[Senate Hearing 118-271]
[From the U.S. Government Publishing Office]
S. Hrg. 118-271
OVERSIGHT OF THE FEDERAL ENERGY REGULATORY COMMISSION
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HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MAY 4, 2023
__________
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Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
55-520 WASHINGTON : 2025
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 BILL CASSIDY, Louisiana
MARK KELLY, Arizona CINDY HYDE-SMITH, Mississippi
JOHN W. HICKENLOOPER, Colorado JOSH HAWLEY, Missouri
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
David Rosner, FERC Detailee
C.J. Osman, Senior Counsel
Richard M. Russell, Republican Staff Director
Justin J. Memmott, Republican Chief Counsel
Patrick McCormick, Republican Special Counsel
C O N T E N T S
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OPENING STATEMENTS
Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
Virginia....................................................... 1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from
Wyoming........................................................ 6
WITNESSES
Phillips, Hon. Willie L., Chairman, Federal Energy Regulatory
Commission..................................................... 7
Danly, Hon. James P., Commissioner, Federal Energy Regulatory
Commission..................................................... 12
Clements, Hon. Allison, Commissioner, Federal Energy Regulatory
Commission..................................................... 16
Christie, Hon. Mark C., Commissioner, Federal Energy Regulatory
Commission..................................................... 23
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
American Public Gas Association:
Statement for the Record..................................... 236
Barrasso, Hon. John:
Opening Statement............................................ 6
Christie, Hon. Mark C.:
Opening Statement............................................ 23
Written Testimony............................................ 25
Responses to Questions for the Record........................ 221
Clements, Hon. Allison:
Opening Statement............................................ 16
Written Testimony............................................ 18
Responses to Questions for the Record........................ 201
Danly, Hon. James P.:
Opening Statement............................................ 12
Written Testimony............................................ 14
Responses to Questions for the Record........................ 142
Hickenlooper, Hon. John W.:
Excerpts from the Fifth FERC-NARUC Transmission Task Force
Meeting.................................................... 47
Chart depicting PJM transmission spending on three project
types before and after 2014................................ 49
Industrial Energy Consumers of America:
Statement for the Record..................................... 238
Manchin III, Hon. Joe:
Opening Statement............................................ 1
Chart depicting FERC pipeline and LNG capacity approvals from
2021-2023.................................................. 3
Phillips, Hon. Willie L.:
Opening Statement............................................ 7
Written Testimony............................................ 9
Responses to Questions for the Record........................ 60
OVERSIGHT OF THE FEDERAL ENERGY REGULATORY COMMISSION
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THURSDAY, MAY 4, 2023
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin
III, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. The Committee will come to order.
I am pleased to be joined by all four of our sitting
Federal Energy Regulatory Commission Commissioners this
morning. Thank you all for being here to discuss FERC's
important work.
First of all, I want to congratulate Chairman Phillips for
a successful and productive few months since your appointment.
As I said before, there is no such thing as an acting chair,
and I am glad that you have been able to hit the ground
running. I am grateful for your efforts so far to run the
Commission efficiently and to work within your jurisdiction and
our laws.
This morning I look forward to discussing how FERC is
addressing the critical energy challenges facing our nation.
FERC is responsible for regulating natural gas markets and
permitting the interstate infrastructure needed to move natural
gas safely and efficiently. Of course, FERC is an independent
agency, but policies and guidance of any given administration
certainly can bear on your work. For example, guidance on NEPA
and greenhouse gas impacts issued by the White House Council on
Environmental Quality can influence the FERC's procedures.
Administration policies also impact permits from other agencies
that are required to build infrastructure regulated by FERC,
and during this Administration, we have seen unprecedented
delays developing the needed natural gas infrastructure,
infrastructure that would have helped restore the supply and
demand balance and lower prices across the world.
According to the Energy Information Administration, in
2022, we had the lowest amount of FERC-regulated natural gas
pipeline infrastructure installed since EIA began tracking in
1995. Incredibly, we built less last year than during the heart
of the COVID-19 pandemic or the great recession. The only
explanation is an administration doing everything they can to
block new fossil energy. And while natural gas projects were
stalled in 2022, natural gas prices soared to the highest level
since 2008. If we learned anything during these energy price
spikes last year, it's that Americans cannot afford for their
government to blindly prioritize climate goals over the
reliable and affordable energy they need to go about their
daily lives. That said, I am glad that FERC appears to have
heard the concerns last year from everyday Americans and from
Members of Congress. We are starting to see FERC make decisions
at a better pace. FERC approved more than ten billion cubic
feet per day of natural gas pipeline permits and nearly six
billion cubic feet per day of LNG export permits over the last
12 months combined. That is more than triple what FERC approved
during the 12 months prior. As you can see, in 2021, the blue
represents the pipeline permits and the orange is the LNG
exports. You can see how low they were, and then, with the war
starting, we were not able to help our allies. You can see here
that it picked up as far as the permits for pipelines. LNG was
starting to come, and you can see what you all have done, which
you should be commended for this.
[Chart depicting FERC pipeline and LNG capacity approvals
follows:]
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The Chairman. And in the past four months, FERC has been
required to act on a bipartisan basis with only four members.
Under the leadership of Chairman Phillips, the Commission has
been particularly productive. As shown on the chart behind me,
as I said, FERC permitted more natural gas infrastructure in
just the last four months than in each of the prior two years.
Furthermore, FERC appears to be easing off the policy that most
natural gas projects require a full environmental impact
statement, or an EIS, as we have known, instead of the more
abbreviated environmental assessment, EA. This course
correction has the potential to cut review times in half
without cutting any corners. Some projects do warrant an EIS,
the most comprehensive, time-intensive type of NEPA review, but
there is no basis to make this the norm just because a project
involves fossil fuels, as has been done in the past.
The Federal Government does an EIS for less than one
percent of projects. So it was not logical for FERC to say that
the majority of gas projects before it needed one. However,
despite these improvements, there is still a large shadow of
uncertainty over whether FERC will revert to its ill-conceived
natural gas and greenhouse gas policy statements issued earlier
last year. These policies signaled that natural gas projects
could be rejected simply because they transport the fossil
fuel. Of course, we addressed those policies the last time you
all were here before this Committee. So I look forward to
hearing about how your views may or may not have changed.
Now, turning to electricity. There is no doubt that our
electric grid is undergoing a rapid transition both in
generation sources and in the types of demand the grid is
called on to serve. The speed of this transition must be
balanced against reliability and affordability of electricity.
The reliability of our electric grid has been put to the test
in the last few years. Frankly, I am not sure it deserves a
passing grade, and I am especially concerned that the grid will
face worse going forward. In 2021, we had a major electric grid
failure during a winter storm that affected millions of people
in Texas and other states. And then again, this past Christmas,
during Winter Storm Elliott, nearly every part of the U.S. grid
was operating under emergency conditions. More than 1.5 million
people lost power. If we can't provide Americans with reliable
power on Christmas, then we definitely are failing at our job.
I am pleased that FERC and the North American Electric
Reliability Corporation (NERC) have issued new cold weather
reliability standards to put us on firmer footing, but we need
to do more. We need to get to work to figure out what is
causing these reliability breakdowns and make the corrections
that are needed. FERC and NERC must move with urgency and
overcome resistance to changing the status quo, whether that be
from industry, other regulators, or environmental advocates. We
cannot wait until two winters from now. This needs to be
addressed for this winter.
While some may find these facts inconvenient, the reality
is that our dispatchable coal power was one of the most
reliable energy sources during the winter storms Uri and
Elliott. Coal-powered plants saw significantly fewer outages
than natural gas plants. The grid would have been absolutely
decimated during these storms if our coal fleet was retired
prematurely. Yet EPA and ESG investors are on a crusade to shut
down every one of these coal plants, whether the grid is ready
for it or not, whether the EPA's Effluent Limitation
Guidelines, Mercury and Air Toxics Standards, Interstate Ozone
Transport Rule, power plant CO2 regulations or
others--the potential reliability impacts of these combined
regulations are simply staggering. And at the same time EPA is
working to decrease power supply by fossil fuels, they are
trying to force a dramatic surge in electricity demand with
radical electric vehicle mandates in the tailpipe regulations,
the expansion the of renewable fuel standard to include EVs,
and more. FERC and NERC have not done enough to highlight and
manage the reliability impacts of premature fossil retirements
or significant changes to the load on the grid.
We all agree that we need to address climate change. And
the energy transition is happening faster than we imagined even
a few years ago. But the only way to transition without
sacrificing reliability and affordability is with policies that
spur innovation, not elimination, so that we can use all of our
energy resources in the cleanest way possible. It makes no
sense at all to take tools out of the toolbox. No energy
resource is immune to weather disruptions, whether that be
frozen wind turbines, frozen gas wells, or frozen coal
stockpiles, all of which we saw in recent winters.
I also want to speak briefly about electric transmission,
which is different from natural gas because states have primary
responsibility for the siting of interstate projects. But
similar to natural gas pipelines, high-voltage transmission
construction has been declining when it should have been
increasing. The fact of the matter is that large, multi-state
transmission lines are needed for reliability, but they are
rarely getting built. And when large lines are built, it is
taking a decade or longer to get through the approval process.
This is simply unacceptable. Transmission is about balancing
supply and demand and moving electricity from where it is most
abundant to where it is most needed. To help, in the Bipartisan
Infrastructure Law, we provided a long-overdue fix to the
backstop transmission siting authority Congress gave to FERC
back in 2005, to make it actually work, but it is clear that
even this current pathway still has roadblocks to constructing
the high-voltage, long-distance lines that are needed for
reliability. I am interested to hear about FERC's activities to
support transmission buildout in a thoughtful way that
recognizes state regulators have the primary jurisdiction over
siting and paying for these projects.
Lastly, let me say a few words about permitting reform, as
I know Ranking Member Barrasso released his proposal with the
Ranking Member of EPW this morning. Last summer, I secured a
commitment from the President and Democratic leadership that we
would get long-overdue energy permitting done, finally. That
led to a bill which 40 Democrats and seven Republicans voted
for in December, and which I introduced earlier this week to
kick-start promoting work in the Senate again this year, and it
is the only bill that had bipartisan support. I am glad to have
led the charge, getting the ball rolling last year. And while
we should have gotten it done then, I believe we have another
chance this year. So I am glad the Ranking Members have
introduced--and my friend, Senator Barrasso--a proposal today.
And I hope that we will now be able to begin a conversation
that will lead to enacting a bipartisan law.
Permitting reform is a topic this Committee knows well. As
the Committee with jurisdiction over energy, we are intimately
familiar with the roadblocks faced by energy projects. We have
covered this in many hearings over the years. That includes
conversations with Secretaries Granholm and Haaland over the
last few weeks and with the FERC Commissioners today. Next
week, we will bring in stakeholders to provide other
perspectives on needed reforms. So I am heartened by the
acknowledgement from both sides that we need to tackle
permitting this year. I sincerely hope that now, with my
proposal, and both the House and Senate Republican proposals on
the table, that we are going to be able to sit down and
negotiate in good faith, putting politics aside to craft a
serious bipartisan proposal for permitting that can actually be
signed into law.
With that, I turn to Senator Barrasso, for his opening
remarks.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Thanks so much, Mr. Chairman. Thank you
for holding today's hearing. Chairman Phillips, members of the
Commission, welcome back to the Committee. The Federal Energy
Regulatory Commission is a critically important agency. To
quote Chairman Phillips from earlier this year, ``the services
that the Commission regulates--energy, natural gas,
electricity--seven percent of our economy. The first seven
percent, because without our energy, there is so much that we
cannot do.''
So Chairman Phillips, I commend you for resetting the
Commission's agenda. You have brought orders forward for
discussions and for action. You have emphasized energy
reliability and affordability. You have rightly highlighted the
negative effects on families and on communities when energy
prices are high. You have emphasized personal respect as a
necessary condition for consensus on the Commission and
elsewhere. Under your leadership, the Commission has made great
progress since you took over just four months ago. I am not
always agreeing with all your decisions--the Commission still,
I believe, needs to do much more to accomplish what I expect is
our shared goal of affordable, reliable, and secure energy for
American families and businesses.
We also should strive to produce enough energy to supply
friendly nations seeking to reduce their dependence on hostile
actors such as Russia. Currently, we are far from achieving
these goals. Last month, the Energy Information Administration
issued a report stating that in 2022, the least interstate
natural gas pipeline capacity was added since they began data
collection back in 1995. Our nation needs more and better
energy infrastructure. The entities that finance, that build,
that maintain and expand energy infrastructure and their
customers rely on the Commission to act promptly. The
Commission must speed up its process and balance energy
interests more effectively. Companies and customers expect the
Commission to act only within the scope of its authority. The
U.S. Supreme Court has explained clearly the principal purpose
of the Federal Power Act and Natural Gas Act, and that purpose
is to encourage the orderly development of plentiful supplies
of electricity and natural gas at just and reasonable rates.
Commissioners, Congress has charged you with this mission
and you must make it your central focus. You must resist those
who want to use the Commission to circumvent Congress and
fundamentally change the nation's energy sector. You must work
to ensure that wholesale power markets reflect the value of
reliable sources of energy. You must fight against litigation
intended to block new and upgraded natural gas pipeline and
electric transmission lines. You must resist efforts from other
federal agencies to undermine the development of needed energy
infrastructure. If you don't take these steps, energy prices
will skyrocket, grid reliability will degrade, and families and
businesses all across the country will suffer. We witnessed it
in New England. We witnessed it in California and elsewhere. We
have also witnessed it in Europe, before Russia's invasion of
Ukraine, when energy regulators lost sight of their principal
mission. This must not be the path that we follow as a nation.
Commissioners, it is beyond time to take meaningful steps
to address threats to reliable, affordable, and resilient
electric service. The Commission must operate in a non-partisan
manner, supporting this central mission. This is especially
important when it comes to the Commission's most consequential
decisions. For this reason, the now draft 2022 Natural Gas
Policy Statement needs to be scrapped. The Commission needs to
solely pursue reasonable and balanced policies that support the
development of plentiful supplies of affordable electricity and
natural gas.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Now we are going to hear from our Commissioners. We have
Chairman Willie Phillips, who will start.
STATEMENT OF HON. WILLIE L. PHILLIPS, CHAIRMAN, FEDERAL ENERGY
REGULATORY COMMISSION
Mr. Phillips. Chairman Manchin, Ranking Member Barrasso,
members of the Committee, thank you so much for the opportunity
to testify here today regarding the important work that we do
on behalf of the American people. The Commission's jurisdiction
is broad. Pursuant to the Federal Power Act, Natural Gas Act,
and Interstate Commerce Act, it is our responsibility to ensure
that rates for the wholesale sale and transmission of
electricity, as well as transportation of oil and natural gas
by pipeline, are just and reasonable. In addition, we are
responsible for ensuring that the nation's bulk power system
remains reliable. And last, but by no means least, we are also
responsible for siting vital energy infrastructure, including
interstate natural gas pipelines, facilities for exporting and
importing LNG, and hydroelectric facilities. By exercising
these authorities in a prudent and responsible manner, the
Commission can help ensure that our country produces energy
that is reliable, affordable, and sustainable.
Earlier this year, President Biden designated me as
Chairman of the Commission, and I am honored to appear before
you today for the first time in that capacity. In January, at
my first meeting, I laid out three principal priorities. They
are reliability, electric transmission, and environmental
justice. I am happy to report to you today that in just a few
short months, we have made substantial progress on all three
fronts. I will begin with reliability because it is and it must
be, always, job number one.
We face unprecedented challenges to reliability on our
nation's electric system. Foreign and domestic actors are
testing our cyber defenses every day. Physical threats to the
grid are on the rise. And extreme weather of all kinds is
threatening the power to our customers. That is why, under my
leadership, the Commission has taken at least one major action
to promote reliability every month since I became Chairman. We
have required NERC to develop enhanced cybersecurity standards
regarding internal network security protocols. We have approved
a series of winter preparedness measures, a new reliability
standard to further protect our electric system supply chain,
and a system of incentives to reward certain cybersecurity
investments. These actions represent the blocking and tackling
that is absolutely necessary to ensure that our electric grid
remains secure, reliable, and resilient.
My second priority, electric transmission--it is, itself, a
reliability imperative. Transmission plays a critical role in
facilitating the interconnection of new resources while
ensuring that the electric system remains reliable. And
transmission is the key that can unlock the potential of so
many of the energy security measures included in the Inflation
Reduction Act. To those ends, we are working as quickly as
possible on a number of important rulemakings, and I will list
just a few: number one, interconnection queue reform; two,
regional transmission planning; and three, backstop siting
authority.
My third priority, environmental justice--this one is
personal. I grew up in an environmental justice community in
Alabama, so I have seen firsthand what it means for a community
to bear more than its fair share of pollution and other costs
of industrial development. But I have also seen benefits that
investment can provide to historically underserved communities
in the form of jobs, tax revenue, and community infrastructure.
Having seen both sides, it is my goal as Chairman to do all
that we reasonably can to ensure that environmental justice
communities do not bear too great a share of the burdens or too
small a share of the benefits that new energy infrastructure
can provide. Here, too, we have made strides. We announced the
hiring of a new Senior Counsel for Environmental Justice and
Equity. And later in March, in the same month, we held the
first ever roundtable on environmental justice and equity and
infrastructure permitting.
Finally, I would be remiss not to mention the significant
strides we have made with respect to permitting. Our country
urgently needs more energy infrastructure of all kinds. As
Russia's war on Ukraine has made clear, energy infrastructure
is essential to any country's national security. I am proud of
the steps that the Commission has taken to streamline our
permitting processes so that we can more efficiently issue our
decisions, while at the same time, continue to enhance our
reliability.
Thank you again for the opportunity to testify here today.
I look forward to answering your questions.
[The prepared statement of Mr. Phillips follows:]
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The Chairman. And now, we are going to have Commissioner
James Danly.
STATEMENT OF HON. JAMES P. DANLY, COMMISSIONER, FEDERAL ENERGY
REGULATORY COMMISSION
Mr. Danly. Chairman Manchin, Ranking Member Barrasso,
members of the Committee, I appreciate the opportunity to be
here today. I want to talk about what I think is a looming
reliability crisis in our electric markets, which is driven
primarily by the effects of state and federal subsidies and
FERC's maladministration of our markets.
So the organized markets, the RTOs and ISOs, were
originally conceived of decades ago as the mechanism by which
we could give the benefits of competition to the ratepayers so
that they get the least-cost generation and also to use market
signals to effectively incentivize the arrival of needed new
generation and the retention of existing generation to meet the
load requirements. This theory has not been borne out, and the
reason it hasn't been in our markets is because FERC has
allowed the markets to fall prey to the price-distorting and
warping effects of subsidies and public policies that have
driven the advancement of large quantities of intermittent
renewable resources onto the electric system and have done so
basically because most of the ordinary economic costs that
would drive the investment of capital have failed to actually
be seen in the market mechanisms.
So the subsidies in question in our markets--of course, I
am speaking in broad-brush strokes--every market has a
different tariff and different mechanisms, but in the main, the
subsidies available are so lucrative that renewables are often
able to offer into the procurement auctions at zero. And just
think for a moment what that means in terms of a price signal.
What that means is that generation is free. The market is
saying there is no cost to this generation being built. Well,
that is obviously not true. The effect of this is market-wide
price suppression, and the effect of the market-wide price
suppression is that it deprives the other generators that are
not eligible for these subsides of much-needed revenue and they
are forcing them into premature retirement. And the problem
with that is that the generators that are being retired are the
ones that have the attributes necessary--like spinning mass,
inertia--they are the generators that actually have the
attributes necessary to keep system stability. As an
engineering matter, it is simply impossible to keep the system
running entirely with unreliable, intermittent generation. That
is just an engineering reality. And so we are employing these
market mechanisms incorrectly because we are allowing them to
fall prey to the subsidies.
Why is this so critical? Well, in vertically integrated
states, that is, the states that don't have our markets as the
administrators, you have a regulatory process in which the
utility and the state PUC figure out, through an integrated
resource plan, what is needed to meet peak requirements. In our
markets there is no other authority besides the market. There
is no other mechanism other than the market signals to
incentivize the arrival of generation, which means that if
those market signals fail or if they are distorted, you will
eventually, in the long run, have a failure to supply adequate
resources to keep the system stable.
Now, we have heard from our RTOs and ISOs that there is
going to be a capacity shortfall in the future. MISO has said
it. ISO-New England has said it. Even PJM, the largest of the
markets, the one that serves Washington, has recently raised
the human cry of impending resource shortfalls, and we
understand these are three-year forward markets, so that means
that if there is a problem four years from now, if it's not
fixed this year, it's not going to be fixed in four years.
These are forward contracts we are dealing with. To show you
just how broken these markets are, despite the fact that PJM is
telling us we are having impending shortfalls of capacity, at
the last residual auction, the prices actually went down. And
you don't need to be Ph.D. in economics or have some strange
theory to let you know that scarcity pricing is not supposed to
reflect lower prices when scarcity is eminent, right? That just
isn't how it works.
FERC has, I am sorry to say, been the midwife to some of
the problems that have led to these market signals being
warped. We got rid of the minimum offer price rule in some of
our markets. That was a mechanism that was employed by FERC to
ensure that resources had to bid either at their actual costs,
as opposed to bidding in what they are able to, based upon
subsidies. We even have increased the moral hazard of the
entire procurement auction mechanism by an order recently
issued that, over my serious objections, that sought to reset
the market prices after the auction ran in order to lower the
prices that resulted. Well, the reason why the prices go up is
because there is scarcity of some kind, and as the old economic
saw goes, the solution to high prices is high prices. If we
don't allow the pricing mechanisms to work and we don't allow
the incentives to actually--that is, the market incentives to
drive people's action, it is impossible to rationally allocate
capital and we will find that there are reliability failures.
And I hope that I am proven wrong on this, right? None of us
want to have a reliability disaster, but given the fact that we
have put so much trust in these markets and we are giving them
the basic job of trying to procure resources, I think it is
very likely inevitable.
So my time is up. Thank you very much. I look forward to
your questions.
[The prepared statement of Mr. Danly follows:]
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The Chairman. Thank you.
Now we have Allison Clements, our other Commissioner.
STATEMENT OF HON. ALLISON CLEMENTS, COMMISSIONER, FEDERAL
ENERGY REGULATORY COMMISSION
Ms. Clements. Thank you, Chairman Manchin, Ranking Member
Barrasso, members of the Committee. I appreciate the honor to
testify here this morning. I am honored to continue to serve at
this critical time for our energy system. I also appreciate the
chance to continue the dialogue with this Committee about the
inflection point that the energy transition has created for
that system. Our nation's grid continues to face significant
challenges, including outdated infrastructure, a changing
resource mix, and intensifying extreme weather events. FERC is
tasked with striving for system affordability and reliability
in the face of these challenges while appreciating some sober
realities--Russia's war on Ukraine, inflation, and the evolving
cyber and physical threat to the grid. This morning I will
highlight a few of my own priorities related to our
affordability and reliability mandates.
I will start with our outstanding proposals on transmission
planning and interconnection reform. EEI has estimated that
U.S. utilities invested almost $28 billion in electric
transmission last year. Customer dollars are going to be spent
on transmission in any case. I believe it is FERC's job to
direct that investment in a manner that provides the most
benefits to customers at the lowest cost. Our regional planning
proposal gives states an important seat at the table and
requires long-term planning across a variety of potential
scenarios in the face of uncertainty. Our generator
interconnection proposal addresses another aspect of the
problem--overwhelmed and broken interconnection processes
around the country where projects face years-long delays in
line in hopes of connecting to the grid.
While facilitating efficient transmission planning and
interconnection reform are cornerstones of ensuring future
reliability, it has not been the Commission's only reliability
focus. Since Winter Storm Uri in February 2021, FERC has made
progress on several recommendations proposed by the North
American Reliability Corporation and FERC staff, including the
issuance of new cold weather reliability standards. I am also
pleased that FERC will host its second New England Winter Gas-
Electric Forum in June to address the region's specific
challenges. I have and will continue to push the grid
operators, states, and stakeholders in New England to quantify
their short- and longer-term risks using a data-driven,
technology-neutral approach.
Of course, no matter the region and no matter the season,
no solution for today's reliability challenges will be complete
without consideration of all the tools in the reliability tool
box. We can improve the efficiency of the existing grid at
relatively low cost using grid-enhancing technologies, and I
hope FERC will finalize several rules that involve the use of
those technologies. We can leverage them out of distributed
energy resources and demand response through effective
implementation of market rule changes and through continued
partnership with state regulators. These initiatives, together
with ongoing interregional transmission planning and cost
management discussions, are meant to maintain reasonable costs
for customers while reducing the likelihood that any single
severe storm or other event will cause shocks to customer bills
or power outages. We have an urgent need to move forward in
finalizing them.
I will end with two bright spots. Last month, under
Chairman Phillips' leadership, FERC held an environmental
justice and equity roundtable at the Commission. The event
reminded me of the importance of engaging early and effectively
with front-line and fence-line communities, not only to address
their important concerns, but to ensure the legal durability of
our decisions.
Finally, I want to share a note of praise for FERC's Office
of Public Participation. I am pleased with what OPP has
accomplished during their short tenure so far, and I look
forward to their continued growth.
As always, it is my honor and privilege to serve. Thank
you.
[The prepared statement of Ms. Clements follows:]
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The Chairman. Thank you, Commissioner.
And now, we have Commissioner Mark Christie.
STATEMENT OF HON. MARK C. CHRISTIE, COMMISSIONER, FEDERAL
ENERGY REGULATORY COMMISSION
Mr. Christie. Thank you, Mr. Chairman and thank you,
Chairman Manchin and Ranking Member Barrasso, members of the
Committee, it is an honor, again, to appear in front of you and
I want to start off and just give some kudos to our Chairman,
Chairman Phillips. I think he's done a great job in a very
challenging situation and I enjoy having him as our Chairman.
The one issue I want to focus on today, I think, is
reliability, and I am really afraid to say that I think the
United States is heading for a very catastrophic situation in
terms of reliability. I hope it doesn't happen, but I think we
are heading for potentially catastrophic consequences. And the
core of the problem is actually very simple. We are retiring
dispatchable generating resources at a pace and in an amount
that is far too fast and far too great and it is threatening
our ability to keep the lights on. Now, the problem is not the
addition of wind and solar and other renewable resources. The
problem is the subtraction of dispatchable resources such as
coal and gas. And of course, Mr. Chairman, as you know, when a
dispatchable coal unit is prematurely retired in West Virginia,
it's still in rate base and the consumers still have to pay for
it. But this is going on all over the country, in both RTO and
non-RTO states, this almost cascading number of early
retirements. And when I mean early retirements, I mean
retirements when there are still many years of useful life left
on these generating units.
So let's look at PJM for one example, and the Chairman
alluded to PJM. The CEO of PJM--and PJM, by the way, is the
biggest RTO in terms of load in terms of consumers served in
our country--so the CEO of PJM announced just a few weeks ago
that PJM is projecting that they are going to lose 40 gigawatts
of generating resources, 90 percent of which is dispatchable--
coal and gas, primarily. And they are going to lose these 40
gigawatts of dispatchable resources in just the next few years.
At the same time, and by the way, the independent market
monitor for PJM says the actual number is not 40 gigawatts,
it's over 50 gigawatts of prematurely retiring generating
resources. And against this, PJM is projecting at least 13
gigawatts of load growth. And so, even if you took every unit
in the queue--and people who think that, well, if we just clear
the queue, everything will be fine--no, it won't. You could
clear the whole queue and you wouldn't be close to covering
what PJM is projecting in terms of their lost resources.
And as we all know, and this is a hard fact, as the
Chairman alluded to it, the fact is most of the units that are
in the PJM queue, almost 90 percent plus, are either wind or
solar. So you can clear that queue, but a nameplate megawatt of
wind or solar is simply not equal in terms of capacity value to
a nameplate megawatt of coal or gas or nuclear. It's just not
there. So basically, in PJM, the arithmetic doesn't work. The
arithmetic doesn't work, and we are going to end up with more
situations like we had last Christmas and during Winter Storm
Elliott, when PJM came that close to having rotating outages.
Now, the largest part of the problem in PJM, again, was the gas
units. A lot of the independent gas units did not show up.
So let's talk about the two reasons why these cascading
retirements, and why we are heading for what I think is a
potentially catastrophic situation. First, yes, market design
is a problem. In the RTOs, particularly those with capacity
markets, like the Eastern RTOs, market design is a big reason
that we are seeing a lack of resources showing up and resources
prematurely retiring. You know, these markets--and they are
called markets, but they are not markets. They are
administrative constructs and they always have been. They are
called markets. They have some market characteristics, but they
are not true markets, and particularly the capacity markets,
which in the Eastern RTOs like PJM are the main way to get to
resource adequacy and are increasingly just simply not working.
So market design in the RTOs is a big problem, but I don't want
to rule out the non-RTOs either. There are problems with
premature retirements there too.
The second reason, particularly, is we are not building a
transportation capacity for gas units. Gas units, increasingly,
are the ones that were being called upon to be the balancing
resources when coal retires prematurely. But if you can't get
gas to the generating units, they can't run. And one of the big
problems, that we already know, and from Elliott and PJM, was
that a lot of the independent gas generators that did not have
firm supply did not have any gas supply during the storm. So
this problem is coming. It is coming quickly. The red lights
are flashing. And I think as a member of FERC, it is important
for us to tell you that we see these problems coming. They are
real. And if we don't do something about them, I am afraid that
we are going to look at potentially catastrophic situations.
And what we saw in Winter Storm Uri in Texas, I think, is a
harbinger of what we are going to get because that was a supply
problem, a supply default, and Winter Storm Elliott was the
same way--supply did not show up when it needed to show up. And
I think we are heading to more situations like that.
And with that, I will be happy to answer your questions.
And thank you, Mr. Chairman.
[The prepared statement of Mr. Christie follows:]
GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT
The Chairman. Thanks to all of you for your opening
remarks. We appreciate it. Now we will start with our
questions, and I will begin.
First of all, we see we have a two-two split, and people
say that we are just divided and we cannot get anything
accomplished. It looks like you all have done fairly well
getting things accomplished in this two-two split. Do you agree
that FERC is not able to continue to come together or work well
in a two-two split? There will definitely be a fifth member,
but I am just saying that you have to do your job until that
happens. So each one of you can comment on that, and we will
start with Chairman Phillips.
Mr. Phillips. Thank you, Chairman Manchin. Thank you for
the question.
I can say this--this Commission, even though we are
divided, and there was lots of doom and gloom about our
inability to get things done, we have not sat on our hands. We
have kept pace with past Commissions as we have moved forward
important, critical infrastructure projects that are needed for
the reliability of our grid. And I can tell you this, it has
very little to do with me, sir. I give the credit--all of the
credit--to my colleagues. They have stepped forward to lead and
to make sure that we don't have a situation where we cannot
move things forward. I can't do it by myself. I give them all
of the credit.
The Chairman. Thank you.
Mr. Danly.
Mr. Danly. I think so far there have been no problems at
all with the two-two split. The rate of orders has been moving
at pace and we have had, I would say, very good collegiality
talking about the contents of the orders over the last few
months.
The Chairman. You all bring a diverse amount of talent to
it, and that is what is great to see--all this talent coming
together for the purpose of a cause.
Commissioner Clements.
Ms. Clements. I think we are doing fine. I think Chairman
Phillips is doing a great job. I think we are very busy and
there are some really important proposals out there that we
need to act on.
The Chairman. Commissioner Christie.
Mr. Christie. You know, I don't really look at it as a two-
two split. I look at four members. Now, we are all four
lawyers. That means we have 16 different opinions on any issue.
[Laughter.]
Mr. Christie. But, you know, we only need three votes to
get something out, and the business is getting done. The vast
majority of our cases come under the Federal Power Act, and I
think there is no real particular lineup on how people vote on
Federal Power Act issues, particularly the ones that come up
from the RTOs. So I don't think it is a two-two. I think it is
a matter of getting to three votes on every order. And I think
that the track record shows that, in fact, we are doing that in
mostly every case.
The Chairman. And you have a lot of unanimous, too, which
really speaks volumes for all of you.
Mr. Christie. The vast majority are unanimous, actually.
The Chairman. Let me throw this to you, what I didn't
understand--the PJM system, which I know, I have been in the
PJM. I was born and raised in the PJM system, know it well. I
have been through some of its challenges. And I am concerned,
but you all said something--the subsidies. Every power source
is subsidized. Coal is subsidized to a certain extent. You can
say, well, they get this and that and credit offsets. Nuclear
is subsidized, and wind and solar. But wind and solar is coming
on, and when it comes on, basically, it has to go when it comes
on. So if you are going to dispatch and basically shut
something down in order to make capacity for the new technology
of wind and solar, but it does not have the storage to give it
to you when you need it, it has to give it to you when it makes
it. Is that the problem? And you said the cost is coming on at
zero. I know that it has come from like 16 cents a kilowatt-
hour down to five and six cents. Coal has gone up because of
environmental concerns. I understand that and all the rest of
them.
I just keep saying that I know back home they want to keep
the lights on. They want to be able to take care of their
families and their businesses. And I looked over at what
happened in Europe, and yesterday I had the privilege of
talking to German military that were here giving me assessments
on different things, but we started talking about energy. I
said, ``tell me what happened.'' He said, ``we made a grave
mistake--we took off our dispatchable quicker and got hooked on
cheap Russian oil and gas.'' He said we got hooked on cheap
Russian oil and gas. And then we thought the North Sea could
produce all of our wind that we needed. None of that happened
and they got in a situation. They threw caution to the wind, as
far as oversight, on environmental oversight to keep people
from freezing and starving. So we know the geopolitical risk
that we are taking here, but is it because of--are we looking
at all the costs when you do that, taking the subsidies away
from the actual cost or basically looking at the cost
delivered? How, I mean, I know Commissioner Danly, you said
that, and----
Mr. Danly. When I was speaking about the offering in at
zero, I was specifically talking about the capacity market. I
am not talking about the all-in cost to consumers. That is a
matter of both the real-time energy cost they have to----
The Chairman. But how does it come out onto the grid? How
is it--you only have so much capacity on the grid. It is like a
highway. You have three highways, three lanes.
Mr. Danly. Right.
The Chairman. And you have four lanes of traffic, you have
a problem.
Mr. Danly. So you rightly identify the fact that
electricity is unique as a commodity because it has to be
produced as it is being consumed, other than marginal, really
unimportant to the running of the system storage capacity. And
the more of the dispatchable resources that are displaced
because they become economically unviable, the harder it is to
rely upon intermittents to keep the system running. It is just
a matter----
The Chairman. Dispatchable, as you talked about, so for
everybody, it is 24/7. It is your baseload.
Mr. Danly. It is not only baseload. This would also include
things like gas plants, which can be, in the moment of
shortfall, right, as soon as load comes on----
The Chairman. Right.
Mr. Danly. Then you have to immediately meet the load with
new generation, and if there is a drop-off, then you have to
immediately make up the shortfall. And so, natural gas has
been, we have moved to, over the last 20 years----
The Chairman. But you are saying that basically those that
are non-dispatchable, that are not 24/7 baseload, they are
basically, because of pricing pushing off and early retirements
as I think----
Mr. Danly. Yes.
The Chairman. As Chairman Christie said, and we see that
happening.
Mr. Danly. Yes.
The Chairman. Pushing off quicker than we have the ability
to replace so we are going to be in a very unreliable
situation, is what you are saying?
Mr. Danly. That is right.
The Chairman. Your turn.
Senator Barrasso. Thanks, Mr. Chair.
Well, let me stick with you, Commissioner Danly. We have
just heard about the potential for catastrophic problems with
the grid. You mentioned it, as did Commissioner Christie. In
your opening statement you said, ``As an engineering matter
there is no substitute for reliable, dispatchable generation.''
You said, ``Intermittent renewable resources like wind and
solar are simply incapable by themselves of ensuring the
stability of the bulk electric system.'' Commissioner Christie
said, ``The red lights are flashing. Problems are coming. The
problem generally is not the addition of intermittent
resources, primarily wind and solar, but the far too rapid
subtraction of dispatchable resources, especially coal and
gas.''
So please briefly explain why natural gas, nuclear, coal,
and hydropower plants are absolutely necessary to keep the grid
stable.
Mr. Danly. So Senator, when you are trying to run an
electric system stably, there are certain attributes, and to
keep it brief, I am not going to get into VARs and all the
complexities of the engineering, but there are basic attributes
that large generators that have large spinning mass have. When
you, as I just alluded, you have to produce the electricity at
the same time it is consumed, when the load changes, the
frequency and the voltage change and the large spinning mass of
bigger generators, not intermittents, allow the system to ride
through more stably than if you were relying wholly on
inverter-based resources like wind and solar. So it is the
basic attributes of those assets.
Senator Barrasso. Commissioner Christie, President Biden is
determined to electrify everything, in my opinion, no matter
what the cost, no matter what the consequences are on the
American people. What do you think the cost and consequences
are going to be of forced electrification on President Biden's
timeline?
Mr. Christie. Well, I don't know about the timeline, but
whenever you, you know, as you increase electrification, let's
say of the transportation sector or the home heating sector or
the other uses where, right now, maybe natural gas is being
used, obviously, you increase load, you increase demand. And
just under supply and demand, as you increase demand, you have
to keep pace on supply. And this is where, I think, we are
looking at potentially catastrophic consequences because if the
demand curve is just going up exponentially, which it would do
if you, you know, with electrifying the transportation sector
really quickly. But at the same time, the supply curve is going
down with the dispatchable resources that you need to meet the
demand, you don't, I mean, again, the arithmetic doesn't work.
And that's what the PJM situation is really showing, is that
when you look at all the gigawatts of resources, dispatchable
resources are going to be prematurely retiring at the same time
load is going up. The numbers just don't balance.
Senator Barrasso. Commissioner Danly, the Energy
Information Administration recently released their figures,
showing, and I quote, ``The least U.S. interstate natural gas
pipeline capacity on record was added in 2022.'' So in your
view, how did the Commission's decisions in 2021 and 2022
contribute to this failure?
Mr. Danly. So the Commission bears virtually all the
responsibility for this. We are absolutely the ones who caused
this. I hate to say I told you so, but a year ago, we had a
hearing on some of the decisions that FERC had made and the
promulgations of the Commission. And at the time, I said that
the slow-processing of the Section 7 applications, that is for
interstate natural gas pipelines, and the regulatory
uncertainty that was going to be created by standardless
issuances in which the pipeline applicants had to guess what
kind of mitigation would be good enough to pass muster under a
sort of black-box review by the Commission--I said that was
going to have a chilling effect on investment, that it was
going to be impossible to rationally allocate capital. And we
have seen the results of those policies.
And we still have a cloud, even now, because I have
repeatedly called on the Commission--my colleagues--to close
those dockets. I really think that as long as those things
remain open, we are going to have continued regulatory
uncertainty that is going to chill investment.
Senator Barrasso. Well, Commissioner Clements, what do you
think about that?
Ms. Clements. I think the Commission has taken its case-by-
case approach to both Section 7 pipelines and Section 3 LNG
facility applications. And in each case, there is a decision
made. There has to be a decision made to balance between speed
and checking all and doing the sufficient analysis so that if a
case goes to court, it withstands review. And that is the
approach that I have brought to all of these dockets.
Senator Barrasso. Final question, for the Chairman.
Chairman Phillips, today, wind and solar developers are
accounting for the vast majority of the applications to connect
new electric generation facilities into the grid. Grid
operators can't depend on wind turbines and solar panels to
supply power whenever the demand is there. In contrast, natural
gas generators can quickly supply or reduce power to the grid.
To me, that means natural gas generators help balance the
weather-dependent resources like wind and solar. Natural gas
provides the backup support that wind and solar need.
So is it fair to say that delaying necessary natural gas
pipelines in infrastructure undermines efforts to allow the
additional wind and solar facilities to be connected to the
grid?
Mr. Phillips. Yes, Senator. I believe that is absolutely
true. My colleagues have talked about it already a little bit.
Actually, the North American Electric Reliability Corporation,
they warned us that we are already seeing potential impacts to
reliability on the grid. You know, I think it is also important
that, as Chairman, you know, we are clear that we are resource-
neutral. We want to advance and open the markets to all
resources. And so, transmission reform is another important
factor when it comes to the question.
Senator Barrasso. Thanks, Mr. Chairman.
The Chairman. Thank you.
Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman.
And thank you to you and Ranking Member Barrasso for this
important hearing. FERC plays a critical role in ensuring all
Americans pay just and reasonable rates for their electric,
their energy supplies. And this role becomes even more
important, in my opinion, during a time of transition. No more
than today, as hundreds of billions of dollars are being
invested to diversify and decarbonize the energy mix, digitize
the grid, and accommodate more intermittent supply and energy
options. And with climate change driving more frequent and
severe weather events, like hurricanes, wildfires, ice storms,
and flooding, it is abundantly clear that we need to move to an
improved, reliable, and resilient electric grid. Many of my
colleagues here represented 1.5 million customers who lost
power last December to the Winter Storm Elliott. In fact, over
80 percent of the major outages over the past two decades were
attributed to weather events. Notably, the extreme weather-
caused outages shot up roughly 78 percent over the last decade.
So my point in stating that is that I want a full and
functioning FERC. I want you to pay attention to this as we go
into the diversification that I think we need to do because our
grid is at peril. We have lots of policy ideas that certainly
support the Chairman's efforts in the past on Middle Mile, on
fiber, and I think that his state has led on some of those
issues. But I wanted to, you know, in the wake of the Enron
crisis, we had to make sure that--actually then-Chairman
Wellinghoff from Nevada did a really great job in implementing
the authority we gave to FERC to really be a policeman on the
beat. Since that date, there have been over 130 settlement
agreements, assessments of over $800 million in civil
penalties, and disgorgement of another $500 million in illegal
profits. So I just want to make sure that--I joined my
colleague again from Nevada on making sure that we have tough
enforcement here on traders who continually manipulate the
market. This is crazy that they go from one company to the next
and just set up the same schemes.
So I would like to hear from the Commissioners whether you
believe that energy markets have to be free of manipulation.
You know, this confusion, well, can you have just and
reasonable rates and manipulation? I will be clear--the answer,
in my opinion, is no, you can't have manipulation if you are
going to have just and reasonable rates. And should those
gains, misgotten gains, be properly returned to the injured
parties and to consumers?
So if I could hear views on that quickly. And yes, you
know, whatever your answers are. Yes, go ahead.
Mr. Christie. Yes, they should be returned to the
consumers, and I also think FERC would benefit from the
authority. I think I read where you had a bill to give FERC the
authority to delicense or revoke the ability of traders who
manipulate the market to continue doing that. I don't think we
have that authority now, and I think it would be a good
authority to have.
Senator Cantwell. Thank you. That is Senator Cortez Masto--
--
Mr. Christie. I am sorry, Senator.
Senator Cantwell. Well, I joined her on that bill.
Mr. Christie. All right.
Senator Cantwell. It is so important, but I am bringing it
up.
Commissioner Clements.
Ms. Clements. I agree completely with Commissioner
Christie.
Mr. Danly. I just delivered a homily on market signals, so
of course, I think markets should be free of manipulation and
yes, we should return the ill-gotten gains, if they are found
to be, to the ratepayers.
Senator Cantwell. Thank you.
Mr. Phillips. You are seeing, yet again, another unanimous
decision right here in front of you.
[Laughter.]
Senator Cantwell. Okay.
Mr. Phillips. I agree.
Senator Cantwell. Well, I think this is, as we face tight
markets and changes, look, it is always surprising. These are
not--well, the traders who manipulate these schemes, as we have
seen, actually over at CFTC too, but you know, FERC, again,
when you play this role of just and reasonable rates, having an
anti-manipulation authority that the Commission aggressively
enforces, I think, is very critical. And so, I am glad to hear
you endorse the Cortez Masto/Cantwell bill on this as well.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Now we have Senator Lee.
Senator Lee. Thank you, Mr. Chairman. Thanks to each of you
for your service and for being here today.
Commissioner Christie, I would like to start with you, if
that's all right?
I want to talk about permitting reform. This is a topic
that is finally becoming sexy--popular to people on both sides
of the aisle, and not a moment too soon. It is getting some
traction, and with good reason. It is encouraging that there is
growing consensus that we need to update our regulations so we
can produce more energy in America, rely less on other
countries that have lower environmental standards than we do,
and also be in a position to supply more natural gas to other
countries that rely on much dirtier forms of electric power
generation. But unfortunately, some harmful ideas have made
their way into the mix. And some of those ideas would increase
consumer costs without providing any benefits.
Now, one of those ideas involves spreading the cost of
large transmission lines among and between a larger group of
electricity ratepayers--of customers. This idea, according to
those proposing it, is necessary because it would make it
easier for them to build large, long-distance lines to deliver
wind and solar power to places like California that suffer
frequent power shortages directly attributable to their short-
sighted, aggressive, radical climate-change policies. Now, in
my opinion, it is simply not fair to force ratepayers in states
like Utah or Idaho or Wyoming to pay for and otherwise shoulder
the burden associated with the costs of the California and
Oregon climate policies. So Commissioner, should Congress be in
the position of socializing the costs of large transmission
lines to customers who will never benefit from those lines?
Mr. Christie. We will focus on the transmission instead of
the permitting. I, first of all, think they are separate
issues. I think permitting is a legal authority to move forward
with construction, and we have huge problems with court reviews
on that, as we all know. On transmission, I think that a
transmission line that would not be built but for the public
policies of a state or states, the cost should be allocated to
the state or states that want to move forward with the public
policy projects.
There are three, really three boxes of projects of
transmission. The first are reliability projects. And I think
everybody agrees reliability projects need to be built,
absolutely. Economic projects are where you solve more
congestion costs with a transmission line and everybody
generally agrees you need to build those. The public policy-
driven projects are projects that are built, but would not be
built but for--and they are primarily state policies. And so,
if the state policies are driving the projects, and a classic
example is New Jersey's offshore wind, which is driven purely
by New Jersey's policies, then I think most people would say
that you should not allocate the cost of New Jersey's policy-
driven projects to, for example, in PJM, to consumers in West
Virginia. And that is the fundamental principle of let the
states that want the policy-driven projects allocate the costs
among themselves.
Senator Lee. Thank you. That is helpful.
Commissioner Danly, let's turn to you. As you are well
aware, FERC has a pretty well-defined mission, and it is a
mission that the Supreme Court described back in 1976 as
involving a job to ``encourage the orderly development of
plentiful supplies of electricity and natural gas at just and
reasonable rates.'' I have noticed that, in recent years, in
the last two, two-and-a-half years in particular, we have seen
the Commission starting to stray from that mission. And while I
am pleased that there has been some progress over the last few
months toward reversing that disturbing trend, I remain very
concerned about the lingering uncertainty that is there,
uncertainty that has been contributed to by past FERC
decisions, especially those in the last two years, that have a
tendency to stifle investment in natural gas pipelines and
electricity transmission projects.
What should FERC be doing, in your view, to provide more
certainty to project investors making risk assessments?
Mr. Danly. Senator, you are quite correct to be concerned
about the regulatory uncertainty. FERC is, at its core, a rate-
making agency, and what we should do is make our rate decisions
as clear as possible. When tariffs are approved, we need to
enforce the terms of the tariff. One of the worst things that
the Commission does is constantly grant the legal retroactive
waivers to do things like jump queue positions or have
deadlines that are relied upon to manage queue processing. We
need to have clear and firm rules, and we need to apply them,
and we need to set the circumstances of clarity and regulatory
certainty that allow rational allocation of capital because the
risk premiums now, given the uncertainty regulatorily are so
great, that they are stultifying investment in critical
infrastructure.
Senator Lee. I have additional questions. We have a lot of
members here and so I am not going to take more time. As my
time is expired, I will submit those for the record.
Thanks so much for being here.
The Chairman. Thank you, Senator.
Senator Heinrich.
Senator Heinrich. Chairman, I want to start just by saying,
as an engineering matter, that we are no longer dependent on
spinning mass to regulate frequency or voltage. You can
accomplish that with state-of-the-art inverters. That is
actually articulated in IEEE 1541, and we have been doing it in
Hawaii for years.
I want to get to the issue of federal rights of first
refusal. So Commissioners, I am highly concerned that the
FERC's proposed plan to reinstate additional federal rights of
first refusals for regionally planned transmission facilities
is fundamentally anti-competitive and will hinder new
transmission lines from being built. I don't ask that you take
my word for that. The Department of Justice and the Federal
Trade Commission had equally strenuous opinions to say about
this. So I just wanted to ask you, Chairman Phillips, is the
Commission still considering reinstatement of federal rights of
first refusals?
Mr. Phillips. Thank you, Senator.
That is one aspect that is in our proposed rule on regional
transmission planning. We propose that we reinstate the ROFR in
very limited circumstances, for example, where there is joint
ownership. But to be clear, we have had many comments on the
record. We are reviewing those comments and I am open to
changes to the proposed rule.
Senator Heinrich. I would just urge you to look very
closely at that policy because I think we obviously have a
transmission issue. You have articulated that well and we do
not want to create a situation where we are making that even
harder to fix.
The transmission and cost allocation NOPR does not propose
changes to the existing interregional transmission coordination
and the cost allocation requirements in Order No. 1000. I think
that interregional progress is really key to solving these
transmission issues. So two questions, Chairman. Does the
Commission intend to undertake such action on interregional
planning and cost allocation?
Mr. Phillips. Yes, absolutely. I have talked about
interregional transmission capability since I joined the
Commission. You don't have to look any further than recent
extreme weather events to see how critical and important they
can be to maintaining the reliability of the grid. It is my
hope that in the very near-term, we can take up a proposal on
interregional.
You mentioned cost. I don't want to take away from your
time. I have a lot to say on that issue.
Senator Heinrich. Go ahead.
Mr. Phillips. Well, we had a forum last fall on cost
containment. And to be clear, this is something that I believe
is critically important. When you talk about affordability, it
is something that--we are still struggling with the last
recession that we had, the last economic crisis. People are
hurting still. So when there is just a slight uptick in cost on
energy bills, people feel it, people like where I am from. And
so, I take this very seriously. This is top-of-mind for me.
Senator Heinrich. Yes, I think one of the big issues is
cost allocation, right? How do you do that fairly, and a key
obstacle to planning some of those interregional transmission
lines is that individual states and RTOs are using different
planning models. So you get in sort of a food fight when it
comes to cost allocation. So on that point, is FERC considering
standardizing planning methodologies for transmission so that
we can negotiate some of those food fights and agree to one set
of rules to the road?
Mr. Phillips. Cost allocation is certainly on the table. It
is a big part of why we are doing our regional planning. We
have a proposal that would bring states more into that process.
I think there are many different ways you can do it, you know,
there is the--you can do it as an ex ante approach, you can
have a state agreement approach, which is something that we
have approved in the past. I know my colleagues feel very
strongly about this. We have received comments. These are all
important reforms that we are considering.
Senator Heinrich. I have about 50 seconds left, so I am
going to throw you a more open-ended question, which is just
the role of reconductoring in transmission. Obviously, you
know, when you reconductor, you can dramatically increase
throughput. You can, you know, line losses are reduced. You can
improve the economics, and if you can pass those along to
customers, then you can really help them with their economic
challenges, and grid-enhancing technologies, also, things like
power flow controls and dynamic line rating have huge potential
to help relieve some of this transmission congestion while you
do the hard work of getting transmission built across the
country.
So just talk about those things, how FERC is thinking about
them as you look at the overall needs to increase transmission
planning.
Mr. Phillips. Senator, you are preaching to the choir when
you talk about grid-enhancing technologies. Advanced
reconductoring--I think that these types of tools, they have to
be a part of our planning process. It addresses every single
point that I raise--reliability, affordability, and
sustainability. Dynamic line ratings----
Senator Heinrich. And not across purposes, it actually
aligns those things.
Mr. Phillips. Absolutely. Thank you.
I mean, and when you talk about dynamic line ratings, we
have a proposal, we have a proceeding that is ongoing on that.
Ambient adjusted line ratings, we have accepted six compliance
filings already. Our regions are implementing--our utilities
are implementing ambient. So this is something that I take very
seriously. It is top-of-mind for me.
Senator Heinrich. Thank you all.
Thanks, Chairman.
The Chairman. Thank you, Senator.
And speaking about transmission, I will say this, just for
the record--that was our greatest challenge we had in
negotiating our permitting bill. It really was. It is something
that we have to overcome, but it was taken to note that if a
state, such as mine, who is an exporter of power, and a power
line has to come through to service the East Coast/West Coast
whatever in the PJM system, there should not be any cost
allocations to a state that is a net exporter. We thought we
worked through all that, but that is one of the greatest
challenges. You all are going to be very much involved in this
whole process as we go through this permitting.
The House gave us a piece of legislation with no
transmission in it. No bill is going to happen without
transmission--same as pipelines, everything. It is all needed.
So we know how critical this is and we really appreciate your
input. And we are looking forward to your expertise on this.
With that, we have Senator Cassidy.
Senator Cassidy. Hey, folks. I always think about this
testimony throughout the year. It is always very thought
provoking. Thank you. Partly because you provoke each other.
That is also a little bit amusing.
Chairman Phillips, I am told that the queue for an LNG
export plant, that if somebody files, the queue is based upon
the time stamp of the filing, even if none of their financing
is put together, and that there are other projects for which
the financing is fully mature and it could launch, but it is
stuck behind. Seems less than optimal to me. One, is it true,
and two, is it optimal, or three, if not optimal, what should
we do?
Mr. Phillips. I think the best thing that we can do----
Senator Cassidy. Is it true?
Mr. Phillips. I am going to have to look into that. I am
not sure exactly about, you know, what you raise with the time
stamp and when the process, the clock starts.
Can I just say this real quick?
The best thing that we can do is to make sure that we
faithfully execute our statutory obligations, and to be clear,
since I have taken over as Chairman, we have done everything we
can to streamline our internal review processes. We have
approved, when you talk about BCF, as much this year as we have
to the last two years combined.
Senator Cassidy. Okay, thank you.
Mr. Christie, okay, a bunch of solar people in my office
yesterday and they are telling me how in New Orleans, which
suffered after the storm with great power outages, that you
could set up solar panels, rooftop solar with a big battery
there, and that would store the energy so that if the power
lines go down, it could feed back in. That almost seems like
that would be, I could ask several of you this question, but it
almost seems like that could be the sort of baseload that would
be available should the other renewables at any given time not
successfully put forward adequate power. Now, all I know is
what I am told. So I am kind of sending it to you because I
always like your comments. Is that pie in the sky, or could
that be feasible for a city of roughly 350,000 people?
Mr. Christie. Well, it would work for about four hours
because that is about the length of the battery. We don't have
long-duration storage on an industrial scale that could run for
a week and inject thousands of megawatts.
Senator Cassidy. Now, if we are talking about just peaking,
for example, in the afternoon we all know we are going to need
more because in Louisiana you run the air conditioner in the
afternoon, or at least you run it more. You know what I am
saying? Would that serve as the peaking, if not the wholesale?
Because when a hurricane hits, as we all know, there are a lot
of problems.
Mr. Christie. No, it absolutely is a peaking resource, and
particularly on a late summer afternoon in Louisiana when it is
really hot and is sunny, the solar is generating at 100 percent
capacity and it is wonderful. What you really need, to keep the
grid going though, you have to have a balanced portfolio, and
you have to have enough different resources that can run at
every second of every hour of every day because the grid has to
be balanced every second of every hour of every day.
So while you have some resources that are great for
peaking, but you need other resources that can run on a
continuous basis for literally----
Senator Cassidy. I accept that. I am not arguing with that.
Mr. Christie. Right.
Senator Cassidy. Mr. Danly, there is something in your
testimony that seemed quite pregnant with meaning but I did not
quite understand. Okay, on the bottom of page one going into
page two, ``FERC has directly interfered with price formation
by allowing one of our wholesale markets to change the rules of
its procurement auction after the auction had run in order to
lower the resulting price.''
Can you elaborate on that, and give specific detail?
Mr. Danly. Yes, Senator. I am sorry that was not clear
enough.
We had a recent order that was issued, and we have to be a
little bit careful because this is still pending before the
Commission, but I can always talk about what the order said. It
allowed for PJM to reset the auction results because there was
an idiosyncratically high price that came out of one of the
areas within the market. And it is my contention in my
testimony that if we are going to rely upon procurement
auctions--that is, capacity auctions--to ensure resource
adequacy, then we cannot rerun auctions because the moral
hazard that attends changing the rules after the fact means
that nobody in future auctions will believe that the offers
they make into it will actually be honored, and they will be
unable to price the risk that is necessary in formulating the
correct offers. It will fundamentally undermine the mechanisms
that we are relying on.
Senator Cassidy. Okay.
So Mr. Phillips, how would you respond to that? Because,
frankly, it seems pretty convincing to me.
Mr. Phillips. My colleague talked about an idiosyncratic
anomaly. I call that an error. There was an error in the
auction. PJM----
Senator Cassidy. But these are major players, right? This
is not like Bill Cassidy goes to the mall one day and pays, you
know, three times as much as he should for an iPod, iPad or
whatever.
Mr. Phillips. This was way more significant than that. We
are talking----
Senator Cassidy. But I mean, these were mature,
sophisticated bidders. So I am a little skeptical that they
would make a mistake. I'd just say that.
Mr. Phillips. PJM, the grid operator, the independent
market monitor, the states, they all agreed that this was an
error to the tune of hundreds of millions of dollars impacting
one of the poorest areas in all----
Senator Cassidy. So can I ask Mr. Danly how would you
respond to that, and then I am out of time. If I can just ask.
Mr. Danly. It is not an error to have high prices at times
of scarcity. That is not a bug of a market. That is what
markets are for. And if what we keep doing is ex post facto
remedies to--it's not an error, it is a scarcity signal. If we
make ex post facto corrections to fix non-errors--that is to
say, actual signs of scarcity--the markets will fail.
Senator Cassidy. I am out of time unless the Chairman
indulges and wishes to pursue this himself, but thank you all
very much.
The Chairman. We will get right back to it.
Senator Cortez Masto.
Senator Cortez Masto. Thank you. I am going to defer to my
colleague to the left, Senator King, who has an appointment he
has to get to.
Senator King. Sitting next to you----
[Laughter.]
Senator King. Rather than implying an ideological--I do
think it is charming that my friend from Louisiana remembers
iPods. That was nice that you did that.
[Laughter.]
Senator King. Mr. Chairman, when we are talking about
rebuilding the grid, I hope that the FERC will encourage
reconductoring and technological smart-grid enhancements before
having to go to new rights-of-way, and I know that is going to
be necessary, but it seems to me that the structure should be
to start with the cheaper stuff first before we go to the total
expansion. Is that a sensible way to proceed?
Mr. Phillips. Absolutely. Absolutely. Yes, sir. I believe
that grid-enhancing technologies like advanced reconductoring,
dynamic line ratings, ambient adjusted line rating, these are
things that are essential to planning for our future.
Senator King. Is there a way that you can enforce that? In
other words, if an applicant comes forward with a proposal for
a new right-of-way, you can say, no, wait a minute, have you
done these other less expensive and less intrusive steps first?
Mr. Phillips. We are considering proposals, just like the
one you mentioned, Senator, in our regional transmission
planning proceeding. I absolutely agree, this is something that
we should discuss, and I am open to it.
Senator King. I want to move to a question that really
isn't strictly a FERC question, but it is certainly involved in
this area, and that is the interconnection queue at the RTOs. I
may be the only Senator ever stuck in an RTO queue for a
generating plant. Although, at the time, it was a matter of
months. Now, we are talking about years. In fact, I think last
year the estimate was five years. Mr. Chairman, we are talking
about permitting reform and speeding things up. This is a
serious bottleneck. How do we address it?
To any of you, but I will start with you, Mr. Chairman.
Mr. Phillips. Thank you, Senator.
There are several different proposals that we have in our
interconnection queue reform NOPR. What we have now is a system
where it is a serial approach where it is first come, first
served. What we have proposed is that we move to a cluster
approach, where it is first ready, first served. This has been
used in other parts of the country. I think there is a real
potential that this can help unlock some of the bottlenecks
that we have seen.
Senator King. Do you have authority to impose this kind of
system or is this just ``Mother, may I'' to the RTOs?
Mr. Phillips. For the RTOs and the regulated utilities, we
have authority, yes, sir.
Senator King. I hope that is something that will be
acknowledged and taken seriously because, again, we can work
very hard here on permitting reform to shorten the term, but if
you then have to tack on five years at the end because of this
interconnection issue, that defeats the whole purpose. We are
in a race against time here, and that is incredibly important.
Another question, and any of you please jump in if you have
further thoughts. Are you satisfied with the cyber standards of
the utilities? Are you satisfied that they are taking the
requisite actions in order to protect, because clearly, in a
conflict, I think GPS will be the first to go and probably the
electric system will be the second level of target. Are you
satisfied with where the industry is?
Mr. Phillips. I give our grade on cybersecurity right now
an incomplete. I think we still have work to do. Our
cybersecurity standards, they are floor. They provide, I
believe, some of the most, best practices. You know, we have a
two-pronged approach, just to be clear, when it comes to
cybersecurity. We have mandatory reliability standards and we
also work with states. We work with utilities. We have audits.
We have tabletop exercises. It is, I believe, the number one
priority for us to secure the cyber and physical security of
our grid.
Senator King. The thing that I didn't hear when you listed
all those things, I am all for standards, but you know,
President Reagan said trust, but verify. And I want to know
what is being done for verification. I remember having a
hearing several years ago with NERC and I said, do you pen test
or red team your utilities? And the answer was no. And I was
shocked at that. Is that, has that changed, do you know? Are
the utilities hiring hackers for hire to demonstrate whether or
not they are secure? Because you can meet all the standards,
and there is nothing like a skull and crossbones coming up on
the CEO's desktop to remind him or her that they are not
actually secure.
Ms. Clements, do you think, is there pen testing going on
and red teaming?
Ms. Clements. My understanding is that yes, there are
various types of that happening both via, you know, with
Commission staff support, with FERC staff support, as well as
outside of that. I am encouraged by the progress that
government agencies have been making, working together as well
as working with private industry related to chasing after this
evolving threat. I think our standards are good foundational
safeguards.
Senator King. And I don't want to sound like I am picking
on the utilities because actually I think they may be among the
most secure of our critical infrastructure compared with water
systems, for example, natural gas pipelines, those other areas.
But that doesn't mean we don't have to be extremely diligent
because of the magnitude of this threat.
Thank you all very much. Thanks for the work that you are
doing. Work on those queues at the RTOs, will you?
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Hawley. Thank you, Mr. Chairman. Thanks to all of
the witnesses for being here.
Chairman Phillips, let me start with you, and start in my
home state of Missouri and St. Louis. The Spire Pipeline in St.
Louis, as you probably know, has had a long and somewhat
unhappy saga until recently. Finally, in December of this past
year, the Commission gave the pipeline a certificate to
operate. I am asking about it because, as I hope you know,
residents of the St. Louis area have been repeatedly told that
their gas bills would rise in a very significant way if the
pipeline was not able to operate. Can you give me some
assurance that the Spire Pipeline in St. Louis will continue to
be authorized for the foreseeable future?
Mr. Phillips. Senator, as you know, we handle pipeline
certifications on a case-by-case basis. We have a public
interest obligation determination to be made. We take them as
they come. My understanding is that--I will double-check to
make sure with my staff to see what the status is of Spire, in
particular, but that is the way we approach pipelines. And I
support that case-by-case approach.
Senator Hawley. Okay, good. Well, if you could get back to
me that would helpful. I want to make sure that this pipeline,
which is now FERC-approved, continues to operate and that we
don't see major disruptions in service for the residents of the
St. Louis region.
Let me ask you about rural co-ops. My state is a majority
rural state. Our rural electric co-ops are a hugely important
part of our energy grid in the state of Missouri. They have
been facing major supply chain issues--in particular, the
purchasing of new transformers. Tell me what you are doing to
help keep prices down for rural electric co-ops.
Mr. Phillips. Again, we have a number of reforms that we
are moving forward right now. A huge part--and I think
affordability is addressed in some of our reforms right now and
it will benefit the country. The more resources that we can
bring on, I believe, can help in the long-term lower prices for
consumers.
Senator Hawley. Great. Well, I want to make sure that we
keep the price of electricity affordable, and again, especially
in our rural areas in the state, especially working with rural
electric co-ops. That is a huge priority. I look forward to
working with you on that.
Let me turn to Commissioner Clements. Let me ask you--some
emails disclosed last year via a FOIA request showed that you
briefed a funders-only session at a left-leaning grantmaking
foundation called the Energy Foundation about FERC 2022
priorities. Who were the donors who attended that session?
Ms. Clements. There was not fundraising in the meeting you
ask about. It was a convening of foundation staff from across
the country and I was having a very straightforward, above-the-
board conversation about 2022 priorities. Subject to my ethics
agreement and any ex parte restrictions, I have an open-door
policy. So I meet with all kinds of stakeholders. I have
actually never said no to a meeting between either my staff
taking it or myself.
Senator Hawley. Wait a minute. You said it was staff? The
FOIA information says it was advertised as a funders-only
session, meaning donors.
Ms. Clements. I am not sure. It was not an advertised
thing. There are foundations that work together.
Senator Hawley. It was briefed as a funders-only session,
meaning that there were donors there. So who were the donors?
Ms. Clements. I think it is important to understand that my
role is to engage with these stakeholders. When I was invited
to present to a group of foundation staff, just like when I am
invited to present to the board of----
Senator Hawley. I don't understand, you keep using the word
staff. The information says there were funders present. There
were donors. I want to know who the donors are. Who were the
donors? Can you get me a list?
Ms. Clements. I would be happy to.
Senator Hawley. Good.
Ms. Clements. I don't remember specifically, but I would be
happy to.
Senator Hawley. Good. Was there money raised at the event
that you spoke at?
Ms. Clements. No.
Senator Hawley. What were the FERC 2022 priorities that you
spoke with this donor group about?
Ms. Clements. I gave my standard speech that I give when I
speak to any convening of stakeholders who participate in the
sector----
Senator Hawley. You have used stakeholders now several
times. Does that include industry donors? Is that a definition
of stakeholder now--major donors?
Ms. Clements. I think----
Senator Hawley. Do you think it's appropriate that you
would be giving closed-door briefings to donors?
Ms. Clements. No, and I didn't do that, sir.
Senator Hawley. What do you mean you didn't do it? The
information says that it was a funders event. It was a funders-
only session at a foundation that raises money from donors.
Ms. Clements. I provide my stump speech on my own FERC
priorities to many different kinds of groups.
Senator Hawley. Donors?
Ms. Clements. Any convening. Some of them might be donors
in any capacity. Certainly, I----
Senator Hawley. Did any of those donors who were present
that day have a financial interest in the energy industry?
Ms. Clements. Almost everyone I speak to has a financial
interest in the energy industry.
Senator Hawley. Oh, wow. Okay, so this is a normal practice
of yours to speak to groups that have financial interests in
your industry?
Ms. Clements. So when I go and I talk to the board of EPSA
or the EEI CEOs or the Interstate Pipeline member companies,
all of whom I have spent time with, the idea is that, subject
to ethical responsibilities and also my ex parte restrictions,
I engage with them. I tell them my priorities. I get their----
Senator Hawley. Do you think it is appropriate--my time is
running out here--do you think it is appropriate to speak to
advocacy groups at a donors-only session? Do you think that is
appropriate?
Ms. Clements. I think it is appropriate to speak with
foundations who are interested in the energy----
Senator Hawley. To their donor sessions? Wow. Wow. I have
to say, I think that is pretty problematic. I would like a list
of the donors. I would like to know who was there. I am
concerned about this, what you have now described as a
practice--pattern and practice of speaking to donor groups that
have financial interests in the industry you are regulating. I
think that's a big problem. If that is not currently foreclosed
by law, we ought to foreclose it, Mr. Chairman, but you said
that you do this on a regular basis.
We will probably follow up. I think I am probably going to
need to see a list of all the groups you have spoken to. I am
going to want to know the donors that you have spoken to. I am
extremely, extremely disturbed by what you have just told me at
a time when we have major ethics issues, you know, we have
Members of Congress buying and selling stock based on
information that only they are privy to. We have members of the
executive branch who are buying and selling stock in industries
that they regulate and now we have you speaking to donors in
industries that you regulate.
The Chairman. Senator, thank you.
Senator Hawley. That is a problem.
The Chairman. Thank you.
Senator Hawley. That is a problem, Mr. Chairman.
The Chairman. Senator Cortez Masto.
Senator Cortez Masto. Thank you.
Other than Ms. Clements, does anybody else speak to groups
that you regulate? I am curious, any of the other
commissioners?
Mr. Phillips.
Mr. Phillips. We speak to regulated groups, yes.
Senator Cortez Masto. Mr. Danly.
Mr. Danly. Yes.
Senator Cortez Masto. Mr. Christie.
Mr. Christie. Yes.
Senator Cortez Masto. Thank you.
So let me move on to Senator Cantwell. I appreciate her
bringing this up, and I appreciate all of you agreeing to
support the Energy Consumer Protection Act because I do think
it is important to provide FERC with additional authority to go
after traders that repeatedly manipulate electricity and
natural gas markets. So thank you. And I invite my colleagues
to join me on that legislation.
Mr. Phillips and Commissioner Clements, let me talk to you
a little bit about the extreme weather that we are seeing in
the West. I know both of you have written testimony today that
references the unprecedented challenges that our nation's
electric system is facing from extreme weather. This has also
been underscored by multiple North American Electric
Reliability Corporation assessments over the years, which have
pointed to the stress, really, that electric power systems in
western states are under due to wildfires, persistent drought,
and heat waves.
Chair Phillips, you referenced the February approval of a
series of winter preparedness measures filed by the North
American Electric Reliability Corporation, and Commissioner
Clements, you touched on recent workshops and conferences to
better coordinate and prepare for extreme weather.
Chairman Phillips, can you expand on these efforts that
FERC is taking to develop a more hardened, resilient grid,
particularly as we see this extreme weather happening in the
West?
Mr. Phillips. Absolutely, Senator.
After the Winter Storm Elliott that happened in December,
FERC requested that NERC do an inquiry into the impacts of the
storm and to provide additional recommendations that we can
implement. That inquiry is ongoing. We expect it this summer.
It involves an even greater amount of operators than Winter
Storm Uri. So it has taken a bit of time for us to get that,
but we look forward to receiving those recommendations in
addition to the--to talk a little bit more about the
reliability standards and the measures that we approved
recently in February, I mean, this requires our grid operators,
our generators to actually have a plan. It addresses things
like, you know, freezing preparedness. These are the types of
things that were in play for Winter Storm Uri and other extreme
weather.
But to be clear, we have seen what used to be one-in-10-
year or one-in-100-year events that seem to be happening almost
every other year. We have to be able to plan our system in a
way that is prepared to keep the lights on in these extreme
events.
Senator Cortez Masto. Thank you. I appreciate that.
And I know I don't have much time. Let me jump to this. I
understand, and first of all, let me just thank Commissioners
Clements and Christie. I understand you were visiting my
state--northern Nevada--last month to meet with some of our
state regulators and stakeholders to discuss the western energy
dynamics. Thank you so much.
As you all know, there has been significant activity around
the wholesale power markets throughout the West in recent
years. In fact, Nevada has enacted legislation during the 2021
legislative session that required every transmission provider
in the state to explore joining a regional transmission
organization by 2030. I am going to ask you both to comment
because I know--I am curious, Mr. Christie, your comments and
your concerns about RTOs as well.
But Ms. Clements, let me start with you. Can you elaborate
on this dating process as you termed it last month and speak to
some of the western circumstances that were discussed?
Ms. Clements. Thank you, Senator.
I have been really pleased to see the developments in the
West over the last five years. State regulators across the
region, as well as state legislators across the region have
identified how do we protect customers and reliability on a
forward-looking basis. And so, they have been thinking
deliberately and carefully about developing markets. They have
taken some steps. They have joined balancing markets. They are
considering joining day-ahead markets. They have not gotten all
the way to a full-blown RTO, but they are exploring the
opportunity. The dating is--there are several--at least two
options, maybe a third, for RTO options for utilities to join.
So they have a choice and they are kind of in a dating process
right now.
I think the important thing to say about RTOs is, while
they are not perfect, the Commission has historically
encouraged their formation or encouraged utilities to join them
because they have, time and time again, saved customers,
improved resilience, and improved reliability. Now, that said,
the only way that they stay successful in that endeavor is for
the market rules that they operate to evolve as circumstances
in the world--like the changing resource mix, like the impact
of extreme weather--evolve. So there is a real opportunity. And
one of the nice things about the utilities and the regulators
in the West is that they get to learn from all the lessons of
the existing RTOs and try to bring forward best practices
toward any action that they might decide to take.
Senator Cortez Masto. Thank you.
And I know my time is out, but Mr. Christie, at some point
in time, I would love to get your thoughts as well, based on
that conversation.
Mr. Christie. Any time, Senator.
Senator Cortez Masto. Thank you. I appreciate it.
Senator Barrasso [presiding]. Senator Daines.
Senator Daines. Chairman Manchin, Ranking Member Barrasso,
thank you.
As the Senate continues to work on permitting reform, I
think it is really important that hydropower is part of the
conversation. I think in Montana, hydropower accounts for 40
percent of our state's electricity generation. It is a critical
source for on-demand and black start energy for the nation.
Hydropower is cheap. It is clean. It is reliable. It is energy
for millions of Americans and we must continue to expand
hydropower capacity across the entire nation. But I never
thought I would live to see the day where there would be calls
to breach hydropower dams, including individuals in the Biden
Administration. Rather than talk about breaching hydropower
dams, we should be talking about how we increase hydropower
generation--it is one of the great renewable, zero-carbon
sources of energy--by expediting the licensing processes, not
going backwards and breaching dams.
Over the last year, I have been working on a comprehensive,
bipartisan hydropower licensing reform package that I hope to
introduce in the coming days. The bill is supported by a very
diverse group of stakeholders--the left, the center, the right,
including two former FERC Commissioners and two former FERC
Chairmen. It is going to expedite licensing and re-licensing,
expand tribal engagement, streamline the permitting process,
and promote the development of hydropower throughout the United
states. And by increasing tribal engagement and expediting the
permitting process for hydropower projects, including low-
impact projects, like pumped storage and closed loop, I think
it is something that every member of this Committee should get
behind.
A question for Chairman Phillips and Commissioner
Christie--do you think it is important for FERC to prioritize
and expand hydropower licensing and re-licensing?
Chairman Phillips, start with you.
Mr. Phillips. Thank you, Senator.
I do believe that hydropower is critical. It is very
essential. It is clean, as you mentioned. It is renewable. I
believe it can help us with reliability. We have taken on
reforms in recent years to speed up our process regarding hydro
licensing and re-licensing. We talk about expanding. I think
you are talking about pumped storage as one element to that. We
actually have an expedited process for pumped storage that is
still being implemented. We look forward to working with you,
and I met with sponsors recently on the legislation that you
mentioned--the Uncommon Dialogue group. I applaud the efforts
that have been made, especially to bring tribal communities to
the table. These are factions that you mentioned that have
been, you know, fighting each other for a very long time.
Senator Daines. Right. Thank you, Chairman.
Mr. Christie.
Mr. Christie. Senator, I think hydro is very important. You
know, FERC's strong suit is rate regulation. We are an economic
regulator, but with hydro and these dams, the law gives us many
more responsibilities than rate regulation. If it was up to me,
I would take away our authority other than in the rate
regulation area. We should not be the parks and rec department
for a dam, but we are because we are told in the statute you
have to consider, for example, recreation opportunities. We
also have to do all the NEPA and Endangered Species Act, all
those analyses. So the reason why this re-licensing takes so
many, many, many years is because we have so many different
interests that we have to weigh, and the statute says,
``equally.''
I don't want to be the parks and rec for a dam. I would
just like to be the rate regulator for a dam. And I think that
would expedite a lot of this re-licensing if those other duties
were put in a more appropriate agency, which could be a state
agency.
Senator Daines. Great. Thanks for the comment.
Speaking of tribal consultation, thousands of Montanans in
the Indian Country rely on electricity generated from
hydropower. It is important that our tribal members,
particularly in the rural and underserved areas, have their
voices heard and play an active role during FERC's decision-
making process.
Chairman Phillips, do you agree that we should incorporate
tribal consultation early and often during the licensing
process for hydroelectric projects in Indian Country?
Mr. Phillips. Yes. I take our obligation very seriously
regarding tribal consultation. I have participated personally
with government-to-government consultation, both as Chairman
and as Commissioner.
Senator Daines. Chairman, thank you.
Last Congress, I was grateful to see my bill to expedite
the process for powering non-powered Army Corps dams be signed
into law. Non-powered dams have immense potential to provide
abundant clean and reliable energy at a very low cost.
Retrofitting non-powered dams to produce hydroelectricity is a
common-sense approach that would greatly expand renewable
energy supply, and lower energy costs.
Commissioner Danly, do you agree that powering non-powered
dams where it is both safe and economical is an important way
to increase hydropower development and capacity?
Mr. Danly. Absolutely. There are huge numbers, vast
quantities of impoundments that could easily be used to produce
electricity.
Senator Daines. Thank you.
For Chairman Manchin and Chairman Barrasso, I do hope we
could work together to get my hydropower licensing bill in any
permitting package moving forward.
The Chairman. We will work on that, with everything else.
Senator Daines. All right.
The Chairman [presiding]. Senator Hickenlooper.
Senator Hickenlooper. First, thank you all for being here
and maybe I will come back to Senator Cortez Masto's question
and let Mark Christie answer that in the framework of a larger
question. It does circle back to that dating process of local
utilities. There is some question about too much local
transmission without enough oversight, and I wanted just to
give you a few quotes of a recent meeting you had with state
regulators. Daniel has some quotes up there.
[Excerpts from the Fifth FERC-NARUC Transmission Task Force
Meeting follow:]
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Senator Hickenlooper. Commissioner Dutrieuille from
Pennsylvania said, ``we're seeing more and more and more local
projects coming before us, instead of the more significant
projects.''
Commissioner French of Kansas said they ``need help
examining the pace of investment and whether transmission
owners are making the most optimal investments.''
To put numbers to it, we will put another chart up here. It
is my day for charts. From the Colorado-based Rocky Mountain
Institute, this chart shows the stunning rise in local
transmission in our nation's largest electricity market, PJM,
before and after 2013, the year PJM updated its transmission
planning. All three pairs of bars show different types of local
transmission as a percentage of total spending on transmission.
Since 2013, you can see we have been building much more local
transmission across the board.
[The chart referred to follows:]
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Senator Hickenlooper. Every bit of this ends up on the
ratepayers' bills at a time when everyone is hurting from the
commodity prices and other increases. All the while, the
development of large-scale transmission projects that I think
in many cases create the greatest efficiencies on the grid,
they've stalled. So within that, can you talk a little bit
about it?
Mr. Christie. Well, Senator, I think one of the problems
with transmission spend has been that what we have today is, as
you mentioned, in the RTOs in particular, 80-some percent of
the spend is on what are called local projects, and they are
coming out of one load-serving entity. And that is not
automatically a good thing or a bad thing, but in terms of
numbers, here's what happens though. You can go back many years
in FERC history, but they get to come to FERC for what is
called formula rate recovery. And formula rate recovery
contrasts to state rate recovery--I was a state regulator for
many years. Formula rate recovery is almost a plug-and-play
type of process. It is very hard to challenge that. So what
happens is, the RTOs are really not reviewing or vetting
closely the local projects, but yet they are going into a
regional plan, which means they are going to be cost-allocated
across the RTO.
Senator Hickenlooper. Right.
Mr. Christie. And then they come to FERC for cost recovery,
and our formula rate mechanism is sort of an automatic, you
know--it is very hard to challenge transmission spent there.
And what has happened, too is, in the RTOs, several states, no
doubt at the behest of lobbyists who did not want state
regulators to take a closer look, have lobbied for laws that
have stripped state regulators of the authority to vet these
local projects. And so what you have is basically a situation
where it is tremendously financially rewarding to build local
projects because the RTOs are not looking at them that closely.
The state regulators in many states have been stripped of
authority to look at them. And then they get to come to FERC
and get formula rate recovery.
Senator Hickenlooper. And so, and I will go down the list,
whether any of you, is this relative ease of self-approving
local transmission coming at the expense of the larger
projects? Why don't you each just take 20 seconds or 30 seconds
at that?
Ms. Clements. Thanks, Senator. I agree with most of
Commissioner Christie's framing of the issue and I have been
pleased that we have been able to work together on some
mechanisms that get at this issue and I hope we can finalize
some process on that front.
Senator Hickenlooper. Great.
Commissioner Danly.
Mr. Danly. So Commissioner Christie is correct, Senator,
that formula rate treatment does have something to do with it,
but there is something else though, which is that the more FERC
attempts to establish mechanisms by which people are to plan
transmission, the more strange incentives are created. And so,
in part, it is an effort to get around and have easier
treatment of transmission projects than our processes that we
created for the purpose of improving competition, right, just
like the markets. We created these processes. They create
perverse incentives and it is easier to do processes for local
transmission than the big projects you are talking about. So
the more FERC you get, the less transmission you get in some
cases.
Senator Hickenlooper. Right, which is regrettable.
Mr. Chair.
Mr. Phillips. Senator, this comes down to cost for me and I
think the cure to it is more transparency in the local process.
This is exactly why we are taking this up in our regional
transmission planning NOPR.
Senator Hickenlooper. Great. I appreciate that.
And I have 25 seconds, so I will plan a question. Well, you
know, it would take too long. I have another regional question
and I will put that into the written record, as I am out of
time. By the time I got halfway through the question, I would
already be well over it. So I will yield back to the Chair.
Thank you all for being here, really. This is very useful
this morning.
The Chairman. Thank you, Senator.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
I particularly enjoy sitting here in an energy committee
room with the FERC Commissioners in front of us and having it
be relatively calm. No protesters. No security at the door. My,
times have changed.
Senator Daines and I were just remarking that when both of
us came here to the Senate, hydro was not considered a
renewable resource. So I want to----
The Chairman. Moonshine does wonders for it.
[Laughter.]
Senator Murkowski. No comment, Mr. Chairman.
Hydropower--I want to stick with the same theme that
Senator Daines hit on because for us in the state of Alaska,
hydropower is about 20 percent of our state's electricity, on
average, every year. That is a pretty low amount, quite
honestly, given the extraordinary hydropower reserves that we
have, particularly in our southeastern part of the state. So
many of our communities rely on small hydro, or run-of-river
projects, and this is what is allowing them to get off of
diesel-powered generation. But unfortunately, for so many of
them, it is just so expensive. It is ridiculously expensive to
go through the FERC process, to go through the legal battles.
And so, what happens is, these communities are stuck. They are
stuck with diesel generating power. And if that isn't an
environmental injustice in and of itself, I don't know what is.
So this is a question for you. I am not talking about big
Bonneville or Hoover. I am talking about our small hydro
facilities, our small, run-of-river, don't impact your
fisheries. What more can we do? We have got to be doing a
better job to ensure that these small and rural communities can
have access to hydropower without it being cost prohibitive.
There was a time, way back when, when we had actually advanced
provisions that could allow these smaller hydro projects to
avoid the FERC process. You know, that may be something that we
need to be looking at, but what do you got? Because there has
got to be a better answer than the status quo.
Commissioner Phillips.
Mr. Phillips. Thank you, Senator.
We talked about this recently when I had a chance to speak
with you. I agree with you and I understand the frustration,
especially when you talk about some of these small operations,
as you mentioned, mom and pop type operations dealing with this
vast process. There are three different licensing processes
that FERC has and they are different--from original to
traditional to sort of like a hybrid. We also have a pilot
project where we are, you know, considering other ways that we
can process applications, but I absolutely agree, we have to do
more to make this process more streamlined. I am focused on it.
I have our entire Office of Projects team working on it.
Senator Murkowski. So let me ask a question directly to
that because you had mentioned, I think in answer to Senator
Daines, that you were working to speed the processing. But one
of the things that is concerning to me is, apparently, what we
are seeing is that now there are numerous requests coming from
FERC staff for additional information related to FERC licensing
amendment applications. So in order to get the FERC approval of
some pretty standard operation and maintenance activities, this
is like in-kind replacement of equipment at the end of its
useful life. So you have a situation where staff is asking for
additional information that can theoretically delay the
project, and further add to the cost of the project. So again,
it gets back to we can't even start.
So let me give you some specifics here. What we understand
is, FERC's standard hydropower license conditions, these L
forms, have long required prior FERC approval only when there
is an activity that is ``a substantial change to the project
works and plans.'' So now, what we are seeing is that FERC is
not necessarily following those license conditions, they are
requiring approval for activities that are clearly not
``substantial.'' Again, what that does is, it requires--it
demands a longer period to process and approve these license
amendment applications.
So if this is something that you are looking at, good. If
you are not looking at it, I would just ask you to commit to
going back to the Federal Power Act and FERC's standard
licensing requirements and what they actually require--that the
licensees are to maintain their projects in adequate operating
condition, that the FERC require approval through license
amendment only for substantial changes to the license, because
what we are hearing is that there is now an add-on, and that
add-on is adding time, and that add-on is adding cost and
taking it to a place where you and I are in agreement--we need
to be speeding up the process. We need to be streamlining the
process and we need to be making it more affordable.
Mr. Phillips. I commit to looking at this and working with
your office to provide you the information you request,
Senator.
Senator Murkowski. Good. I will look forward to that.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Kelly.
Senator Kelly. Thank you, Mr. Chairman and Chairman
Phillips and the other members, thank you for being here today.
Chairman Phillips, in your testimony you mention that
reliability is job number one, and the Bipartisan
Infrastructure Law that we passed includes $3 billion to expand
smart technology that allows for the efficient use of existing
transmission lines. It enables demand response. It improves
grid reliability. Demand-response technology can include smart
thermostats or appliances that can save consumers money and
also stabilize the electrical grid during times of peak energy
demand. And additionally, the Bipartisan Infrastructure Law
contains a provision that I authored that directs the
Department to promote the installation of demand-response
technology in all federal buildings.
And we have seen this technology work pretty well,
especially in Arizona. In 2020, there was a regional heat wave
that spanned 12 western states. It forced California to
implement some rolling brownouts. And Arizona was only able to
keep the lights and the air conditioning running thanks to this
demand-response program. The utility was able to turn off the
air conditioning in tens of thousands of homes and it kept the
grid from crashing. And this also benefited customers. In
exchange for this voluntary participation in this program, they
got a rebate or a discount, and Arizona utilities were then
able to sell some excess energy to California at the same time.
So what is the status of the implementation of the demand-
response provisions that were put into the Bipartisan
Infrastructure Law for federal buildings?
Mr. Phillips. Thank you, Senator, for the question.
I want to applaud the work of your office and this
Committee for the Infrastructure Act. I believe demand
response, I agree with you, is a critically important tool,
especially when we have reliability events on the grid. As you
mentioned, California has recently used it and many places in
the West have used it. FERC has implemented Order No. 2222,
which opens the market to distributed energy resources,
including demand response. There is also a situation with opt-
outs. That is not included in 2222, but in another order, No.
741, I believe, states have the option to opt out. We have a
proceeding that is ongoing right now to address that opt-out.
Senator Kelly. So they would be able to opt out from
federal buildings?
Mr. Phillips. No, sir. I am speaking more general. I am
speaking more general.
Senator Kelly. Beyond what we have today then, so this is
voluntary in I think upwards of about 30,000 homes in Arizona,
and that is voluntary, and people get a credit or a rebate. And
then when we add it in federal buildings, that provides a
bigger response that we can implement in times when we need it.
What do you think we should be doing beyond that with this
technology?
Mr. Phillips. I think there is--first of all, to take a
step back, many of the distributed energy resources that we
talked about, they are behind-the-meter resources, you know,
our state regulators, they have a significant role as part of
their jurisdiction. I agree with you. The cheapest megawatt is
the one you don't use. And so this is something that I continue
to support. I am open to discussions and I look forward to
working with your office to see what more we can do.
Senator Kelly. All right. And I am going to quote you on
that, ``the cheapest megawatt is the one we do not use.''
Mr. Phillips. That's right.
Senator Kelly. I am going to hold on to that.
Mr. Phillips. Thank you, Senator.
Senator Kelly. And thank you, and thank you, Mr. Chairman.
I will yield back.
The Chairman. Thank you.
Senator Hoeven.
Senator Hoeven. Thanks, Mr. Chairman.
According to the North American Electric Reliability
Corporation, MISO faces a 1,300-megawatt capacity shortfall
beginning this summer. And this trend is continuing to grow as
older baseload requirements outpace new replacement generation,
more variable generation. Both Commissioners Christie and Danly
noted this critical problem in their written statements.
So let's start with you, Commissioner Christie. Are there
specific policies accelerating the retirement of coal and gas
dispatchable resources, and what should be done to reverse this
trend?
Mr. Christie. Well, the RTO markets, which I have said
before, are not true markets, they are administrative
constructs. The rate designs are not working because,
particularly in the capacity markets, when resources are
heavily subsidized, they get to bid in at zero or close to
zero. And the way these markets work with the pricing
mechanisms is, they have a thing called a single-clearing price
mechanism, and they start with the lowest bid. So if you get to
bid in at zero, you are automatically going to clear, and then
if they work up to the last unit, and the last unit is usually
a gas combustion turbine or very expensive, and everybody else
gets the top price. So the problem is, the financial incentives
are driving out of these markets capital-intensive, or units
that have high marginal costs like coal and gas, because they
have to buy fuel, obviously, so their marginal costs are
higher. So it is really a rate design issue in the RTOs.
Now, in the non-RTOs, what is happening is that state IRPs,
driven by state policies, are, you know, moving toward
eliminating, particularly coal in many states and replacing
with renewable. And again, the problem is, as I have said, is
not the addition of wind and solar, the problem is the
subtraction of dispatchable resources. And it is just not
adding up. Now, at least in the state IRP you can correct. And
I would give one example. Three years ago in Virginia, our
largest utility, when I was on the Virginia Commission, filed
an IRP, and it had a number of retirements, early retirements
that Dominion was proposing. Those were factored into PJM's
loss of 40 gigawatts that I mentioned at the beginning of this
proceeding. Well, Dominion filed a new IRP just this week, and
they have sort of corrected the one from three years ago, and
they are going to keep units on board longer. So it's an
example of how in an IRP structure you can change the resource
mix and respond to needs.
In these markets, there is nothing planned. These markets
simply reward or don't reward. And so, the problem in these
markets is, the units that we need to stay in operation are not
being sufficiently rewarded to keep them in business, and they
are giving up and shutting down.
Senator Hoeven. And we have seen real problems because of
that, with blackouts and brownouts and not having power when
you have had polar vortexes in various parts of the country,
have we not?
Mr. Christie. Yes, I mean, PJM, in the Winter Storm
Elliott, came very, very close to rotating outages. Now, one of
the big problems was, a lot of gas did not show up. And the
reason a lot of gas did not show up is because they did not
have firm supply. And they did not have firm supply because
they did not have enough transportation, and also the economics
just don't work. And there have been a lot of complaints from a
lot of independent gas generators and PJM, for example, about
weatherization standards. They say they don't have the money to
make the weatherization standards. Well, you know, units that
are in rate base have the money to make the weatherization
standards. Units that are--particularly IPPs that only depend
on the markets, particularly the energy markets--the energy
markets simply don't provide enough revenue for capital-
intensive units. That is why they came up with the capacity
markets.
And the bottom line is, they are just not working to keep
enough resources available to keep the lights on. In an IRP
situation, you can adjust, because you can make adjustments and
make sure your portfolio is balanced. And that is what we need
here, are balanced portfolios of all these different types of
resources, from dispatchable to renewable, in a way that keeps
the lights on at the lowest possible cost.
Senator Hoeven. And this is at a time when we are
aggressively working in states like mine, and certainly like
the Chairman's, to capture CO2 and sequester it,
which, of course, adds some costs as well. That, again,
increases your capital cost, but it captures CO2 at
the same time, but if you wipe out all those plants before we
even get to that point, you lose all that baseload power for
the system.
I was going go to Commissioner Danly next, but since the
Chairman is nodding his head, I have to jump to you and ask for
your response.
Mr. Phillips. Senator, I have to say I am extremely
concerned when it comes to the pace of retirements that we are
seeing of generators that are needed for reliability on our
system. NERC and other grid operators have warned about this,
as I mentioned earlier. This is something that we have to keep
a careful eye on. We have to work with the states. They have
plenary authority over resource adequacy. But there is an
opportunity. We are resource neutral, but we are not
reliability neutral. And so, I am focused on this issue.
Senator Hoeven. Thank you, Chairman.
Committee Chairman, I beg indulgence for one more question
for Mr. Danly. Would that be agreeable with you?
The Chairman. Oh, my goodness, absolutely. I can't wait to
hear it.
[Laughter.]
Senator Hoeven. Okay, thanks.
Mr. Danly. Neither can I.
[Laughter.]
Senator Hoeven. Commissioner Danly, I would like you to
weigh in on this issue too, as you have commented on it, and I
would appreciate your comments here.
Mr. Danly. So yes, I do. Thank you, Senator.
So the problem is the subsidies that are being driven by
the Federal Government and states in the markets, and it is our
abject failure as an institution, FERC, to exercise our
ratemaking powers to protect those markets from the influence
of those subsidies. That is the reason why these retirements
are happening prematurely, and the results, I fear, are going
to be catastrophic down the road. The resource adequacy that
typically resides with the states in an ordinary, vertically
integrated utility set before the markets were established,
they looked through IRP processes to make sure that everything
was going to be--all the requirements for load would be met by
sufficient generation, and that simply does not happen in
markets. We rely upon market forces to accomplish that
objective. And when we undermine the markets and we send warped
and distorted price signals, it is impossible for that sole
means of procurement to actually achieve the objective. It will
ultimately fail, I am afraid.
Senator Hoeven. Thank you, Commissioner.
Thanks, Mr. Chairman.
The Chairman. Thanks, Senator.
I have one follow-up, and it is pretty simple. In today's
world, and what you all have talked about, the energy and the
grid system and all that, do any of you believe that it is
possible to eliminate coal today or in the near future and be
able to maintain a reliable or somewhat reliable system? Is
coal intricately irreplaceable at this point in time?
Chairman Phillips.
Mr. Phillips. Senator, we have talked about this before. I
believe in an all-of-the-above approach. Whatever resources are
needed to keep our grid reliable, we have to make sure that
they are available.
The Chairman. I think what I am asking is, basically, we
know that it is the only dispatchable we have. I have been told
forever that you only have two baseloads, that is coal and
nuclear.
Mr. Phillips. Coal is still----
The Chairman. Anything else can be interrupted, and even
coal, if it gets bad enough, but usually the coal pile, if it
is 60 days, it will run 60 days. If a nuke is fueled, it will
run. Gas will run if you can get gas to it, but you have more
chances of gas being interrupted. So there are only two you
really have, for all of our period of time that I have grown up
in, it has been those two.
Mr. Phillips. Yes, sir. You are right.
The Chairman. So if you pulled it off right now, would it
give you the certainty that the system would give you the
reliability needed?
Mr. Phillips. It would not.
The Chairman. Okay.
Commissioner.
Mr. Danly. Thank you. No. As things stand, coal is
required. It makes up, I don't know, just under a quarter of
all the installed capacity in America. And it would be
impossible, given the locations and the realities of the
electric system, to replace it.
The Chairman. Commissioner Clements.
Ms. Clements. Right now, today, no.
Mr. Christie. Coal is more dependable than gas. And yes, we
need to keep coal generation available for the foreseeable
future.
The Chairman. Coming from the coal fields, and having been
born and raised in the coal fields, I have seen all the
sacrifices that have been made to provide the energy the
country has needed and also during the war efforts and
everything else. There is a transition going on, and everyone
understands the transition. The only thing I am trying to make
a point on is, is that the expediency of which this
Administration and other Administrations have tried to move the
market or move their source of energy before we had anything to
replace it with. And all you have to do is go talk to the
Europeans. They will tell you, please don't do what we did. And
I have spoken to all of them.
And with that being said, we are using coal now, and I know
in my state, I think every plant has been scrubbed. It has low-
NOX boilers. It has baghouses. Now, for the first
time, we are putting an actual cost to help the sequestering.
So it should be able to remove most of the concerns we have had
from the environment while we still have a stable source. So I
am thankful for that.
Let me just say this--I appreciate it. It has been quite
informing and you all have done a great job. The information
you have given us and the advancement you all have made in the
last year, working together as a team, I think, is admirable.
And I thank you for that.
Let me make sure--what do we have here? He is running back
for what? Oh, is he here? Okay, hurry up, Josh.
Senator Hawley has one follow-up question.
Senator Hawley. There we go.
Senator Cortez Masto asked on this ethics issue. Can we
just go down the line? I know what the answer is as it respects
Ms. Clements, but for the rest of you.
Chairman Phillips, do you speak to industry groups, to
donor meetings behind closed doors, of donors who may have a
financial interest in your industry?
Mr. Phillips. No, sir.
Senator Hawley. Next.
Mr. Danly. No.
You can go ahead.
Ms. Clements. I did not speak at a donor's meeting. There
was no donating happening. And you don't have to take my word
for it. You can talk to my agency ethics official, who saw no
problem and has not seen any problem with any of the meetings I
have taken during my term.
Senator Hawley. But it was a meeting of funders--donors.
You are saying there were no donations solicited, right?
Ms. Clements. These are policy-focused foundations who
participate in the sector by making grants, just like PE Shops
make investments, just like CEO utilities make investments.
There was no inappropriate conversation that took place.
Senator Hawley. Well----
The Chairman. If I can interrupt, just one second, to make
sure I understand.
I think what the Senator is trying to get to is, did any of
you know you were going to a donor-sponsored event? There are
going to be donors, my goodness, special interest is
everywhere, I mean, everybody--but going and speaking in
generalities of what you do, what your thoughts are and what--
you have all probably been in those, and you did not go and
solicit, and say, well, I am going to a donor to give little
bit of red meat, what they want, so they will give more. Is
that correct?
Is that where you are going, Senator?
Senator Hawley. Well, I am disturbed by the idea that
anybody--and this is why I was worried when Senator Cortez
Masto asked the question, everybody answered yes. I just want
to be sure that we are not going to events that are funders-
only events--funder means donor--that are donor events.
The Chairman. You mean advertised as one?
Senator Hawley. Correct. Yes, sir.
The Chairman. Okay. Were any of them advertised as donor
events?
Senator Hawley. Yes, sir, this one was.
What about you, sir?
Mr. Christie. Not to my knowledge.
Senator Hawley. Okay, yes, I would hope not. And we will
have a lot of questions for the record on this.
Thank you, Mr. Chairman. I just wanted to clarify that,
because I am alarmed by it. Thank you.
The Chairman. No problem. I get you. Absolutely.
Let me just say to all of you again, I appreciate so much
you all coming and being frank and forthright and doing the job
you are doing. We have a lot of work to do, got heavy lifting
to do, and the country needs to keep the lights on. So thank
you for that.
And any of our members will have until tomorrow afternoon
to submit any of the other questions they might have.
And with that, the meeting is adjourned.
[Whereupon, at 12:00 p.m., the Committee was adjourned.]
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