[Senate Hearing 115-493]
[From the U.S. Government Publishing Office]
S. Hrg. 115-493
PENDING LEGISLATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
on
S. 1336 S. 1876
S. 1455 S. 1981
S. 1563 S. 2030
S. 1851
__________
DECEMBER 5, 2017
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
28-094 WASHINGTON : 2019
-----------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).E-mail,
[email protected].
COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
CORY GARDNER, Colorado JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama CATHERINE CORTEZ MASTO, Nevada
------
Subcommittee on Energy
CORY GARDNER, Chairman
JAMES E. RISCH JOE MANCHIN III
JEFF FLAKE RON WYDEN
STEVE DAINES BERNARD SANDERS
LAMAR ALEXANDER AL FRANKEN
JOHN HOEVEN MARTIN HEINRICH
BILL CASSIDY ANGUS S. KING, JR.
ROB PORTMAN TAMMY DUCKWORTH
LUTHER STRANGE CATHERINE CORTEZ MASTO
Brian Hughes, Staff Director
Patrick J. McCormick III, Chief Counsel
Brianne Miller, Senior Professional Staff Member and Energy Policy
Advisor
Mary Louise Wagner, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Scott McKee, Democratic Professional Staff Member
C O N T E N T S
----------
OPENING STATEMENTS
Page
Cassidy, Hon. Bill, a U.S. Senator from Louisiana................ 1
Manchin III, Hon. Joe, Subcommittee Ranking Member and a U.S.
Senator from West Virginia..................................... 5
WITNESSES
Tillis, Hon. Thom, a U.S. Senator from North Carolina............ 9
Menezes, Hon. Mark, Under Secretary, U.S. Department of Energy... 10
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Cassidy, Hon. Bill:
Opening Statement............................................ 1
Letter to Secretary Perry dated October 5, 2017 from Senators
Cassidy, Barrasso and Murkowski............................ 3
Manchin III, Hon. Joe:
Opening Statement............................................ 5
U.S. Department of Energy Press Release entitled ``High
Concentrations of Rare Earth Elements Found in American
Coal Basins'' dated November 29, 2017...................... 7
Menezes, Hon. Mark:
Opening Statement............................................ 10
Written Testimony............................................ 12
Responses to Questions for the Record........................ 28
National Hydropower Association:
Statement for the Record..................................... 51
(The) Retail Industry Leaders Association:
Letter for the Record........................................ 52
Tillis, Hon. Thom:
Opening Statement............................................ 9
----------
The text for each of the bills which were addressed in this hearing can
be found on the committee's website at: https://www.energy.senate.gov/
public/index.cfm/hearings-and-business-meetings?ID=C916913D-3DA3-454B-
A1B0-F4CAD5587F22.
PENDING LEGISLATION
----------
TUESDAY, DECEMBER 5, 2017
U.S. Senate,
Subcommittee on Energy,
Committee on Energy and Natural Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:44 p.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Bill Cassidy,
presiding.
OPENING STATEMENT OF HON. BILL CASSIDY,
U.S. SENATOR FROM LOUISIANA
Senator Cassidy [presiding]. Good afternoon. I call this
meeting to order.
Today the business before the Subcommittee is to receive
testimony on several pieces of legislation relating to the
applied energy programs at the Department of Energy.
I would like to thank Under Secretary Mark Menezes for
appearing before the Subcommittee today to provide the
Department of Energy's perspective. A Louisiana native and
fellow LSU Tiger, I introduced Under Secretary Menezes at his
confirmation hearing. I am pleased to welcome him back today.
A bill under consideration today is one I introduced with
Senator Rubio, the Small Scale LNG Access Act of 2017. This
legislation codifies a rule proposed by the Department of
Energy to expedite the approval to small scale exports of
natural gas.
Small scale exports primarily target markets in the
Caribbean, Central America and South America. These markets
represent relatively untapped potential as the United States
only exported approximately three billion cubic feet of natural
gas to the region in 2016.
An increase in exports of U.S. liquefied natural gas, or
LNG, will decrease Caribbean and Central American reliance on
Venezuelan fuel oil, increase economic opportunities and offer
a cleaner burning fuel source for those nations. Reducing the
time and investment required for small scale exports will
simultaneously benefit U.S. production, manufacturing and
construction jobs while also reducing trade deficits with the
importing country.
Increasing LNG exports, even on a small scale, will
positively impact the economies of the U.S. and those receiving
the U.S. gas.
I would like to submit a letter for the record that I,
along with Senator Barrasso and Chairman Murkowski, sent to
Secretary Perry in support of the Department of Energy proposed
rule. The letter highlights the U.S.'s ability to meet the
demands of increased LNG exports and benefits of doing so.
[The information referred to follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Cassidy. In addition, the Committee will consider
three bills relating to energy storage.
Just a few weeks ago in this room, the full Committee held
a robust hearing on energy storage highlighting a number of
opportunities and challenges associated with these
technologies. Our accomplished panel of witnesses provided
numerous thoughts on what a successful research development,
demonstration and deployment program could look like.
Today, we continue that conversation by considering S.
1455, Senator Flake's Energy Storage Goals and Demonstration
Projects Act; S. 1851, Senator Franken's Advancing Grid Storage
Act; and S. 1876, Senator Wyden's Reducing the Cost of Energy
Storage Act. In addition, we will consider Chairman Gardner's
Reliable Investment and Vital Energy Reauthorization Act, a
bill that previously was reported from this Committee last year
and included in the energy bill as well as Senator Tillis'
ceiling fan Energy Conservation Harmonization Act. Last, but
not least, we will consider Senator Manchin's Rare Earth
Element Advanced Coal Technologies Act which I am sure he will
touch on during his opening statement.
With that, I turn to Senator Manchin.
STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
Senator Manchin. Thank you, Mr. Chairman, for scheduling
this hearing to discuss the seven bills on today's agenda. I
would like to also thank our witnesses, our dear friend,
Senator Tillis, and Mr. Menezes, for being here.
I would like to briefly discuss my bill which is Senate
bill 1563, the Rare Earth Element Advanced Coal Technologies
Act, which ensures the Department of Energy and its partners
have the resources to continue its vital research into
developing and commercializing a domestic source of rare earth
elements from coal and coal by-products.
Rare earth elements are an essential component for products
that Americans rely on every day. The list includes everything
from smartphones to wind turbines, to electronic vehicles, to
national defense systems critical to our national security. The
United States does not have a domestic source of these critical
minerals. I repeat. The United States does not have a domestic
source of these critical minerals, and instead imports nearly
all of its rare earth elements from China.
The National Energy Technology Laboratory (NETL) in
Morgantown, West Virginia, has explored the concept of
extracting rare earth elements from coal and coal by-products
for some time now, and Congress recognized it as a liability to
have a growing dependence on foreign imports and began
appropriating funds for NETL's Rare Earth Element Program in
2014. The Consolidated Appropriation Act of 2017 provided $15
million for NETL to develop prototype advanced separation
technologies for rare earth elements from coal and coal by-
products.
My bill, Senate bill 1563, authorizes an annual
appropriation of $20 million for the Department of Energy to
continue its work on rare earth elements. I believe the
Department of Energy's research will help set us on a path
toward reestablishing domestic production of these critical
minerals.
My bill also directs Department of Energy to focus on the
rare earth elements most critical to the national security
interests of the United States. So far, NETL's Rare Earth
Element Program has produced promising results.
Just last week Secretary Perry announced that NETL found
high concentrations of rare earth elements in coal samples
taken from various locations across the country, including the
Northern Appalachia, Central Appalachia and the Rocky Mountain
Coal basins. According to the Department of Energy, the samples
contain concentrations of rare earth elements exceeding 300
parts per million, the necessary level to make commercial
viability of these technologies a reality.
Mr. Chairman, I would ask unanimous consent that the press
release from the Department of Energy be entered into the
record.
Senator Cassidy. Without objection.
[The information referred to follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Manchin. In conclusion, I am excited about the work
that NETL is doing, and I believe we have a tremendous
opportunity to continue to use our nation's abundant coal
resources to strengthen our national security, introduce
competition into the supply chain and ensure that America
entrepreneurs have reliable access to these materials.
I want to thank you again, Mr. Chairman, and I look forward
to the hearing.
Senator Cassidy. Our first witness, the Honorable Thom
Tillis.
STATEMENT OF HON. THOM TILLIS,
U.S. SENATOR FROM NORTH CAROLINA
Senator Tillis. Thank you, Chairman Cassidy, Ranking
Member. I just want to thank you and your staff for your
willingness to hear a bipartisan, commonsense, regulatory
reform idea. Ranking Member Manchin, I also want to thank you
and your staff. You have been very helpful.
I think it is a real testament to the simplicity of what we
are trying to do here in terms of the underlying bill.
I am deferred from presenting the 30-page PowerPoint that I
had to describe the technical aspects of this bill.
[Laughter.]
With your approval----
Senator Cassidy. Approved.
[Laughter.]
Senator Tillis. I will just simply say that Senator
Heinrich and I just tried to come together on something that
makes perfect sense. We have two regulations that are going to
be implemented over the course of the next two years that could
disrupt the supply chains all the way from the manufacturers to
the retail outlets, twice, or we can simply harmonize it by
targeting the dates, delaying a date, having both regs go into
place at the same time.
It makes good sense, particularly for all the consumers
that rely on ceiling fans to actually--I have had a ceiling fan
in my house forever. As a matter of fact, my wife brought it to
my attention. My last ceiling fan I purchased back when grunge
rock was very popular. They last a long time, but it is a
significant purchase. What we don't want to do is add cost and
complexity to getting something as simple and as helpful as a
ceiling fan in a home.
So there are so many debates on regulatory reform to where
we could really drill down and cause an impasse, but I don't
think this is one of them. I think that this commonsense
legislation, if we can work it in to the markup and get it
passed, makes perfect sense and it is an example where
Democrats and Republicans can come together when you see a
commonsense solution.
I appreciate your support and serious consideration of
Senate bill 2030, the Ceiling Fan Energy Conservation
Harmonization Act. That is all it is doing. Harmonizing
regulations and moving forward. And I appreciate your serious
consideration.
Senator Cassidy. Mr. Menezes.
STATEMENT OF HON. MARK MENEZES, UNDER SECRETARY, U.S.
DEPARTMENT OF ENERGY
Mr. Menezes. Chairman Cassidy, Ranking Member Manchin,
members of the Subcommittee, I thank you for inviting me here
today to provide the Department's testimony on the seven bills
currently pending before the Committee. I ask that my written
statement be included in the record.
I have the honor of serving as the Under Secretary of
Energy at the Department of Energy, and I appreciate the
expeditious action that this Committee took to conduct my
hearing and to report me unanimously to the full Senate. It was
greatly appreciated.
Having been confirmed about a month ago, I have had the
opportunity to see the successes and challenges facing the U.S.
energy sector firsthand. The Department of Energy is an agency
tasked with a number of important responsibilities. Among them,
assuring our nuclear readiness, overseeing the nation's energy
supply, carrying out environmental cleanup from the nuclear
mission and managing the Department's 17 national laboratories.
The Department of Energy is fostering an environment that
promotes responsible investment, increased efficiency and
development of new technologies as well as predictability and
ease of access by the private sector to the national labs and
facilities.
In support of the Administration's goals of establishing
energy dominance and economic competitiveness, the Department's
energy and science programs are focused on research and
development across a variety of technologies and fuel sources.
By carefully setting priorities and focusing on the most
promising research, the Department and its national
laboratories will continue to support the world's best
enterprise of scientists and engineers. These are the great men
and women who create innovations that help drive American
prosperity, security and competitiveness for the next
generation.
I have been asked to testify on multiple bills today which
the Administration continues to review. They are, as mentioned:
Senate bill 1455, the Energy Storage Goals and Demonstration
Projects Act; Senate bill 1851, the Advancing Grid Storage Act;
and Senate bill 1876, the Reducing Cost of Energy Storage Act.
Let me pause here and remind the members that our Office of
Electricity has an ongoing storage research office that looks
at the materials, devices and systems and analyses necessary to
help foster breakthrough technologies on battery storage. The
specific national labs that are included in that are Sandia,
Pacific Northwest and Oak Ridge. We partner with universities,
utilities and industry, we have published 185 peer-reviewed
publications, and we hold 122 patents in this area. We have--we
are holding over 20 commercial licenses, and we have won nine
R&D 100 awards. So we are pleased to see additional bills on
this topic, and we look forward to working with the members on
the storage bills.
In addition to those three bills, as Ranking Member Manchin
said, we're looking at his bill, 1563. And in addition to the
comments that Ranking Member Manchin said, I'd like to point
out to the Committee members that our Office of Rare Earth
Elements at the Department has conducted over 1,000 rock
samples in 14 states and came to the conclusions that were
expressed by Ranking Member Manchin, in your comments.
Senator Tillis described the ceiling fan bill. And again,
this bill seeks to harmonize two of the rules that we had
issued, one for the electric motors and one for the electric
lights. They were on the same timetable initially; however,
they were finalized at different times and because a statute
separated those two technologies and devices, there was no way
that we could link them up. So, unless Congress acts we are
really unable to do the harmonization ourselves.
Chairman Cassidy described the small scale LNG access and
there's not anything I can add to his description of what it
does in the reasons set forth, as he stated.
And then finally, we have the Senate bill 1336, the
Reliable Investment and Vital Energy Reauthorization Act, that
is, the River Act.
I look forward to discussing these bills in further detail
and helping the Committee understand the impact these bills
could potentially have on the Department. The Department
appreciates the ongoing bipartisan efforts to address our
nation's challenges and looks forward to working with the
Subcommittee and Committee on the legislation on today's agenda
and any future legislation.
Our nation will achieve our economic energy and
environmental goals by ensuring the United States continues to
be a leader in energy technology, development and delivery and
by unleashing America's ingenuity to unlock our natural
resources and energy potential. Through research and
development, collaboration at all levels of the government and
the private sector, the Department of Energy and our national
labs aim to support the America's energy renaissance.
The Administration looks forward to continuing to work with
Congress on legislation to enhance U.S. competitiveness and job
creation.
I thank you for the opportunity to be here today. I look
forward to your questions and, if the Chairman wishes, I can
give a very brief update on the situation in Puerto Rico and
the Virgin Isles, just having returned from a trip there, you
know, over the weekend.
[The prepared statement of Mr. Menezes follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Cassidy. I think we have a bunch of folks who have
to hustle, so I am going to ask you to hold that for a little
bit.
Senator Wyden wanted to make a short statement.
Senator Wyden. Mr. Chairman, thank you, and it will
literally be 30 seconds.
First, I very much appreciate your putting my bill, S.
1876, on the schedule and the reason why is to get renewable
energy to the power grid. Our country needs fresh strategies to
reduce the cost. That is the point of this legislation. I
appreciate it.
The second. This is a complement to what I have been
working over the years to look at using the tax code to provide
incentives to promote energy storage as well. I think the one-
two punch is going to make it possible and particularly as we
move to a tech neutral policy with respect to energy.
So I thank you and I apologize to my colleagues and
appreciate them letting me leap in for this 30 seconds.
Senator Cassidy. I am not under a time constraint, so I am
going to allow my Democratic colleagues to go because I think
some of you all are. So, please proceed.
[Laughter.]
Senator Manchin. Thank you, Mr. Chairman.
[Laughter.]
Mr. Menezes, I want to thank you for being here, but also
on the rare earth bill that we are working on, I was amazed to
find out that nowhere in the country are we mining any of this,
producing any. We are totally dependent for things we depend on
almost every minute of every day on other countries supplying
us the rare earth minerals that we need to do this.
I know that you all have partnered up with Western
University, of which our state is very proud. If we have, we
have already mined--we are still mining coal. We have already
mined a lot of coal.
There are three elements and three aspects, I guess we
would have to do. First of all, we have what we call the coal
fines in ponds and slurry dumps and all that. We can go back
and reprocess that and get an awful lot out of that also. Next,
you have coal that you are mining, that we are mining, fresh.
When we do that, we wash some of it. So if the washing process
is changed when we are cleaning the coal, taking the ash and
all the particulates out of it, that could be an easy source
also. And next, we run what we call run-of-the-mine (ROM), just
taking the rock and that without going through a wash plant.
Are you all looking with NETL and partnering up on all
three technologies trying to find the best and most cost-
effective way? Or my biggest question, are we looking at it
from a defense of our nation, a national defense perspective,
that we have to be able to produce so much of this in this
country so that we are not entirely, totally dependent?
Mr. Menezes. Thank you for the question, Ranking Member
Manchin. To answer your last question first.
Yes, you know, 84 percent of these minerals are produced in
China.
Senator Manchin. Yes.
Mr. Menezes. We at one time had a mine in Eastern
California that was attempting to produce, was producing, but
it no longer is. Yes, you are correct that we are not producing
this and we are dependent, primarily, on China and other
countries for these rare earth minerals.
With respect to your first question, the short answer is
yes. We are doing all of those. We are looking at all of those
different aspects of trying to recover those rare earth
minerals in the most cost-effective or efficient way to do
that.
Senator Manchin. I think what I am asking also, with the
Department of Energy, is if you all are supporting and
stressing that with the defense of our nation, the security of
our nation, that we should be mandated and basically finding
ways that we can produce this in the United States of America
whether it is through coal or, if there is a different process
that can be used, but coal seems to be the most logical since
we are mining through strata to begin with. It would seem to me
that it would behoove our country to take a position that we
are going to produce so much domestically, knowing that we can,
just for the defense of our own nation, for the security of our
nation. But unless you all, the Department of Energy, take that
position, it might not be taken up at the highest level.
Do you all feel it is that important or have you gotten to
those discussions yet or do you not feel like we are vulnerable
with 84 percent dependent upon China with things that could go
a little bit awry at any time? We have very little control over
this.
Mr. Menezes. Right.
And Secretary Perry, you know, serves on the NSC.
Senator Manchin. Yes.
Mr. Menezes. And we also have NNSA within our jurisdiction.
So readiness for our defense, our nuclear weapons program,
I mean, our national security is one of our top priorities,
should I say.
Our Fossil Energy Office is working with those labs and the
industries to, in fact, try to become more independent in our
own production and supply of these materials. So, yes, I mean,
I agree.
Senator Manchin. But we are depending on your support
because I think the State of West Virginia can produce what is
needed to be produced if we have the technology and the support
from NETL and support for NETL to work with WVU and the
research people we have there. To find a way that we can
extract and produce it right here in America.
Mr. Menezes. And I appreciate your comments in talking to
the program scientists who have been doing this. They were
genuinely pleased to see your bill.
Senator Manchin. Right.
Mr. Menezes. So, it seems as though it is building on what
we have been doing.
Senator Manchin. Good.
Mr. Menezes. It recognizes the work that has been going on
and the need to continue it.
Senator Manchin. Well, we appreciate your support on this,
and tell Secretary Perry we appreciate his support very much.
Thank you.
Senator Cassidy. Senator Heinrich, I was going to let you
go next, but my staff tells me I have to be some places too.
[Laughter.]
So, if you don't mind, knowing that you have a Committee.
Our bill, Mr. Menezes, there has been bipartisan interest,
and I am sorry that I am not hearing what you have to say about
USVI and Puerto Rico.
If you could submit that for the record, I would like to
review that.
There has been bipartisan interest in how we can make the
grids more resilient for those two places.
One thing that I have been trying to promote is that we
would have some sort of mix, again, trying to find 60 votes of
renewables and a microgrid, but the backstop being LNG.
Now knowing that about 17 percent of the Puerto Rican grid
right now is LNG but knowing that they have clearly got a grid
that is vulnerable to storms empirically, we see that.
What is the possibility of these floating gasification
tankers going to the Caribbean Islands or a place like Puerto
Rico and providing the backstop for the microgrids as we build
that out? Is that pie in the sky or is that something that we
can reasonably do?
Mr. Menezes. Well, to be sure we have heard from many
interested parties on a variety of ways to make improvements to
the grid down there and making both their generation,
transmission and distribution systems more resilient because as
we know there will be additional extreme weather events on the
island.
Regarding LNG, indeed, those that are there have looked at
modernizing, if you will, some of the generation there to be
able to get off of the bunker oil that they currently are on.
Senator Cassidy. Could they use the same turbines if we
came in with a tanker that gasified LNG, pulls it up and
provides the fuel, does everything else stay the same or do
they have to change the turbines to adapt to a different fuel
source?
Mr. Menezes. Excellent question.
As we've discovered, and others have known this, but a lot
of their generation really has, you know, had not been properly
maintained.
There's a particular unit, Palo Seco, which is important to
the San Juan area. It runs on bunker fuel. It's dated. It needs
to be redone.
And so, in this instance, were you to bring LNG there,
right now we have, I think, two 30-megawatt, natural gas,
modular units that have re-energized the grid around San Juan.
It uses natural gas. That is being brought in by LNG. Now it's
re-gasified, and that's what's powering it.
Senator Cassidy. On the boat itself, I presume.
Mr. Menezes. On the island.
I'm not sure, I think it's re-gasified there. There is a
re-gasification unit there, but I'm not sure that it's
operating at this time.
But the point being is that they're very desirous of
getting off the bunker fuel.
Senator Cassidy. But to the point, those are two temporary
turbines. If they have a turbine in Haiti that is running off
of bunker fuel and they bring in liquefied natural gas, can
they use the same turbines that they are using now, just
replacing the bunker fuel with the natural gas or do they
actually need to replace the electricity generating unit?
Mr. Menezes. We're looking at this right now, Senator
Cassidy. I'm not sure that I can answer that question.
Senator Cassidy. Let me also ask what is the possibility,
because I think there is a lot of interest here and I am
obviously mixing what you are going to say about Puerto Rico
with finding a utility for liquefied natural gas. I think we
could get bipartisan support, if it was somehow tied to
increased use of renewables and a microgrid.
You have been going to Puerto Rico. What is the feasibility
of that?
Mr. Menezes. Well, what we're doing is next week we are
having a workshop where we are bringing in all of the parties
that have made proposals on refurbishing generation, the
transmission system and the distribution system. The staffs of
this Committee have been invited, actually, the Chairman and
Ranking Member have been invited. We expect their staffs to
attend, as well as the House. But attending will be DOE, will
be FEMA, the Corps, our labs that have been asked to do the
resiliency modeling, the economic analyses, New York Power
Authority, NYPA, and its consultant, Navigant, will be there,
and all of the interested parties. The goal is to put
everybody's best thinking there to look at an all-of-the-above
strategy, to make it as resilient as we can and the placement
of these.
LNG is certainly one of the key fuel choices that are being
looked at, as well as renewables, the integrated microgrids and
to try to modernize the system.
Senator Cassidy. Okay.
Mr. Menezes. So that will occur next week and your staffs,
your Committee staff has been invited to participate.
Senator Cassidy. Thank you.
Senator Heinrich.
Senator Heinrich. Thank you, Mr. Chairman.
I want to thank you, Mr. Chairman. I want to thank you for
holding this hearing today, and I am certainly pleased to co-
sponsor three of the bills on today's agenda.
Mr. Menezes, congratulations on your recent confirmation.
Mr. Menezes. Thank you, Senator.
Senator Heinrich. I also want to say a special thank you to
Senator Tillis for his testimony on our bill, S. 2030, and
suggest that it might be time for him to consider a new ceiling
fan.
[Laughter.]
Mr. Menezes, I wanted to ask you about the status of the
reorganization at DOE and, in particular, do you know yet what
specific areas that yourself and Under Secretary Dabbar are
going to be responsible for?
Mr. Menezes. Well, we have considered a realignment in
several categories and we have been discussing our plans, what
we've been thinking about, with the staffs of this Committee.
We have also been meeting with other stakeholders on the Hill,
particularly the appropriators, to talk about our ideas that we
have. We have not made any announcements yet. We haven't made
any final decisions yet. We have committed not to, frankly, do
any realignment until after you all have completed your work on
the budget, on the CR, and then it would, we would continue to
get input.
Senator Heinrich. Let me shift here----
Mr. Menezes. But as a practical matter, you know, I think
as we have told your staffs on the realignment, I would have
the applied offices. Under Secretary Dabbar would have the
science labs.
Senator Heinrich. Okay.
Mr. Menezes. And so, we're going to follow that kind of
model.
Senator Heinrich. Okay.
Let me just shift gears on you real quick then.
I was pleased to host in Albuquerque last year a summit
that was focused just on energy storage. We had more than 200
industry leaders, scientists and grid experts who came together
from all around the country, as well as national labs, experts
from Sandia and Los Alamos.
One outcome of this summit was that New Mexico became the
first state that requires investor-owned utility companies to
include storage in their integrated resource plans. So they
don't have to pick it, but they have to model it and see if it
comes out cheaper than other alternatives.
Do you think sufficient attention is being given to energy
storage in utility system planning and is there a role for DOE
and/or the labs to play in that process?
Mr. Menezes. There's a big role for DOE and the labs to
play.
In looking at the bills submitted, for example, you may
have different technical objectives whether it's stationary
battery storage, if you will, or transportation and perhaps in
some instances you can gain economies of scale or sharing of
technologies in both, but generally for the reach goals and to
make the breakthrough technologies, you're going to make sure,
we would like to make sure, that you have metrics for each
because we don't know whether or not, even if we have a
transportation battery that works, it may not be able to just
easily be grid scale. So we play a big role in that. And I
think you would be pleased were the program folks with me to
testify, I think that you would be pleased with the work that
they have done. And as I had mentioned, the patents and the
licenses that, you know, that they have.
Regarding whether or not utilities are doing enough in the
IRP, a lot of that is, of course, driven by their individual
states, if they go through the IRP and whether or not it's a
priority there. FERC, I think, can play a role in trying to
make, send out, guidelines.
Senator Heinrich. Right.
Mr. Menezes. Right, as to, as you know, there's state
jurisdictional and what is FERC jurisdictional.
Senator Heinrich. Right.
Mr. Menezes. And so if we had some clarity on that.
Senator Heinrich. Let me ask you about that, that FERC
piece, in following up, because last year FERC issued a
proposed rule that would assure that energy storage is
compensated properly for the flexibility that it provides to
grid operations, things like frequency and voltage control.
Do you believe that utilities and regulators have the tools
that they need to properly model the market value of energy
storage and is there a useful role for DOE and the labs to help
power markets and regulators make sure that they accurately
value the services that storage provides?
Mr. Menezes. We do think that we have a role. We can
certainly provide a collaborative forum, if you will, for these
issues to be resolved because we know that we have differing
markets throughout the country, across the country, rather, I
should say, with differing rules. And so, not all have capacity
markets, for example.
Senator Heinrich. And some don't have rules.
Mr. Menezes. And some don't have any rules. That is
correct.
Senator Heinrich. That is a good first step, I think.
Mr. Menezes. But if, even if, in any event there's always
how can you work with the states, with the commissions or with
FERC.
And indeed, in getting prepared for this hearing our
program folks made it clear there's one of the bills, and I
generally think this is kind of a good thing, I think it's
Senator Franken's bill that talks about, you know, nothing in
here will cloud the jurisdiction, if you will, of the various
agencies. I can see that as a good thing because you don't
really, necessarily, want to make that an issue in the bill
itself.
But on the other hand, they said, we want to make sure that
we can continue to work with the state officials or the state
commissioners who ask us, as a practical matter, how does this
work? Right? How could it be priced? What is the cost? You
know? How can it be integrated? Right? Basic questions like
that. And so, those regulators come to us just to ask for
technical assistance.
Senator Heinrich. Right.
Mr. Menezes. They don't ask our opinion as to whether they
should have jurisdiction over something or not and we can't
comment on that. But again, we're a source of information to
help people understand. And then they can go with their pricing
and figure out----
Senator Heinrich. Make those decisions, yes.
Thank you, I appreciate it, Mr. Chair.
Senator Strange [presiding]. I was interested in the
answer. That is great.
I can save my questions for last. Senator King, if you
would like to ask your questions, I recognize you.
Senator King. Well, I was going to point out when Senator
Heinrich leaves you and I are in charge. What part of the
Constitution do you want to rewrite? We could, there is just
the two of us here.
Mr. Menezes, thank you and congratulations again on your
confirmation.
Mr. Menezes. Thank you.
Senator King. There is a notice of proposed rulemaking
which was submitted to FERC, I think, by the Department, called
the Resiliency Rule. It seems to identify two main sources,
nuclear and coal. Wouldn't storage have been a logical part of
that proposal because storage is clearly a resiliency
technology. Why was it left out?
Mr. Menezes. Well, the rule was written generally. The rule
was not written specifically for any fuel at all. You just have
to simply meet the criteria of the rule, as it was in storage,
but certainly, you know, qualify. It's a 90-day on-site fuel
requirement, but it could be anything.
The key about batteries is that it actually has to act like
a fuel. In other words, it has to accept, receive the
electricity, hold it over a short or longer period of time and
then to be able to discharge electricity when----
Senator King. So is your interpretation of the submission
that it would, in fact, accommodate a storage component, if it
met the other requirements of the rule?
Mr. Menezes. It could, certainly.
Senator King. Fine, thank you.
Mr. Menezes. It's fuel neutral.
Senator King. And let me ask, and I think you covered this
somewhat with Senator Cassidy on Puerto Rico. Many of us think
that Puerto Rico offers us a huge opportunity to build the grid
of the 21st century instead of rebuilding a grid of the 20th
century. There were some questions with regard to the Stafford
Act that disaster funds can only be used to rebuild, not to
build new.
Do you know----
Mr. Menezes. To restore--to restore not to rebuild.
Senator King. Restore, yes.
Do you consider that a limitation on our ability to do, for
example, a more distributed grid using LNG and renewables? Is
the Stafford Act an obstacle and, if so, I would appreciate for
the record if you would let us know how we might fix that.
Mr. Menezes. Well, thank you for the opportunity to talk
about the Stafford Act. I know it's not the subject of the
hearing, and I'm sure we could fill up the whole day of
testimony on the Stafford Act.
It has been the experience here that the Stafford Act does
go through a process. And indeed, it is restore. And in this
case, where the Corps went in and had to decide on whether or
not restore would be tantamount to a rebuild, it created some
confusion.
Our role was to help play a role, rather, in making
determinations. As a practical matter now we are moving toward,
I think, triggering what's called the 428 under the Stafford
Act and move toward a rebuild. And indeed, historically, you do
have a transition from restoration to a rebuild.
Senator King. So, the Stafford Act does allow----
Mr. Menezes. It does.
Senator King. ----some new infrastructure as opposed to
just rebuilding or restoring what was already there.
Mr. Menezes. It does.
The Stafford Act probably did not anticipate a situation
like Puerto Rico in that to restore, it was tantamount to
rebuild.
Senator King. Right.
Mr. Menezes. And that caused lawyers, everybody, to look at
it and to say well, do we have the authority and not FEMA that
has to make the calls, was relying on DOE in a lot of respects.
Senator King. Has that call been made? Are we moving toward
a new form of grid or are we rebuilding the old one?
Mr. Menezes. Well, as I said, we're now in anticipation of
moving toward spending monies to a potential rebuild. We have
put in place this workshop to put together a comprehensive plan
on the rebuild as to what it would look like to make it more
resilient so that we're not coming and doing the same kind of
restoration the next time a hurricane hits.
I just saw before coming over here we were getting briefed
by NYPA in what was going on down there. We had modeled the
hurricane tracking across Puerto Rico, I mean, just going
back----
Senator King. Well, as I understand it one of the problems
is most of the generation is in----
Mr. Menezes. South.
Senator King. In the south.
Mr. Menezes. Correct.
Senator King. And the load is in the north.
Mr. Menezes. That is correct.
Senator King. There are these long transmission lines
which, of course----
Mr. Menezes. Across the mountains.
Senator King. Across the mountains?
Mr. Menezes. Yes.
Senator King. Vulnerable?
Mr. Menezes. Yes.
Senator King. And transmission loss.
Mr. Menezes. Yes.
Senator King. So are we going to be able to build a more
distributed grid?
Mr. Menezes. We are. We're looking at distributed----
Senator King. Whose call? Who makes this decision? Who
decides what goes? Is it the Puerto Rico Power Authority or is
it FEMA or is it you? Who makes the decision we are going to
rebuild that high-tension line or we are going to do something
different?
Mr. Menezes. That's an excellent question. I mean, right
now we're still restoring so those decisions are fairly easy to
make. We're doing whatever it takes----
Senator King. Sure.
Mr. Menezes. ----to restore.
Senator King. I understand that. But I am talking about the
longer-term.
Mr. Menezes. Yeah, the longer-term.
We intend to submit this to the White House, to Congress,
to the Corps. We will have it, and we will all be united on the
priorities.
The Corps has now let over $1 billion to floor and
contractors to begin to rebuild. So we've got that amount to
work with initially. We expect that whatever this group
produces will likely have some cost scenarios. And so, it will
probably need approval from Congress, in all honesty, to be
able to do it. We look forward to working with everybody as we
go forward.
But next week will be the big gathering where we're going
to try to make----
Senator King. I would appreciate it----
Mr. Menezes. ----consensus, if you will.
Senator King. ----if you could keep this Committee informed
of the steps and the plan and this process so that we can have
an opportunity to review the progress, but not only the
progress but the plans and structure of the response.
Mr. Menezes. Yeah.
Senator King. Final question.
Mr. Menezes. Well, good.
Senator King. Final question, I am out of time, but Senator
Cassidy's bill talks about small, relatively small, exports of
LNG and it said, it basically exempts them from the finding of
public interest.
But I remember voting on an amendment here a couple of
years ago that said that those decisions had to be made within
90 days or something and the Department was here and they said
there was no problem. We are doing them rapidly anyway.
My question is, and maybe you want to take this for the
record, what is the timeframe for making these national
interest decisions? Do we need this bill, I guess is the
question, or is there a holdup or is there not?
I would like, and you don't have to answer now, but----
Mr. Menezes. Yeah, let me take that one for the record.
Senator King. I appreciate it.
Mr. Menezes. So we can have a timeframe.
Senator King. Thank you, Mr. Chairman.
Mr. Menezes. Can I?
I was just going to say something else.
Senator Strange. Well, if you want to, go ahead and finish
your thought.
Mr. Menezes. Well, I was just going to say that it's really
an exciting project because we do have the labs that are doing
modeling. The White House is in full backing of us to try to
identify opportunities for microgrids, for example, you know,
these would be integrated microgrids.
Senator Strange. Sure.
Mr. Menezes. So that, you know, both the structure, the
grid, benefits as well as the individual places that take
advantage of distributed generation.
Senator King. And my understanding from a prior hearing is
that the solar installations on Puerto Rico survived pretty
well and also on the Virgin Islands, that there were some that
were destroyed, but others survived, depending, I think the
testimony was, on how they were built and, you know, this is a
place where there is certainly an abundance of solar energy.
We want to be sure that is part of the solution.
Mr. Menezes. I mean, the fact is that those that were in
the path of the storm did not survive well at all.
We visited----
Senator King. Well, that's contrary to the testimony we had
from the Governor of the Virgin Islands----
Mr. Menezes. Well----
Senator King. ----who said that depending upon how they
were built some survived amazingly. In fact, we saw photographs
of some surviving amazingly well and they were in the track of
the storm.
Mr. Menezes. Right.
Senator King. But I think it depends. He said it was how
they were engineered.
Mr. Menezes. He's talking about--in fact, we just saw these
over the weekend.
On St. Croix we passed and they were fairly close together,
I mean, within several miles. We saw one solar array, probably
a couple acres, nothing was touched. In fact, I have pictures
here. They look fine. Okay?
We literally went down the road toward the municipal
building, believe it or not, where it was across from the
municipal building a similar array totally trashed, okay.
Now this was film. It wasn't like glass panes. It wasn't
smashed like one of the arrays were on Puerto Rico. So the
question was well, why? Right? I mean, clearly the hurricane
passed over this area. As explained was in one area on the
frame structure the boards that held the film lined up with the
frame structure. On the one that was destroyed, they overlapped
just by a couple of inches. And that lip was essentially like a
wing and it caught it and they were tighter on the structure
than the structure was on the ground and it literally lifted
the whole thing and twisted it and it was amazing to be told.
So, yes, to answer your question, those that told you that, in
fact, that is true.
My point----
Senator King. I will follow up on this.
Mr. Menezes. Yeah, yeah.
Senator King. I don't want to take too much of the
Senator's time.
Mr. Menezes. No.
Senator King. But I just don't want to miss this
opportunity to do it right.
Mr. Menezes. Exactly.
Senator King. Thank you.
Senator Strange. I appreciate that, Senator King. And I
think you actually have taken my entire time which I----
Senator King. Sorry.
Senator Strange. ----which I am happy to concede to you
because I was very fascinated by your line of inquiry there and
what is going on in Puerto Rico.
I do have some questions, but I am going to submit them for
the record.
You have had plenty of time to testify today, I know.
I want to thank you, Mr. Menezes and Senator Tillis, for
being here and remind my colleagues that questions for the
record are due by the close of business on Thursday.
With that, the hearing is adjourned.
[Whereupon, at 3:27 p.m. the hearing was adjourned.]
APPENDIX MATERIAL SUBMITTED
----------
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]