. It is certainly a topic that
we would be willing to try to address in a bipartisan fashion.
Thank you. I yield back the balance of my time.
Mr. Upton. The gentleman yields back.
We are now prepared to hear the testimony from our first
panel. We are joined by, first, Steven Winberg, the Assistant
Secretary for Fossil Energy from the Department of Energy, and
then Mr. James Danly, general counsel from FERC.
So thank you. Your testimony is made part of the record.
And we would like to give you 5 minutes now to summarize that,
and then we will go into questions.
Mr. Winberg, welcome to the subcommittee.
STATEMENTS OF STEVEN WINBERG, ASSISTANT SECRETARY FOR FOSSIL
ENERGY, DEPARTMENT OF ENERGY; AND JAMES DANLY, GENERAL COUNSEL,
FEDERAL ENERGY REGULATORY COMMISSION
STATEMENT OF STEVEN WINBERG
Mr. Winberg. Chairman Upton, Ranking Member Rush, and
members of the subcommittee, it is an honor to appear before
you on behalf of the administration. I will provide technical
comments on the two bills that pertain to the Department's
authority under the Natural Gas Act to regulate natural gas
exports.
DOE's authority to regulate the export of natural gas
arises under section 3 of the Natural Gas Act. This authority
is vested in the Secretary of Energy and has been delegated to
the assistant secretary for fossil energy.
Section 3(a) of the Natural Gas Act sets forth the standard
for revision of most LNG export applications. The Department
interprets section 3(a) as creating a rebuttable presumption
that a proposed export of natural gas is in the public
interest.
Under this provision, DOE performs a thorough public
interest analysis before acting on applications to export
natural gas to nonfree-trade agreement countries.
In the Energy Policy Act of 1992, Congress introduced
section 3(c) to the NGA which created a different standard for
free trade agreement countries that deems these applications to
be consistent with the public interest and granted without
modification or delay.
Since January 2017, DOE has granted authority to export
natural gas to two world-scale LNG projects, Golden Pass
Products in Texas and Delfin LNG, which is proposed for
offshore Louisiana. DOE has also granted authority to export to
Eagle LNG's small-scale Maxville, Florida, project as well as
an additional capacity at the proposed Lake Charles LNG
project.
In total, DOE has authorized 21.35 billion cubic feet per
day of natural gas under section 3(a) for export to anywhere in
the world not prohibited by U.S. law or policy.
This morning I will provide technical comments on both H.R.
4605, the Unlocking Our Domestic LNG Potential Act, and H.R.
4606, the Ensuring Small Scale LNG Certainty and Access Act.
H.R. 4605 would remove DOE's authority in regulating
natural gas trade for the United States. Currently under the
NGA, DOE has authority over imports and exports of natural gas.
The Federal Energy Regulatory Commission has authority over the
siting, construction, and operation of interstate natural gas
pipelines and LNG terminals. The bill appears to make no
modification to FERC's jurisdiction under the NGA.
Under current law, LNG export project sponsors submit
applications to both FERC and DOE, and most projects require
the completion of an environmental impact statement under the
provisions of the National Environmental Policy Act. In these
cases, FERC is the lead agency in preparing the EIS and DOE is
the cooperating agency. Separate from the FERC reviews, DOE
conducts a public interest review under section 3(a) of the
Natural Gas Act.
Regarding H.R. 4606, all exports of natural gas, regardless
of quantity, are subject to review and approval by DOE through
its regulatory authority under the Natural Gas Act. Regarding
4606, all exports of natural gas, regardless of quantity, are
subject to review and approval by DOE under its regulatory
authority under the Natural Gas Act.
H.R. 4606 would amend section 3(c) to expedite approval of
imports and exports of small volumes of natural gas. The effect
of this bill would be to have qualifying applications granted
without modification or delay.
This bill appears to be similar to the volume criteria DOE
laid out in its recent DOE notice of proposed rulemaking
concerning small-scale natural gas exports, published on
September 1 of 2017, which offered that natural gas export
applications to nonfree-trade agreement countries that propose
to export up to and including 0.14 billion cubic feet per day
would be deemed to be consistent with the public interest.
So in conclusion, I note that the United States has become
the world's largest combined producer of oil and natural gas,
resulting in an abundance of reliable and affordable energy
resources. In 2017, the United States was a net exporter of
natural gas for the first time on an annual basis since 1957.
Overall, the Energy Information Administration forecasts net
natural gas exports to average 2.3 billion cubic feet per day
in 2018 and 4.6 billion cubic feet in 2019.
The Department appreciates the ongoing bipartisan efforts
to address our Nation's energy challenges and looks forward to
working with the committee on the legislation on today's agenda
and on any future legislation.
Thank you for the opportunity to be here today, and I look
forward to your questions.
[The prepared statement of Mr. Winberg follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you.
Mr. Danly, welcome to the subcommittee.
STATEMENT OF JAMES DANLY
Mr. Danly. Mr. Chairman, Ranking Member Rush, members of
the subcommittee, I appreciate the opportunity to come here and
testify today. My name is James Danly, and I am the general
counsel of the Federal Energy Regulatory Commission.
Before I begin with my opening remarks, I want to mention
that I am appearing here today as a staff witness, and my
opinions are not those of the Commission or of any individual
commissioner.
I have been asked to testify about a bill that amends the
Public Utility Regulatory Policy Act of 1978, PURPA. That bill,
H.R. 4476, has three provisions in it, and I will discuss
briefly the effect of each one in turn.
The first of the provisions, section 2, has to do with the
so-called One-Mile Rule. PURPA defines small power production
facilities as any power production facility which, when taken
with the other facilities at the same site--that determination
is made by FERC--is less than 80 megawatts. And it is worth
pausing for a second to mention that the small power production
facility is one of the two types of qualifying facilities under
PURPA, the other being combined heat and power, cogeneration.
The regulations that were promulgated by FERC pursuant to
PURPA provide that generation facilities are considered to be
at the same sight if they are within 1 mile of each other, if
they share the same energy resource, and if they are owned by
the same person or an affiliate of that person.
The proposed bill would convert the Commission's current
bright line One-Mile Rule to a rebuttable presumption that
could be overcome by a number of specified statutory factors,
for example, were the facilities that were more than 1 mile
apart purchased with the same financing, do they share
interconnection points, such factors like that.
The second provision, which is section 3 of H.R. 4476, has
to do with nondiscriminatory access. The heart of PURPA is the
mandatory purchase obligation. That is the mechanism that
really drives PURPA's effect. This provision requires utilities
to purchase the electric power of the qualifying facilities
that operate within their service territory. This is regardless
of whether or not the utility requires that power and whether
or not the QF participated in the procurement process of that
utility.
Under PURPA, the power is to be purchased from those QFs on
a mandatory basis at the avoided cost rate that is established
by the State instrumentality responsible for regulating those
utilities.
In recognition of the changing landscape of the American
power industry, in 2005, Congress passed EPACT 2005, which had
a provision that allowed for the termination of this mandatory
purchase obligation when the Commission makes a finding that a
QF enjoys nondiscriminatory access to an electric market.
In implementing that provision of EPACT 2005, FERC
promulgated regulations which established a threshold of 20
megawatts above which it would be rebuttably presumed that the
QF did have nondiscriminatory access to the market and below
which there is a rebuttable presumption that it did not. This
was based on the basic premise that the larger the QF's
capacity, the more likely it is to be a sophisticated party and
the more likely it would have nondiscriminatory access.
The proposed bill leaves the basic mechanics of this
threshold in place, simply lowers the threshold from 20
megawatts down to 2.5.
And then the last provision, section 4 of 4476, has to do
with the State and local determinations of need. As I explained
a moment ago, the heart of PURPA is that mandatory purchase
obligation, and it is fundamental to the way PURPA works
currently.
In response to the 1970s energy crisis, PURPA was passed in
order to establish a nationwide policy which is explicitly
stated in the statute to encourage the development of
cogeneration and small power production facilities. That policy
objective was largely achieved by this mandatory purchase
obligation.
And as drafted, the bill would alter PURPA so as to replace
the nationwide policy advancing those interests through the
mandatory purchase obligation to a State-by-State regime that
would allow State agencies to relieve their utilities of the
obligation to mandatorily purchase power from qualifying
facilities if the State agency certifies to FERC either that
there is no need for their regulated utilities to purchase the
power that the QFs produce or that the utility employs some
type of a competitive procurement process.
This represents a fundamental change to the mechanism of
how PURPA operates and, as such, as the agency that is charged
with implementing PURPA, the subcommittee and Congress are in a
far better position to determine whether or not that advances
the policy goals of PURPA.
With that, I have no more remarks to start with. I would
just like to thank you all for the opportunity to give my
thoughts on these bills. I look forward to your questions.
[The prepared statement of Mr. Danly follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Well, thank you very much.
Mr. Danly, back in 2015, Senator Murkowski and I wrote to
FERC regarding the state of PURPA in the face of changes that
the electricity markets have undergone in the last number of
years. And in that letter, we asked FERC to take a
comprehensive look at PURPA and its regulations. I know that
you held a 1-day conference to discuss those concerns.
Can you tell us what FERC has been doing to update the regs
and policies since that letter went?
Mr. Danly. Certainly. Yes.
The Commission has kept PURPA in mind for years. It is one
of the main statutes we administrate, and the technical
conference was convened.
After the presentations and submissions in the technical
conference were reviewed by staff, further comments were
solicited on a number of questions that were thought would be
valuable to amplify the positions of the people who appeared
and submitted the initial round of comments.
Those were received, I believe in November of 2017 or
thereabouts, and the issue is still pending before the
Commission today for consideration.
Mr. Upton. Do you have some guess as to when they will come
to a conclusion or make some finding to go forward?
Mr. Danly. I do not know when that will happen. It is
certainly one of the subjects that the Commission has
actively--that it is actively pursuing.
Mr. Upton. Mr. Winberg, we are all grateful that the U.S.
is now the largest producer and exporter of LNG. A number of us
on this panel have gone places overseas to look at the need and
the requests for additional LNG exports to those countries.
In the past, there has been a pretty big backlog of
requests by companies to be able to export LNG. Can you tell us
what that list may look like today in terms of requests for
approvals by the Department of Energy?
Mr. Winberg. Yes. Thank you, Chairman Upton.
There are actually 54 applications that have been filed.
There are 29 that have gone through final approval and there is
1 that is conditionally approved. So out of the remaining 24,
they are in various stages of the approval process. A lot of
them are going through the NEPA process, which I am sure, as
you know, can be a very lengthy process. So that is the status.
I can tell you that in 2017 there were three that were
approved, Golden Pass, I mentioned in my testimony, Delfin, and
then Lake Charles. That was an amendment to an existing one.
And then the Eagle Maxville LNG, which is the small-scale
facility.
Mr. Upton. And as I recall, each of these projects as they
go forward, if they are approved, could mean as much as $100
million in terms of infrastructure construction. Is that still
about the right number, the dollar amount?
Mr. Winberg. I think that is a probably a good number. And
a fair amount of investment needed to get through the NEPA
process, because you have to do a front-end engineering and
design study, and that is quite expensive as well. So, yes.
Mr. Upton. Well, I would just like to say that as these two
bills begin to move forward through the process, we look
forward to your engagement and commitment to work with us to
help us make improvements to that legislation.
Mr. Winberg. Happy to do so.
Mr. Upton. With that, I will yield to the ranking member of
the subcommittee, Mr. Rush.
Mr. Rush. I want to thank you, Mr. Chairman.
Mr. Danly, I really want you to clear up something for me.
I am somewhat confused in terms of your opening statement.
Are you here as a witness for FERC or are you a witness for
the staff?
Mr. Danly. I am sorry. I didn't understand the question.
Could you say it again?
Mr. Rush. All right. You said in your opening statement
that you were not representing the commissioners, but you were
representing the staff.
Mr. Danly. Yes. That is correct.
Mr. Rush. Explain that to me.
Mr. Danly. I am the general counsel. I am not one of the
commissioners. The Commission is a multimember independent
agency. The Commission as an agency can only speak through its
orders, which are issued by the votes of the commissioners. I
am not only unable to predict what they are going to do at a
specific time. I am actually restricted by our regulations from
making predictions about what they are going to do and when.
Mr. Rush. All right.
Mr. Chairman, is that sufficient for this committee.
Mr. Upton. Yes. Yes.
We would like you to help us with the Senate. Are you able
to do that?
Mr. Danly. I am happy to try.
Mr. Rush. All right. Thank you, Mr. Chairman.
All right, Mr. Danly, in your testimony, you noted that
H.R. 4605 would delete section 3(a) of the Natural Gas Act,
which includes a public interest standard for judging whether
or not to approve LNG terminals.
What is the significance of omitting the public interest
determination? And why do you suggest that this committee
should consider reintroducing such a standard as this bill
moves through the committee process?
Mr. Danly. Thank you for the question.
I offered that thought in my testimony for really only one
purpose. Because it appeared to me that the purpose of the two
bills was to make alterations to what was squarely within the
DOE's jurisdiction, I thought that perhaps there was an
unintended consequence of removing that public interest
standard on the basis of which FERC is charged with overseeing
the siting, construction, and operation of LNG terminals. And I
wouldn't want the committee to unintentionally remove the
public interest standard that applies to FERC's role in LNG
terminal approvals as opposed to the DOE's.
Mr. Rush. Mr. Winberg, under current law the DOE is
responsible for conducting the public interest review under
section 3(a) of the Natural Gas Act. So I would like to hear
from you your thoughts on the significance of vetting this
section.
Mr. Winberg. Thank you for the question.
The administration has not taken a position on either of
these bills. Congress gave authority to the Department of
Energy to perform the public interest review. We certainly look
forward to working with this committee to review the bills in
more detail and to understand the implications that they have.
But ultimately----
Mr. Rush. I certainly want to pick that up. My time is
running out--I think it is pretty clear.
I want to ask Mr. Danly and yourself, Mr. Winberg, do FERC
or DOE have any concerns over hastily approving significant
amounts of LNG for exports and how that might impact prices for
domestic natural gas customers or manufacturing competitiveness
or jobs here in the U.S.
As well, we already just witnessed natural gas price spikes
during the most recent cold snap. Are either of you concerned
about unintended consequences if we start basically approving
any and all requests for LNG exports willy-nilly or without a
public interest review?
Mr. Danly. I can give a very quick answer. FERC does not
have anything to do with the public interest analysis for
exports, and I don't have any opinions on the subject.
Mr. Winberg. To date, DOE has approved just a little over
21 BCF per day for LNG exports. Currently there are only about
3 billion cubic feet per day being exported, so there is plenty
of room within what has been authorized and how much we are
exporting.
And the studies that we have done, the most recent study
suggests that we could have exports up to 28 billion cubic feet
per day with no negative economic benefits or no detriment to
the price of gas in the United States or our economy.
To your point on the recent deep freeze, bomb cyclone, and
the high prices, I would suggest to you that that is probably
more a function of inadequate pipelines than it is the resource
base. The price of natural gas in Dominion South and down in
Texas went up slightly. The price in New England, of course,
was up at about $150. And that spread was mostly due to
inability to get gas up into the Northeast during that deep
freeze.
Mr. Rush. I yield back, Mr. Chairman.
Mr. Upton. Thank you.
Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman.
Again, thanks to our witnesses for your testimony today.
Mr. Danly, as you know, QF developers can skirt the intent
of FERC's One-Mile Rule by breaking a large project into
smaller projects to bypass the FERC's size limitation. H.R.
4476 directs FERC to investigate a list of factors if somebody
challenges a QF developer's application.
My question is, can FERC implement these changes to the
One-Mile Rule without H.R. 4476 becoming law?
Mr. Danly. Yes. That is something that we can pass
regulation--we can probably get a regulation for.
Mr. Walden. Well, that would appear to be a pretty easy fix
for FERC to make to its regulations. I don't know if you can
answer this or not, but is that something FERC has on its mind
to do?
Mr. Danly. I do not know what the commissioners have on
their mind. I know that----
Mr. Walden. Do you know what they have on their agenda?
Mr. Danly. I do know what they have on their agenda. And
among other comments that were submitted, both orally and in
writing, to our tech conference, suggestions along the lines of
the provisions of H.R. 4476 were included. It is under active
consideration among all the other comments.
Mr. Walden. So you are limited on what you can predict?
Mr. Danly. Yes.
Mr. Walden. Got it.
Mr. Winberg, in 2010 and 2012, the Obama administration
Department of Energy commissioned studies on the macroeconomic
impacts of LNG exports. The major findings in the LNG exports
would benefit the entire economy, not just the oil and gas
producers.
Could you walk me through some of those findings and answer
this question: Does the Department of Energy plan on updating
the study since the last one appears to be from 2012?
Mr. Winberg. At this point, we don't have immediate plans
to update the study. As I mentioned, the last macroeconomic
analysis that we did, we evaluated 28 billion cubic feet per
day as a number that we could live underneath that umbrella. I
also mentioned earlier, I believe, that currently we are only
exporting 3 billion cubic feet per day.
So there is a good deal of headroom between where we are
and where we think we can go and still provide a lot of
economic value to the country through construction jobs and
operation and maintenance jobs on these LNG facilities.
I do not have any specific numbers for you relative to the
economic impact. I am happy to get those for you, though.
Mr. Walden. Yes, I think that would be helpful. There is a
big debate out there about the importance and effects of LNG
exports and jobs and effect on greenhouse gas emissions.
Can you talk at all about what happens when it leaves the
country and kind of the fuel switching that may or may not take
place, where it goes, LNG?
Mr. Winberg. That is a big part of--a component of our
public interest review, to understand where the LNG is going.
Having come out of the natural gas business, and especially
in seaborne trade, I can tell you it becomes very difficult to
start chasing molecules that are in ships. It is just the way
the seaborne trade operates. So it isn't easy to track those
molecules necessarily.
However, on LNG tankers, if they are going from port to
port, we know where the fuel is being delivered. But at any
point in time, some of those tankers can be diverted.
Mr. Walden. OK.
All right. I guess that is all I have.
Mr. Chairman, I yield back.
Mr. Upton. Mr. McNerney.
Mr. McNerney. Well, I thank the Chair, and I thank the
witnesses.
Mr. Danly, what forms of generation is 4476 aimed at
specifically?
Mr. Danly. Do you mean which category of QF? That is the
small power production facilities.
Mr. McNerney. Well, I mean, are they aimed at wind or----
Mr. Danly. The types of power production facilities that
can qualify as a QF under that part of the regime are
renewables, waste, facilities powered by waste, and----
Mr. McNerney. What would be the most impacted? What form of
generation would be the most impacted?
Mr. Danly. I would think probably renewables would be, but
I am not certain. I haven't thought about that specifically,
but that seems to be logical.
Mr. McNerney. Well, does H.R. 4606 benefit more than one
corporation?
Mr. Danly. I am sorry, 4606 or 4476?
Mr. McNerney. 4606. I have changed the subject.
Mr. Danly. Oh, OK. I am sorry. I apologize.
Could you say that good question again, because that threw
me?
Mr. McNerney. Does that benefit more than one corporation?
Mr. Danly. I don't know. I would presume--you know what? I
do not know the answer to that. I can't tell you. I am sorry.
Mr. McNerney. Do you have an answer, Mr. Winberg?
Mr. Winberg. I think 4606, as I understand it, is intended
to allow expedited permitting of small export and import
facilities. As was noted earlier, there is only one right now,
but that is not to say that there won't be more applications.
Mr. McNerney. So there is only one right now. So,
basically, we are considering a bill that is essentially an
earmark, which are currently prohibited by House rules.
Mr. Winberg, moving on, how do you determine whether
granting the exports is in the public interest?
Mr. Winberg. There are a number of factors that we
evaluate. We look at economic impacts, international impacts,
security, and natural gas supply, and environmental impacts,
among others. But those are the four chief factors that we
evaluate with the public interest regime.
Mr. McNerney. So you examine the impact of LNG imports on
domestic supply of natural gas and the international impacts of
LNG exports. Is that right?
Mr. Winberg. Yes, sir.
Mr. McNerney. Do you think that the DOE process is valuable
for ensuring that U.S. LNG exports are strengthening the energy
sector of our allies and not benefiting those who seek to harm
us?
Mr. Winberg. Yes, sir, I do.
Mr. McNerney. Well, good. I think we should be mindful of
the effects of removing DOE from the LNG export approval
process. Shouldn't we be careful before we green light exports,
unlimited LNG exports, without consideration of our national
security interests?
Mr. Winberg. I think that is up to the Congress to decide.
But whatever Congress decides, we will implement it.
Mr. McNerney. OK. Thank you.
Mr. Chairman, I yield back.
Mr. Upton. Mr. Barton.
Mr. Barton. Thank you, Mr. Chairman, and thank our
witnesses on this panel.
I have a comment since I didn't give an opening statement.
I have got a question or two.
Some of the comments I heard in the opening statements and
some of the questions from the minority on the question period
remind me of the debate that we had 3 or 4 years ago on
exporting oil, crude oil.
We were prohibited, we as a country, from exporting crude
oil. And because of hydraulic fracturing and horizontal
drilling in their shale formations, there became a fairly
substantial price disparity between the domestic price of crude
oil and the international price. The Arab oil cartel, or the
OPEC oil cartel, artificially elevated the world price.
And when we introduced my bill to repeal that, that Mr.
Cramer was a big part of and Mr. Flores and a number of other
people in this committee, Mr. Cuellar on the Democratic side,
we heard these complaints about national security and things of
this sort.
Well, what happened? We repealed the crude oil ban. As I
speak today, we are exporting about 2 million barrels of oil
per day. The U.S. domestic producer is now in the driver's
seat. Supply and demand set the price and the price on average
is about half what it was from 3 years ago.
It is coming up a little bit. It is a little bit between
$55 and $60 a barrel, but it has been as low as $23. But it is
darn sure not over $100 a barrel like it used to be.
American free markets are determining the price of oil in
the world, and we are creating trillions of economic benefit
every year in the U.S. and overseas. So it has been an
unmitigated success.
Now, let's look at natural gas. We literally have more
natural gas production capability in the United States than we
know what to do with. We really don't know what the resource
base is, but we know it is extremely large.
By any normal economic assumption, we have enough natural
gas, if we never found anymore, to handle the expected demand
of the United States for the 100 to 200 years.
So Mr. Johnson and I think Mr. Latta and a few others have
introduced these two bills, 4605 and 4606, and they have the
intention of doing for the natural gas markets what the crude
oil export repeal ban did for oil markets. I don't think there
is any downside to that at all.
So I just want to put this in context. This country has
been so blessed with natural resources, and then doubly blessed
with an economic system based on freedom and free markets and
free market capitalism, that we are literally the envy of the
world. We are the dominant energy producer in the world, and we
are going to be.
And Mr. Johnson's bill is simply an acknowledgment of that
and says let's use this economic resource that we have to
benefit the rest of the world and create more economic benefit
here in the United States.
Now, I have one question to Mr. Winberg. The bill, 4605, as
currently constructed, only deals with LNG, liquefied natural
gas. I am sure that the Department of Energy and the FERC too
are aware that there are other natural gas liquids that can be
produced and can be exported.
And I have asked Mr. Johnson to consider making a
modification that his legislation would apply not only to pure
liquefied natural gas, but to other natural gas liquids also.
Mr. Winberg, do you believe that, if you support the bill,
that we should make that modification so that we create a level
playing field for all types of liquefied natural gas products?
Mr. Winberg. The Department of Energy has responsibility
for public interest review for liquids also, as well as LNG. I
think it is not my place to suggest to Congress as to whether
they ought to modify or expand the modification of 4605.
Mr. Barton. Well, let me rephrase it. Do you believe the
Department would officially oppose creating a level playing
field for natural gas products to be exported?
And the answer is, no, we do not oppose it.
Mr. Winberg. Congressman Barton, what I know is that we
have an abundance of oil and natural gas in this country. Your
statement, I absolutely agree with. And I share the statement
about the resource base as well, the reserves and the resource
base in the United States. And our opportunity to become a
continued long-term net exporter of natural gas, natural gas
liquids and oil, is something that is in the interest of the
United States.
Mr. Barton. My time has expired.
I appreciate the generosity of the chairman.
Mr. Upton. Mr. Peters.
Mr. Peters. Thank you, Mr. Chairman.
Just thinking about Mr. Barton's characterization of the
abundance of energy, which I think we all agree on, and he
knows better than anyone, this isn't your issue, but the rush
to drill for oil off the coast seems incredibly ill-timed given
that abundance--I guess except in Florida, which the Federal
Government seems to think is the only costal State with
tourism. But that is not your issue.
I guess the issue I wanted to ask you about, Mr. Winberg,
is the nature of the public interest discussion, I think,
clearly one concern when that law was passed was supply, and I
think that that has been fairly well established. That is not
so much a concern of ours if we have enough energy for the next
two centuries.
Mr. McNerney also talked about the national security
interests that may come up in the movement of natural gas.
But the third was, we mentioned, and I just want to explore
a little bit, was the environmental interests.
Can you describe for me what the nature of the analysis is
around environmental concerns when you are talking about making
this public interest determination?
Mr. Winberg. Actually, the environmental assessment for LNG
under the Natural Gas Act falls to FERC, so we are a supporting
agency. So they do the vast majority of the NEPA review.
So I apologize. I can't speak to detail.
Mr. Peters. Right. I may be confused then.
Mr. Danly, maybe you can answer this. Is this environmental
analysis going to be eliminated as part of the proposed bill?
Mr. Danly. No. The process by which the siting and
construction operation is conducted is still going to have
certain coordination between different agencies for approval.
So, for example, for these marine gas terminals, we would have
coordination with the Coast Guard, Department of
Transportation.
Mr. Peters. No, I understand that. I am talking now about
the movement of natural gas. Because my understanding was that
there was an analysis in Mr. Winberg's section on the
environmental impacts associated with the import and export of
natural gas. Is that not right? Am I reading that wrong? Maybe
I misheard.
Mr. Winberg. That is correct, but it is a joint effort
between FERC and DOE.
Mr. Peters. OK. So if the bill passes, and I want to
understand what it would do, it would be to eliminate this
public interest analysis associated with the movement of
natural gas, whether you did it or FERC did it. Isn't that
right?
Mr. Winberg. Well, our read of 4605 is that it does not
appear to affect FERC's requirements under the Natural Gas Act.
Mr. Peters. The first requirements are associated with the
siting of a facility, not with the movement of the natural gas.
Is that correct?
Mr. Danly. That is correct.
Mr. Peters. Is there today an analysis of the environmental
effects associated with the movement of natural gas, import or
export, that would be eliminated by virtue of this bill?
Mr. Winberg. Potentially, yes.
Mr. Peters. I think so.
So what I want to know is, what are the components of that
analysis which we would be giving up? What are the things that
you are looking at as an assessment of the environmental
impacts of the import or export of natural gas?
Mr. Winberg. I don't know the specific components of the
environmental impacts portion. I certainly can get that over to
your office.
Mr. Peters. I would love to see that. I think we ought to
know kind of what we are giving up. In particular, I am a
little concerned--I think natural gas offers a lot of
potential. I think we all understand it burns cleaner than
coal. But in my other subcommittee we had Mr. Pruitt in, and he
didn't seem to be as convinced about the need to control
fugitive methane emissions as I think some of us are.
And fugitive methane emissions can really surrender the
benefit of natural gas from a climate perspective even though
it burns cleaner than coal. If you are losing a lot of it to
the atmosphere in terms of extraction or distribution, we are
losing that benefit, and I think we would like to know that. I
think that might be part of the analysis that we want to look
at and associated with import and export.
So I would like to have that information and appreciate
your sending it over.
Mr. Winberg. I would be happy to do so.
Mr. Peters. Thank you, Mr. Chairman. I yield back.
Mr. Upton. Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman. Great hearing.
Thanks for being here.
Would our clerk put on the--and members on the committee
have seen this photo before numerous times, some may have not,
import terminal. And I point to the front. I am not a Navy guy,
so what is the front? The bow? The bow.
And on the front of the blue terminal, which is really a
ship, on the bow you see in English the word ``independence.''
Can anyone guess where that is located?
It would give you an idea that it might be a North
American-placed vessel or a vessel placed in England, an
English-speaking country, but that is actually an import
terminal in Lithuania. And I note that because it addresses
this issue about the importance to national security of LNG
imports and exports for those of us.
So the public interest, I think, Mr. Winberg, as we talk
about this vague term, and then you kind of define down, part
of it is the public interest to our strength with our allies
and friends. Lithuania and the Baltic countries, I spent a lot
of time dealing with their interests, a former captive nation,
a former Eastern European country, that has been part of a
concerted extortion by the Russians using the tool of energy.
This has allowed them to free themselves from the shackles
of Russian energy extortion. And so it talks about the great
ability.
Now, they have been crying for U.S. LNG, and I think they
finally first--this has been up for about 18 months now. And I
think they have now recently signed a contract with Chevron
for, quote/unquote, like you said, the molecules are molecules.
The world market is the world market. That is what I keep
trying to preach to them.
But U.S. LNG, they want U.S. natural gas into their port.
So that is going to happen. And it is a sign of, for them,
freedom and democracy, strength, and alliance with the West. So
that is why a lot of us are just so excited.
You just look at the Eastern European, the former captive
nations, just go from the Baltic Sea down to the Black Sea, and
you see the turmoil, and you still see the stress that other
countries have. Hence the discussion that we are having about
smaller LNG terminals in this debate. It has been a good
hearing in that.
For this terminal, in that region of the world, there are
smaller LNG terminals being debated and planned for up the
Baltic Sea into Finland and those areas which will not have a
need for a larger terminal or may have difficulty with ice
where a smaller terminal can provide the access.
Now, a lot of us had a chance to--well, not a lot of us,
but some of us had a chance to go down to see Puerto Rico
during--in a hurricane. And we are talking about, really,
energy security for them. A smaller LNG terminal would be great
for them. It would be part of the all-the-above energy strategy
if you want to help Puerto Rico free themselves from kind of
their--the capture they have, because they are an island nation
and have a failed electric system.
And there is a lot of this debate.
So I wouldn't be so quick to rush judgment on the
importance of incentivizing smaller LNG facilities, or at least
freeing it up and giving some more access for expedited
permitting, because there is, I believe, a pent-up demand from
that worldwide. And I think now with the current hurricanes
that have gone through, the signal has been sent that even our
own citizens of our country were probably benefited by that.
So, Mr. Winberg, in my 18 seconds left, just can you
confirm that the public interest in national security is part
of the public interest debate?
Mr. Winberg. Yes, absolutely, I can confirm that. And our
DOE proposed rule for small facilities is exactly targeted to a
large degree at Caribbean nations, island nations, and on
islands that truly do need LNG in small quantities.
Mr. Shimkus. And I would just end by saying an LNG terminal
is probably not $100 million. It is probably in the $2 billion
to $3 billion or the $4 billion in construction and economic
benefits.
And I will I yield back.
Mr. Upton. Mr. Tonko.
Mr. Tonko. Thank you, Mr. Chair.
And thank you to our witnesses for joining us today.
Mr. Danly, am I correct that under PURPA, qualified
facilities must have a capacity less than 80 megawatts?
Mr. Danly. Not entirely. There is a nuance that I should
point out, which is that cogeneration facilities, which are
also qualifying facilities, can have larger than 80-megawatt
capacities.
Mr. Tonko. OK. And is that threshold listed, stated in
PURPA statute?
Mr. Danly. Yes. It is a statutory threshold of 80
megawatts.
Mr. Tonko. OK. Thank you.
The current existing presumption is that qualified
facilities with a net capacity above 20 megawatts have
nondiscriminatory access to interconnection services and
markets. What types of barriers exist for small producers that
may hinder their ability to get their market access?
Mr. Danly. The presumption that that threshold is based on
is that the much, much smaller qualifying facilities are simply
less sophisticated parties that don't have the resources and
personnel or experience interacting with the market that larger
energy companies that might be making the larger QFs would
have.
So it comes down to technical expertise, experience in
having their power provided to markets in others contexts,
things like that.
Mr. Tonko. And transmission services or interconnection
ability?
Mr. Danly. Sure. Everything from the process of getting
connected to actually ensuring that they get dispatched.
Mr. Tonko. OK, thank you. And is this threshold for
presumption of nondiscriminatory access in the PURPA statute or
was it established by FERC?
Mr. Danly. FERC established the 20-megawatt limit.
Mr. Tonko. Was that after the EPA Act of 2005?
Mr. Danly. Yes, that is correct. Yes.
Mr. Tonko. So in 2006, FERC conducted an extensive
proceeding and established a presumption that all facilities
larger than 20 megawatts have nondiscriminatory access to
market. What was the reason behind the 20-megawatt threshold 12
years ago?
Mr. Danly. In part, the 20-megawatt number is used in other
parts of FERC's regulations. For example, it is the dividing
line between the large interconnection and small
interconnection agreements that we have in other contexts. For
creating a rebuttable presumption, a line has to be drawn
somewhere, and it accorded with other parts of FERC's
regulatory regime.
Mr. Tonko. And what is your understanding of the
significance--section 3, let me first state, section 3 of H.R.
4476 would lower that threshold to 2.5 megawatts.
Mr. Danly. Yes.
Mr. Tonko. So what is your understanding of the
significance of that threshold?
Mr. Danly. Of the 2.5-megawatt threshold?
Mr. Tonko. Yes.
Mr. Danly. That presumably this would be enacted, because
the judgment of the subcommittee in the House is that the times
have changed such that even smaller qualified facilities have
sufficient sophistication to get access to the markets on a
nondiscriminatory basis. I assume that that would be the intent
of the bill.
Mr. Tonko. I have heard concerns from a number of
industrial energy users. Apparently, some industrial qualified
facilities are certified as small power producers. Can you
explain how or why this happens?
Mr. Danly. Do you mean as opposed to being cogeneration
facilities?
Mr. Tonko. Right.
Mr. Danly. I am not sure about the specific facts of the
case. Do you have any more information about that?
Mr. Tonko. Not offhand. But I am just wondering if you have
any sense of understanding the significance for that threshold.
Mr. Danly. I would imagine that in the ordinary course of
business, because cogenerators are not limited to 80 megawatts,
they would typically choose to be designated as a cogenerator.
So nothing springs to mind immediately as to why they would
make that decision.
Mr. Tonko. Well, to clarify, not all industrial qualified
facilities would be exempt from this legislation.
Mr. Danly. No.
Mr. Tonko. OK. Thank you, Mr. Danly.
Well, Mr. Winberg, you had earlier explained the factors of
DOE using factors to determine whether an LNG export project is
in the publicinterest. And, obviously, our Nation's energy use
and needs change over time.
So I, for one, believe that this is a feature of the system
that these projects are evaluated and that someone is assessing
the consequences for American consumers and manufacturers as
well as our energy and national security.
So I think that is important to bear in mind as we go
forward with some of the bills that are introduced and the
changes that would be produced.
And with that, I yield back, Mr. Chair.
Mr. Upton. Mr. Latta.
Mr. Latta. Well, thanks for being here.
And thank you very much, Mr. Chairman.
And if I could follow up a little bit where my friend from
Illinois was with his discussion on the LNG exports going into
the Baltic nations.
Mr. Winberg, DOE has recently issued a proposed rule for
small-scale LNG exports. Small-scale LNG projects could serve
markets in Latin America and the Caribbean, but these job-
creating projects are bogged down with a lot of unnecessary red
tape.
Where do you see the greatest potential for small-scale LNG
projects are right now for U.S. producers?
Mr. Winberg. As we talked about earlier, I think primarily
the Caribbean, Central America, and South America, possibly
some European countries as well. But for those small loads on
seaboard trade, distance becomes an issue if you have got----
Mr. Latta. Right. And besides, when we are talking about
Lithuania and Latvia and Estonia, when you are talking about
other European countries, who would you have in mind on that?
Because I know that some of us were over to see some of the LNG
ports out around in the Iberian Peninsula. Where else would you
see?
Mr. Winberg. DOE doesn't take a position on where LNG ought
to be traded. We have free trade agreement countries and
nonfree trade agreement countries.
So as we get in the applications, we review them, based on
whether it is FTA or non-FTA, but we don't take a position on
where LNG should be traded.
Mr. Latta. OK. And under the H.R. 4606, how would this
improve the process for permitting these small-scale
facilities?
Mr. Winberg. Our read of 4606 is that any small export or
import would be granted without modification or delay. So it
would be, in effect, the same procedure that we would use with
FTA countries.
Mr. Latta. Let me follow up. There was a little bit of
discussion when we were talking about Puerto Rico. As we all
know, that Puerto Rico's grid was devastated by Hurricane
Maria, and here we are more than 100 days out and power
restoration is still not completed.
What role could a small-scale LNG play in Puerto Rico's
grid modernization?
Mr. Winberg. I think the role that LNG would play would not
be so much in the grid modernization, but perhaps in the
electricity production modernization, which arguably is a part
of it. They burn a significant amount of oil. Also, there are
opportunities for LNG to be brought into Puerto Rico to
displace oil, lower-emission, higher-efficiency units. So there
are some significant advantages.
Mr. Latta. Thank you very much.
Mr. Chairman, I yield back.
Mr. Upton. Mr. Loebsack.
Mr. Loebsack. Thank you, Mr. Chair. Great discussion today,
as always. I always learn a lot in this committee, and we have
great witnesses and great questions from my fellow Members.
Once again, I have to brag about Iowa and wind power.
Mr. Upton. Time has expired.
Mr. Loebsack. Too bad.
Look, Iowa is a success story when it comes to wind energy.
Texas is as well. Texas produces more wind energy than Iowa,
but----
Mr. Barton. Give him more time, Mr. Chairman.
Mr. Loebsack. For the size of our State, we are doing
great. And the fact of the matter is over a third of our
electricity in Iowa comes from wind, and it has just been a
great story. It is good-paying jobs, plays a critical role in
our economy. In 2016, Iowa produced about 20 million megawatts
of wind energy, and by 2020, I think we are going to get to 40
percent of our electricity is going to come from wind.
So, obviously, when we move forward on PURPA, I think it is
really, really important that we ensure that wind energy is
deployed in the most cost-effective manner for my constituents,
and also ensure that the Federal Government continues to play a
role in promoting renewable energy. I think that is absolutely
critical going forward and I think we can get some good
bipartisan agreement on that.
I really just have a question for Mr. Danly. There are
concerns, of course, about this, qualified facility developers
who have been developing some large wind farms, and they
intentionally disaggregate and place portions of the project
more than a mile apart to ensure that it doesn't exceed the
PURPA megawatt threshold.
How will this legislation, Mr. Danly, going forward, ensure
that qualified projects are not subdivided to take advantage of
higher PURPA prices?
Mr. Danly. The intent of the legislation is to allow the
presumption of that One-Mile Rule, which is the bright line
rule currently established by FERC regulation. That at the
moment is an absolute rule.
It would convert that to a rebuttable presumption. And it
can be rebutted by a series of statutory listed factors:
whether they share common financing, if the land comes from the
same purchase, if they share an interconnection, if they use
the same resources, have the same people on it. That would be
the list of the various factors.
And if the presumption is rebutted, then having crossed
that 80-megawatt threshold, they would not qualify for the
other benefits that come with being a qualified facility, most
importantly the mandatory purchase obligation.
Mr. Loebsack. So that is how you see it. It is implemented
in that sense, in what FERC will do to implement this.
Mr. Danly. Say that again, please.
Mr. Loebsack. So that is how you see the implementation
going forward.
Mr. Danly. FERC will implement it by, when asked,
presumably conducting a review on the fact-based statutory
factors.
Right now, qualifying facilities are certified by one of
two ways, primarily through self-certification or by having a
FERC review process. So it may have an impact on that second of
the two ways of being certified, which is really a minority of
QFs get certified that way.
And then for the others, presumably people who have an
interest that is adverse to that determination or that self-
certification would bring a petition for FERC to review it.
That is my presumption--I am not sure, of course--based on what
the bill currently reads.
Mr. Loebsack. Because it is a big issue, there is no
question about that, and I am sure not just in Iowa.
In your opinion, also, does it make sense to allow States
to require QFs to participate in a competitive solicitation
process to ensure that renewable energy is deployed in the most
cost-effective manner?
Mr. Danly. To the extent that the subcommittee and Congress
do not want to advance PURPA's goals under the current
mechanisms that PURPA has, then having a competitive process is
another viable alternative.
Mr. Loebsack. OK. Thank you.
Thank you. I yield back, Mr. Chair.
Mr. Upton. Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chair. I appreciate it.
And thank you, gentlemen, for joining us today.
Mr. Winberg, LNG exports and PURPA reforms are two issues
very, very worthy of our committee's consideration, especially
as it relates to bringing our energy policy into the 21st
century.
I am encouraged by this administration's effort to find
sensible ways to unleash America's energy. Secretary Perry and
the DOE have carried out that approach through their continued
approval of LNG export permits and through the agency's work on
small-scale LNG exports.
But DOE can only do so much, as the current law pertaining
to LNG exports was written at a time when our energy landscape
was very different than it is today. The bills we are
discussing today reflect the realities of our energy abundance,
with over 2 trillion cubic feet of recoverable natural gas
beneath our feet.
Congress, and this committee in particular, have done a lot
of work to advance bipartisan bills that encourage LNG exports.
Last Congress, LNG export bills advanced not only in the House,
but through the Senate as well, always with bipartisan support.
So I think I have heard you say it before this morning, Mr.
Winberg, but because these are my bills that we are talking
about today I will sleep better if I hear you say it again.
Will you help continue that work by working with the committee
and me on these bipartisan bills that we are discussing to
advance LNG exports?
Mr. Winberg. Yes, absolutely, we would be delighted to
help.
Mr. Johnson. OK, good. Do you know if the DOE has plans to
further its work on expediting and reforming LNG export, the
process, the permitting process?
Mr. Winberg. We do through our latest notice of proposed
rule, which we came out with on September 1 of last year, and
that specifically addresses the small-scale exports.
And so we have received comments on that. It is not
finalized. It hasn't been published in the Federal Register.
But we are reviewing the comments and we plan to publish
shortly. It is fairly closely in line with 4606.
Mr. Johnson. OK. All right.
My colleague Mr. Shimkus touched on this a little bit. You
know, for too long we have seen countries like Russia use
energy as a weapon. They have a stranglehold on Europe's energy
supply. But with our LNG exports, that has already started to
change.
How, in your opinion, have U.S. exports of natural gas
helped our allies and strengthened our hand diplomatically on
the global stage?
Mr. Winberg. I think the access or the production of U.S.
fossil energy resources, whether coal, oil, or natural gas,
have had a profoundly positive impact with our allies in
helping them to ensure energy security and, therefore, security
in general, much as it has here in the United States.
Mr. Johnson. Well, Russia gets about--and experts differ on
the exact number--but somewhere on the order of about 50
percent of their revenue comes from the sale of oil and gas.
About 80 percent of that resource runs under pipelines that go
across the Ukraine. Seventy percent, I have heard, of their oil
and gas sales are to our friends and allies in the region. And
they have been known to turn the switch off when things weren't
going their way in the past.
I believe that this gives the administration, especially in
light of the events going on in the world and the temperature
of our relationship with the Russians, in particular, today, a
new and different kind of leverage than we have had in the
past. Would you agree with that?
Mr. Winberg. Absolutely.
Mr. Johnson. OK. All right.
Mr. Chairman, I yield back.
Mr. Upton. Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman. Good hearing, I
agree.
Mr. Danly, you indicated that or seemed to indicate that
very few self-certifying applications come through the system.
And I have got a pretty extensive list of folks that do self-
certify in my State. We got over 2,000 megawatts here in just a
little over a year and a half. Could you comment on that?
Mr. Danly. I think I may have been misunderstood. We get
about 2,000, roughly 2,000 self-certification requests a year,
and just a handful of the FERC certifications in which the
agency does the certification on behalf of the entity.
Mr. Schrader. OK. Because there clearly is a ton of it
going on.
And we sent you all a letter, many members of the
committee, including myself, back in June, talking about the
gaming of the system. I have got a couple of great examples
here where Fresh Air Energy in Jefferson County, Oregon, has
three different applications that were approved for 79.66
megawatts, just under that 80. And then again in Klamath
County, again, Fresh Air Energy had five successful sitings for
80 megawatts.
So, clearly, we need to be doing something with the system
to prevent that gaming.
From your technical review hearing, what is the current
state of play from the Commission with regard to solving some
of these problems and dealing with that one by one?
Mr. Danly. So the Commission was in receipt of the oral
presentations at the technical conference and the
postconference submissions, and it is currently under review
before the Commission.
Mr. Schrader. OK. In your testimony, you comment about the
rebuttable presumption, and you have elaborated here about the
conditions that might be used to deal with some of these
instances. But you also talk about resources.
Without having that clear bright line, what sort of
resources is the Commission going to need to be able to
adequately get through the application process, as you now
have?
Mr. Danly. It is difficult to predict the number of people
that might challenge a self-certification. If challenges come
up, then it is going to require a fact-intensive review in some
mechanism. I can't imagine what the mechanism would be yet; we
haven't dealt with it.
But there would have to be some mechanism to review the
facts that are under the statutory factors. And it would
require a significant amount of personnel time if we find
ourselves facing----
Mr. Schrader. You would need more resources than you
currently have?
Mr. Danly. I am not sure that is true. I just know that it
is going to require us to devote time and manpower to a subject
that we have never had to deal with before.
Mr. Schrader. OK. So either you have a lot of extra
employees right now or you can easily--or you need more people
to deal with the process.
Mr. Danly. Presumably. But depending upon the shape of the
final bills that are passed, we could find ourselves having
less work to do on other subjects.
Mr. Schrader. OK. OK. Very good. Very good.
Talk a little bit about the State-by-State determinations
rather than having FERC do it. How would that, to your point a
moment ago, affect your workload?
Mr. Danly. Do you mean the State-by-State determinations as
to whether there is need or a competitive solicitation process?
It would not directly have much of an impact on FERC staff
time. That would really have more to do with whether or not the
QFs are even able to participate.
So that really is an issue of whether or not the
subcommittee wants to abandon this national policy. It is not a
resources question for us.
Mr. Schrader. How would that affect the industries
themselves or the partners, our energy partners?
Mr. Danly. Well, depending upon what decision each State
makes, the effect could be that there are less incentives for
qualifying facilities of different types to put forth the
effort and the risk of trying to develop a generation facility.
It could be that that has a stultifying effect. But in other
areas where there are competitive markets, it may not.
It is difficult to predict in the laboratory of democracy
the different possible outcomes. This is one of the great
problems with PURPA, is how complicated it is with all the
different State regimes for avoided cost calculations and the
like.
Mr. Schrader. Shifting gears a little bit, we haven't
talked a whole lot about the industrial qualified facilities.
What degree of problems with the gaming issue are presented by
these facilities compared to the others?
Mr. Danly. When you say the industrial ones, I took----
Mr. Schrader. Cogeneration.
Mr. Danly. OK, cogeneration. Right.
Cogenerators are in a really different category from the
small power producers. They are very often in industrial
facilities that are, in fact, themselves net consumers of
electricity. They are either using the heat that is produced
for industrial processes to generate electricity after the
process is over beforehand, and this is simply a way to make
money and be more efficient in the use of the generation.
Mr. Schrader. They are not part of the problem?
Mr. Danly. When it comes to gaming?
Mr. Schrader. Yes.
Mr. Danly. No.
Mr. Schrader. I yield back. Thank you.
Mr. Upton. Mr. McKinley.
Mr. McKinley. Thank you, Mr. Chairman.
I applaud Bill Johnson's legislation on LNG. I think this
is something we have needed for some time, and he has addressed
a problem that is starting to emerge or issue of how we might
be able to help out with that.
Our districts are right opposite each other. The only thing
that separates his congressional district from mine is the Ohio
River, and that is just a line on the map.
So we are in the middle of the Marcellus and the Utica
Shale gasses formations, and we are seeing this resurgence as
this country is pivoting away from fossil fuels or coal in a
way that we have an opportunity to take an advantage of the
Marcellus and Utica Shale gasses that are there.
It has had a profound effect on our valley, improving the
morale and the hope that we are going to see in this country
some positive things happen with that.
We are now at a point between our two districts that with
the Marcellus and Utica, we are producing 50 percent of all the
shale gas in this country, 50 percent. That is incredible, the
opportunities then that come with that.
So, again, I thank Congressman Johnson for that.
From what I can gather, talking to EIA, is that this shale
gas, the potential that we have from these two formations,
could provide all the gas for this country for 58 years. Fifty-
eight years.
That is only with 50 percent. Remember, the rest of the
country, down in Texas and elsewhere, they have got shale gas
formations there coming. But just from the Marcellus and the
Utica, we could provide all the gas in America for 58 years.
So it really is opening up a new opportunity for us, and
what we have to do is get this bill passed and continue to do
this.
Some of the critics say that if we export our LNG, it is
going to raise prices. That has not been proven to be true. It
is not accurate at all. It is just unimaginable opportunities
that we have if we can pursue this.
And what the impact is for my district in West Virginia,
there is a study out done by the Fraser Institute that ranks
around the world about 97 different jurisdictions, States,
countries, about where would you put your investment in fossil
fuels? Where would you invest in energy?
Two years ago, West Virginia ranked 22nd in the world where
they should invest. Last year we ranked fifth, fifth best place
in the world to invest, because of what this formation, what it
is going, the opportunity we have in creating that.
So we are seeing as a result of that, we are seeing now
that we have the second-fastest growing GDP in America, in West
Virginia. We are seeing Cheniere over in China investing $84
billion in West Virginia, is trying to explore and use this gas
to try to help create jobs for people with this.
So I see just a series of things, but yet we hear pushback
from some people: We don't want to do this. We want to leave
that gas in the ground.
So I am saying, what I don't understand--I will start with
you, Steve--excuse me, Mr. Winberg, you and I have known each
other for too many years--why would people want to stop
something, this momentum that is recreating wealth,
opportunity, and an economy and strong families and keeping
them? Why would people stop that?
Mr. Winberg. Sir, I really can't answer that question on
why people would want to stop it. But to your point in the
Marcellus and Utica area, there are numerous opportunities.
There is an LNG opportunity.
We need more pipeline capacity to remove that rich resource
that you have in your State and in surrounding States and move
it into LNG terminals, for example, at Cove Point, to take
advantage of the liquids in the Marcellus Shale for ethane
production, which then goes into chemical production, the
opportunity to move that gas up into the Northeast, where it
was so badly needed just a couple of weeks ago.
So numerous opportunities there. You can articulate them
much better than I can.
Mr. McKinley. I think the ethane storage, you and I have
had meetings about that, instead of sending it elsewhere, if we
will be able to use that here in our area, that is positive.
But I also want to emphasize to you again, Mr. Winberg, I
am not trying to go away from coal. I just think we can have a
dual track in energy dominance.
And this is an opportunity. We just have to continue to
explore it and put more money into research and how we might be
able to have clean coal technology as well as we are developing
this petrochemical industry in other than the Gulf Coast.
Not that I don't support my friends in the Gulf Coast. I
think as a safety valve, we should have someplace else as well.
So, with that, I yield back my time.
Mr. Upton. Mr. Green.
Mr. Green. I do represent the Gulf Coast.
I want to thank the chair and the ranking member for this
hearing today.
Both PURPA and LNG exports are issues that in our area I
care deeply about. And to follow my friend from West Virginia,
when folks at my meetings come up and say, we want to leave it
in the ground, I say, that is not a Texas value, if we can sell
it to someone or build a plant.
And I have to admit on the export of LNG, I was concerned,
because the upper Texas coast--well, literally, most of the
Texas coast, from Corpus Christi over in Louisiana, is huge
petrochemical complexes. And with the reasonable-priced LNG, we
have seen huge numbers of expansion and new chemical plants,
just because of the availability of the natural gas and the
different molecules that you get from there.
I was concerned that we may price ourselves out of the
market, but I haven't seen that. We have Cheniere there in
Louisiana. I mean, we have a number of ports along Texas that
have permits in the process, and they are not small ones. They
are very large. And, in fact, I had a joke a few years ago that
if you had a 5-foot ditch that ran from the Gulf of Mexico into
it Texas land, they wanted an export permit for LNG. And if you
do the small ones, you may end up making that truthful.
But one of my concerns is I have always been a very big
supporter of NEPA, but smaller plants may not have that issue.
But I am concerned about the exemption of that for these
smaller plants, because it wouldn't be unusual for maybe a
company to build five export facilities that was just below the
level so they could get past the NEPA review. So I think our
committee needs to look at that.
Mr. Winberg, the small volumes, like I said, is important.
Under the DOE proposed rulemaking, how many companies would
qualify for the streamlined process for quick expedition? Do
you have any idea how many companies that would qualify for the
streamlined process?
Mr. Winberg. Yes, sir. If you are asking about the current
applications that we have----
Mr. Green. Either the current applications or ones that
have been built.
Mr. Winberg. At present, there is only one that would
qualify, and that is the Eagle Maxville LNG small-scale
facility.
I do not know how many other developers or potential LNG
exporters might be considering small facilities. We have heard
there are a couple people out there that are interested in
this, but we haven't gotten any applications, and so I can't
comment on it specifically.
Mr. Green. OK. Do you have an estimate on what the daily
volumes increase would be under such a rule, if it became
final?
Mr. Winberg. I don't have an estimate, but the limit that
we would have for the small-scale facilities would be 0.14
billion cubic feet per day for a facility. But, again, not
having an estimate on how many might try and avail themselves
of this small-scale opportunity, I can't give you a total
number.
Mr. Green. DOE in its proposed rulemaking required a small-
volume exporter to meet categorical exclusions critical under
NEPA to be approved.
Can you tell me why the DOE felt it was important to
include NEPA protections under this rule?
Mr. Winberg. Yes, I can. It is because the small-scale
facilities, based on what we have seen, the primary markets
would be the Caribbean, Central America, and South America. And
without a small rule exclusion or a small facility exclusion,
the cost to build a large facility for that many potential end
use points we believe would be prohibitively expensive.
Mr. Green. OK. One of the concerns I have is when FERC does
it, does FERC also require a NEPA review?
Mr. Danly. For the siting construction, yes.
Mr. Green. OK. So is there any duplication between what DOE
does and what FERC does for the NEPA review? Is there any----
Mr. Danly. In fact, in our review--you are a cooperating
agency, correct?
Mr. Winberg. Right.
Mr. Danly. So, yes, there would be no overlap.
Mr. Green. So there is no dual regulations or oversight?
Mr. Danly. The statutory regime neatly divides the
responsibility into two different buckets: FERC for siting,
construction, operation, and DOE for export.
Mr. Green. I am out of time, but one of my concerns is that
the bill today would take away what the DOE has done on the
rule, and I have a concern on that.
Mr. Chairman, obviously, I have a lot of questions, and I
will submit them.
Mr. Upton. Great. Thank you.
Mr. Flores.
Mr. Flores. Thank you, Mr. Chairman.
I appreciate the panel for joining us today on these
important pieces of legislation.
Mr. Danly, I have two quick questions for you. The backdrop
for the first question is this. Under the current framework for
the Natural Gas Act, FERC has delegated authority over LNG
export facilities. And in your testimony, you have stated that
H.R. 4605 primarily concerns the authorities of the DOE. The
DOE witness seems to agree with that, because he stated the
bill makes no modification to FERC's jurisdiction.
And so we need to make sure we get this on the record
clearly, and so the question is this. Does H.R. 4605 affect or
expand FERC's jurisdiction in any way?
Mr. Danly. Upon my reading of it, no. But if you have a
specific idea, I am happy to talk more about it.
Mr. Flores. No. I mean, I read it the same way you do. And
so we just need to get that into the record so that some of the
other comments that have been made here today are rebutted by
the testimony of our expert witnesses.
The next question is, as you are probably aware, there are
new technologies to transport natural gas and natural gas
liquids other than in an LNG form. And so, because of that,
they can be transported either in vehicles or in vessels that
are not LNG vessels, and also in ways other than pipelines. And
so I understand that DOE has determined that imports and
exports of these mixtures should be regulated under the Natural
Gas Act.
Since the export facilities for these different types of
products are not LNG terminals and they are not connected to
interstate gas pipelines, FERC doesn't appear to have any
apparent authority over siting and construction. So if H.R.
4606 were to become law, would FERC take that same position,
that they do not have jurisdiction over the export of these
products since it is not LNG and not connected to pipeline?
Mr. Danly. I cannot predict what the Commission will
determine as far as what its jurisdiction is, but the way I
read it here, it would remain the same. There is no
jurisdiction.
Mr. Flores. OK. I think you have read it correctly.
Thank you. I yield back the balance of my time.
Mr. Upton. The gentleman yields back.
I would note that votes have started on the House floor. We
are going to do Mr. Kennedy, and then we are going to take a
recess until we come back after votes.
So Mr. Kennedy is recognized.
Mr. Kennedy. I promise I will be brief, with the eyes of
everybody in this room now upon me now to be so.
I want to thank the witnesses for coming. I want to thank
the chairman and ranking member for an important hearing, very
helpful on a number of issues.
Mr. Danly, it is a pleasure to meet you. We have not had a
chance to meet personally yet, but I appreciate your presence
here. As you might be aware, our office has worked very closely
with a number of folks at FERC, including your predecessor, on
a couple pieces of legislation. I know you are not here to talk
about one of them today, but I did want to try to clarify a
couple of things.
You testified over in the Senate back in October about one
of those bills, the Fair RATES Act, that has passed unanimously
by this body already this Congress and passed unanimously out
of the House of Representatives, again, last Congress as well.
We worked very closely with FERC in the drafting of that
legislation. Your predecessor had testified as well, largely in
support of that. I gather from your testimony on the Senate
side that you have some reservations there.
Candidly, looking at some of the testimony, I am not
entirely certain I understand what those reservations are. I
don't want to put you on the spot, given that you are not here
today to speak about that.
Mr. Danly. I am happy to answer questions about it.
Mr. Kennedy. So the point of the legislation is to try to
make sure that consumers always have at least some knowledge as
to and a voice in some of the decisions that are being done by
FERC.
What happened, the legislation itself was in response to
essentially a forward capacity auction, FCA 8, several years
ago, where forward capacity prices, because of a shortfall,
went from a billion dollars before to $3 billion to then $4
billion to $3 billion, so $10 billion over the course of 3
years, and in that specific auction deadlocked two-two.
Now, what was interesting also about that deadlock is a
Democrat and Republican appointee was on one side and a
Democrat and Republican appointee was on the other. Because
there was a two-two tie, because of a gap, in my view, of the
way that the statute was drawn, a two-two tie becomes, in
effect, an approval by operation of law.
Mr. Danly. That is correct.
Mr. Kennedy. And there is no way for consumers to then
appeal it. What this legislation seeks to do is to say a two-
two tie should enter as a decision so that that can be
appealed.
The mission of FERC--I believe I have it right--or part of
the mission is to, quote, assist consumers in obtaining
reliable, efficient, sustainable energy services at a
reasonable cost through appropriate regulatory market means.
Obviously, putting them in a circumstance where you have
this tripling and then quadrupling of these capacity rates
without any measure then to get a rehearing or justification
for that, particularly given the unique circumstances that
surrounded Forward Capacity Auction No. 8, seemed ripe for a
fix to that statute.
Clearly, the House of Representatives agreed. It was a
bipartisan bill. Again, it passed actually on the first day of
the Trump administration.
So I understand your reservations. I also am cognizant of
the fact that I promised the chairman here I would be quick.
All I am asking for is some engagement with you and your office
to try to understand in a bit more detail what your concerns
here are, as I believe that the bill was meant to address that
concern.
Mr. Danly. I would be delighted to work with you. Do you
want me to express the reservations I did before?
Mr. Kennedy. To keep my friendship with Mr. Upton, no.
Mr. Upton. We budgeted 2 minutes. It has been 4 now.
Mr. Kennedy. We will follow up.
Mr. Upton. All right. Thank you very much.
We are going to have to come back. I know Mr. Walberg has
questions that he wants to ask. I think it will be pretty
quick. We are told that we have three votes on the House floor,
so we will do that and then we will come back.
[Recess.]
Mr. Olson [presiding]. The hearing will come back to order,
and we will proceed as before with the Members asking questions
from the witnesses. The next question will come from the
gentleman from Michigan, Mr. Walberg, for 5 minutes.
Mr. Walberg. Thank you, Mr. Chairman. I appreciate the
opportunity to get well on my way to 10,000 steps.
Mr. Danly, thank you for being here. And we appreciate the
work of your staff in assisting us, getting us information as
we have developed our legislation to this point. So I
appreciate that.
State utility commissions set avoided cost rates. They have
the authority to do a number of things, appropriate length of
PURPA contracts. It seems to me that they have significant
authority in implementing PURPA.
I noticed in your testimony you stated granting PURPA
exemption findings to the States would create a State-by-State
energy program. Essentially, I view this as providing State
regulators with the tools to help each of them meet their
State's electricity needs at the lowest cost to the ratepayers.
Couldn't one argue that extending FERC's waiver authority
is keeping in line with State implementation, coupled by strong
Federal oversight?
Mr. Danly. So, yes, you make a point here, which is that
there is already some degree of balkanization in the way that
PURPA is implemented, because the actual recovery under the
mandatory purchase obligation is set at the rate that is
established by the State utility commissions. There is no doubt
about that.
And this would be a further step in the direction of
allowing the States to act independently of one another, based
upon their own either political or policy goals. The only
difference is if a QF is capable of being guaranteed a recovery
of some amount that is based upon an avoided cost rate, that is
a thing that is different in kind, I think not degree, from
whether the rate is X or X plus 5 percent.
Mr. Walberg. It would still allow strong Federal oversight
if we move that direction still further?
Mr. Danly. Yes. There would be Federal oversight of the
utilities, as there already is, but there would be a different
way that QFs would be functioning in the market in the States,
based upon what the State legislature--rather, the regulatory
commission wants.
Mr. Walberg. Since PURPA was signed into law back in 1978,
transmission access has become open to competitive generators,
organized markets have been developed, and even bilateral
markets. There is robust trading in those markets with
independent generators.
Given that the electricity sector has changed drastically,
do you believe that the implementation of PURPA has fully kept
pace?
Mr. Danly. I agree with your point that there have been big
changes, and, in fact, Congress recognized this in 2005, with
the passage of EPACT 2005, where it allowed the States to get
out from under--or, rather, the utilities to get out from under
the mandatory purchase obligation in the areas with organized
markets.
I do not wish to opine on whether or not PURPA has kept
pace. There are definitely changes going on in the market, and
it is properly the role of Congress to decide how to respond to
those changes.
Mr. Walberg. OK. Well, let me then add to that or put it
this way. Do you believe the current law represents the
maturity of competitive markets, State renewable energy
portfolio standards, investment tax credits, production tax
credits, zero emission credits, reduced cost in renewables, and
greater access to markets for smaller power producers?
Mr. Danly. OK.
Mr. Walberg. Put it all in there.
Mr. Danly. Yes, yes.
So the answer is that there are a huge number of different
policy vehicles available to the State governments and the
Federal Government to achieve policy goals, and PURPA is but
one of those tools that is used to achieve a goal.
Some people say that it is abusively used and creates
market distortions, and others say that it is a necessary
requirement in order to promote this congressional mandate to
encourage QFs being developed. That, as I say, is a question
for your consideration.
Mr. Walberg. I appreciate that. I won't ask the followup
questions then on that basis.
I am a believer in an all-of-the-above energy approach. I
believe a diversified electricity portfolio is crucial.
With that being said, I fear PURPA is inhibiting my
constituents from benefiting from the lowest-cost source of
renewable electricity.
What FERC policies would need to be modified to ensure the
best deal for customers in moving forward? Could I get--I would
get a smile.
Mr. Danly. I hate to say this, but I can't speak on behalf
of the Commission or predict its actions. Right now, the
Commission is reviewing the comments that came out of the tech
conference, and we are actively working, as you are well aware,
with members of the subcommittee here to talk about possible
legislative reform.
Mr. Walberg. Well, thank you. I appreciate it.
My time has expired.
Mr. Olson. The gentleman yields back.
The Chair now calls upon himself for 5 minutes.
First of all, thank you and welcome to all the witnesses.
As many of my colleagues mentioned, U.S. shale has made
America number one in the world for natural gas, and that fact
has allowed America to make our world safer, more secure, with
cleaner air and cleaner water.
Mother Russia has used their natural gas dominance to force
Eastern European nations to cower instead of seeking freedom.
Our LNG exports have changed that forever.
As Chairman Shimkus said about Lithuania, I want to point
out what has happened in Poland. Poland was part of the Iron
Curtain. The first shots in World War II happened in Poland.
Russia came in to counteract Germany. They were in that curtain
until 1989 and beyond.
They are a member of NATO. They broke away from Russian
dominance led by a worker from a shipyard, Lech Walesa. But
they had an Achilles' heel: Mr. Putin still controlled their
energy, their natural gas.
This past summer, guess what happened? A large LNG tanker,
American tanker from Cheniere, in Sabine Pass, docked in
Poland. It docked in Gdansk, Mr. Walesa's hometown. That simple
act said: Good-bye, Mr. Putin. Hello Uncle Sam. And that same
story is happening in other nations we care about, like Japan,
South Korea, and India.
And I will be honest with you, too, this energy boom has
been great for my home State of Texas.
My first question is for you, Secretary Winberg. Can you
talk about the administration's views on energy exports as a
national security matter? Is there coordination between DOE,
Department of State, Defense, USTR, Commerce, Ag, all the
people involved in trade, are they working together to make
sure this happens?
Because natural gas is not just fuel and power. Also big
for agriculture. Their crops, their stock, their fertilizers
come from natural gas.
And so are you guys looking with all those other guys to
make sure we seize this opportunity? Any questions, any
comments about that?
Mr. Winberg. Yes, we are. And I agree with your assessment
of the value that U.S. energy has brought to our friends and
allies around the world. We are working with other agencies,
other departments to continue that growth in U.S. energy
dominance and our ability to export to, again, our friends and
allies.
Mr. Olson. So, again, just to confirm, you see this as an
important part of our national security going forward, U.S.
exports of oil and natural gas?
Mr. Winberg. And coal.
Mr. Olson. And coal, you betcha, you betcha.
The next one is to you, Mr. Danly. As you know, Texans like
to brag we are big oil and gas, number one in America for over
half a century. That has not changed. But what has changed the
last 10 years? Wind power. Texas is number one in America, by
far and away, for wind power. And we are concerned about the
One-Mile Rule with wind power. As you said, FERC determines
that wind production is at the same site based on the One-Mile
Rule.
Can you talk about how FERC decided that standard and
whether it has been reconsidered over the years? Because people
are concerned about that back home, one-mile standard towards
wind production.
Mr. Danly. Certainly. So the one-mile standard was
implemented by Federal Energy Regulatory Commission regulation
and it is based upon a simple measurement of the distance from
one of the facilities to another. There is nothing complicated
about the specific site points of the location.
It can become complicated when there are multiple
generating facilities in propinquity with each other, but it is
basically a fairly straightforward locational distance
requirement.
Wind and solar, which have larger footprints, are open to
more difficult analysis, because you can say, at what point, at
what part of the, let's say, the PV array do you measure the 1
mile from or how far apart do the individual turbines have to
be. And so that is a consideration in an interest in reforming
the One-Mile Rule.
Mr. Olson. OK. I am out of time. One final question. It is
very important for people back home. Are you both happy the
Houston Astros are now the World Series champions, yes or no?
Mr. Winberg?
Mr. Winberg. Coming from Pittsburgh, that is a very
difficult question to answer.
Mr. Danly. I am happy that you are happy.
Mr. Olson. Well played, running for office.
Again, we are done with the questions from Members. I want
to thank all the panelists. I apologize for the votes. This
panel is adjourned. We are going to recess for what, for a
couple minutes, just to get the second panel set up. But thank
you, thank you, thank you.
[Recess.]
Mr. Olson. Welcome to our second panel. And I apologize.
Today, as you know, in DC is kind of a unique day, having some
things happen on both sides of the Hill that are very
important. And I just want to read you something from our whip:
``Members are reminded to remain flexible, as additional votes
may be possible.''
So I just want to apologize before. We will try to get this
done as quickly as possible. And I am so thankful you guys are
here.
And I will start out with the first questions and stick to
the 5-minute rule. Oh, yes, opening statements. I apologize. No
questions about the Houston Astros. We will just go from my
left to my right.
And, Mr. Kavulla, you are recognized.
STATEMENTS OF TRAVIS KAVULLA, VICE CHAIRMAN, MONTANA PUBLIC
SERVICE COMMISSION; TIMOTHY J. SPARKS, VICE PRESIDENT OF
ELECTRIC GRID INTEGRATION, CONSUMERS ENERGY; KARL R. RABAGO,
EXECUTIVE DIRECTOR, PACE ENERGY AND CLIMATE CENTER; PAUL N.
CICIO, PRESIDENT, INDUSTRIAL ENERGY CONSUMERS OF AMERICA; AND
CHARLIE RIEDL, EXECUTIVE DIRECTOR, CENTER FOR LIQUEFIED NATURAL
GAS
STATEMENT OF TRAVIS KAVULLA
Mr. Kavulla. Thank you, Vice Chairman. And Vice Chairman
Olson, Ranking Member Rush, it is great to be back before you
today and in front of all the members who are here of the
Subcommittee on Energy. Thank you for the opportunity.
My remarks today address only H.R. 4476, the PURPA
Modernization Act of 2017.
I am the vice chairman of the Montana Public Service
Commission. Today, I am also here on behalf of the National
Association of Regulatory Utility Commissioners, or NARUC.
NARUC is a nonprofit organization founded in 1889, and our
members are the public utility commissions in all 50 States,
the District of Columbia, and U.S. territories. It is our
members who are primarily responsible, as Congressman Walberg
has already pointed out, for implementing PURPA.
I would like to thank him for his efforts in working on
this legislation as well as his staff. And on behalf of NARUC,
I would like to express our support for it unreservedly.
PURPA is nearly four decades old at today's point, and it
reflects the reality of another era when renewables were
scarce, demand was booming, and the country looked for ways to
diversify its energy portfolio and shield itself from
overreliance on foreign sources of supply.
Today, the world has changed dramatically. The U.S. Energy
Information Administration reports that nearly half of utility-
scale capacity installed in 2017 came from renewable resources.
More than half of States, including my own, have their own
renewable energy mandates, and even those which do not, such as
Iowa, have shown substantial additions in renewable capacity,
not because of PURPA, but because of the falling cost curve of
renewable technologies, such as solar and wind.
A revision of PURPA, in other words, does not have to be
anti-renewables, and this bill we do not consider to be anti-
renewables.
To the degree that PURPA was enacted at a time when
renewable technologies were not the norm, that norm has changed
profoundly.
And there has been another significant transition too.
Nearly all States today require power generation to be procured
through competitive means. Even in States that do not have
consumer choice or are restructured, monopoly utilities are
nonetheless typically required to procure resources through
competitive solicitations.
In short, other events have transpired that have
accomplished PURPA's twin goals of advancing QF technologies
and introducing competition into the sector, rendering PURPA
itself largely needless.
PURPA mandates that power sales be at the utility's avoided
cost, which on its face sounds unobjectionable. Conceptually,
it means that consumers would pay no more or no less for PURPA
resources than they would pay for non-PURPA alternatives.
However, FERC has long held that PURPA requires that States
forecast the utility's avoided cost into the future for the
purpose of offering QFs a long-term contract at
administratively determined rates. This type of administrative
pricing essentially requires States to guess at future market
prices, allowing QFs to lock in rates that often substantially
overstate the actual avoided cost.
This approach is fundamentally different when compared to
procurements that use competitive mechanisms, like auctions or
requests for proposals, to discover the least-cost resources.
And, indeed, courts have recently determined that
competitive programs that attempt to implement PURPA are at
odds legally with the law. Even California, which has done
probably more than any other State to implement pro-renewable
policies, has found that its PURPA program compliance is not in
compliance with the law, according to a recent court ruling.
It is almost universally acknowledged that a competitive
process is optimal, more optimal than administrative pricing,
because generators there with a profit motive can vie against
one another for the business of the Nation's consumers, and
that this is a best practice, compared with prices set by a
State commission through a trial-like proceeding where the
cost-reducing aspect of competition is absent.
Subsection 4B forthrightly acknowledges this and would
allow competitive solicitations to substitute for
administrative pricing regimes.
In addition to the flaws underlying the so-called avoided
cost pricing, PURPA's mandatory purchase obligation is a poor
match to the relatively flat and sometimes even declining
customer demand for electricity seen in many parts of the
United States.
In many parts of the country, new power plants of simply
any kind may not be needed, a testament, in large part, to the
increasing energy efficiency seen in the market, and yet
unneeded power plants are in some places nevertheless being
brought online, due to PURPA's mandatory purchase obligation.
In sum, PURPA's flawed approach to administrative pricing
and its mandatory purchase obligation is harming consumers.
Ironically, it is even at odds with the values of competition
and conservation that are at the heart of PURPA itself.
Again, I would like to express NARUC's thanks to
Congressman Walberg and the subcommittee members for
considering this piece of legislation. Thank you.
[The prepared statement of Mr. Kavulla follows:]
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Mr. Olson. Thank you, Mr. Kavulla.
The Chair now calls upon Mr. Sparks, who is the vice
president of Electric Grid Integration with CMS Energy. Five
minutes, sir.
STATEMENT OF TIMOTHY J. SPARKS
Mr. Sparks. Vice Chairman Olson, Ranking Member Rush,
Representative Walberg, and distinguished members of the
subcommittee, thank you for the opportunity to testify
regarding H.R. 4476, the PURPA Modernization Act of 2017. My
name is Tim Sparks, and I am vice president of Electric Grid
Integration for Consumers Energy, referred to throughout this
testimony as CE.
CE is the principal subsidiary of CMS Energy and is
Michigan's largest energy provider, serving natural gas and
electricity to 6.7 million of the State's 10 million residents.
CE and parent company CMS Energy were recently honored as the
top performer for Michigan companies by Newsweek in its annual
green rankings.
Recent activities include helping our customers save over a
billion dollars through energy efficiency, producing 10 percent
of our customers' energy from renewables, reducing our waste
use for electric generation by 17 percent, removing 1 million
cubic yards of landfill space in 2017, closing 7 of the
company's 12 coal-fired power plants, opening two community
solar power plants with a third on deck for 2018. We have
learned that we can increase renewable generation and keep
costs low for our customers.
Enacted 40 years ago, PURPA mandates that electric
utilities purchase power from qualifying generating facilities
at forecasted prices set by State public service commissions.
Now, four decades later, America's energy landscape looks
nothing like it did in the 1970s, and it is therefore
imperative that PURPA be modernized. H.R. 4476 takes a modest
but important step in this direction.
First, the bill provides clarification to stop abuse of the
One-Mile Rule. H.R. 4476 allows a challenge to be pursued
should QFs not properly adhere to the criteria for calculating
capacity and avoid gaming the system.
Second, the bill recognizes the QFs between 2.5 megawatts
and 20 megawatts already have nondiscriminatory access to
markets in those parts of the country with organized regional
transmission organizations, or RTOs.
RTOs assure unbiased open access to the electric
transmission system within their footprints. Many of the QFs
within which Consumers Energy was obligated to contract over 30
years ago now have access to the transmission system as an
independent power producer.
Without recognizing this access to the electric
transmission system and electric market, Consumers Energy
estimates its customers will pay approximately $18 million
annually above market prices to QFs larger than 2.5 megawatts.
This increased cost of our customers is formulated by the
State-calculated avoided cost rate and applied to the QF's
output.
Recently, the Michigan Public Service Commission announced
a new avoided cost rate for Consumers Energy. While we
appreciate their steadfastness in doing their due diligence as
mandated by Federal law, the rate still remains well above
market.
To illustrate this point, in 2017 Consumers Energy received
683 applications from new independent generators looking to
interconnect to our electric system as potential PURPA QFs. The
5-year average prior to the new MPSC rate order was just shy of
200 applications per year.
The existing and potentially new PURPA contracts greater
than 2.5 megawatts could cost our customers an estimated $35
million annually above market over the next 5 years.
The third provision in the legislation recognizes the
critical role State public service commissions play in keeping
energy costs low for customers. The bill would allow greater
flexibility to suspend the mandatory purchase obligation when
additional electric capacity is not needed by the utility's
customers.
I want to be clear on one thing: Consumers Energy is not
advocating for less renewables in our energy mix. In fact,
since 2005 we have increased our renewable portfolio from 3
percent to 10 percent and will meet Michigan's new renewable
requirement of 15 percent by the end of 2020. We have
accomplished this through competitively bid renewable contracts
and company-developed assets unaided by any expansion of higher
cost PURPA QFs.
In closing, PURPA served its original intended purpose of
expanding renewables. However, as shown, the law is simply
outdated and our customers are bearing the price. Between 2006
and 2015, Consumers Energy customers paid 300 million above
market prices for electricity from PURPA generators less than
20 megawatts. It is time for this law to be updated, which is
why we strongly urge the passage of H.R. 4476.
I thank you for your time today.
[The prepared statement of Mr. Sparks follows:]
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Mr. Olson. Thank you, Mr. Sparks.
The Chair now calls upon Mr. Karl Rabago. Karl is the
executive director of Pace Energy and Climate Center.
Sir, you have 5 minutes, opening statement.
STATEMENT OF KARL R. RABAGO
Mr. Rabago. Thank you, Chair Olson, Ranking Member Rush,
members of the committee.
[Continuing after audio error] against market abuse and
improper discrimination.
My name is Karl Rabago. I am appearing actually in my
capacity as a principal of Rabago Energy LLC. I worked in the
electricity sector for about 30 years, after spending 12 years
as a cavalry and JAG officer in the United States Army. I have
been a public utility commissioner in the State of Texas, a
Deputy Assistant Secretary at U.S. DOE, a utility executive,
and a frequent expert witness in State proceedings.
I am also the executive director of the Pace Energy and
Climate Center at Pace University in New York. I am not
appearing before you in that capacity, but I do bring greetings
from one of my office mates, former Congressman Richard
Ottinger, who founded the center where I work and who codrafted
and sponsored PURPA when he sat in this body 40 years ago.
The first thing I am going to do is describe some very
serious concerns with H.R. 4476. Second, I am going to share
with you some general thoughts about PURPA.
H.R. 4476 should be rejected by this body in favor of a
more measured and competition friendly approach. Section 2
would eliminate FERC's One-Mile Rule and instead mandates a
rebuttable presumption, inviting utilities to use FERC
litigation as an anticompetitive tool.
The result would make project financing more expensive or
even impossible for private sector small power producers who,
unlike monopoly utilities, cannot pass their litigation costs
onto captive ratepayers.
Section 3 would create a presumption that all facilities
2.5 megawatts or greater in size have nondiscriminatory market
access, but the record does not support that presumption.
Section 3 would expose many small power producers to market
access discrimination and would stifle competition.
Section 4 puts the utility fox in charge of the power
sector hen house. Under the bill, the monopoly utility can
almost unilaterally determine competitors' market
opportunities. It would take the small power sector back 40
years to the days when utilities ran their markets like cartels
and consumers paid the price.
In sum, PURPA modernization, as proposed in the bill, tilts
the law so steeply in favor of monopoly utilities that it would
frustrate Congress' long history of efforts to grow and improve
competitive markets in the electricity sector.
Now just a few general issues.
PURPA is 40 years old, but we still do not have truly
competitive and nondiscriminatory markets for qualifying small
power producers and cogenerators. There are still many States
where utilities, and even some of their regulators, perpetuate
the very problems that led to PURPA. The real problem today is
the need for modernization of a utility business model that is
now more than 100 years old.
Second, PURPA is working well in many places. The Michigan
Public Service Commission recently concluded a case involving
Consumers Energy and all the utilities in Michigan,
demonstrating that it was ready, willing, and able to address
questions like how to use IRP processes to inform avoided cost
calculations, how to account for and keep up with market
changes, and how to chart a course for future improvements in
avoided cost methodologies.
Third, there is a competitively significant difference
between how utilities want to treat qualifying facilities and
how they treat themselves. Utilities' shareholders would never
build power plants based on a 2-year contract. They would never
limit their earnings to marginal cost-driven market prices.
They can't even keep their existing generators running with
those prices today. And utilities would never wait until there
was an energy or capacity shortage crisis to begin planning for
or building a new power plant.
Fourth, market prices and competitive solicitations can
inform but cannot replace the avoided cost determinations under
PURPA. Market prices are the result of bidding strategies and a
system designed to generate lowest short run prices for energy
and capacity, not build power plants. Competitive bids tell you
the lowest bid anyone is willing to offer, but that does not
tell you what anything is worth.
To establish full and fair avoided cost, more work does
need to be done by State regulators. That work increasingly
includes evaluating distribution level costs that are avoided
by small generators, values that FERC rules and procedures may
actually not fully assess.
So, finally--well, I will just stop there and say thank you
very much for the opportunity to address this committee, to
address these important issues, and I look forward to standing
for your questions.
[The prepared statement of Mr. Rabago follows:]
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Mr. Olson. Thank you, Mr. Rabago. And thank you also for
your service to our Army. Please pass on to Chairman Shimkus, I
just want to say congratulations, congratulations. In 16 years
your Army has beaten my Navy twice, but two in a row, so well
done.
Mr. Rabago. As a former professor at West Point, I have to
tell you, it felt good this year. But that doesn't cover all of
the problems.
Mr. Olson. Well said.
Our next witness is Paul Cicio. And Paul is the president
of the Industrial Energy Consumers of America.
Welcome back. You have 5 minutes, Mr. Cicio.
STATEMENT OF PAUL N. CICIO
Mr. Cicio. Thank you, Vice Chairman Olson and Ranking
Member Rush and subcommittee members. Thank you for this
privilege.
Regarding H.R. 4476, the PURPA bill, we extend a thank you
to Representative Walberg for exempting manufacturing
cogeneration from the proposed changes to PURPA. The exemption
recognizes that manufacturing companies are not in the business
of generating and selling power and are not creating market
problems.
However, it is very important that the bill also exempt
manufacturing company PURPA facilities that are classified at
FERC as small power producers. To not do so would negatively
impact their ability to produce low-cost power thereby reducing
competitiveness and jobs. Congress should not pull the rug out
from underneath these capital investments that were made with
PURPA regulatory assurances.
Also, manufacturing companies who have installed wind and
solar units inside their fence line or intend to do so in the
future for purposes of reducing electricity costs or reducing
greenhouse gas emissions would be negatively impacted. We do
not believe that that was the intent of Mr. Walberg. We look
forward to working with him to exempt this class of QF
facilities.
Regarding LNG exports and H.R. 4605, IECA is strongly
opposed to this legislation. The bill presents Members of
Congress with a decision: Either to vote for the bill and
support the oil and gas industry or oppose the bill and support
your voters back home who risk higher natural gas and
electricity costs long-term.
DOE's own LNG study that is entitled ``Macroeconomic
Impacts of Increased LNG Exports From the United States''
illustrates that the net economic benefits of LNG exports
almost exclusively serve the oil and gas industry and the
public is impacted economically. The report concludes, quote,
``Expansion of LNG exports has two major effects on income. It
raises energy costs and, in the process, depresses both real
wages and the return on capital for all other industries,''
that is ``all other industries,'' unquote.
Raising energy costs, depressing real wages, and the
reduction of the return on capital on U.S. industries, one
would conclude that increasing LNG exports cannot possibly be
in the public interest. These impacts are exactly what happened
in Australia.
The bill is anti-consumer and removes the Natural Gas Act
public interest test, which Congress put in place, which you
put in place wisely.
Importantly, the legislation is actually not needed.
Volumes already approved by the Department of Energy for
nonfree trade and free trade agreement countries is equal to 71
percent of 2016 demand. That is 53 billion cubic feet a day.
The excessive volume approved by the Department of Energy
is a legal issue. Exporting 71 percent of U.S. demand cannot
possibly be in the public interest. It is a violation of the
Natural Gas Act.
The DOE has failed to implement its regulatory
responsibilities under the Natural Gas Act. It has not acted to
protect the U.S. economy and the consumers from excessive
future LNG exports. Congress is responsible for assuring
implementation of the Natural Gas Act and safeguarding the
American public with affordable and reliable natural gas.
The Natural Gas Act is the law of the land. We urge the
subcommittee to act to provide oversight of DOE-approved
volumes and make remedy to protect the public interest. This is
particularly important given that the 2017 AEO demand forecast
indicates that 56 percent of the lower 48 natural gas resources
would be consumed by 2050.
I look forward to your questions.
[The prepared statement of Mr. Cicio follows:]
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Mr. Upton [presiding]. Thank you.
Mr. Riedl.
STATEMENT OF CHARLIE RIEDL
Mr. Riedl. Good afternoon, Subcommittee Chairman Upton,
Subcommittee Ranking Member Rush, and members of the committee.
Thank you for the opportunity to testify today. My name is
Charlie Riedl. I am the executive director of the Center for
Liquefied Natural Gas.
CLNG represents the full LNG value chain, providing it with
unique insights on the benefits LNG brings to the U.S. and
global economies. CLNG operates within the Natural Gas Supply
Association, a national trade association that has represented
the U.S. natural gas industry for more than 50 years. This
gives us a deep understanding of the entire U.S. natural gas
supply portfolio.
I am pleased to be here today in support of Congressman
Johnson's efforts to improve the liquefied natural gas
permitting process and encourage members of the committee to
support his legislation. Representative Johnson has been
steadfast in spearheading legislative solutions to improve the
permitting process for liquefied natural gas facilities.
And the time for action is now. As Representative Johnson
has said himself, the window of opportunity for LNG exports
will not remain open indefinitely. The U.S. is awash with
affordable natural gas. And as other countries look to enjoy
these same benefits the United States enjoys, we are in a
unique position to meet the growing demand globally.
However, there is a tight window to capture the market
share, and providing regulatory and legislative certainty will
help U.S. exporters claim our share of the global market. By
allowing the United States to export natural gas after
completing the FERC review process, as proposed in H.R. 4605,
the Unlocking Our Domestic LNG Potential Act, a more certain
and consistent regulatory environment would be created to
unlock that future potential.
The length of time for DOE permitting has varied widely to
date. The first six LNG projects had delayed an average of 2.6
to complete the permitting process. That period of review is
unnecessarily long, and we can and should do better.
The LNG export opportunity, the very reason we are able to
have this conversation today, is because of our vast supply of
natural gas. It is the supply that is growing by the year that
underpins the economic and environment benefits we can achieve
with exports. Technological breakthroughs in the oil and
natural gas industry have unleashed an energy renaissance,
establishing the United States as the world's largest natural
gas producer.
As I speak today, the U.S. natural gas resource has reached
an all-time high. According to the U.S. Potential Gas
Committee, these numbers continue to increase, up 68 percent
since 2005, according to the U.S. EIA.
This alone is impressive, but consider this: During that
same time, our total natural gas resource estimates also
continued to increase.
New domestic supplies of affordable natural gas have
created competitive advantage for U.S. manufacturers, leading
to greater investment in industry, investment in jobs, and
creation of additional workforce. Experts forecast additional
industrial investment of $135 billion to build 59 new
manufacturing projects and expand 11 additional projects in the
next 5 years.
There are those who suggest we must choose between exports
and our domestic manufacturing sector, but study after study
tells us otherwise. According to a study from the Department of
Energy, exports will not compete with our manufacturing sector
for supply. And it is important to note that additional exports
will be met by new production of natural gas.
What we are finding is that LNG exports can and will react
to both the global marketplace and domestic demand. Less than 2
weeks ago, the Northeast was hit by the bomb cyclone, one of
the coldest weather systems to reach our shores in years, and
natural gas met record-setting levels of demand admirably. As
the bomb cyclone moved along the East Coast, the import
customers of the Cove Point facility in Maryland responded to
price signals and delivered LNG gas to meet domestic consumer
demand, demonstrating the flexibility of LNG at a time of
increased demand.
In-depth research by DOE in 2015 found that exports are a
net benefit to the U.S. economy. The DOE study determined that
increased production will drive investment to revitalize
economically depressed regions of the U.S. and bring thousands
of jobs to those areas. In fact, the September 2017 study by
ICF showed that exports could generate more than 450,000 jobs
and more than $73 billion for the economy by 2035.
LNG exports do more than just provide jobs and investment.
They offer an opportunity for also strengthening America's
foreign policy interests abroad. LNG exports are already
supporting our national security interests by strengthening the
energy security and weakening those nations who look to use
natural gas for political leverage.
So in conclusion, the promise of more LNG facilities in the
United States brings a promise of a new era benefiting the U.S.
economy and our global allies. Our enormous natural gas
resource base ideally positions the U.S. to compete on a global
level for the market share.
Free and open trade of U.S. LNG sends the important signal
of unencumbered exports to the market. Artificially limiting
LNG exports could undermine commitments to free and open
markets as well as lead to complaints in international trade
cases in the future.
In closing, we commend Representative Johnson for his
leadership and steadfastness in championing LNG over the course
of the last several years. His legislation would ensure that
consistency in the review process without sacrificing the rigor
and thoroughness or our review.
I thank you for your time today and look forward to
answering your questions.
[The prepared statement of Mr. Riedl follows:]
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Mr. Upton. Thank you. Thanks all for your testimony.
Since I was a little late coming back, we will start with
Mr. Olson for questions.
Mr. Olson. I thank the chairman.
Again, welcome to our five panelists.
My first question is for you, Mr. Riedl.
As you heard in the first panel, I was pretty strong about
LNG exports, that they are a national security matter for our
country. We mentioned some countries like Lithuania, Poland,
South Korea, India, Japan. Can you talk about some countries
like that or other countries where our gas has been shipped,
can be shipped, and about what upcoming projects might we send
overseas, how can we expand that market?
Mr. Riedl. I can answer the question, and thank you for it.
So a couple of things. You touched on some of the countries
that we are already sending gas to. To date, we have got one
facility operating in the lower 48 that is exporting natural
gas, a second that is going to come online very soon. That
single project that is exporting right now out of the U.S.,
Sabine Pass Cheniere project, has exported to over 25
countries.
That is expected to continue to increase. And I think that,
as you continue to see additional cargoes of LNG moving into
Europe, as they start to see the reliability of U.S. LNG coming
there, other countries are going to look to come online.
Germany just opened an LNG import facility in the Port of
Hamburg. So I would expect there is another opportunity for
U.S. LNG to start being delivered to Germany.
But I think the other area that we didn't talk about is in
South America, in Latin America. There are enormous
opportunities there that we haven't necessarily fully exploited
yet.
Mr. Olson. And do you agree, if we don't export our LNG and
don't sell it to overseas, that market will be swamped by other
countries, other entities, that we will drop the ball, let them
control these nations or have influence with them that we
should grab right now? Can we do that? And can you confirm that
that is a benefit of exporting our liquefied natural gas?
Mr. Riedl. Absolutely. Yes. The timeframe, as I said in my
testimony, is limited for this opportunity for U.S. LNG. You
think about the length of time that contracts are typically
signed, 15- to 20-year-length contracts. So right now countries
are looking to purchase LNG, and if we don't capitalize on it,
there are other exporting countries that absolutely will.
Mr. Olson. On our trip with our Chairman Upton and Chairman
Walden to Asia a couple years ago, we went to Japan, China, and
South Korea. All those nations, especially Japan and South
Korea, were just craving our exports of our oil and natural
gas. They are tired of being strung out by Russia and OPEC.
They want that freedom, that independence, and right now we can
do that. Thank you.
My final question for you is I kind of want to make you--I
am not going to ask you guys, ``Do you like the Houston Astros
being the world champs?'' But they have a player named Jose
Altuve, MVP of the American League, a little man about 5 foot 5
tall, but a great power hitter.
I will make you Jose Altuve. I am going to throw a big, fat
pitch right down the middle for you to knock out of the park.
My question is, what are some of the benefits to a State like
my State of Texas from increased exports of LNG?
Cream that pitch.
Mr. Riedl. Happy to.
There are a couple. One is obviously the job creation that
comes along with it here domestically.
The other major opportunity that I would point to is the
obvious, is the geopolitical impact. You mentioned some of
those countries that are craving U.S. LNG.
The third is the environmental impact that we could have in
helping other countries meet some of their environmental
standards. And you look to a country like China, for instance,
and Beijing. Last quarter they reported a 54 percent reduction
in CO2 emissions. Greenpeace actually reported that. So you
start to see the impact of switching from other fuels to
natural gas and the environmental impacts that would happen
there.
So those are the three that I would point to.
Mr. Olson. And obviously jobs back home. A little town
called Beasley, Texas, there is a company there called Hudson
Products. They make the compressor blades for these LNG bundled
shares to be passed to the top of those trains you see that--
they probably sold 5,000 units, and more are coming. So that is
big for Texas, small little towns thriving because of our
export of liquefied natural gas.
My final is for you, Vice Chairman Kavulla.
We are in a very different world than we were when PURPA
was passed a long time ago. And as you know, as I mentioned, my
State, number one for wind power in America. In fact, it is the
fastest growing job sector in our State. And there have been
hours the past year where wind has supplied over 50 percent of
our statewide power--50 percent.
If we make changes to PURPA, do you think it would change
the investment decision to keep building wind turbines in a
State like mine?
Mr. Kavulla. Vice Chairman Olson, no, I do not. I think
renewables have been deployed throughout the country in
response to price signals that clear through open markets and
competitive solicitations issued by individual utilities and
overseen by State commissions.
And if you look at my testimony, you will see that that is
how the vast majority of renewables are being brought online;
in contrast to renewables that come to State commissions and
litigate in front of them asking for us to play crystal ball
reader about what future market prices are.
Mr. Olson. Thank you.
My time has expired. I yield back.
Mr. Upton. Mr. Rush.
Mr. Rush. I want to thank you, Mr. Chairman.
Mr. Cicio, as you may have heard during the first panel, I
asked both representatives from FERC and DOE if they had any
concern with hastily approving LNG exports and impact that
might have on domestic natural gas consumers, manufacturing
competitors, and American jobs.
Were you satisfied with their answers?
Mr. Cicio. Thank you for that question.
No, not at all. You know, we have examined all of the DOE
studies that were due, that were completed, to justify the
approval of nonfree trade agreement LNG exports. And we find
them woefully inadequate to establish whether or not it is in
the benefit of the country and satisfies the public interest.
Where we are today is that a total of around 53, 54 BCF a
day of LNG exports for free trade and nonfree trade have been
given final approval. That is 70 percent of U.S. demand in
2016. Shipping that volume cannot possibly be in the public
interest.
So we are unsatisfied with that. We think that they have
not fulfilled the Natural Gas Act and the regulatory
responsibility to protect the consumer long-term.
This is not a short-term concern. This is a long-term. But
we are making decisions today as to whether these terminals get
approved and then will be built later on. So this is why we
have to be careful not to overcommit legally on approving these
applications today for the future demand that will happen.
Mr. Rush. Sir, I want to thank you.
Mr. Rabago, in your testimony you note that H.R. 4476 will
grant utilities full control to determine the size of their
competitors' market. Additionally, under this bill, a utility
could refuse to purchase energy or capacity from a qualified
small power facility if the utility unilaterally determined
that it has no need for energy or capacity in an IRP process.
Why is this problematic? And what impact might this
provision have? Who would be responsible for oversight under
this section of the bill as it is currently drafted?
Mr. Rabago. Thank you, Ranking Member Rush, for that
question.
In order to answer it, we have to understand that there is
IRPs and then there is IRPs. We have only 40 States in this
country, as I believe, or roughly 40 States in this country
that even have IRPs.
The level of regulatory oversight by State commissions of
those IRPs varies dramatically, the time period that those IRPs
are meant to address varies dramatically, and the authority of
the regulators to actually dig into the details of these
integrated resource plans varies dramatically.
In some places, basically the utility puts together their
set of assumptions, their set of evaluations about resource
needs, and then basically sends it over to the Commission. And
the Commission may or may not even have authority to read it,
much less question it or approve it.
So what we are really doing is saying that in a planning
process, which isn't even focused on procurement under section
4(a) and (b) in the proposed bill, that a utility can use that
to definitely exclude a competitive offer of energy without any
real regulatory oversight.
As you heard earlier on, even FERC is unsure the extent to
which they have any authority to look at the use of these IRP-
type decisions as a subterfuge for basically undermining
competition. My concern, therefore, is that section 4(a) and
(b) essentially puts the utility in the driver's seat and a lot
more qualifying facilities will be denied access to markets as
a result.
Mr. Rush. Thank you, Mr. Chairman. I yield back.
Mr. Upton. Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Riedl, thank you for your kind words. We have been
working for a long time on the LNG issue and the ability to put
America into the LNG markets globally.
You know, my district in eastern and southeastern Ohio that
sit on top of the Utica and the Marcellus Shale is no stranger
to the economic benefits of the shale energy boom and the vast
amount of gas at our disposal.
With the Sabine Pass facility already exporting LNG and
with more export facilities under construction, new job
opportunities have simultaneously emerged in my district, a
part of the country that has been impoverished over a number of
years.
As pipeline infrastructure is laid, combined-cycle power
plants are being built, while ethane crackers and ethane
storage possibilities begin to take shape or are already under
construction.
In many cases, local budgets of counties and townships have
also been saved from oil and gas tax revenues that have
increased their coffers. In fact, the top six shale counties in
my district have collected more than $43.7 million in real
estate property taxes from 2010 to 2015. That is a lot of money
for Appalachia. The median income within those counties has
also risen over a similar period.
So, Mr. Riedl, the Appalachian region has clearly benefited
from the use of natural gas in various ways. Do you expect this
trend to continue as more export facilities come online?
Mr. Riedl. I think the short answer is, absolutely, we do.
We would expect that, I think, if you look at sort of the
number of jobs that the oil and gas industry already supports,
10.3 million jobs, if you look at where we are projected to go.
We have, like I said, one facility operational, one set to
become operational very soon, and another four that are under
construction. I would expect that there would be somewhere in
the neighborhood of 10 facilities operational in the next 5 to
7 years.
And if you look at sort of the amount of opportunity that
those facilities represent, roughly 10 BCF a day projection of
exports, it only is going to mean that there is more
opportunity for those States that are producing the gas and
need to then get that gas to the facilities to have
opportunities for additional demand.
And as I mentioned in my testimony, it is all new
production that is going to meet that demand from these LNG
facilities, which means additional jobs, because there are
going to be additional rigs running. And that ripple effect on
down the line in the support opportunities, the jobs that would
come out of that as well, is one that obviously becomes a
multiplier pretty quickly.
Mr. Johnson. OK. Well, thank you.
Facing competition from other countries, and we know there
is competition out there, I understand, as you mentioned, that
our window of opportunity to export LNG is limited.
What is a realistic outlook for global LNG demand over the
next 20 years? And what does that outlook mean for companies
wishing to build LNG export facilities here in the U.S.?
Mr. Riedl. I think that that answer, if you look at sort of
the current demand today, roughly 35 BCF a day is the current
demand, there are projections that would show that doubling in
the next 20 years. And if you look at sort of where we are from
a production of LNG globally, we are expected to start having a
shortfall pretty quickly with coming demand in the mid-20s,
depending upon which academic study you would look at.
But that means is the opportunity for U.S. natural gas, and
LNG exports in particular, those long-term contracts that are
going to start popping up here in the next few years, U.S. LNG
is going to be competing on a global level for those contracts.
And so if we look at potential doubling of LNG demand in
the next 20 years, our opportunity to look at some of the
projects that are currently awaiting approval, we don't have a
lot of time to wait before they are going to need to start
making investment decisions to build those facilities to meet
that coming demand.
Mr. Johnson. Do you think there is going to be any market
pressure to allow only so many LNG facilities to be built?
Mr. Riedl. Sure. So if you look at the projections of where
total demand is, how contracts are already set up with other
countries that are exporting LNG, yes, EIA projects that out
through 2050 roughly 12 BCF of LNG exports, which account for a
much smaller percentage of our overall production of close to
40 BCF. So, absolutely, the market is going to limit how much
export we will be able to capitalize on.
Mr. Johnson. OK. One final question, and different experts
give different opinions of this. But what is your realistic
projection of what our U.S. natural gas supplies are? What do
you think?
Mr. Riedl. Well, I think that it depends upon--EIA is
typically where I would point to as far as the potential
opportunity, and a number that I continue to hear is somewhere
in the neighborhood of 2 to 3 TCF.
Mr. Johnson. OK.
Mr. Chairman. I yield back. Thank you.
Mr. Upton. Mr. Green.
Mr. Green. Thank you, Mr. Chairman.
And I don't know if you all were here earlier. I am kind of
torn because I am from Texas. But I also have an area that has
chemical plants, and we have seen just a huge number of
expansion of those plants in east Harris County and along the
Texas Gulf Coast.
My colleague from Texas knows that we have some ice cream
in Texas, Blue Bell ice cream, and their slogan is that we eat
all we can and we sell the rest.
That is where I come from. I want to be able to use that
for relatively small, cheaper utilities, so we can bring
manufacturing even more in. But also for, in our area, my
manufacturing, refineries, and chemical plants. And I don't
mind selling the rest. I just want to make sure we can still
continue the growth in our area.
Mr. Riedl, can you talk a little bit about how the LNG
market is evolving from a potential market with facilities
waiting for approval? And what are we learning now we are
finally up and running some of those facilities?
Mr. Riedl. Great question and I appreciate the opportunity
to share some thoughts on that.
I think the big thing that we continue to focus on is the
long-term opportunity for LNG. And where we look at it here in
the United States, as I was talking to Congressman Johnson's
question, we are still talking about an excess of gas.
So we are meeting all of our needs for gas. EIA has
projected that we are going to meet all of our needs for gas in
the future as well. And we are going to have a surplus of gas.
And when you look at what EIA projects, dry gas production
increasing year over year for the next few years, what that
gives us is an opportunity, looking out to 2019, even, we are
talking about 5.5 BCF a day of exports. And so when we talk
about a total production number close to 80 BCF a day, we have
an enormous opportunity to still capitalize and room to grow,
as mentioned in the first panel.
Mr. Green. OK. A question I have, and for are the entire
panel, how big is our natural gas supply in the U.S., looking
in that crystal ball in the future? Can we support both a huge
domestic demand as coal plants continue to close and a large
LNG export footprint?
Why don't we start at this end of the table. Do you think
those projections where we can have our ice cream and eat it
and sell it too?
Mr. Kavulla. You are putting me on the spot. But since
PURPA is my MO, but I will say, in eastern Montana, western
North Dakota, we have still had a big problem with flaring
natural gas because we can't make productive use of it coming
off of the oil patch.
Mr. Green. I will respond. I go through south Texas a lot,
and there is still a lot of flaring in Eagle Ford that, if I
was a royalty owner there, I would be upset about that. You are
putting that product into the air that we could sell to
somebody.
Mr. Sparks.
Mr. Sparks. Yes. Part of my responsibility at Consumers
Energy is fuel for generation, which includes natural gas. And
everything that I have seen shows that there is an abundance of
natural gas going forward. And I would say that probably the
limiting thing more is pipeline capacity, to get it from the
production to facilities, than it is the actual natural gas
itself.
Mr. Green. And a comment too. I know West Virginia and Ohio
have trouble getting those pipelines up to the Northeast where
they really do need the natural gas.
Mr. Rabago. This is not my field of expertise, but living
in the Northeast and looking at the reliability assessments
that are produced by NERC for our region, I would share Mr.
Sparks' statement that up there our issue is transport.
We don't make a lot of it directly there. We are concerned
about the pipes. And from Texas, you will remember once upon a
time when Mr. Wyatt realized that, at a certain price, it is
cheaper to send lawyers down the pipeline than gas.
Mr. Green. Having known Oscar Wyatt for most of my life, I
understand.
Mr. Cicio. The only independent source of how much natural
resources we have is EIA. And we have used their AEO 2017
demand to 2050, 33 years away.
And when we look at domestic consumption, LNG exports that
they have forecasted and pipeline exports that they have
forecasted to Mexico on a net basis, so it is fair, it consumes
56 percent of all of our lower 48 natural gas technically
recoverable resources. Technically recoverable does not mean
than it is economically recoverable. So 56 percent.
If we put in that scenario, and it is in my testimony, that
we can assume that all that has been approved is in that 33
years, you use up 80 percent of all the natural gas resources.
Mr. Green. Mr. Riedl.
Mr. Riedl. So I think that I would say, the short answer
is, yes, we can. We are not necessarily supply constrained. We
are demand constrained. That is, we are needing to find markets
for this gas, which is why we are talking about LNG exports,
which is why, 10 years ago, we were talking about imports and
now talking about exports, because we found so much gas.
Mr. Green. Mr. Chairman, thank you.
I have a concern, no crystal ball, because when we put
something in the law and take away oversight, I would be more
concerned, not maybe a hard hand of oversight, but somebody
minding the store to make sure that we are not raising our
utility costs. Because I remember when the price of natural gas
in the North Sea was cheaper than it was from Louisiana and
Texas, and we lost chemical jobs over to Rotterdam. And I don't
want to get to that point.
So that is why I think the bill we need to look at, to see
somebody can go in, whether it be Department of Energy, and say
this is a national security issue.
So, Mr. Chairman, I thank you for the time.
Mr. Upton. Mr. Flores.
Mr. Flores. Thank you, Mr. Chairman.
I want to assure my friend from Texas on the other side
that, as a former member of the oil and gas business for years,
we have got plenty to eat what we want and sell the rest for
decades, if not centuries.
Let's talk about PURPA first, if we can.
Mr. Kavulla, you heard from your neighbor there at the
table the impact that these PURPA contracts are having on their
company. My local community is powered by a muni. And so we
have smaller electricity utilities out there, munis, co-ops,
and so forth.
What is the impact on those folks? They don't have a
shareholder base, if you will, to spread the economic damage of
these PURPA contracts. What happens to the munis and the co-
ops?
Mr. Kavulla. In my view, the smaller the consumer base of
the utility, the greater the potential magnitude of erroneous
price forecasting from the regulator would be. In the case of a
municipality, they are likely, I assume in Texas, self-
regulated by their city council. These are people who are
probably even in less of a good position than I am to try to
guess about the future market prices of energy for the purpose
of establishing a rate that should be----
Mr. Flores. Well, kind of let's cut right to the chase. Who
gets hurt?
Mr. Kavulla. The consumers.
Mr. Flores. Exactly. Yes. There we go. OK. And I am sorry.
I wasn't trying to cut you off. I have just got some other
things that we need to talk about.
Mr. Riedl, I appreciate your testimony today. And I have
been fascinated by your neighbor at the table and some of the
things he said. And as somebody who is an expert in this field,
I do have a good feel for the supply of natural gas in this
country and the huge impact it has had not only on our economy,
but also geopolitically.
How do you respond to his claim that our energy abundance
is a myth?
Mr. Riedl. It is a great question, and I appreciate the
opportunity to talk a little bit about that.
I think that there are a couple of points that I would
point to. One, if you look at--Congressman Johnson stepped
away--but the State of Ohio alone in 2016 added 5 TCF of
natural gas proven reserves.
So I think that there is some miscommunication here or mix-
up here in what we are talking about with proved reserves and
technically recoverable reserves. And how the market will
actually dictate demand will dictate how we recover those
reserves and at what price point we recover them.
So when we talk about a supply situation, it is driven by
market demand. And so as market demand continues to increase,
we are able to respond to that with supply. And we have seen it
happen time and time again since the discovery of the shale gas
in the early 2000s.
Mr. Flores. Well, the other thing that fascinating too is
that technology continues to change the paradigm, and it is
happening at an incredibly rapid rate. If you could have told
me you would get oil and gas out of some things we are getting
it out of today, if you had told me that 15 years ago, I would
have thought you were smoking some bad dope. But it is really
interesting. I guess I got to be careful of my record here,
don't I?
I want to talk about the impact on jobs and economy a
little bit. The oil and gas industry was one of the bright
spots at a time when our labor markets were struggling.
Particularly if you look at the 2008-2016 time period, there
were some times during that time period, if we hadn't had the
increase in oil and gas jobs, that that job growth would have
been negative.
And so it has been a hugely positive factor for economic
opportunity for what I would consider the working class
Americans in this country, stable jobs, great incomes, great
benefits.
And so I want to drill in on a more of a micro basis. How
many jobs are typically created by the construction, first, and
then the operation of an LNG facility?
Mr. Riedl. So construction, and if you look at the sort of
timeframe of construction projects, one of the fastest moving
projects that we have going right now is the Cove Point
project, which is set to begin operation. And that is somewhere
in the neighbor of 40 months of construction time.
And that creates somewhere between the neighborhood of
4,000 to 7,000 job at each one of these facilities. And so if
you talk about we are building four more, you can pretty
quickly do the math on how many construction jobs that that
supports over a number of years.
And then if you think about sort of from an operational
standpoint directly at a facility, it is not an enormous number
of jobs, but we are still talking about adding real wages and
real jobs to each one of those facilities in the neighborhood
of a few thousand employees for each one of those facilities.
Mr. Flores. OK. And those jobs are not paid in crumbs,
right? They are good, well-paying jobs.
Mr. Riedl. No. The average salary is well over six figures
in those jobs.
Mr. Flores. OK. Well, six figures, right?
Mr. Riedl. Yes, sir.
Mr. Flores. OK. Great.
Thank you, Mr. Chairman. I yield back.
Mr. Olson [presiding]. The gentleman yields back.
The Chair now calls upon the pastor, Mr. Walberg from
Michigan, for 5 minutes.
Mr. Walberg. Thank you, my son.
Mr. Olson. Amen.
Mr. Walberg. Go, Cubs.
Thank you to each of the panel for being here.
And in relationship to PURPA, our design is to make sure
that the consumer is benefited. And we are certainly open, we
are open to discussing better ways of doing things. But in the
end, we want the consumer to be king and have utilities that
can succeed in such a way to make the consumer king.
So I appreciate you being here today.
Mr. Sparks, before I get to my question, I want to thank
you for being here. I am greatly appreciative of what CMS does
in my district, being headquartered there, and all of the
impact.
And the fact that--you know, we have talked about a lot of
things, and it is an absolute truth that you are ahead of the
curve and ahead of the game of even what our State is mandating
as far as renewables. And you are leading the way on those
things. And it comes not because you are being forced, but it
is a better way when it works. And so I appreciate that.
You gave your comments early on, and I am sure you have
listened as other things have been said. So I want to give,
before I ask my questions, an opportunity for you to comment on
any things that you heard and would like to add to the mix
here.
Mr. Sparks. Yes. Thank you, Mr. Walberg, for that.
Two things I would say. One is, at least for Michigan
anyway, Michigan has a very robust IRP process. We have been
going through stakeholder meetings over the last year, we are
now having public meetings, to talk about the whole process of
integrated resource planning.
All of the utilities in Michigan have to file integrated
resource plans by, I believe, it is April of 2019. Our company
will be filing one before June of 2018.
So I would just say that lots of opportunity for all
stakeholders to participate in that process in Michigan.
The other thing I think I would just mention is that I
believe that H.R. 4476 actually promotes competition. I don't
understand how forcing customers to buy from renewable
resources that are priced higher than other renewable
opportunities, or other generation resources for that matter,
could ever promote competition. So by lowering that threshold,
in my view, it actually promotes competition.
Mr. Walberg. Well, add to that a bit. One of my questions
was going to be, is it fair to say that Consumers Energy is
being forced to purchase power they don't need at above-market
prices?
Mr. Sparks. Absolutely. Our company right now has 650
megawatts of wind resources that we either own or we contract
for. We just brought online 44 megawatts of wind this past
December, $45 per megawatt hour. Another third party that we
contract with brought on 100 megawatts of wind this past
November, less than $45 per megawatt hour that our customers
are paying.
So when we look at the avoided costs that have been
established for Consumers Energy for renewables, it is much
higher than that, sometimes twice the cost of what I just
quoted. And we have plans to put more megawatts from wind on
our system, again in that mid-$40 range.
Mr. Walberg. Drilling down a little bit further. If H.R.
4476 were signed into law, would it save your customers money?
And if not, what will they overpay?
Mr. Sparks. It absolutely would save our customers money.
Dollar for dollar, our power supply costs are a direct pass-
through to our customers. So any dollar that we can save in
power supply costs will go directly to our customers.
In my opening remarks, I commented about customers paying
about $35 million, we predict, more than what they otherwise
would pay from other options from all of the PURPA contracts
that we have been asked to sign. That was as of last week when
I was preparing my materials. I looked yesterday. We are up to
about $53 million now.
Mr. Walberg. OK.
Finally, I understand Consumers is taking steps to expand
your renewable generation portfolio, as you mentioned. This is
an effort I applaud, but want to know if PURPA is actually
hindering consumers from building more renewable generation at
lower cost to your customers.
Mr. Sparks. It certainly could in the future if enough
PURPA generators come onto our system. We obviously have to
look at that supply-demand balance. And we wouldn't want to
have more generation available than what our constituents, our
customers, would consume. So is could affect that, yes.
Mr. Walberg. Mr. Chairman, without objection, I would like
to submit letters from 17 different entities in support of this
for the record.
Mr. Olson. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Walberg. Thank you. I yield back.
Mr. Olson. The gentleman yields back.
It appears that we have no further Members seeking to ask
some questions. So on behalf of the entire subcommittee, thank
you, thank you, thank you for your patience.
I will remind you all Members have 10 days to submit
questions for the record, legislative days, and our guests have
10 days to respond to those questions after receiving them.
Before we close, I would like to enter 21 letters for the
record.
A letter from Alliant Energy. A letter from American Public
Power Association. A letter from the Arizona Public Service. A
letter from the Basin Electric Power. A letter from Berkshire
Hathaway Energy. A letter from Consumers Energy. A letter from
Covanta. A letter from DTE Energy. A letter from Duke Energy. A
letter from Edison Electric Institute. A letter from
Electricity Consumers Resource Council.
Whoa, boy.
A letter from the Environmental Law Policy Center, Natural
Resources Defense Council, Solar Energy Industries Association,
Southern Environmental Law Center, and Vote Solar, all
collectively.
A letter from the Idaho Power Corporation. A letter from
the Independent Power Producers Coalition of Michigan. A letter
from the Industrial Energy Consumers of America. A letter from
ITC Holdings Corporation. A letter from National Association of
Regulatory Utility Commissioners. A letter from the National
Rural Electric Cooperative Association. A letter from OG
Electrical Corporation. A letter from Portland General Electric
Company. A letter from Xcel Energy.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Olson. Again, thank you, thank you. This hearing is
adjourned.
[Whereupon, at 1:04 p.m., the subcommittee was adjourned.]
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