[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
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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
__________
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
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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
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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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