[Senate Hearing 117-143]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 117-143

                AN EXAMINATION OF EXISTING PROGRAMS AND
                FUTURE OPPORTUNITIES TO ENSURE ACCESS TO
                 AFFORDABLE, RELIABLE, AND CLEAN ENERGY
                  FOR RURAL AND LOW-INCOME COMMUNITIES

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                                 OF THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 23, 2021

                               __________


                       Printed for the use of the
               Committee on Energy and Natural Resources
               
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]               

        Available via the World Wide Web: http://www.govinfo.gov
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-970                    WASHINGTON : 2023                    
          
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon                    JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
MARTIN HEINRICH, New Mexico          STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii              LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine            JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada       JAMES LANKFORD, Oklahoma
MARK KELLY, Arizona                  BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado       CINDY HYDE-SMITH, Mississippi
                                     ROGER MARSHALL, Kansas
                                 ------                                

                         Subcommittee on Energy

                         MAZIE K. HIRONO, Chair

RON WYDEN                            JOHN HOEVEN
BERNARD SANDERS                      JAMES E. RISCH
MARTIN HEINRICH                      LISA MURKOWSKI
ANGUS S. KING, JR.                   JAMES LANKFORD
CATHERINE CORTEZ MASTO               BILL CASSIDY
JOHN W. HICKENLOOPER                 CINDY HYDE-SMITH
                                     ROGER MARSHALL

                      Renae Black, Staff Director
                      Sam E. Fowler, Chief Counsel
                 Adam Berry, Professional Staff Member
             Richard M. Russell, Republican Staff Director
              Matthew H. Leggett, Republican Chief Counsel
      Justin Memmott, Republican Deputy Staff Director for Energy
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hirono, Mazie K., Subcommittee Chair and a U.S. Senator from 
  Hawaii.........................................................     1
Hoeven, John, Subcommittee Ranking Member and a U.S. Senator from 
  North Dakota...................................................     3

                               WITNESSES

Moreno, Alejandro, Deputy Assistant Secretary for Renewable 
  Power, U.S. Department of Energy...............................     4
Kealoha, Brian, Executive Director, Hawaii Energy................    16
McLennan, Mac, President & CEO, Minnkota Power Cooperative.......    27

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Hirono, Mazie K.:
    Opening Statement............................................     1
Hoeven, John:
    Opening Statement............................................     3
Kealoha, Brian:
    Opening Statement............................................    16
    Written Testimony............................................    18
    Responses to Questions for the Record........................    45
McLennan, Mac:
    Opening Statement............................................    27
    Written Testimony............................................    29
Moreno, Alejandro:
    Opening Statement............................................     4
    Written Testimony............................................     7
    Responses to Questions for the Record........................    41

 
                  AN EXAMINATION OF EXISTING PROGRAMS.
                   AND FUTURE OPPORTUNITIES TO ENSURE
                    ACCESS TO AFFORDABLE, RELIABLE,
                     AND CLEAN ENERGY FOR RURAL AND
                         LOW-INCOME COMMUNITIES

                              ----------                              


                        WEDNESDAY, JUNE 23, 2021

                               U.S. Senate,
                            Subcommittee on Energy,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:07 p.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Mazie K. 
Hirono, Chair of the Subcommittee, presiding.

          OPENING STATEMENT OF HON. MAZIE K. HIRONO, 
                    U.S. SENATOR FROM HAWAII

    Senator Hirono. The Subcommittee will come to order. We 
meet this afternoon for the first Energy Subcommittee hearing 
of the 117th Congress. I would like to start by congratulating 
Senator Hoeven on becoming Ranking Member of the Subcommittee 
and I am happy to be a partner with you on these issues going 
forward.
    I would also like to welcome all the new members of the 
Subcommittee and I hope some of them--oh, hello, you are here. 
So I am looking forward to working with all of you. On the 
Democratic side, we have Senator Hickenlooper, and on the 
Republican side we have Senators Lankford and Marshall. These 
are the new members of the Subcommittee, and I look forward to 
working with everyone on the Subcommittee.
    The Energy Subcommittee, much like the full Energy and 
Natural Resources Committee, has a great history of working 
together in a bipartisan way and I hope to continue that 
tradition. Last Congress, this Subcommittee held three 
legislative hearings and considered 31 pieces of energy 
legislation, most of which were bipartisan. The work of the 
Subcommittee played a significant role in the development and 
passage of the Energy Act of 2020, which was the first major 
update to our nation's energy policy in over 13 years. As we 
get to work this Congress, we should let that collaboration and 
effort guide our efforts.
    Today's hearing will examine ways to make sure that people 
living in our rural and lower income communities are heard and 
fully included as we transition to a cleaner energy future. Too 
often in our country, our rural, isolated, and low-income 
communities bear the brunt of higher costs and less access to 
innovative infrastructure, health care, and education 
solutions. In particular, our low-income communities already 
have the highest energy burden of anyone in the United States. 
Department of Energy data shows that low-income households pay 
an average of nearly three times as much of their income for 
energy as other households.
    A report from the American Council for an Energy-Efficient 
Economy shows that rural communities similarly pay more of 
their income for energy--about 33 percent above the nationwide 
average. Right now, Hawaii still relies on imported oil for 
over 60 percent of our electricity generation, which is a large 
part of why we have the highest-cost electricity in the 
country, with rates about 29 cents per kilowatt-hour--nearly 
triple the U.S. average. We already know that renewable energy 
sources like wind and solar are the cheapest available in the 
market, thanks to growing demand for clean energy sources as 
well as strong federal and private investment. Hawaii has set 
an ambitious goal of generating 100 percent of our power from 
renewable sources by 2045, which will take significant 
investment in solutions like broadly accessible rooftop and 
community solar, energy storage, and microgrids that can 
benefit Hawaii's rural and low-income communities, including 
our Native Hawaiian communities.
    As Ranking Member Hoeven has emphasized, carbon capture 
systems for power plants and industrial plants can play a key 
role in reducing carbon emissions. Different states and regions 
will have different approaches, but we all have the opportunity 
to act now to lead the world in the clean energy transition, 
create millions of well-paying jobs, and mitigate the impacts 
of climate change. We are dealing with climate impacts now. The 
extreme temperatures that hit the Southwest last week and that 
the Northwest will face this weekend strain the power grid. 
Extreme temperatures will worsen the droughts, hurting farmers 
across the West and across the Great Plains, and are especially 
dangerous for those in poor housing conditions.
    We should also recognize the critical role that energy 
efficiency plays in making energy affordable, reliable, and 
clean. Federal programs like the Weatherization Assistance 
Program, the State Energy Program, and the Energy Efficiency 
and Conservation Block Grant provide resources to state and 
local communities to improve the resiliency and reduce the 
energy consumption of residential, commercial, and industrial 
buildings. Simple energy efficiency upgrades like replacing 
windows, installing heat pumps, and other efficient heating, 
ventilation, and air conditioning systems and appliances can 
save households hundreds of dollars a year, which is especially 
important for low-income and more isolated communities. And 
while we highlight efforts to address home and building energy 
efficiency upgrades, we must also keep in mind the 
transportation sector as auto makers transition to making and 
selling electrical vehicles. We will need widely accessible 
public charging facilities to keep communities connected.
    I am excited to hear from our panelists this afternoon 
about the path forward for clean, reliable, and affordable 
energy in Hawaii and across the nation. Thank you all for being 
here with us today. With that, I will turn to Ranking Member 
Senator Hoeven for his opening statement.

            OPENING STATEMENT OF HON. JOHN HOEVEN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Hoeven. Thank you, Chair Hirono, for holding our 
first hearing of the Energy Subcommittee. I look forward to 
working with you as well, and with our members on this 
Subcommittee.
    Today, we are examining existing programs and future 
opportunities to ensure rural and low-income communities have 
access to affordable, reliable, and clean energy. I believe an 
important part of this is to advance new technologies to 
produce more energy with good environmental stewardship. In 
North Dakota, we have been working, actually, for over a decade 
to do what I call, ``crack the code'' on carbon capture 
utilization and storage (CCUS) to help us do just that.
    I want to thank our witnesses for being here today and I 
would like to extend a special welcome to one of our witnesses 
from North Dakota--that is Mac McLennan, President and CEO of 
Minnkota Power Cooperative. Mac has been with Minnkota since 
2011 and has led the company in its efforts to advance Project 
Tundra, a large-scale, carbon capture retrofit project at the 
Milton R. Young coal-fired power plant. Project Tundra is part 
of our effort to crack the code on CCUS. Mac is a graduate of 
Jamestown College and has previous experience working for my 
predecessor, Senator Byron Dorgan, and for the National Rural 
Electric Cooperative Association. When a consumer flips the 
light switch on or turns on the air conditioning on a hot 
summer day, the electricity needed does not just magically 
appear. That electricity must first be generated and then 
delivered, often across a great distance before reaching our 
homes and businesses. We expect that electricity to be there 
with our grid operating 24 hours a day, 7 days a week. It takes 
a skilled workforce, robust infrastructure, technology to 
ensure sufficient supplies of power, and that that power is 
always available to meet consumer demand in real time, 
regardless of the weather conditions.
    North Dakota is a leader in producing electricity from both 
traditional and renewable sources. However, coal-fired electric 
power remains the backbone of our grid, providing 57 percent of 
our state's electricity. As we have seen during recent extreme 
weather events, consumers are facing increased interruptions in 
their electric service and it is becoming more critical that we 
preserve the first fuel sources of generation, including 
baseload power to reduce the risk of blackouts and brownouts. 
The positive news is that the U.S. leads the world in reducing 
emissions while maintaining access to low-cost energy. Meeting 
our economic and environmental needs are not mutually 
exclusive. However, global demand for fossil energy sources is 
going to continue for the foreseeable future, particularly in 
developing economies, like China and India. It is for this very 
reason that Dr. Fatih Birol, head of the International Energy 
Agency (IEA), has said before our full ENR Committee that 
carbon capture utilization and storage--CCUS technology--is 
``the most important technology that exists today.'' 
Accelerating the deployment of this technology is indispensable 
in meeting both our energy and environmental goals. That is why 
we must crack the code of CCUS, and I am appreciative of the 
strong bipartisan support, particularly from members of the ENR 
Committee, to make CCUS more widely available.
    We look forward to hearing from Mac on why initiatives like 
Project Tundra are key to our energy future. Efforts to 
decarbonize coal-fired generation help ensure we are able to 
continue using our abundant domestic resources with improved 
environmental stewardship, thereby preserving access to the 
reliable baseload power needed to keep the lights on. 
Furthermore, promoting energy efficiency can help reduce costs 
over time while improving environmental stewardship, so long as 
the goal can be met in a cost-
effective way without a ``one-size-fits-all'' mandate. For 
these technologies to be adopted on a broad scale, we should 
focus on achievable goals--not, again, one-size-fits-all 
mandates or fossil fuel bans. Consumers must know that their 
investment will pay for itself over a reasonable time period.
    I look forward to hearing from Mr. Moreno and also Mr. 
Kealoha on how best to encourage energy efficiency improvements 
that are accessible, affordable, and meet the needs of 
consumers. Ultimately, all of our efforts need to be focused 
with one central goal in mind--improving access to low-cost, 
dependable energy. I look forward to our discussion today. With 
that, I turn things back to Chair Hirono.
    Senator Hirono. Thank you very much, Ranking Member Hoeven.
    We now turn to our panel, two of whom will appear 
virtually. We ask that you keep your opening statements to five 
minutes. Your full statements will be placed in the record.
    As I mentioned, we have three panelists with us today. 
First, we will start with Mr. Alejandro Moreno, who serves as 
the Deputy Assistant Secretary for Renewable Power at the 
Department of Energy. Welcome, Mr. Moreno. Please proceed.

    OPENING STATEMENT OF ALEJANDRO MORENO, DEPUTY ASSISTANT 
    SECRETARY FOR RENEWABLE POWER, U.S. DEPARTMENT OF ENERGY

    Mr. Moreno. Thank you.
    Chairman Hirono, Ranking Member Hoeven, thank you for the 
opportunity to testify before you today. My name is Alejandro 
Moreno, and I'm the Deputy Assistant Secretary for Renewable 
Power in the Department of Energy's Office of Energy Efficiency 
and Renewable Energy (EERE). As the Deputy Assistant Secretary, 
I direct activities for the geothermal, water, solar, and wind 
technology programs.
    Technology advances driven by EERE will be instrumental in 
realizing the Administration's goals for achieving a clean 
energy future, including reaching a zero-carbon power sector by 
2035 and a net-zero energy sector by 2050. But to be truly 
successful, our transition to clean energy must not only reduce 
emissions, but also provide widespread benefits to all 
Americans. These include stable, well-paying careers in 
building, installing, and operating thousands of new clean 
energy generation systems and ensuring equitable access to 
reliable, affordable energy systems and services to Americans 
across all regions, income levels, and races. Today, we know 
that low-income communities, including rural communities and 
communities of color are disproportionately affected by high 
energy burdens and lower access to renewable energy. Households 
in rural communities have a higher median energy burden than 
urban households, and majority Black and Latinx census tracts 
have significantly lower solar adoption rates than white 
majority census tracts.
    The Department supports a range of programs that support 
workforce development and equitable access, and we plan to 
build on these initial efforts moving forward to ensure a just, 
equitable transition to a clean energy future. This is the 
cornerstone of DOE and EERE's mission and work. For example, 
EERE's Weatherization and Intergovernmental Programs Office 
partners with state and local organizations to increase the 
energy efficiency of dwellings owned or occupied by low-income 
persons, reducing their total residential energy expenditures 
and improving their health and safety. Similarly, states have 
used funding from our State Energy Program to support efforts 
to promote energy efficiency and renewable energy in rural and 
low-income communities. Recent examples include solar energy 
projects in Washington State that are expected to result in a 
total $6.1 million reduction in the energy burden of low-income 
households, as well as the development of a roadmap for 
supporting coal communities and workers in Colorado.
    Within EERE's renewable power sector, the National 
Community Solar Partnership was established in 2015 to expand 
access to affordable community solar to every American 
household, supporting both increased renewable energy use and a 
more resilient energy supply. EERE issued a request last month 
for information to seek input and inform the program's next 
steps. Another renewable power initiative, the Energy 
Transitions Initiative Partnership Project recently selected 11 
remote and island communities to assist with their transition 
to resilient clean energy. Through this program, EERE has 
leveraged the expertise of regional, community-based 
organizations to ensure our efforts are driven by local 
priorities and needs and to reach a scale that would not be 
possible with direct engagement alone.
    While these individual programs and others within our 
Renewables, Efficiency, and Transportation programs have 
benefited the lives of low income and rural Americans, we 
recognize that we need to work strategically through 
coordinated programs to meet communities on their terms and in 
the context of their priorities. For this reason, the 
Department recently established a new office within the Office 
of Economic Impact and Diversity, led by the Deputy Director 
for Energy Justice. That office will focus primarily on energy 
justice issues, including the reduction of energy burden, 
increasing clean technology adoption in underserved census 
tracts, increasing access to capital among underserved 
populations, and creating new jobs and businesses in 
underserved communities.
    As we implement these priorities within EERE, we are 
focused both on developing new programs specifically designed 
to promote an equitable transition as well as making sure we 
consider equity, justice, and job creation throughout our 
entire portfolio. We recognize that in order to do either of 
these well, we need to engage directly with rural, low-income, 
indigenous, and energy-transition communities and listen to the 
preferences and priorities of people in towns and neighborhoods 
across the entire country. DOE and I, personally, are committed 
to this effort to create a research, development, 
demonstration, and deployment portfolio in which new 
technologies address immediate community needs and a clean 
energy future is a future that benefits us all.
    Thank you for the opportunity to appear before the 
Subcommittee today. I look forward to working with you to 
address the climate crisis while ensuring equitable access to 
low-cost and reliable clean energy. I look forward to your 
questions.
    [The prepared statement of Mr. Moreno follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Hirono. Thank you, Mr. Moreno.
    Next, we have Mr. Brian Kealoha, who is the Executive 
Director of Hawaii Energy, a state-funded organization that 
encourages energy savings and clean energy for families and 
businesses in Hawaii. Welcome, Mr. Kealoha. Please proceed.

              OPENING STATEMENT OF BRIAN KEALOHA, 
               EXECUTIVE DIRECTOR, HAWAII ENERGY

    Mr. Kealoha. Thank you.
    Aloha, Chair Hirono, Ranking Member Hoeven, and members of 
the Subcommittee. My name is Brian Kealoha and I'm the 
Executive Director of the Hawaii Energy Program, administered 
by Leidos. I am pleased to appear before you today to discuss 
energy efficiency--the cheapest, clean energy resource--and how 
it is supporting rural and low-income communities in Hawaii.
    Hawaii has always been an innovative leader in energy. Back 
in 1886, Iolani Palace had electricity before most of the 
world, including the White House. More recently, in 2015, 
Hawaii was the first state in the nation to sign a 100 percent 
renewable energy mandate into law. As the energy efficiency 
program for the State of Hawaii, Hawaii Energy's mission is to 
empower island families and businesses to make smart energy 
choices, reduce energy consumption, save money, and pursue that 
100 percent clean energy future. This is especially important 
because, as an island state some 2,400 miles from the nearest 
landmass, we are heavily dependent upon imported fossil fuels 
to meet our energy and transportation needs. We also have the 
highest electricity rates in the nation, more than double the 
national average.
    Since the inception of Hawaii Energy nearly 12 years ago, 
the program will reduce energy use in Hawaii by 17,000 
gigawatt-hours over the life of the measures installed. Most 
importantly, this has provided over $2 billion in electric 
savings to date, bringing immediate relief to those families 
and communities that need it most. Low-income households are 
more likely to face significant energy burdens with a 
disproportionately higher percentage of the total household 
income going toward annual electric bills. Efficiency measures 
help to lower energy bills so that money can be directed toward 
basic necessities. It also makes homes healthier, more 
comfortable, spurs job creation, and contributes to clean 
energy goals.
    Low-income populations also face unique barriers that often 
hamper their participation in clean energy, including lack of 
access to energy information, lack of capital, and/or lack of 
credit to pay for the high upfront costs of clean energy 
investments. Additionally, these communities may be distrustful 
of programs intended to assist due to poor experiences and 
trauma. With Hawaii's high cost of living, many of our 
neighbors are surviving paycheck to paycheck, working multiple 
jobs, and living in multigenerational households. We also have 
a large share of renters--condo and apartment dwellers--who 
often cannot install renewable technologies such as solar on 
their roof. This is why efficiency is so important--it is 
available and accessible to everyone.
    We created our Affordability & Accessibility program to 
focus more resources on reaching these communities. For 
example, we have been working on the Island of Molokai. Located 
between Oahu and Maui, it is home to about 7,300 residents and 
has no freeways, traffic lights, or major retail stores. Going 
into that community, it is about establishing trust, delivering 
on promises. We are proud to say we have been able to implement 
several programs, including our ``Hui Up'' appliance exchange 
program that swaps out old, inefficient appliances like 
refrigerators with new, efficient, ENERGY STAR ones that we are 
able to coordinate through a bulk purchase for them, since they 
do not have access to these appliances on the island. The 
program has resulted in 1,500 new appliances for Molokai 
residents, which will save each household $168 per year, or a 
cumulative $3.5 million on their energy bills. We have also 
been able to install energy efficient lights, showerheads, 
faucet aerators, and smart power strips through our ``Energy 
Smart 4 Homes'' program. On Molokai, this program has reached 
22 percent of island households. We have also completed similar 
work in the majority of affordable housing units managed by the 
State and County of Honolulu and Catholic Charities.
    There is so much more that energy efficiency can do. At a 
policy level we look to the Federal Government to establish 
standards such as lighting and appliance standards, that will 
ensure that the most efficient equipment is purchased. In our 
experience, we have found that collaborating is the best way to 
effectively shift attitudes and behaviors. From working with 
government and the utilities to community organizers, 
contractors, and non-profits serving the community, the Hawaii 
Energy program is an example of how key partnerships are making 
a difference in helping all Hawaii residents reap the benefits 
of our clean energy transition that can serve as a model for 
the rest of the country.
    As for Iolani Palace, they have since replaced those first 
incandescent lights with LED, continuing Hawaii's legacy in 
being a clean energy leader. Thank you for the opportunity to 
address the Subcommittee today. I look forward to your 
questions.
    [The prepared statement of Mr. Kealoha follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Hirono. Thank you, Mr. Kealoha. I am glad you 
mentioned Iolani Palace, because there are a lot of people who 
do not know that Hawaii was a monarchy. We had a king and 
queen. Learn something new every day.
    Finally, we have Mr. Mac McLennan, the President and CEO of 
Minnkota Power Cooperative, which provides electricity services 
to thousands of rural customers in North Dakota and Minnesota.
    Welcome, Mr. McLennan. Please proceed.

              OPENING STATEMENT OF MAC McLENNAN, 
         PRESIDENT AND CEO, MINNKOTA POWER COOPERATIVE

    Mr. McLennan. Thank you, Chair Hirono and Senator Hoeven, 
thank you as well for all the support associated with these 
projects. I am happy to testify today and talk a little bit 
about the things we are doing in the states around how to 
produce reliable, affordable, clean energy, and I think the 
answer is that it is not any one sector and I will talk about 
that as we move ahead. As the Chairman indicated, we are a 
provider of electricity to rural electric cooperatives on the 
eastern half of North Dakota and the northwest corner of 
Minnesota. We have about 160,000 consumers, and we serve some 
of the lowest income counties per capita in both North Dakota 
and Minnesota, along with some other disadvantaged areas. We 
only have about four consumers per-mile of line, so we have a 
phenomenal amount of infrastructure that goes in to serve those 
over a 34,000 square mile space.
    Our mission, fundamentally--we are a not-for-profit--and 
our mission is to affordably and reliably generate and transmit 
electricity into rural communities, and we have been doing that 
for 80-plus years. We use a diverse mix of generation, not 
unlike, I think, a lot of utilities in this country, but 
primarily, in our case, we have coal, wind, and hydro. Forty-
two percent of our generation capacity is already derived from 
carbon-free resources, about a third of that being wind. I will 
talk about that in just a moment. However, what we discover is, 
that the wind, even in North Dakota, does not blow all of the 
time and so we need to have a diverse mix to be able to meet 
those times when it does not. If you look back over the last 
couple of years, in 2014, 2019, and most recently now in 
February 2021--at those times when we needed electricity the 
most, so during a polar vortex time--during the times here in 
January, or in February when it is most cold, there were times 
during that stretch that we had none of our wind blow at all. 
So zero production out of 30 percent of our supply. When you 
face 30 degree below temperatures in the winter in North 
Dakota, having no wind blow and no electricity is life 
threatening. And so we need to find additional alternatives in 
our neck of the woods--or at least the capacity for 
technology--to change our ability to deliver on electricity.
    In addition to those resources, for the last 30 years we 
have developed what I think is one of the highest penetration 
levels for demand response, meaning we can control more than a 
third of our load as well, if necessary, at times when 
critical. And so we have put together a tremendous program as 
well on the load side--or the member side--to help them be able 
to manage times when we have significant events. We have also 
had numerous energy efficiency programs and we have lots of 
rebate programs and opportunities to try to incentivize people 
to reduce their electric use. The question about how to provide 
affordable--and this will be somewhat cliche--but I think the 
answer is ``All of the above.'' So when we look at what we need 
to be able to produce and keep affordable, reliable 
electricity, it is all of those things.
    In our case, because of our heavy focus on coal, as Senator 
Hoeven indicated, we have taken on what is called Project 
Tundra, which is to capture 90 percent of the CO2 
off the back-end of our largest unit and store that permanently 
right below the facility. We are fortunate in the State of 
North Dakota to have geology that allows us, we think, to be 
able to store it down there permanently and safely forever. So 
it is an effort to be able to continue to--baseload, 
dispatchable, affordable electricity at the same time, 
including or in cleaning up our environmental footprint as it 
relates to the CO2. I do not think there is any 
silver bullet as you look at this with respect to what you can 
do in this space. I think you need all of it, maybe even 
technologies that we do not see as that advanced today, 
including significant carbon capture off of coal, gas, and 
other industrial facilities.
    There are some things I think the Committee can do 
immediately. One is, as you continue to ponder moving forward, 
recognize that each utility segment is structured differently. 
We don't all look the same, we don't all work the same, we're 
not all the same. And so, as we think about cooperatives and 
municipals and 
investor-owned utilities, we all have different needs. The 
second is, if we are going to provide incentives to advance 
changes in what we do, provide comparable incentives, like 
direct pay--where we are not afforded the ability to use the 
tax code, to use direct incentives that help. The last two 
things I just may comment on are 
support--efforts like the Flexible Financing Act, which allows 
us to reprice our debt, which allows us to keep our debt costs 
down and be able to advance those over into the communities 
where we serve. And then lastly, I think Senator Hoeven said 
this, is support efforts that help us advance carbon capture 
and utilization.
    I'll just close by saying recent events demonstrate that 
reliable and affordable electricity is vital to the individuals 
who live in this region and to the economic circumstances to 
allow them to continue to be successful. We need a strategy 
that allows us to use all the resources available while 
advancing the next set of technologies. Thank you.
    [The prepared statement of Mr. McLennan follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Hirono. Thank you, Mr. McLennan, and to all the 
other panelists. I will start the questioning.
    For Mr. Kealoha, you talked about your experience on 
Molokai with 7,300 residents. Did you do things such as 
actually go door-to-door in that community to have them 
exchange their appliances, et cetera?
    Mr. Kealoha. Yes, we have to be present in the community, 
and we worked with a couple of community groups on the island 
to be able to get the word out and really outreach to the 
residents of Molokai. This is a small, tight-knit community.
    Senator Hirono. So can you scale up what you did on Molokai 
with the State of Hawaii that consists of some 1.4 million 
people?
    Mr. Kealoha. Absolutely. We are currently doing that now in 
four different other communities, picking the right community 
partners who are ready in those communities to really enable 
them to do more.
    Senator Hirono. I think that is really very intriguing 
because you really have to scale up substantially to get to all 
of these rural communities. People do not maybe realize that in 
much of the State of Hawaii there are significant numbers of 
our residents who live in very rural areas. It is mainly on 
Oahu where there is a concentration of people.
    So what do you see as some of the biggest, perhaps yet 
untapped future opportunities for energy efficiency to make an 
impact on low-income and rural communities?
    Mr. Kealoha. As I mentioned earlier, many low-income 
families do not have money to make energy efficiency upgrades, 
so adequate funding of the Weatherization Assistance Program 
can make a big difference. In Hawaii, the demand far outpaces 
the funding for eligible households, and that is really the 
case in a lot of other areas across the country.
    Another thing is Hawaii Energy, along with other efficiency 
programs across the country, utilizes ENERGY STAR for its 
benchmark in providing incentives. It is an easy way to improve 
energy literacy quickly in these communities when we say look 
for the ENERGY STAR logo. So they can save a lot of money when 
they purchase ENERGY STAR, and ensuring that ENERGY STAR, which 
saved consumers over $39 billion in energy costs last year, 
making sure that program is adequately funded is very 
important.
    Senator Hirono. Thank you.
    Mr. Moreno, you noted in your testimony that the federal 
programs that could help ensure equitable access to reliable, 
affordable, and clean energy are not as accessible to low-
income and rural Americans. You indicated that the DOE is 
examining how to reduce barriers for low-income and rural 
communities to access DOE funding and assistance. I would also 
like to note that tax credits for energy and energy efficiency 
are mostly helpful for households that have a tax burden, which 
many low-income households either do not have at all or have 
too little of for the tax credit to make much of a difference. 
What, in your view, can Congress do to ensure that our federal 
programs have the flexibility they need to provide the types of 
financial assistance that are most useful to individual 
communities?
    Mr. Moreno. Thank you. Thank you for the question.
    Certainly, it is absolutely essential that these programs 
are accessible to all communities--in particular to the low-
income communities. The work that we have done in EERE within 
the Renewable Power program--for example, on community solar--
looks at how we create financing structures that make 
technologies that exist more accessible to people who may not, 
in this case, own their own homes. And so providing 
technologies and financing structures that can allow people the 
same access and the same benefits that somebody might get with 
their own rooftop solar.
    The same thing in the State Energy Program, for example, is 
making sure that we have the programs and--the work that we 
have to be able to focus specific projects and specific 
incentives around low-income communities and around some of the 
work that, for example, that I mentioned with the transition 
communities with developing a roadmap that can help provide 
resources and help provide guidance for how we can ensure 
communities and workers in those communities are not 
disadvantaged by transitioning to clean energy as well.
    In terms of tax credits, I know there has been a lot of 
discussion about creating, as my co-witness said, direct-pay 
mechanisms that can make it easier for those without a tax 
burden to see the same benefits. And that is something I would 
be interested in working with you and your staff to explore.
    Senator Hirono. I would also be very interested in this new 
office you mentioned that would focus on energy justice issues 
because clearly, part of what this hearing is all about is that 
there are poor and rural communities that do not have access to 
the kind of energy that we are talking about.
    I would just like to have the indulgence of my Committee to 
ask Mr. McLennan a short question.
    I understand that Minnkota is a generation and transition 
cooperative, but are any of your member cooperatives pursuing 
community solar projects on behalf of their members?
    Mr. McLennan. They are. We have two members who have 
pursued--and they are the larger members because they tend to 
have more consumers be able to utilize the program. So we have 
11 members. Two of them have community solar programs today.
    Senator Hirono. Do you consider those to be very successful 
ways for families that otherwise would not be able to afford 
this kind of energy source to get lower-cost energy?
    Mr. McLennan. Yes, really, they are a good mechanism to 
achieve that because they allow for them to aggregate at a site 
rather than try to figure out how to place--and in some cases 
very poor solar opportunities, in other cases, I think Mr. 
Kealoha described it well, don't have the means for which to 
place it on their home or to go through the--so there's a 
phenomenal amount of convenience to them using community solar 
from an aggregation perspective. So I think it is a good way, 
if you want to think about it from a practical perspective, for 
those who might not be advantaged or live in apartments or do 
not have circumstances which would allow them to do that.
    Senator Hirono. Thank you.
    Senator Hoeven.
    Senator Hoeven. Thank you.
    So Mac, tell me in general terms, how are electric 
cooperatives such as yours at a disadvantage when it comes to 
accessing capital through the federal tax incentives?
    Mr. McLennan. Yes, so because we are not-for-profit and 
don't generate, obviously, large amounts of revenues for which 
you would pay taxes on, using tax incentives doesn't really 
have any value to us. And not just in--in our case right now, 
obviously, as you well know, working on how to do that with 
respect to a carbon capture facility--but I'll reference back. 
So we have six wind contracts right now, all of those, 
actually, with NextEra Energy Resources, because they can 
figure out how you monetize those tax credits.
    And so the disadvantage, if you will, is that we're using 
an incentive mechanism that really doesn't have value for at 
least two sectors of the electric utility industry. So 
municipals and cooperatives both have no ability to use that 
incentive. And so, you look at the pie chart that suggests that 
cooperatives and municipals at times aren't engaging in the 
clean energy transition. I would argue part of that is that 
they have not been afforded the opportunity to be able to do so 
as it relates to the wrong side of ownership. It doesn't mean 
that they don't have it. Like in our case, 42 percent of our 
supply already comes from non carbon-based resources. So that 
is clearly one of them, Senator Hoeven, is that we use 
mechanisms, and tax credits aren't the only place that we've 
chosen to use incentive programs, but they are the most 
prominent.
    Senator Hoeven. Right, so you can use a counterparty, but 
then that diminishes the value of that tax credit to you, 
correct?
    Mr. McLennan. Yes, there are always some, you know, banks 
and lenders do not do anything for free, right? So there is 
always a transaction fee or a portion of it that they are going 
to take off the top for their risk of converting those tax 
credits. And it's substantial. So if you look at the current 
project that we're working on today, we estimate somewhere 
between 10 and 13 percent will go for the conversion of those 
tax credits or finding those partners or someone taking 
additional risks. And so they're the revenues, fundamentally 
they go to--and I do not want that to suggest that I don't 
appreciate what banks do and others--but they will take a 
substantial portion of the project cost that could otherwise go 
into the development of infrastructure, but for that mechanism.
    Senator Hoeven. So how would the Carbon Capture 
Modernization Act and Carbon Capture Utilization and Storage 
Tax Credit Amendment Act--bipartisan legislation I have 
introduced along with Senator Tina Smith and others--how would 
that help you?
    Mr. McLennan. So that allows us to then bypass having to go 
find a series of tax aggregators and tax equity investors and 
essentially allows the project to move forward--that that tax 
be paid back directly in a way that would help us then pay down 
the debt and the cost associated with the project.
    So it is, you know, it is a substantial benefit in that and 
it substantially simplifies the number of transactions and the 
pieces that you have to put together as well. So the legal 
documents get significantly smaller, in my mind, as it relates 
to having to deal with trying to put all the tax equity 
provisions together.
    Senator Hoeven. So nationally, how would that direct-pay 
option for 45Q and 48A provide certainty for all those that 
want to move forward with carbon capture and storage across the 
country?
    Mr. McLennan. Yes, so how it provides certainty is that you 
then know it's there and that you know it is available. So you 
aren't then left to the whims of trying to find individuals who 
have tremendous tax burdens that they are going to offset by 
use of a tax credit.
    Senator Hoeven. So that certainty, you think, would really 
help advance the ball in terms of making carbon capture and 
storage commercially viable and getting companies across the 
country to do it?
    Mr. McLennan. Yes, I think it is a tremendous benefit to be 
able to advance the projects that have direct pay. And not only 
for us, that we talk about in carbon capture for, in our case, 
obviously, a coal unit. Ethanol facilities who are currently 
looking at whether they can capture carbon off the backside of 
ethanol are exactly in the same position. They don't generally 
generate huge tax burdens that you would have to offset by 
making the investment. So it's well beyond what happens with 
respect to, in our case, a coal unit in North Dakota--it is gas 
units, ethanol facilities, wherever you might want to capture 
carbon in a way that the tax credits are advantageous.
    Senator Hoeven. Right, so it is important for renewable 
energy like biofuels as well, correct?
    Mr. McLennan. Correct.
    Senator Hoeven. Okay. Thank you.
    Thank you, Chair Hirono.
    Senator Hirono. Senator Heinrich.
    Senator Heinrich. Thank you, Madam Chair. Mr. Moreno, I 
wanted to start with you. You know, we are all concerned about 
reducing the burden of high energy costs on rural and low-
income families, and we have had that policy objective for a 
long time, but we are hearing today about some of the things 
that stand in the way. We probably started back with the 
Weatherization Assistance Program in the seventies, but a lot 
of well-intentioned programs just do not get at it. We have 
heard about the inadequacy today, for example, of tax credits. 
If you do not have a tax burden, that does not really help you. 
You cannot wait around if you are somebody who has a high 
energy burden and is struggling just to make ends meet to begin 
with, you cannot really wait around until you file your taxes 
anyway, to get the benefit to be able to afford new 
infrastructure in your home.
    So I wanted to ask, would a point-of-sale rebate program 
for the sort of highly efficient electric appliances, things 
like air-sourced heat pumps and heat pump water heaters, would 
that help underserved communities benefit from lower monthly 
power bills and clean up their indoor air quality?
    Mr. Moreno. Thank you, Senator, and thank you for the 
leadership on this issue.
    I would be very interested to go and look at the details of 
the specific program and I think the intent behind a program 
like that is potentially very good. Certainly, we heard from 
one of my fellow witnesses some of the challenges of existing 
programs and the way they are designed in ways that 
unintentionally do not let some of the people that we most want 
to benefit from them be able to benefit. Every community is 
different, so I do not want to give a blanket answer that yes, 
any program will be a one-size-fits-all answer. I think what we 
will find is programs like that are likely to benefit some 
communities and others less so.
    And from a DOE perspective, the key, I very strongly 
believe, is that programs need to be designed from the 
beginning with low-income communities in mind and listening to 
low-income communities and not treating every community exactly 
the same. Even as we have heard today, certain low-income 
communities and rural communities have different needs. If we 
are not at the table with them, they are not at the table with 
us. And also, informed by data and research, we can 
increasingly focus on the needs of low-income communities, 
giving communities the tools to be able to engage in the 
development of research in decisions that affect them in an 
informed way, in an impactful way. That is the way to make sure 
that the programs, whether they are Congressional programs or 
DOE programs, are truly going to be as effective as possible 
for as wide a variety of people as possible.
    Senator Heinrich. Yes, and I would add, Mr. Moreno, that in 
addition to being at the table with all of those communities, 
looking at private-sector players who have figured this out, 
who have gotten it right, you know, stories like BlocPower, 
that are effectively cleaning up the very communities that we 
are talking about, getting cleaner infrastructure and they are 
benefiting their customer's air quality as well as their 
monthly power bills.
    We have talked a little bit about community solar here. 
Does the DOE offer technical assistance to state and local PUCs 
and PRCs that are trying to set up the rules for their 
community solar in their states?
    Mr. Moreno. That is a very good question and DOE does have 
a number of different technical assistance programs for 
different state bodies. Ultimately, it is up to the states 
through, for example, the State Energy Program, where most of 
the technical assistance that we provide through various 
programs, including through our solar program to PUCs, if that 
is of interest to the PUCs, it is absolutely something that we 
can provide assistance on.
    Senator Heinrich. We may want to follow up with you on that 
because I know that we passed a community solar bill recently 
in New Mexico and now our PRC is trying to pull together the 
data to make that real--and my time is starting to run short. I 
will just finally put another challenge on the table, which is 
to make the point that coal thermal generation is not the same 
baseload as it used to be. When my dad worked for a utility, we 
had a 70 percent coal capacity factor in the United States. 
Today, it is 40 percent. So you cannot really call it baseload 
exactly, because some of that is driven by economics and the 
poor economics of coal, some of that is driven by the fact that 
when a coal-fired generating station goes down, it goes down. 
It is zero megawatts.
    And so in a market where nuclear is 16 cents, and coal is 
11, and solar is coming in at 3.6, and 4 cents for wind--those 
are, you know, challenges that we are going to have to figure 
out because at 40 percent, I just do not think you can call 
that baseload anymore.
    Senator Hirono. Thank you.
    We are going to start voting soon, but I think we can 
proceed with a second round before we finish up.
    Mr. Moreno, I am really glad that you mentioned that each 
community has different energy needs and how important it is to 
work with them from the very beginning. One of the concerns 
that I have is that these communities often need reliable 
sources of energy and one of the ways that we can do that is to 
promote microgrids. Would you agree with that, Mr. Moreno?
    Mr. Moreno. Thank you and yes, I think for a number of 
communities a microgrid can increase the reliability and the 
resilience of the system, of course, depending on the 
generation that is serving it and the design and operation of 
the system. I would note----
    Senator Hirono. Yes, the thing is that there are such very 
limited federal resources to support microgrid development. So 
what work is the Department doing to expand these microgrids as 
a solution for resilient energy for communities, and what could 
Congress do to expedite these efforts?
    Mr. Moreno. Sure, we do have a microgrid program within our 
Office of Electricity and I would defer to my colleagues for 
the specifics on that, but I would point out within my programs 
in the Office of Energy Efficiency and Renewable Energy, I had 
mentioned the Energy Transitions Initiative Partnership 
Program, which is designed to specifically work with remote 
communities, and we have actually selected two in Hawaii to do 
energy.
    Senator Hirono. Where are they?
    Mr. Moreno. One is, in fact, looking at microgrids in 
Honolulu.
    Senator Hirono. Okay.
    Mr. Moreno. And what we are finding is that microgrids are 
of very high interest, particularly to small communities where 
that may be the entirety of their system. In addition, 
microgrids can be a solution to improve resilience as part of a 
larger system when they can be de facto islanded.
    Senator Hirono. I agree with you and I would like to work 
more closely with you as to these two Hawaii communities. I 
hope that one of these communities is on the neighbor islands, 
so we will work with you.
    Senator Hoeven, please.
    Senator Hoeven. So Mr. Moreno, you highlight in your 
testimony a recent first place award the University of North 
Dakota provided for a project using existing gas wells to 
generate geothermal energy in the community of Mandaree, 
located on Fort Berthold Indian Reservation for the Mandan, 
Hidatsa, and Arikara Nation. So my question is, will the 
Department work with us to support an all-of-the-above approach 
to meeting our energy and environmental goals and specifically 
supporting technologies like CCUS?
    Mr. Moreno. Thank you for the question.
    I will likewise defer to my colleagues in our Fossil Energy 
and Carbon Management program for the specifics on CCUS, but I 
will note that the Department has been a leading innovator and 
driving the research in CCUS for over 20 years, and as somebody 
who has spent my career in renewables, I will say that firm, 
flexible generation is incredibly valuable as part of an entire 
system.
    Senator Hoeven. Good.
    Mac, Senator Heinrich mentioned that coal has a 40 percent 
capacity factor. What is the capacity factor for the Milton 
Young plant?
    Mr. McLennan. Yes, so our capacity factor is closer to 90 
plus, year over year, 80. Our target, I would put it this way, 
that we have for the plant is 92 percent availability and 93 
percent availability on the other unit.
    Senator Hoeven. Okay.
    Mr. McLennan. We use ours frequently.
    Senator Hoeven. Which again goes to the importance of 
having that baseload regardless of what the demands are, what 
the weather conditions are, correct?
    Mr. McLennan. True.
    Senator Hoeven. Okay, thank you.
    And then, Mr. Kealoha, would you agree that, I guess with a 
couple things, one is that as we talk about all these different 
approaches, we have to not only have flexibility, but we have 
to demonstrate dependability, cost savings, and that--you know, 
we are talking here about states as diverse as North Dakota, 
Hawaii, and many others across this country--that we really do 
have to empower states and regions to develop a lot of these 
different types of energy and have that kind of mix to truly 
have the kind of energy security, stability, and environmental 
soundness that we all want.
    Mr. Kealoha. Thank you for the question, Senator. From my 
perspective, and I think as we are approaching things here in 
Hawaii and particularly with Hawaii Energy, there is no silver 
bullet to how we are going to get there. I think we are trying 
to find ways to pursue whatever means that will get us to, at 
least in Hawaii, our 100 percent clean energy mandate and part 
of that and some of my fellow testifiers have shared this, but 
part of this means we have to consult the people who will be 
most directly affected, make sure they participate and benefit. 
And folks oftentimes bypass the voice of the community in the 
effort of trying to pursue clean energy. And I think it is 
really important that that voice is also heard.
    Senator Hoeven. Right, yes, I agree with that. Thank you.
    And then, Mac, is there anything else? I appreciate you 
joining us today. Is there anything else that you want to bring 
up relative to these efforts to advance carbon capture and 
storage that I did not ask about?
    Mr. McLennan. That is a really open-ended question.
    Senator Hoeven. Well, you have a minute and a half.
    [Laughter.]
    Mr. McLennan. A minute and a half. Well, I would say that, 
to your point, I mean, it is an alternative for us, based on 
the region that we operate within, the characteristics and 
resources that we have today. It is demonstrable, so we are not 
talking about something that does not exist today and it leaves 
an option, right? So I think at times we get myopic as we start 
to think about how do we get there and, I mean, you look at 
energy efficiency, you look at new technologies, you look at 
technologies that don't exist today and I think today, 
arguably, carbon capture is one that we will be able to 
demonstrate--even get there--and it will produce electricity 
with no carbon footprint or near zero carbon footprint and be 
able to store carbon.
    I think the other thing that is not just about fossil or 
coal-based assets and I think you noted this is we can't get 
there to reduce the carbon footprint of the world without 
figuring out how to store carbon in the ground safely.
    Senator Hoeven. Thank you. Thank you for your leadership 
and thank you to all of our witnesses today. I thought you all 
had great testimony to offer and I appreciate it very much.
    Thank you, Chair Hirono.
    Senator Hirono. Thank you very much.
    Just one last note. Both Mr. Moreno and Mr. Kealoha 
testified, I believe, on the importance of community input 
going forward and Mr. McLennan, would you agree that that is a 
very important aspect of what we are doing as we enable rural 
communities and poorer communities to access the kind of energy 
that they need?
    Mr. McLennan. Sure. And then, in our model, Chair Hirono, 
that's how it works. I have a Board of Directors who are 
elected from their communities, by their colleagues in those 
communities, who sit on those boards and provide the guidance 
to us about the path and direction of the things that they 
would like to achieve.
    Senator Hirono. Thank you all for participating in this 
discussion. Members will have until close of business tomorrow 
to submit additional questions for the record.
    The Subcommittee is adjourned. Mahalo, everyone.
    [Whereupon, at 3:00 p.m., the hearing was adjourned.]

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