[Senate Hearing 113-514]
[From the U.S. Government Publishing Office]
S. Hrg. 113-514
HONORABLE NOMINATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
ON
NOMINATION OF COLETTE D. HONORABLE TO BE A MEMBER OF THE FEDERAL ENERGY
REGULATORY COMMISSION
__________
DECEMBER 4, 2014
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
MARY L. LANDRIEU, Louisiana, Chair
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
BRIAN SCHATZ, Hawaii ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin
Elizabeth Leoty Craddock, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Baldwin, Hon. Tammy, U.S. Senator from Wisconsin................. 3
Boozman, Hon. John, U.S. Senator from Arkansas................... 5
Honorable, Colette, Nominee to the Federal Energy Regulatory
Commission..................................................... 7
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
Pryor, Hon. Mark, U.S. Senator From Arkansas..................... 4
Stabenow, Hon. Debbie, U.S. Senator From Michigan................ 3
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 1
APPENDIXES
Appendix I
Responses to additional questions................................ 23
Appendix II
Additional material submitted for the record..................... 49
HONORABLE NOMINATION
----------
THURSDAY, DECEMBER 4, 2014
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 11:38 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden,
presiding.
OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR
FROM OREGON
Senator Wyden [presiding]. The committee will come to
order. We meet this morning to consider the nomination of Ms.
Colette Honorable to be a member of the Federal Energy
Regulatory Commission.
Senator Landrieu very much regrets that's she's not able to
be here this morning to chair the hearing. She has asked me to
chair in her absence. She has submitted a written statement in
support for the nominee. Without objection, it will be included
and printed in the record.
Senator Wyden. Like Senator Landrieu I'm pleased to support
Ms. Honorable's nomination. Ms. Honorable clearly has the
background, training and experience necessary to serve on the
Federal Energy Regulatory Commission.
She's demonstrated her ability in the Arkansas Public
Service Commission for the past 7 years.
Was Chairman of the Commission for the past 4.
Was President and Chair of the Board of the National
Association of Regulatory Utility Commissioners for the past
year.
Moreover, she has demonstrated her fairness, her commitment
to safe, reliable and affordable utility service.
In the words of FERC's organic statute, her ability, and I
quote here, ``to access fairly the needs and concerns of all
interests affected by Federal energy policy.''
Ms. Honorable, as Chairman of Arkansas' Public Service
Commission, kept her State's electric rates among the lowest in
the Nation, promoted diversity of energy sources and investment
in new energy infrastructure and ensured the safe operation of
her State's natural gas pipelines.
I believe we will benefit by having her experience and
ability on the Federal Energy Regulatory Commission. I hope
that it will be possible to confirm her nomination before the
session is over.
We'll have Senator Murkowski make her opening remarks and
we'll recognize our colleagues.
Senator Murkowski.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman.
I appreciate the fact that we are able to have this hearing
today considering the nomination of Colette Honorable, to serve
as Commissioner on the FERC. I think we recognize that it is an
increasingly important, independent agency.
To Ms. Honorable, I would like to welcome you back to the
committee. In your capacity as President of NARUC you've been a
national figure in energy regulation. Our committee has had the
benefit of your testimony and your expertise at our electric
reliability hearing last spring. Through your role at NARUC and
as the Chair of the Arkansas Public Service Commission, I think
it's clear that you have seasoned experience that, I believe,
will be an asset at FERC. I do appreciate the willingness to
serve.
At its core FERC's purpose is to ensure reliable energy at
just and reasonable rates. By one rough measure the energy
transmitted over FERC regulated pipes and wires is worth over
$400 billion per year. Considering that energy is a fundamental
input across the economy, the Commission's impact can be
multiplied significantly.
Most Americans feel the effect of FERC's decision in
hundreds of individual cases and controversies. Ultimately,
though, what we're talking about is money from their pockets
and the quality of their energy service. More and more, though,
we're hearing concerns about encroachment on FERC's fundamental
mission.
It appears that the Administration is intent on
transforming the very nature of energy production and use
regardless of costs or sometimes even feasibility. Considering
electricity alone, just one of the energy sectors that are
regulated by FERC, I've noted for years now that the EPA is
releasing an unrelenting onslaught of new and unduly burdensome
Federal regulations, particularly in combination with one
another. These rules could seriously challenge the reliability
of our Nation's grid system and push more Americans into energy
insecurity.
As I discussed last week with Ms. Honorable, if you are
confirmed, I'm counting on you to champion FERC's role as the
Federal agency with responsibility for electric reliability. We
need the FERC to stand up in interagency dialogs and guard
against Federal regulations that will make our electricity less
secure and more expensive. I would hope that you'll agree with
me and your future colleagues, Commissioners Moeller and Clark,
that FERC must be a stronger voice for balance.
I would think that one immediate step would be for the FERC
to accept a request that I made last week with Chairman Upton
and Whitfield to convene a technical conference on this subject
as soon as possible.
Again, I'm glad that we have this hearing this morning.
Given the controversy surrounding the Commission and its work
since 2009, I think we need to make sure that as a committee we
give Ms. Honorable sufficient time to provide thorough and
complete answers to the questions that Senators may submit for
the record.
I would also like to remind my colleagues that we've got 6
nominations pending on the Senate calendar that have been
approved by the Energy Committee. We did process a couple
today. But most of the nominees are for the Department of
Energy. They've been pending since January, if not longer.
I have told Secretary Moniz and I think we would all agree
that he deserves to have his team in place. So I would hope
that we can clear those nominees before the end of this
Congress, including that of Ms. Honorable.
Senator Wyden. Thank you.
We have 2 colleagues with a very tight time schedule.
Senator Stabenow is going to have to leave.
Senator Baldwin has to preside on the Floor.
So if both of you could make short statements that would be
great.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR
FROM MICHIGAN
Senator Stabenow. Thank you, Mr. Chairman.
I will be very brief. I will not be able to stay for the
hearing, but I did want to indicate for the record 2 things.
One, I did have the opportunity, I appreciate, to meet in
my office with Ms. Honorable and will be supporting her.
I also did want to indicate that we did discuss in my
office a very serious situation affecting the families and
businesses in the Upper Peninsula in Michigan in the issue
before FERC. It does involve both some legislation that we've
introduced, House/Senate bipartisan legislation, but also
actions before FERC. I'm going to be working very closely and
urging FERC to make the right decision as it relates to
distribution of costs regarding a very critical project in the
UP.
So, thank you.
Senator Wyden. Very good.
Senator Baldwin.
STATEMENT OF HON. TAMMY BALDWIN, U.S. SENATOR
FROM WISCONSIN
Senator Baldwin. Thank you, Mr. Chairman.
I am grateful for an opportunity to, rather than ask
questions, at least make a brief opening statement and put the
issues that I have into the record.
Mrs. Honorable, I was very happy to have a chance to speak
with you earlier and also support your nomination to the FERC.
We had a chance to cover 3 issues of great consequence to
the State of Wisconsin and the region.
One of them relates to the reliability of rail, freight
rail transport of coal, to our regional power companies. We are
hearing alarming reports that there are low stocks as we face
the onset of winter, unreliable service, unpredictable service
and obviously, this has an impact on reliability. So I want to
underscore what Ranking Member Murkowski just said about the
importance of interagency dialog. I will want a commitment that
FERC will engage with the Surface Transportation Board to
ensure that these reliability issues are addressed.
Also, I understand the value of the idea of technical
conferences where FERC and the STB and industry convene to find
solutions to supply issues that threaten grid reliability.
Two other quick issues that were raised during our
conversation that I'm very concerned about.
This committee heard me talk many, many times last winter
about the propane crisis that hit the Upper Midwest as well as
other regions of the United States when stocks were alarmingly
low. There were multiple agencies that were involved in a
response. We've drafted legislation that came out of a hearing
that was held by this committee. But I want to identify, again,
that FERC played a very specific role in using an emergency
authority that it had never used before to mandate that one of
the batch pipelines be set aside for propane only to alleviate
this crisis.
Since it was the first time FERC had ever used it, we want
to make sure that that emergency power would be available in
the future and that they've worked out any issues relating to
that authority.
The last thing I want to just address really briefly. I
know this affects many States, as it does ours. But as we see
manufacturers and utilities plan on pivoting from coal to
increasing use of natural gas in the coming years, you know,
they're certainly contemplating this and doing this to take
advantage of low prices, update their processes, reducing
pollution.
It's not unique to my State. It's a transition that's being
experienced across the country. But we know that it's going to
result in a cumulative increase in domestic demand that's going
to require careful monitoring and review. FERC plays an
important role in ensuring this transition will be smooth and
successful.
So I want to know how Ms. Honorable and FERC will work to
ensure that cumulative increases in demand for natural gas are
modeled and considered in our infrastructure planning.
So with that, again, thank you for letting me get in a few
words before I dash to the Floor.
Senator Wyden. Thank you, Senator Baldwin.
We're fortunate this morning to be joined by our 2
thoughtful colleagues from Arkansas, Senator Pryor and Senator
Boozman. They'll introduce the nominee. I think it's fair to
say we often have Senators introduce their constituents to the
committee but it is not a frequent occurrence that a Senator,
who hired the nominee that they're introducing and that is the
case with Senator Pryor and Ms. Honorable is here with the
committee.
So, Senator Pryor, I know you feel strongly about this
nominee. That's important to us. Please proceed.
STATEMENT OF HON. MARK PRYOR, U.S. SENATOR
FROM ARKANSAS
Senator Pryor. Thank you very much. Thank you to all the
members of the committee for having me here today. I'll just be
very brief.
But I do feel very strongly about this nomination because I
know Colette. I know her well. I've known her for years. She
will be an outstanding member of the Federal Energy Regulatory
Commission.
I've known her since my time in the Attorney General's
office. She was one of the first people I hired when I came
into the office. I've just seen her grow and blossom and seen
her career just take off. It's been a great thing to see.
Currently or she has just been the Chairman of the Board
and President of the National Association of Regulatory Utility
Commissioners, NARUC. In that capacity she's had the
opportunity to talk to her colleagues. She's on the State
Public Service Commission. But she's had the opportunity to
talk to her colleagues all over, from all over the country, and
to hear their concerns and hear how they do it. I think it's a
great training ground for her to be on the FERC.
I don't want to take much more of the committee's time.
But, you know, when you think about Colette Honorable, once you
get to know her, she's honest. She's fair. She listens. She
works harder than anyone I've ever seen. I just think she'll be
a great commissioner.
Just by virtue of Senator Boozman sitting here with me you
see that she has across the board support in Arkansas and
that's not just partisan support from business, consumer
groups, etcetera, etcetera. I think you'll find that around the
country as well. Anyone who has any exposure to her will
wholeheartedly endorse her effort to become part of the FERC.
So again, thank you very much for having me here.
Senator Wyden. Senator Pryor, thank you. Thank you for your
support.
I told Ms. Honorable given your connection when you look at
her relationship with you, she is running with the right crowd.
We very much appreciate your being here.
Senator Boozman, I've always admired your input. Please, go
ahead and make the comments that you seek.
STATEMENT OF HON. JOHN BOOZMAN, U.S. SENATOR
FROM ARKANSAS
Senator Boozman. Thank you, Chairman Wyden and Ranking
Member Murkowski, very much for allowing me the privilege to
introduce Colette Honorable, the current Chair of the Arkansas
Public Service Commission and the President's nominee to an
important seat on the Federal Energy Regulatory Commission.
I didn't hire Ms. Honorable and yet certainly after getting
to know her, I certainly would hire her. I guess that's really
what this is all about.
I also want to welcome her family, her sisters, Pam Smith
and Coleen Jeter and her daughter, Sydney. I'm sure that
Colette is very proud of them in being here. I'm also glad that
they took the time to travel here to show their love and
support.
Chairman Honorable served on the Arkansas Public Service
Commission for over 7 years. During that time she's earned the
deep respect of Arkansas. Her experience includes served as
President of the National Association of Regulatory Utility
Commissioners and prior service as Executive Director of the
Arkansas Workforce Investment Board.
Colette has practiced law for over 18 years from her time
as a public defender through her service in the Attorney
General's office. She has built an excellent reputation as a
person of high integrity.
In Arkansas our electricity rates are the fourth lowest in
the country. Colette understands that affordable energy is very
important to the creation of jobs and opportunity. She can also
be proud of her work to encourage energy efficiency and
conservation. Most importantly and the reason why I'm very
comfortable endorsing her is that I believe that Colette is
dedicated to the principles of fairness and the role of law,
principles that will continue to guide her.
She has a reputation as a straight shooter and an
independent regulator. As you know FERC has the important
responsibility of regulating the interstate transmission of
oil, electricity and natural gas, as well as reviewing and
licensing other major energy projects. I believe that Chairman
Honorable's experience, knowledge and fairness have prepared
her for these important responsibilities. I'm proud to
introduce her today and express my strong support for her
nomination.
Thank you very much.
Senator Wyden. Thank you, Senator Boozman.
In my view, she's lucky to have you in her corner. I
appreciate it.
Both of you are welcome to stay, but I know you've got busy
schedules with the week being hectic. We'll excuse you at this
time.
OK.
The rules of the committee which apply to all nominees
require that they be sworn in connection with their testimony.
So, Ms. Honorable, if you could stand and raise your right
hand.
Do you solemnly swear the testimony you're about to give to
the Senate Committee on Energy and Natural Resources shall be
the truth, the whole truth and nothing but the truth, so help
you God?
Ms. Honorable. I do.
Senator Wyden. Thank you.
You can be seated.
Before you begin your statement, Ms. Honorable, I need to
ask 3 questions addressed to each nominee before the committee.
The first is will you be available to appear before the
committee and other Congressional Committees to represent
departmental positions and respond to issues of concern to the
Congress?
Ms. Honorable. I will.
Senator Wyden. Are you aware of any personal holdings,
investments or interests that should--could constitute a
conflict of interest or create the appearance of such a
conflict should you be confirmed and assume the office to which
you've been nominated by the President?
Ms. Honorable. My investments, personal holdings and other
interests have been reviewed both by myself and the appropriate
ethics counselors within the Federal Government. I've taken the
appropriate action to avoid any conflicts of interest. There
are no conflicts of interest or appearances thereof, to my
knowledge.
Senator Wyden. Are you involved or do you have any assets
that are held in a blind trust?
Ms. Honorable. No, I do not.
Senator Wyden. Alright.
Ms. Honorable, we have had a long tradition in this
committee, one that I like very much, of having our nominees
introduce any members of the family that are with them today.
Is there anyone you would like to introduce?
Ms. Honorable. Thank you, Mr. Chairman.
I'm honored to be joined here today by my sweet daughter,
Sydney Marie, who is 13 and also my twin sister, Coleen Jeter.
She resides in Atlanta, Georgia and my sister Pamela Smith, who
lives in Little Rock.
Senator Wyden. I bet they're all sweet, not just the first
one.
Ms. Honorable. That's right. They all are.
Senator Wyden. Alright.
Ms. Honorable, you're now recognized to make your
statement. Your written statement will be included in the
record in its entirety so you may summarize your prepared
remarks and just go ahead.
TESTIMONY OF COLETTE D. HONORABLE, NOMINEE TO THE FEDERAL
ENERGY REGULATORY COMMISSION
Ms. Honorable. Thank you.
Mr. Chairman--Chairman Wyden, Ranking Member Murkowski,
members of the committee, good morning. My name is Colette
Honorable and I'm honored to sit before you today as a nominee
to serve as Commissioner on the Federal Energy Regulatory
Commission.
I'm grateful to President Barack Obama for this opportunity
to serve. If confirmed, I'm certain it will be the highest
honor in my lifetime.
I would also like to thank Chairman Landrieu for scheduling
this hearing.
I'm appreciative to both of my home State Senators,
Senators Mark Pryor and John Boozman, who have shown such a
wonderful, bipartisan leadership. Certainly you've heard that
I've had the honor of working for Senator Mark Pryor. Therefore
I learned up close what it means to truly serve others and to
put Arkansas first.
I'm also grateful to Arkansas Governor, Mike Beebe, who has
supported my career in public service and has been a wonderful
mentor and friend.
I'm thankful to my incredible family. I've introduced those
here today. I also want to acknowledge my mother, Joyce Dodson,
who has been such an inspiration to me, my in-laws, William and
Maggie Honorable and also want to thank my brothers and the
rest of my family. I have a wonderful support team.
My husband, Rickey, is here with me in spirit today. He
strongly encouraged me to pursue this incredible opportunity.
The Federal Energy Regulatory Commission is an independent
agency charged with ensuring just and reasonable rates,
wholesale rates, by public utilities and to ensure that such
service is not unduly discriminatory or preferential. Among
other duties FERC is charged with overseeing the reliability of
the bulk power system and regulates construction of new
pipeline, LNG and hydropower projects nationwide.
I believe that I'm well suited to serve on the Federal
Energy Regulatory Commission at this time. I do believe that
public service is my calling.
I began my legal career at legal services. I've also worked
as a consumer protection attorney in civil litigation and as a
Department of Medicaid Fraud Special Prosecutor before serving
as then Attorney General Mike Beebe's Chief of Staff.
As you've heard I've served in a cabinet level work force
position which taught me the importance of energy in the
economic work force development arena.
I was appointed to the Arkansas Public Service Commission
in October 2007. Since that time I've worked in a number of
capacities there as Commissioner, Interim Chairman and now as
chairman, a position I've held since January 2011.
As chairman of the PSC I've overseen an agency charged with
ensuring safe, reliable and affordable retail electric service.
Our Commission has jurisdiction over approximately 450
utilities with annual jurisdictional revenues of approximately
$5 billion. Therefore, I've participated in rate case
proceedings, plant acquisitions, transmission build out
applications, regional transmission efforts and other
transactions to ensure that Arkansas has a reliable grid and
diverse generation mix.
We're also proud that we use all sources and resources to
ensure affordability and reliability for Arkansas consumers.
Therefore, we truly employ an all of the above approach.
Arkansas leads the south and southeast in comprehensive
energy efficiency programs. Our electric rates are consistently
among the lowest in the Nation. Arkansas also has one of the
most prolific shale plays in the Fayetteville Shale of which
we're proud too.
My Commission also ranks first in pipeline safety
transparency nationwide.
As you've heard I've served as President of NARUC. I was
elected by my peers to lead our association on many issues
including pipeline safety, reliability and resilience efforts
and fuel and work force diversity. I've worked with government
and industry on behalf of our 200 plus member commissioners and
the consumers that they serve. I've testified before Congress
including this committee on multiple occasions and have
advocated for infrastructure development to ensure safety and
efficiency, increased reliability and resilience efforts,
diversity of energy and of our energy work force.
My peers have described me as fair, pragmatic, moderate and
a hard working leader, who is able to build consensus across
party lines for common goals.
If confirmed to serve at FERC I would continue to build
upon the work which began so many years ago in my beloved
Arkansas, a place that's taught me so much, to do good, to
listen to the opinions of others, even when we don't agree, to
respect others and to serve, the least of these.
This is an exciting time to work in the energy sector but
it's also a challenging time. I believe that I'm up for the
challenge. If confirmed I would be committed to carrying out
the duties and obligations of the position of Commissioner of
the Federal Energy Regulatory Commission.
This concludes my testimony. Thank you for the opportunity
to appear here today. I'm happy to answer any questions that
you may have.
[The prepared statement of Ms. Honorable follows:]
Prepared Statement of Colette D. Honorable, Nominee to the Federal
Energy Regulatory Commission
Chairman Wyden, Ranking Member Murkowski, Members of the Committee,
good morning. My name is Colette Honorable and I am honored to sit
before you as a nominee to serve as a Commissioner on the Federal
Energy Regulatory Commission.
I am grateful to President Barack Obama for this opportunity to
serve and, if confirmed, it will be the highest honor in my lifetime. I
would also like to thank Chairman Landrieu for scheduling this hearing.
I am appreciative to both of my home state senators: Senator Mark
Pryor and Senator John Boozman and the bipartisan leadership they have
displayed. I had 1 the honor of working for and with Senator Pryor and
saw up close what it means to truly serve others, and to put Arkansas
first.
I am also grateful to Arkansas Governor Mike Beebe who has
supported my career in public service and has been a wonderful mentor
and friend.
I am thankful to my incredible family. I am joined today by my
daughter, Sydney Marie, my twin sister Coleen and my sister Pam. I want
to also acknowledge my mother, Joyce Dodson, who has been such an
inspiration for me, and my in laws, William and Maggie Honorable. I
also thank my brothers who are such a support to me. My husband Rickey
is here with me in spirit today, and he strongly encouraged me to
pursue this wonderful opportunity.
The Federal Energy Regulatory Commission is an independent agency
charged with ensuring just and reasonable wholesale rates by public
utilities, and to ensure that such service is not unduly discriminatory
or preferential. Among other duties, FERC oversees reliability of the
bulk power system and regulates construction of new pipeline, LNG and
hydropower projects nationwide.
I believe I am well suited to serve on the Federal Energy
Regulatory Commission. Public service is my calling.
I began my legal career at Legal Services, and worked as a consumer
protection attorney, in civil litigation, and as a Department of
Medicaid Fraud special prosecutor before serving as then-Attorney
General Mike Beebe's Chief of Staff. served in a cabinet-level
workforce position, which taught me the importance of energy in
economic workforce development. I was appointed to the Arkansas Public
Service Commission in October 2007 and I have served at all levels at
the PSC-commissioner, interim chairman, and now as Chairman of the
agency, a position I've held since January 2011.
As Chairman of the PSC, I have overseen an agency charged with
ensuring safe, reliable and affordable retail electric service. The
Commission has jurisdiction over approximately 450 utilities which have
annual Arkansas jurisdictional revenues of approximately $5 Billion
dollars. I have participated in rate case proceedings, plant
acquisitions, transmission buildout applications, regional transmission
efforts and other transactions to ensure Arkansas has a reliable grid
and diverse generation mix. We are proud that we use all sources and
resources to ensure affordability and reliability for Arkansas
consumers. We truly employ an all of the above approach. Arkansas leads
the South and Southeast in comprehensive energy efficiency programs and
our electric rates are consistently among the lowest in the nation.
Arkansas also has one of the most prolific shale plays, the
Fayetteville Shale, and we're proud of that too. My Commission also
ranks first in pipeline safety transparency nationwide.
I have served as President of the National Association of
Regulatory Utility Commissioners. I was elected by my peers to lead our
Association on many issues, including pipeline safety, reliability and
resilience efforts, and fuel and workforce diversity. I worked with
officials and executives at the highest levels of government and
industry on behalf of our 200-plus member commissioners and the
consumers they serve. I testified before Congress, including this
Committee, on multiple occasions, and have advocated for infrastructure
development to ensure safety and efficiency, increased reliability and
resilience efforts, diversity of energy and of our energy workforce.
My peers have described me as a fair, pragmatic, moderate,
hardworking leader who is able to build consensus across party lines
for common goals.
If confirmed to serve at FERC, I would continue to build upon the
work which I began several years ago in my beloved Arkansas, a place
that has taught me so much: To do good; to listen to the opinions of
others even when you don't agree; and, to respect others and to serve
the least of these. This is an exciting time to work in the energy
sector, but it is also a challenging time. I am up for this challenge.
If confirmed I would be committed to carrying out the duties and
obligations of the position of Commissioner at the Federal Energy
Regulatory Commission.
This concludes my testimony. Thank you for the opportunity to
appear today and I am happy to answer any questions you may have. 5
Senator Wyden. Thank you very much, Ms. Honorable.
I noted your comment of this being a very challenging time
because I and Senator Cantwell and other members of the Finance
Committee have been very much involved in this debate with
respect to renewable energies that is part of the tax extender
debate. We've seen a real evolution in renewable technologies,
you know, recently with making considerable headway toward
price, you know, competitiveness. I want to do everything I
possibly can to advance those kinds of policies.
I also want to note that at FERC you are not in the
business of laying fossil verses renewables. That is not part
of the agency's statutory mandate. I've expressed my personal
views. Why I'm going to have to leave here shortly because I'm
continuing that kind of effort to ensure that as part,
particularly of the tax debate, we start moving toward
technological neutrality and something resembling parity
between the various kinds of energy sources.
Now, in the Pacific Northwest we do feel very strongly
about our region being able to maintain its historic
independence. You and I have talked about that in the office.
We discussed order No. 1 thousand where the agency, in effect,
required Bonneville Power and other utilities in the Northwest
to seed significant transmission cost allocation authority to
FERC. Our region, sort of, every particular political
philosophy and sector feels that this was a substantial over
reach. I'd like you and I appreciate your answer in the office,
but I think we need to get this on the record.
I want to make sure that you will support policies that
keep the locus, keep the place, of Northwest electricity
decisions in the Northwest as opposed to shifting authority to
FERC headquarters in Washington.
Ms. Honorable. Thank you, Senator and Mr. Chairman, for the
question.
Indeed as a State regulator I'm very experienced with
working with regional transmission organizations, independent
system operators, interacting with FERC and other energy
stakeholders surrounding these specific issues. The greatest
thing I've appreciated is the diversity of the States, the
diversity of the regions and the ability of each region and
State to plan very thoughtfully and deliberately with experts
what works best for them.
I'm certainly committed to upholding the important tenant
that participation in any regional transmission organization or
ISO is voluntary. That we should allow the States and regions
to continue to make decisions that work best for them.
I would hesitate to speak directly about anything that
might touch on a pending matter. I'm certainly aware of the
order one thousand issues and more importantly the fact that
there are varied issues among the regions.
Senator Wyden. You'll always do well up here when you talk
about the diversity of the States in the energy field.
Ms. Honorable. Thank you, Senator.
Senator Wyden. For what it's worth, unsolicited counsel.
[Laughter.]
Senator Wyden. Second, in my part of the country we
obviously have base load power as hydro, in particular. We have
some unique challenges there as well. Last month, FERC issued
an order upholding Bonneville's ability to set rates that
address this concern and balance the need of hydro with other
energy sources, particularly renewables.
If confirmed, can we count on you to continue this
precedent?
Ms. Honorable. Yes.
Senator Wyden. OK.
We also want to work with you as we discussed in the office
to explore additional measures such as a regional energy in
balance market so we could compensate for changes in energy
generation, again, from what has been our focus which is
renewables. There have been some unexpected challenges, as you
know, in rolling out California's in balance market. So, I
think, it's fair to say in our part of the country we would
like a slower, essentially more voluntary, approach.
We don't want any more Enron scams in the Pacific
Northwest. If you need any background on Enron, certainly talk
to my colleague, Senator Cantwell, who, I think, knows more
about Enron than anybody around.
So, can you ensure us that if confirmed FERC will not try
to impose new market mechanisms on the Northwest?
Ms. Honorable. I can confirm that. I will also confirm
that, if confirmed for this post, I will uphold the tenant that
it's voluntary participation in the markets.
Senator Wyden. We've also been interested in your
involvement in reliability and grid security kinds of issues
which are increasingly important for a variety of reasons
whether about terrorist threats, a whole host of concerns. What
steps have you taken in your role at NARUC and in Arkansas on
the issue to promote reliability and grid security?
I'd be interested. Make it a 2 part question.
What have you done in the past?
What do you think need to be done in the future?
Ms. Honorable. OK. Thank you.
With regard to what I've done in the past certainly in
Arkansas we've been very focused on reliability. I participate
in leadership roles in both the MISO, the organization of MISO
States which is comprised of commissioners throughout the
Midwest, focus very heavily on reliability.
Also at the national level with reliability was one of my
top themes of work in this past year. In conjunction with that
work and I will couple it to with resilience efforts.
Reliability certainly speaks to ensuring that when consumers
flip the switch, the lights come on and that things are moving
along smoothly, as they should.
Resilience, however, refers to our ability to prepare for
disruptions to the grid and to be able to respond quickly from
severe weather events, cyber security, physical security,
geomagnetic disturbances and the like. So, in my year as NARUC
President we partnered with the National Academy of Sciences to
literally roll out this work throughout the country, even in
the Pacific Northwest, to focus and aid communities in
preparing practically to respond in these situations. I think
that that response would address both reliability and grid
security issues.
I must also add, with regard to grid security, I've
participated in the Electric Sector Coordinating Committee
which is chaired by the Department of Energy and the White
House, but it is comprised of a number of stakeholders
throughout the country, industry, various Federal entities,
security entities, NERC, FERC, other bodies. NARUC has
certainly had a seat at the table where we are focused on
ensuring that we're contemplating what those challenges are
that could soon come and how we respond to them. Certainly the
past few years, as this committee is well aware, we've
encountered, certainly, both cyber security attacks and
physical security attacks.
Going forward, if confirmed, I will certainly commit to
staying abreast of the current issues, the current challenges.
As my experience has demonstrated, I'm certainly willing to
participate in any way necessary to ensure that we meet these
tenants.
Senator Wyden. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Ms. Honorable, thank you for your comments here this
morning. I am following on the chairman's remarks here about
the issue of reliability. As you and I discussed, this is a key
area of concern for me. Thus I was pleased for your personal
commitment to me that you were going to be very mindful of the
reliability piece and to also formally recognize FERC's
responsibility to safeguard that role, particularly as we see
rules that seem to keep coming.
So it wasn't a surprise to see your comments, as Chairman
of the Arkansas Public Services Commission, when you commented
on EPA's proposed clean power plan. The statement that you
made, as it referenced the Arkansas goal, the terminology that
you used was you stated it's technically flawed and is
unattainable under the contemplated timeframe. You then went on
to say that the proposed rule should be clarified and changed
in various ways to better enable compliance.
I would certainly acknowledge the concerns that you have
raised there. The question then going forward, should you be
confirmed as a FERC Commissioner, which I'm assuming you will
be, is how you will fulfill FERC's mission of ensuring this
grid reliability as well as ensuring that the rates are just
and reasonable in face of this proposed 111(d) rule?
Ms. Honorable. Thank you, Senator.
As I've demonstrated, hopefully from my experience, both
reliability and affordability are key, key to providing
reliable electric service to homes, to businesses, to industry.
I've demonstrated certainly also leadership in this regard
at home. I have, in conjunction with the Arkansas Department of
Environmental Quality, convened a 111(d) workshop. We have
brought together more than 20 stakeholders of diverse
perspectives, including our regional organizations, to walk
through what this proposed rule would mean for us.
Can we reach the goals?
What is the economic impact on Arkansas?
Ultimately, how it might impact reliability?
As we've seen throughout the country, there are a number of
regional transmission organizations and independent system
operators that have provided some preliminary information of
their perspectives. Certainly some have raised some concern
that there could be reliability impacts.
So therefore, I've demonstrated that I'm up to the task,
that I've been involved in, certainly as President of NARUC, of
overseeing the collaborative effort among the State economic
regulators and the commissioners at FERC to ensure that we are
working together through workshops on reliability, on gas/
electric coordination, thinking about what the future might
hold.
If confirmed to serve as a Commissioner at FERC, I will
commit to you, Senator, that I will continue to participate,
continue to be a productive part of our mission to ensure
reliability.
Senator Murkowski. Let me ask then, because I mentioned in
my opening that I have recently sent a letter over to the
Chairman at FERC to request that the Commission convene this
technical conference to hear formally from DOE, other
stakeholders, about the concerns that have been raised in the
NERC report relating to the clean power plan. I have requested
that, I think, that it is important to not only examine that
proposal, but other pending regulations that might be coming
forward that will impact grid reliability.
Do you support having FERC convene a technical conference
such as I've requested?
Ms. Honorable. Senator, I would certainly support any
effort to get the stakeholders together and also for FERC to
provide that necessary guidance to the EPA.
Senator Murkowski. I do think that it is something that
should be encouraged. I think we recognize and you certainly do
that when you have these issues coming at you that to have that
expertise at a technical conference to drill down is greatly
important.
I, again, with the conversation that we had, I just want to
hear your commitment on the record here that as a FERC
Commissioner you will act in a meaningful, specific and a
measureable way to ensure that FERC's expertise and the
expertise of the electric reliability professionals is brought
to bear in this interagency dialog that we've been talking
about as it relates to the rulemakings that may have a negative
impact on reliability. I would just like your affirmation that
that is your intention.
Ms. Honorable. That is absolutely my intention, if
confirmed.
Senator Murkowski. I appreciate that. I will ask again just
to put on the record whether or not you will support a formal,
documented process for FERC's interaction with EPA and DOE on
rules and other initiatives that bear on electric reliability.
Ms. Honorable. Senator, certainly the chairman of FERC
would set the course. I'm certainly aware, based upon the
response that Chairman LaFleur has provided that they are
already contemplating ways to participate. Certainly wouldn't
want to get ahead of her on that.
If the chairman chose to move forward with the technical
conference I would wholeheartedly support that.
Senator Murkowski. Great.
I appreciate your focus on reliability. Thank you for the
responses.
Ms. Honorable. Thank you, Senator.
Senator Wyden. Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman.
Thank you, Ms. Colette Honorable, sorry, Honorable,
Honorable, thank you for your interest in this post. I think
your unique background in work force provides an interesting
viewpoint too, something that may not be directly in charge of
FERC, but I think the committee is always interested in how we
build a more sustainable work force in our energy policy since
there's such a growth there.
I want to get back to this basic question though that my
colleague, the chairman asked, as it relates to the Northwest.
I think you understand, you know, being a 70 percent reliant
hydro State in cheap hydro.
Ms. Honorable. Yes.
Senator Cantwell. It has rebuilt our economy over and over
and over and over and over again from storing apples to storing
bits. So we do not want anything that jeopardizes that. So when
you say you will support a voluntary market, first of all we
don't like regional transmission organizations that would
artificially increase the cost of hydro. The answer to that is
no.
Ms. Honorable. Yes.
Senator Cantwell. No.
We certainly don't support any efforts that manipulate the
price of electricity which we saw in spades as it related to
the ISOs and RTOs that were established in California.
What I have a concern about your comments as it relates to
a voluntary organization is, what I want to know from you is,
if FERC, in your authority of just and reasonable rate setting,
saw that even a voluntary market was distorting just and
reasonable rates that FERC would take action to ensure that
there were just and reasonable rates in an area like the
Pacific Northwest?
Ms. Honorable. Indeed, Senator. Let me say the hydro that
the Pacific Northwest possesses is something to be proud of.
It's something, the diversity and the ability of States and
regions to harness their own potential to ensure reliable,
affordable energy is something that should absolutely be
protected. I want to be very clear that, if confirmed, I would
be committed to ensuring that not only the markets are
operating fairly, that we ensure that participation is
voluntary.
But more importantly that the markets are operating fairly,
that there is no manipulation in the markets, that fuels are
able to compete fairly and also that when there is such an
occurrence that we are vigilant and responsive. I will commit
to that.
Senator Cantwell. OK. But I just want to clarify because
again, you used the word voluntary.
What I want to understand is if a voluntary RTO distorted
the price of hydro and made it more expensive would you support
FERC making sure that those rates were just and reasonable and
not artificially increased?
Ms. Honorable. Yes, I would.
Senator Cantwell. Thank you.
Ms. Honorable. Certainly it would be based upon an
application filed and but absolutely I would commit to that.
Senator Cantwell. I don't know about, you know, I don't
think anybody filed an application in the California ISO case,
maybe they did.
Ms. Honorable. There is one. I'm trying to be----
Senator Cantwell. Previously, I'm saying now we're talking
2001. I mean, you know, we were all talking about other
policies and the next thing you know the California market
deregulated and we all paid a price for a long, long history
here.
So, you know, I'm--the use of just saying FERC isn't going
to condone it, but hey, voluntarily you can go and do this, I
think is problematic. Got to have just and reasonable rates.
Hydro is not looking to be artificially increased.
We all want to figure out how to, as you've done in
Arkansas, keep rates, as you say, some of the lowest in the
country, and focus on efficiency to drive down those costs even
more.
So, I thank you for that answer.
OK, back to my, you know, colleagues also talked about grid
reliability which your leadership at NARUC probably provided
you a great deal of expertise in that particular area. How much
do you think that the smart grid applications, you know, from
synchophasers to other types of things are part of what can
help make us more secure? How much is making us secure also
making implementation of the smart grid strategy?
Ms. Honorable. Senator, I believe that smart grid
technologies and quite frankly, a number of technologies are
able to ensure and support grid reliability, grid diversity.
I've been enlightened by that, about that, through my
participation in a White House Smart Grid Working Group where
regulators from NARUC were brought together with the technical
world.
We normally live very separate lives. But understanding how
we can use the power of technology to provide and ensure 2 way
communication to benefit both consumers of energy and providers
of energy. Also through my participation with the Electric
Power Research Institute where they are presently studying the
value of the integrated grid which includes a number of very
diverse participants in supporting grid security, reliability
and technology is key among them.
Senator Cantwell. Thank you. My time is expired.
Thank you, Mr. Chairman.
Senator Wyden. Thank you, Senator Cantwell.
Let's see, Senator Hoeven is next.
Senator Hoeven. Thank you, Mr. Chairman.
It's good to see you again here today and thank you so much
for stopping by my office. I appreciate it very much.
Ms. Honorable. Thank you.
Senator Hoeven. I'd like to start out with in order to
build an energy plan for this country where we're truly energy
secure we've got to have the infrastructure to do it.
Talk to me for a few minutes, if you would, about what you
see FERC's role is in ensuring that we build the necessary
infrastructure to have energy security for our country?
Ms. Honorable. Thank you, Senator.
A few ways in particular that FERC can support the
infrastructure development.
One is by ensuring that the markets are sending proper
signals to investors and to others who want to support
infrastructure, upgrades, build outs, to ensure that we're
getting the power in all of the resources where they need to
be.
Certainly I've spoken about FERC's role to ensure just and
reasonable rates. That's a key way.
Another way that maybe you don't read specifically in what
FERC's roles would include would be providing regulatory
certainty.
Hearing, being consistent with the--with honoring what the
law says, the rule of law and ensuring that we're issuing
orders in a timely fashion.
Those are a few ways.
Senator Hoeven. How do you make sure that applicants can
get through the process where we certainly make sure that
they're doing things right and well but that they can get
through the process in an expeditious manner so they're
encouraged to make the investment in new transmission and other
infrastructure that we need?
Ms. Honorable. Indeed.
As a State regulator I'm very cognizant of this specific
issue where investor owned utilities or others come to us with
a request, with a request to construct a transmission line or
to offer a particular rate to a newcomer in economic
development. It's important that, as I mentioned, that we
follow the law. But that, for instance, with regard to a
pipeline application there's a pre-filing period which allows
the parties to work with FERC and others to ensure that they
work out the bumps in the road and the kinks to ensure that
when the formal application process gets underway that it will
be done as seamlessly and quickly as possible.
I understand that, in particular with those applications,
FERC does by and large respond to them within the year.
However, the law requires FERC to, for instance with regard to
a project to make a determination regarding safety and
environmental impacts, in the locale where the project would
take place. This also requires FERC to get input from other
Federal agencies, to comply with NEPA and other Federal laws.
So much of that timeline is constrained by what the law says.
If confirmed, I would be, certainly, I would be more than
willing to uphold the law but more importantly, I would be open
to any suggestions that you may have or others for ways to
streamline those processes so that we're not only providing
regulatory certainty, that we're responding in a timely
fashion, but that also sends a signal of confidence to the
market and to the investors and also provides some degree of
certainty about the process.
Senator Hoeven. What's your view on LNG export?
Ms. Honorable. I have certainly, generally supported the
notion. I think, and I've also noted that DOE conducted a study
some time back that determined that within certain ranges that
there would not be a significant impact on domestic prices.
That's very important.It would be prudent for DOE to undertake
that exercise. We certainly don't want to harm domestic prices
in our ability to harness this resource and participate in the
global gas market.
Senator Hoeven. Do you think LNG will adversely impact the
domestic market?
Ms. Honorable. No, not at this time.
Senator Hoeven. How do you--how do we expedite the citing
of transmission lines, electric transmission lines? How do we
expedite that citing process?
Ms. Honorable. Certainly I can speak to this from a State
regulatory perspective.
It's important for industry to, much in the way that I
described about this informal process that takes place ahead,
for the relevant entities to ensure that they've worked out
some of those conflicts. So that when they present the various
options to be considered by the regulatory authority the
process can move seamlessly.
I would be committed to dotting the ``I''s, crossing the
``T''s and by that I mean following the law, ensuring that due
process is observed, but moreover, ensuring that we provide the
applicant with a timely and certain response.
Senator Hoeven. I think that's very important.
We need more electric transmission.
Ms. Honorable. I agree.
Senator Hoeven. You know, we need to build out the grid. We
need safety, security, but certainly more transmission. This
will be an important role for you.
Ms. Honorable, thank you. I think you bring an outstanding
track record.
Ms. Honorable. Thank you.
Senator Hoeven. Resume to this job. Great to have you here
today. Thank you.
Ms. Honorable. Thank you, Senator.
Senator Wyden. Thank you, Senator Hoeven.
Senator Manchin is next.
Senator Manchin. Thank you, Mr. Chairman.
Thank you for being here and putting your name up so that
we could have someone of your caliber to serve this great
country of ours.
I was so amused when I was first introduced to you and they
said there is a Colette Honorable. I said you mean, Honorable
Colette, don't you? Before I knew your last name was Honorable.
They said, no. This is not a title. This has real meaning
to it.
[Laughter.]
Ms. Honorable. Thank you, Senator.
Senator Manchin. So I appreciate so much.
Let me just say that everybody has basically touched on and
we're all concerned about what we have in every area of the
country to be represented properly. I've been so impressed
because you're looking at an all in energy policy for our
country, to use all the resources in the most balanced,
environmental and economic way possible, taking both of those
in consideration. As, I think, Senator Cantwell said one size
doesn't fit all.
Ms. Honorable. Yes.
Senator Manchin. In West Virginia we don't have the luxury
of hydro, but we have energized this country for many, many
years and given it the coal and now we have the natural gas. So
we want to continue to be able to provide whatever energy that
we can for this Nation. We just want a balanced, level playing
field that we can work within. We don't really get that right
now.
I think if you can comment on the polar vortex and what
you've been able to study about that. How close we came to a
shutdown which would have been horrific for a lot of people's
lives. People that are harmed the most are those in the low end
of the socioeconomic totem pole and the elderly and frail.
How close are we to being in that position again with
another polar vortex based on our base load of power which is a
coal and nuke and most of the coal coming, old plants coming
offline and nothing new to retake its place as far as in base
load. I'm concerned about that. That gets back to reliability.
My final question would be and you can answer in any order
you want to. What's the greatest challenge you think that when
you are, not if you are, but when you are confirmed, will be
taking on as a new member of FERC trying to look at the
challenges you think is the most pressing this country is
facing?
Ms. Honorable. Thank you.
Senator, if you don't mind, I'll take the last one first.
Senator Manchin. OK.
Ms. Honorable. The greatest challenge that I perceive from
my experience as an economic regulator and also interacting
with the FERC Commissioners is reliability. It's reliability in
a number of respects. I spoke about it earlier.
In many ways we need to think about, not only reliability,
but resilience efforts. There are so many potential
interferences with the ability to provide reliable and
resilient service to, as you mentioned, businesses,
communities, nursing homes, schools, to the, as one of our
State legislators said, the little old lady at the end of the
road, what that truly means. Reliability is certainly a top
priority for me in my daily work. If confirmed, it would
continue to be.
As I think about the polar vortex and reflect upon what
occurred and the lessons learned. Certainly I read somewhere a
saying that the grid bent but didn't break. We were certainly
challenged.
It was challenging in a number of respects, not only with
regard to the ability to get the capacity where it needed to
be. Certainly the base load capacity was key in that. But also
the lives that were at risk.
I think the lessons learned from my perspective are these.
Coordination and collaboration is key.
The ability to move trucks and people from across the
country to where they needed to be is an effort we hadn't
undertaken before. But we were experiencing more and more
severe weather events. We've had some this year. It will
continue to be an issue we'll need to resolve together.
Who's on first?
Also the interplay and interconnection between electric and
telecommunications and the telecommunications sector needed
electricity to get up and running. The electric sector needed
telecommunications. So we need to coordinate. I think that even
industry and other stakeholders that are nontraditional have
learned that lesson as well.
FERC, I also observed with regard to propane, for instance,
used a very limited authority for the first time ever to ensure
that they got together the relevant stakeholders who agreed to
allow the redirection of a propane pipeline for a limited time
and in a way that didn't impact industry and other suppliers,
but to shore up reliability in an instance.
If confirmed, I would certainly be open to, I wouldn't want
to prejudge this issue, but I would be open to entertaining the
prospect of using that authority in order to ensure reliability
in the future.
Senator Manchin. Let me just say my time is up, but I would
like to say this, that it's just such a breath of fresh air
because from this standpoint you're the first person that's
been nominated to the FERC that's had, truly, the experience to
do the job that we're asking you to do. That's have regulatory
experience, being recognized by your peers, having that
expertise to bring, immediately, to something, I think, is very
vulnerable, our grid system and how we produce reliable,
affordable and clean power in a balanced way.
So I really appreciate that and look forward to your taking
the rein.
Ms. Honorable. Thank you.
Senator Manchin. Uh huh.
Senator Wyden. Thank you, Senator Manchin.
Senator Franken.
Senator Franken. Thank you, Mr. Chairman of another
committee.
[Laughter.]
Senator Franken. I want to ask you like a very big, sort
of, overarching future of the grid, kind of question.
We're seeing a transformation in the way electricity is
generated and delivered in the United States which is
challenging the, kind of, the centralized hub and spoke model
of our grid. Because of energy efficiency electricity demand is
down and this is saving households and businesses money. The
plummeting prices of wind turbines and solar panels have driven
more renewables and distributed power generation to the
marketplace. We are developing more efficient and effective
energy storage systems which will allow us to balance and
manage increasing amounts of these intermittent clean energy
sources.
My State of Minnesota is on track to be 25 percent
renewable by 2025. It's working so well the State is actually
looking at ways of increasing the target to 40 or even 50
percent by 2030. So the future of our grid will be
fundamentally different than it is today.
David Crane, who is the CEO of NRG described this
eloquently in his letter to stakeholders. He said that we were
moving toward and I quote. ``A post grid future, a future that
is driven by renewables incorporating both energy storage and a
sophisticated localized automation to balance production and
load.''
So, Ms. Honorable, I would like to hear from you your
vision for the future of the grid. In your view what needs to
be done to prepare for electricity delivery in this post grid
future, as David Crane calls it?
Ms. Honorable. Thank you, Senator.
I must tell you that we look to Minnesota. You all provide
such a great example in many ways in the energy sector. So I
applaud you on all of the work that you've done.
The future of the grid, in my mind, and in my opening
statement when I talked about this being an exciting time, it
truly is when you think about the future and what the grid will
and should look like in the future. I agree with Senator
Hoeven, that we do need more transmission. But in doing so we
allow a greater optionality that allows consumers to
participate more greatly in their energy futures.
You've talked about energy efficiency. I'm proud of the
work in Arkansas. We have--we lead the South and Southeast in
our comprehensive energy efficiency programs. Certainly we
don't hold a candle to you yet. But we're on our way.
Senator Franken. It's because you've been using candles.
Ms. Honorable. Maybe so.
[Laughter.]
Ms. Honorable. Maybe so.
Senator Franken. I don't even know why I said that, but go
ahead. I'm sorry.
Ms. Honorable. You couldn't resist.
Senator Franken. Yes, not that I can.
Ms. Honorable. But certainly the ability to integrate
cleaner, more efficient resources is a must. Wind and solar,
absolutely will be part of that future. They should be.
Storage is a key. Microgrids. When I talked about the value
of the integrated grid effort that EPRI is undertaking, they're
looking at all of these ways in which technology, innovation,
cleaner energy sources and by the way, energy efficiency is at
the top of that list, will come together in a way that ensure
diversity, reliability and also a more nimble grid.
So I'm looking forward to seeing the grid of the future. If
confirmed, I look forward to working to help make that happen.
Senator Franken. I want to see a lot more energy production
in working in island mode too, in terms of resilience.
Let me ask you about coal stockpiles that utilities over
the past year in Minnesota we've seen them repeatedly drop to
dangerously low levels due to the inadequate rail delivery of
coal. At least 4 coal powered plants in Minnesota were shut
down so that their stockpiles could be built back up before the
cold winter months. In the end the cost of the unreliable rail
service is passed on to the public who will have to pay for the
more expensive replacement power that was purchased to make up
for the lost generation.
Last month I sent a letter to FERC highlighting my concerns
about Minnesota's utility's low coal stockpiles and asking FERC
to work with all other stakeholders to find a solution to this
ongoing issue.
Ms. Honorable, what do you think FERC should do to mitigate
the problems that we're seeing with rail delivery issues which
are shrinking coal stockpiles and unnecessarily driving up
electricity prices in Minnesota?
Ms. Honorable. Certainly, Senator.
I sympathize with Minnesota's concerns. In Arkansas we've
experienced a similar situation that occurred years ago. The
industry is captive to when their shipments will arrive. The
greatest concern for me is the very thing that you've said. It
ultimately impacts everyday people and their ability to pay for
this electricity.
Certainly from a State regulator's viewpoint it impacts
reliability.
If confirmed at FERC and certainly I recognize that this
issue is not purely within FERC's jurisdiction. I guess the
Surface Transportation Board would have the primary oversight
there. But I would commit to you that having had personal
experience with understanding and working through a similar
issue, I will be committed to working with the FERC
Commissioners and working collaboratively and in ways maybe we
haven't before to ensure that FERC is doing its part to send
proper signals, to in any way possible, alleviate this concern.
I certainly would look forward to your thoughts and because
you are up close and personal with this issue right now. I
understand that you had, even over the summer possibly, some
issues as well. So I'd be happy to visit with you.
Senator Franken. Thank you very much.
Ms. Honorable. Thank you.
Senator Wyden. Thank you very much, Senator Franken.
Ms. Honorable, there aren't any more questions. We're going
to allow members until 5 tomorrow to submit additional
questions for the record.
Senator Wyden. I just want you to know we're going to do
everything we possibly can to see if we can get you confirmed
before the Congress wraps up. As you know this is not
completely within our power and there are many, many
nominations that are in the queue.
But I'm struck in terms of particularly how you've
addressed some of these important issues, the question of
diversity and recognizing the differences between the various
parts of the country, the questions of grid security is
obviously, and reliability is very important to members.
In effect, the FERC challenge is almost like a teeter
totter, you know, everybody wants to keep prices as low as
possible. This is something that I feel very strongly about. I
essentially got my start in public service as Co-Director of
the Oregon Gray Panthers. We were always concerned about the
prices that seniors pay.
So, over here you've got to keep the prices down. Over here
you've got to figure out how to ensure that people get adequate
service. It's, kind of, a teeter totter here.
I will tell you based on what you have said today, based on
your history and the significant bipartisan support that you've
had today, I think you're going to do a good job of striking
that balance on the teeter totter. It's not an exercise for the
faint hearted, but I think you'll do it very well.
With that we wish you well and the committee is adjourned.
[Whereupon, at 12:40 p.m. the hearing was adjourned.]
APPENDIXES
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Appendix I
Responses to Additional Questions
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Responses of Colette Honorable to Questions From Senator Landrieu
Question 1. Midla Pipeline--Over the past year there has been a
great deal of controversy in Louisiana regarding an attempt by the
American Midstream company, the owner of the Midla natural gas
pipeline, to obtain authorization from the Federal Energy Regulatory
Commission (FERC) to ``abandon'' most of the Midla pipeline and take it
out of service. If this proposal had been adopted by FERC the result
would have been a termination of affordable natural gas service to tens
of thousands of customers in 9 parishes in Louisiana: Franklin,
Catahoula, Ouachita, Richard, Tensas, Concordia, West Feliciana, East
Feliciana and East Baton Rouge. This would have been devastating to the
well-being and economy of these parishes.
I have written and contacted FERC on numerous occasions to suggest
that it reject the Midla abandonment proposal in its entirety. In
response, FERC initiated a settlement process between the various
parties, including both the Midla pipeline and affected Louisiana gas
consumers. I was pleased to learn on October 9, 2014, that an agreement
in principle regarding the future of the Midla pipeline had been
reached between the key parties. Under this agreement virtually all
current gas customers will be assured access to affordable continued
service on a modernized Midla pipeline or other means.
Assuming that a final settlement is reached by the key
parties and submitted to the Commission for its approval do you
agree that FERC should, to the maximum extent possible, approve
such settlement without modification?
Alternatively, if no final Midla settlement is reached do
you agree to carefully and thoroughly review any Midla
abandonment proposal to assure that existing gas customers
continue to receive gas pipeline service at a rate that is just
and reasonable and not unduly discriminatory?
Answer. Because the Midla proceeding is currently pending before
the Commission, I cannot comment on any issues that may specifically be
raised in any settlement or abandonment proposal. However, as a state
regulator, I understand that reliable and affordable service are key
issues to consumers. Section 7(b) of the Natural Gas Act provides that
an interstate pipeline company may only abandon jurisdictional
facilities or services if the abandonment is permitted by the ``present
or future public convenience or necessity.'' Central to the
Commission's consideration of any request for abandonment authorization
are the principles that: (1) a pipeline which has obtained a
certificate of public convenience and necessity to serve a particular
market has an obligation to continue to serve; and (2) the burden of
proof is on the applicant to show that the public convenience or
necessity permits abandonment, that is, that the public interest will
in no way be disserved by abandonment. If confirmed, I commit to
carefully considering any settlement proposal or abandonment
application filed by Midla and to carefully consider the public
interest.
Question 2. Toledo Bend Project--Over the last few years, I have
focused a significant amount of my time on the Toledo Bend Project, a
FERC-licensed project on the Sabine River that is half owned by my
state of Louisiana and half owned by Texas. This project, which was
first licensed in 1963, received a new 50 year license from the
Commission on August 29th of this year. I conducted a field hearing at
this Project in Sabine Parish, Louisiana on May 17th of this year. My
experience with this Project acquainted me with the extreme cost of the
relicensing process. The manager of this project for Louisiana
testified at my field hearing that the re-licensing process of the
Commission, plus changes in the operation of the Project that are
required by the new license, will increase the annual operating cost of
the Project by 44 percent. This calculation is based on amortizing
these costs over the 50 year term of the new license rather than the 30
year term of hydro licenses that has become increasingly common.
Do I have your commitment that you will review the licensing and
relicensing process of the Commission for hydroelectric projects and
lead the Commission's efforts to improve the process that will reduce
the current extreme cost of the hydro licensing process?
Answer. According to the Supreme Court, the Commission must examine
all public interest considerations to meet the Federal Power Act's
mandate to ensure that hydropower licenses are best adapted to a
comprehensive plan for developing affected waterways. The costs of
providing the Commission information regarding affected resources in
order for the Commission to understand the environmental impacts of
relicensing a project will vary depending on the complexity of the
issues involved in the licensing proceeding and the availability of
existing information. Also, Congress has given certain federal and
state agencies the authority to impose mandatory conditions which the
Commission must include in a license, regardless of their cost impacts.
While I understand that the Commission makes every effort to ensure
that hydropower relicensing proceedings are as efficient and cost-
effective as possible, if confirmed, I commit to considering ways to
improve the process.
Finally, I would ask you to review carefully a pending appeal of
the terms of the new license that was issued in August for the Toledo
Bend Project. The states of Louisiana and Texas believe that Section
406 of the new license has the potential to prevent the operation of
the Project for its primary purpose: water supply. The Project contains
the major unallocated amount of fresh water available in the state of
Texas and the water in the Project is equally important to Louisiana
for residential, commercial and industrial water use. Section 406 seems
to have no basis in the record of the relicensing process and seems to
be impossible to implement. Section 406 seems to require the Project to
maintain a minimum water level that the Project has not been able to
maintain for a significant portion of the time it has been in operation
due to drought and other natural conditions. This Project is very
important to the states of Louisiana and Texas and its primary water
supply purpose should not be thwarted by an ill-considered provision in
the new license for the Project.
Do I have your commitment on this matter?
Answer. Because the Toledo Bend project is currently pending before
the Commission on rehearing, I cannot comment on the issue you raise.
However, if confirmed, I commit to fully consider all issues raised in
the proceedings before the Commission.
Responses of Colette Honorable to Questions From Senator Murkowski
When a question calls for a ``yes'' or ``no'' answer, please answer
``yes'' or ``no'' before elaborating.
Question 1. On November 5, NERC released its initial reliability
review of EPA's proposed Clean Power Plan, which raised concerns about
a number of the assumptions that serve as the proposal's foundation and
that require additional consideration for reliability purposes. Do you
support NERC's independent initiative to understand and comment upon
the reliability impacts of this major EPA regulation?
Answer. As I noted at the hearing, I have, in conjunction with the
Arkansas Department of Environmental Quality, convened a workshop to
discuss EPA's proposed Clean Power Plan with more than 20 stakeholders
of diverse perspectives, including our regional organizations. I think
it is imperative that FERC and the industry examine the important
issues raised by the proposed rule, particularly how it might affect
reliability. I support NERC's efforts to look at the proposed rule and,
if confirmed, I look forward to discussing the NERC report more in
depth with NERC and my colleagues.
Question 2. In comments submitted to the EPA on the Clean Power
Plan proposal, the ISO/RTO Council--the national council of electric
grid operators--asked EPA to include a ``safety valve'' in the final
rule for electric reliability purposes. The Council outlined what it
sees as three scenarios for such a reliability ``safety valve'' or
``backstop'': (1) if a state determines that the interim goals between
2020 and 2029 cannot be met; (2) if a state determines later in the
compliance period that it cannot meet the final target by 2030 without
risking reliability; and (3) providing for grid operators to request
EPA to review state plans that might jeopardize reliability in other
states.
2a. Do you agree with the ISO/RTO Council that a reliability
``safety valve'' is needed?
2b. If so, should FERC assert itself to ensure that there is a true
reliability backstop? If so, how?
Answer (a-b). I have not studied the ISO/RTO Council's specific
proposal in depth. It is important to note that, with regard to the
most recent proposed EPA regulation, there has been an unprecedented
and significant level of outreach employed by EPA at local, state,
regional and national levels. On October 28, 2014, after engaging in
significant outreach to a broad range of stakeholders, the EPA issued a
notice of data availability (NODA) to, in part, seek comment on the
potential technical challenges described by some stakeholders
associated with achieving all of the reductions that states would be
required to make as early as 2020. In the NODA, EPA requests comment on
two approaches that stakeholders have offered to address these issues
and explains how EPA's June 2014 proposal requests comment on the
option of early reductions. As a state regulator, I have had numerous
opportunities to offer feedback and comments about the proposed rule
informally, through the formal comment period, and additionally with
regard to the ``glidepath'' after the EPA-issued NODA. At FERC, my
understanding is that staff from FERC discusses issues concerning the
proposed rule with the EPA. I believe it is important for FERC to
continue this relationship and discuss reliability issues with the EPA
and other interested stakeholders. If confirmed, I will continue to
participate in the discussions on this rule and be a productive part of
FERC's mission to ensure reliability.
2c. Should FERC or the ERO have stronger legal authority or
obligation to conduct an analysis of any major federal regulations that
could negatively impact the reliability of the electric grid? Should
the implementing agency be required to address any concerns raised
before the rule could be finalized?
Answer. Section 215 of the FPA authorizes NERC to conduct periodic
assessments of the reliability and adequacy of the bulk-power system in
North America. In fact, NERC has performed assessments of EPA's rules
in 2011 and 2014 and includes issues involved in the EPA rules in its
regular assessments. Thus, I do not believe NERC needs additional
authority to conduct reliability analyses. As stated in response to
Question 2.b, I believe it is important to continue to discuss
reliability issues with the EPA. In my view, FERC's role in the
reliability of the electric grid includes communicating with other
agencies on significant reliability issues that may be raised by their
regulatory efforts. I do not have an opinion yet on whether the type of
legislation you describe would be appropriate, and would like to
discuss this with a variety of stakeholders first. If I am confirmed
and Congress chooses to grant the Commission additional authority, I
will work to ensure that the Commission faithfully executes that
additional authority.
Question 3. Increasing supplies of natural gas from shale, together
with proposed new environmental regulations, are accelerating a major
switch from coal to natural gas as the fuel for power generation.
However, FERC has expressed concern that the lack of coordination
between the gas and electric sectors could lead to future natural gas
supply problems for electric generation and potential reliability
concerns for both gas and electricity consumers.
3a. Are we at risk of an overreliance on a single fuel for U.S.
power generation? How will the electricity industry continue to achieve
fuel diversity, which can help moderate electric power costs?
Answer. Maintaining diversity in our nation's energy sources and
generation fuel supply is important to ensuring reliability and just
and reasonable rates for consumers. In Arkansas, I worked to promote
diversity in our state's energy resources, helping us achieve some of
the lowest rates in the country, and, as President of NARUC, I
proactively engaged with my peers across the country and with industry
on the security and diversity of our energy supplies. To continue to
achieve fuel diversity, appropriate planning by industry and continued
proactive engagement among regulators and industry will be needed. The
electricity industry is already including fuel diversity in its future
planning, and FERC has appropriately focused attention on the need for
increased coordination between the natural gas and electricity
industries, and, in a recent order, generator fuel assurance concerns
in organized wholesale markets. In addition, traditional state
integrated resource planning and the resource adequacy constructs
adopted in many regions can provide additional tools to address fuel
and resource diversity. If confirmed, I would work with my fellow
Commissioners to continue these efforts and explore new ways to
collaborate with other regulators and industry on these issues.
3b. In your view, what are the reliability implications of
increasing natural gas use for electricity generation, especially in
New England and the northeast? Are existing federal policies and
initiative adequate to ensure gas-electric interdependence does not
become a reliability problem? If not, what should FERC do to improve
the situation?
Answer. Abundant and low cost supplies of domestic natural gas can
provide positive benefits for consumers and the environment and will
become increasingly important for compliance with proposed
environmental regulations. Increased reliance on natural gas for
electricity generation, however, can create infrastructure and
coordination challenges that industry, state regulators and FERC must
continue to address to maintain reliability.
For example, pipelines and other natural gas infrastructure must be
expanded to keep pace with the needs of both local distribution
companies and gas-fired generators. The events of last winter showed
that infrastructure constraints in the Northeast and in other areas of
the country can result in volatile and often higher electricity and
natural gas prices for consumers, and can negatively impact the
delivery of fuel to gas-fired power plants. Using its authority under
the Natural Gas Act to approve the siting and construction of
interstate natural gas pipeline infrastructure, FERC has an excellent
track record of quickly and efficiently processing applications to
build needed new facilities. In addition, as FERC staff has noted in
quarterly reports to the Commission (posted on the Commission's
website), there are ongoing efforts at the regional level by
reliability planning authorities, RTOs/ISOs, and state regulators to
collaboratively asses their unique infrastructure needs. All of these
efforts should continue.
Increased use of natural gas for electricity generation also
requires increased coordination of communications and scheduling
practices between the two industries. Since 2012, FERC has proactively
engaged with the electric and natural gas industries, NARUC, NERC and
other stakeholders to identify and address these coordination
challenges. FERC has also taken affirmative steps to improve the
coordination of communications and scheduling between the two
industries and address reliability risks that can result from a lack of
effective coordination. For example, in 2013 the Commission issued a
Final Rule to affirmatively allow interstate natural gas pipelines and
electric transmission operators to share non-public operational
information to promote the reliability and integrity of their systems.
Electric transmission operators reported that the enhanced
communications facilitated by this rule were vital in maintaining
reliability during the events of last winter. In addition, in March of
2014, the Commission proposed changes to the natural gas operating day
and scheduling practices used by interstate pipelines to schedule
natural gas transportation service. The Commission also initiated
investigations under section 206 of the FPA to determine whether the
day-ahead scheduling practices of the RTOs and ISOs align with any
revisions to the natural gas scheduling practices that may be adopted
by the Commission in a Final Rule stemming from the proposal.
Commission is currently considering responses to the proposal. If
confirmed, I will carefully review the record developed in these
proceedings to identify potential reforms that could improve gas-
electric coordination and address potential reliability risks.
Question 4. FERC's Order 745 requiring full locational marginal
pricing (LMP) for demand response resources was recently vacated in its
entirety by the D.C. Circuit which ruled that FERC was attempting to
regulate retail electricity markets in violation of the Federal Power
Act.
4a. In your opinion, where is the federal/state jurisdictional
divide?
Answer. As noted in your question, the D.C. Circuit on May 23, 2014
issued a decision vacating Order No. 745 and addressing the
Commission's jurisdiction over demand response in organized wholesale
markets. On July 7, 2014, FERC filed with the D.C. Circuit a petition
for rehearing en banc of that May 23, 2014 decision, which was denied.
On December 5, 2014, the Solicitor General at the U.S. Department of
Justice indicated that he has authorized the filing of a petition for a
writ of certiorari seeking review at the U.S. Supreme Court of that May
23, 2014 decision. FERC's legal authority to regulate demand response
in organized wholesale energy markets will be determined in this
ongoing litigation.
4b. Given the Appellate Court's decision, should RTOs continue
allowing demand-side resources to bid in forward capacity auctions?
Answer. Market participants in the PJM and ISO New England regions
have filed complaints at the Commission presenting the same issue noted
in your question. Because this issue would be likely to come before me
if I am confirmed as a member of the Commission, it would be
inappropriate for me to prejudge how the Commission should address this
issue.
Question 5. As Senator Barrasso and I and other Senators pointed
out earlier this year, there is controversy surrounding some of the
methods and practices of the FERC enforcement program. Would you
support convening a series of FERC technical conferences to develop the
public record on these matters and consider reforms that the record of
the technical conference may justify?
Answer. I believe it is important for an enforcement program to be
fair and transparent. If confirmed, I look forward to discussing the
issues raised concerning the Commission's enforcement program and
considering what, if any, reforms are necessary. If confirmed, I commit
to gain a better understanding of the issues associated with the
enforcement program, and to consider any number of ways to address
these concerns, including technical conferences, if necessary.
Question 6. In July 2013, the National Association of State
Regulatory Utility Commissioners (NARUC) issued a resolution specifying
a number of concerns about FERC's implementation of its sweeping Order
1000 on transmission cost allocation and planning. The Resolution
concluded that Order 1000 ``inappropriately infringes on State
authority reserved by Congress over such matters and threatens to
relegate States to the status of a mere `stakeholder' on these crucial
issues.''
6a. Please explain NARUC's concerns with Order 1000 and whether or
not you agree with them.
Answer. From my perspective, NARUC's ``Resolution Regarding State
Authority over Public Utility Resource Planning'' served as a reminder
of the states' collective and substantial jurisdiction, efforts and
role in the oversight of utility integrated resource planning and
resource adequacy processes, and transmission planning and expansion.
The resolution also urged FERC to recognize the crucial role of the
states in developing regional transmission planning and cost allocation
policies, and to provide flexibility to the states to continue this
work through cooperation and collaborative efforts. I do agree with the
concerns expressed in the resolution.
6b. Please explain your idea of what the phrase ``beneficiary
pays'' should mean in the context of transmission cost allocation.
Answer. The phrase ``beneficiary pays'' refers to a concept applied
during transmission planning and cost allocation to ensure that those
customers who benefit from a particular transmission project
participate in paying for the cost of the transmission line or facility
construction.
6c. Do you believe ``benefits'' should be measured and specifically
defined?
Answer. To the extent possible, ``benefits'' should be measured and
specifically defined in a collaborative process. In the context of
transmission planning and cost allocation, where the benefits flow
would necessarily depend upon the size of the line and the customers to
be served by the improved transmission capability. Clearly, the value
of approving and constructing a transmission line over a larger
footprint in the regional context would allow the sharing of costs
among a greater customer base, thereby allowing lower costs for
individual consumers. I also recognize that it is difficult to
prospectively define who benefits from a particular project in certain
circumstances. The customer composition of an area in which a
transmission line was constructed twenty years ago could change over
time, for instance, based upon factors such as economic development,
population shifts or load growth. I believe that regions can define
``benefits'' for themselves, through a flexible, robust collaborative
process. If confirmed, I would follow the law and current precedent.
Question 7a. Regulatory Philosophy--What is your over-arching
regulatory philosophy?
Answer. My overarching regulatory philosophy is to ensure the
provision of safe, reliable and affordable electricity that is in the
public interest through processes that are open, transparent and fair.
I also strive to uphold the law, observe due process, respect
precedent, and conduct this work in a way that encourages stakeholder
participation, investment and innovation, and provides regulatory
certainty, confidence in the process and preserves the integrity of the
institution.
7b. How far should FERC seek to evolve its role beyond the
authorities specifically given it by Congress? For example, how, if at
all, would you use FERC's authorities with respect to RTO formation in
the Western Interconnection?
Answer. FERC cannot seek to evolve its role beyond the authorities
specifically given it by Congress. Based upon my legal training, it is
the role of Congress to say what the law is, and FERC's role would be
to apply the law to the facts to arrive at a particular result. I
believe that RTO participation is voluntary, as noted from my work in
Arkansas in which I presided over requests for utilities to participate
in an RTO. Likewise, I would not seek to use FERC's authority to
require RTO formation or participation in the Western Interconnection
or any other portion of the country.
Question 8. Some regional transmission organizations have dispatch
rules which allow intermittent generators such as wind power to
participate in day-ahead markets rather than just real-time markets. It
is my understanding that the current federal Production Tax Credit
(PTC) allows wind generators to submit a zero dollar bid, or even a
negative bid price, in these competitive markets. What are your
thoughts on this ability to submit a zero dollar bid or even a negative
bid price into competitive markets?
Answer. RTO market dispatch rules find the lowest cost of
dispatching resources, based on their bids, to serve load while
respecting transmission system limitations. A resource's bids reflect
the resource's incremental cost of energy production. A zero dollar bid
by an intermittent resource is consistent with the incremental cost of
energy from the resource and usually reflects a resource's contractual
obligation to produce its full output regardless of what the market
clearing price is. A negative bid usually indicates that a resource is
willing to continue to produce as long as it must pay less than its
opportunity cost to do so. This is consistent with competitive bidding.
In addition, when variable energy resources do not bid into the energy
market, the market operator is forced to manually curtail the generator
if too much energy is produced. This manual curtailment is economically
inefficient and can create risks to system reliability.
Question 9. What is your view of the importance of new transmission
assets and electricity storage technologies for power grid efficiency
and reliability? Are FERC's existing rate and market policies
sufficient to encourage the development and appropriate deployment of
this infrastructure in the grid?
Answer. I foresee a greater role for energy storage in the bulk
power system. As our energy supply becomes more diverse, and as more
renewables are integrated, the ability to develop widely deployed
storage capability will allow for greater fuel diversity and grid
reliability. FERC has continuously assessed whether existing wholesale
market rules and operational practices erect barriers to the
participation of storage and other new and emerging technologies, and
has required changes in those market rules to remove such barriers and
ensure that all resources can compete on a level playing field. For
example, the Commission has encouraged or required RTOs and ISOs to
revise certain minimum megawatt size and run-time requirements in their
tariffs that it found created unreasonable barriers to the
participation of storage and other small resources, and also required
the RTOs and ISOs to reform compensation practices that failed to
appropriately compensate fast-responding resources like energy storage
based on their performance. If confirmed, I would support continuing
efforts to assess whether existing wholesale market rules and practices
result in unreasonable barriers to new and emerging technologies like
energy storage.
Question 10. What are your views on financial incentives for
transmission system development? Have existing transmission rate
structures provided proper incentives to promote transmission system
construction?
Answer. I believe that FERC has used financial incentives to
encourage necessary investment in transmission infrastructure for
reliability. Existing transmission rate structures have provided
incentives to promote transmission buildout, but FERC should remain
vigilant in overseeing the provision of these incentives to ensure that
they are provided judiciously, and in a way that does not inhibit
investment in other areas.
Question 11. With regards to transmission, how does a greater
reliance on a risk-based approach to resiliency investments differ from
traditional methods?
Answer. Traditionally, states and regions have taken approaches and
methodologies that determine necessary investments to ensure
reliability of the electric grid. However, due to the increase in
disruptions to the grid that are potentially catastrophic, it is
imperative that the current transmission planning and cost allocation
process plan for, invest in, and construct a grid which also employs a
risk-based approach to resiliency investments. In this way, states and
regions are not only undertaking investment that fortifies the grid for
disruptions, but also ensures our collective ability to quickly respond
to disruptions to the grid such as cyber security events, physical
security attacks, severe weather events, geomagnetic disturbances and
the like.
Question 12. What are the implications of ``smart grid''
technologies for the wholesale electric grid in terms of efficiency,
reliability, and security? Do FERC policies appropriately take into
account these implications and/or concerns?
Answer. In its March 19, 2009, Proposed Policy Statement and Action
Plan, the Commission stated that ``Smart Grid advancements . . . will
bring new efficiencies to the electric system through improved
communication and coordination between utilities and with the grid,
which will translate into savings in the provision of electric
service.'' The Policy Statement also indicated that ``[t]hese
technologies will also enhance the ability to ensure the reliability of
the bulk-power system.'' The Commission in its July 16, 2009, Smart
Grid Policy statement addressed cyber security issues, observing that
``cybersecurity is essential to the operation of the smart grid and
that the development of cybersecurity standards is a key priority.
Cybersecurity and physical security are ongoing concerns for both the
Commission and the electricity industry . . . '' If I am confirmed, I
will join my fellow Commissioners in continuing to consider the
implications of smart grid technology on Commission jurisdictional
activities.
Question 13a. EPA's Clean Power Plan contemplates natural gas
combined cycle operating at higher capacity factors. What can FERC do
to advance and expedite gas delivery infrastructure investment?
Answer. Under the Natural Gas Act, FERC plays an important role in
gas infrastructure development. First, FERC issues certificates for the
construction of new facilities. Since 2003, FERC has certified 93.1
Bcfd of capacity in new pipelines and expansions. The Commission also
encourages natural gas pipeline development through its regulation of
the wholesale markets, which can attract investment in needed
infrastructure. For example, last year FERC held a technical conference
that discussed, among other things, pricing of fuel security into the
wholesale power markets. The Commission recently directed the regional
transmission organizations and independent system operators to file
reports on their efforts to address the need for generator access to
sufficient fuel supplies and the firmness of generator fuel
arrangements. The Commission has also acted in several individual
proceedings to put in place a number of market rule and tariff changes
that can help address fuel assurance concerns, including clarifying the
obligations of capacity resources with respect to fuel procurement, and
providing greater fuel cost recovery certainty. If confirmed, I look
forward to reviewing the fuel assurance reports and to discussing any
additional ways to advance needed natural gas infrastructure.
13b. Have you considered what challenges FERC might face in
changing market rules to accommodate an increased reliance on gas?
Answer. Yes. As president of NARUC, I oversaw the collaborative
effort among the state economic regulators and the Commissioners at
FERC to ensure that we are working together to discuss the important
issues raised by the changing infrastructure mix in this country
through workshops on reliability and gas-electric coordination. If
confirmed, I look forward to continuing those conversations.
In addition, The Commission recently directed the regional
transmission organizations and independent system operators to file
reports on their efforts to address the need for generator access to
sufficient fuel supplies and the firmness of generator fuel
arrangements. The Commission has also acted in several individual
proceedings to put in place a number of market rule and tariff changes
that can help address fuel assurance concerns, including clarifying the
obligations of capacity resources with respect to fuel procurement, and
providing greater fuel cost recovery certainty. If confirmed, I look
forward to reviewing the fuel assurance reports and to discussing any
additional ways to advance needed natural gas infrastructure.
Question 14. What can FERC do to help improve gas delivery
scheduling practices to allow both natural gas consumers and gas-fired
electric generators to access gas supplies efficiently?
Answer. As noted in my answer to Question 12.b, earlier this year
the Commission proposed changes to the natural gas operating day and
scheduling practices used by interstate pipelines to schedule natural
gas transportation services, to more closely align their processes and
improve coordination. In response to the proposal, the North American
Energy Standards Board (NAESB) filed a set of alternative proposed
changes to natural gas scheduling practices in September that it
developed through an industry stakeholder consensus process. In
November, the Commission received comments from the public on its
proposals and the alternative proposals submitted by NAESB. If
confirmed, I look forward to carefully reviewing this record and
collaborating with my fellow Commissioners to consider what next steps
on gas delivery scheduling practices may be appropriate.
Question 15. In general, widespread and persistent outages to the
Bulk Power System are rare. However, as assets begin to retire, the
risk of a ``localized'' reliability effect is growing.
15a. If true, would you find this impact acceptable if caused by
federal policy?
Answer. No, I would not find such an impact acceptable. While such
an occurrence may or may not be within the jurisdiction of the
Commission, if confirmed I will commit to analyze such instances, and
to engage with other FERC Commissioners or other relevant federal
entities to alleviate any such occurrences.
15b. How do you define a ``localized'' reliability threat?
Answer. I would define a ``localized'' reliability threat as one
that impacts a smaller customer territory or area, and would not
necessarily spread to a region or cause a ``domino effect'' of outages
beyond the local area.
Question 16a. Reliability--Should FERC continue to support
``reliability-must-run'' (RMR) agreements for coal plants in
competitive markets even though these plants may not be able to
generate electric power at competitive prices?
Answer. ISOs and RTOs issue RMR agreements only after determining
that there is no alternative available to maintain reliability. These
agreements are intended to be of short duration until a long-term
solution can be placed into service. I support these agreements under
these circumstances.
16b. Should FERC and the North American Electric Reliability
Corporation (NERC) consider potential cost increases to consumers under
the ``just and reasonable'' requirements of the Federal Power Act in
reviewing RMR or similar actions?
Answer. If an RMR agreement is filed with the Commission under
section 205 of the Federal Power Act, the Commission must determine
whether the costs included in that agreement are just and reasonable.
NERC, as the Commission-approved Electric Reliability Organization
(ERO) under section 215 of the Federal Power Act, is responsible for
developing reliability standards for the bulk power system and
enforcing compliance with those standards. To my knowledge, NERC does
not have an affirmative role in reviewing RMR agreements or the costs
included in those agreements.
16c. Are you concerned about the prospects for continued operations
of baseload coal and nuclear generation in organized markets? If so,
what do you think should be done to address the situation?
Answer. Baseload generation is an important part of the nation's
resource mix and will continue to operate in the future. The organized
capacity markets have been attracting and retaining baseload resources.
For example, PJM's base residual action for 2017/2018 procured about
4,800 MW of new combined cycle generation. The Commission is resource-
and fuel-neutral. My concern is that all resources are fairly
compensated for the value they provide the system. These resources
depend critically on revenues earned in the energy markets. The
Commission's ongoing price formation effort is exploring whether energy
and ancillary service prices appropriately reflect the costs to serve
load. If confirmed, I look forward to discussing the issues explored in
the price formation proceeding.
Questi on 17a. Capacity Markets--Do you think that there is a
sufficient level of transparency in pricing and other relevant data
from the electricity markets?
Answer. A significant amount of electricity pricing and other
market data is made available to regulators and the public. For
example, FERC's regulations require wholesale power sellers to report
the details of their transactions (including pricing, quantity, etc.)
on a quarterly basis. The Commission makes this information available
to the public. In addition, RTOs and ISOs publicly post pricing data
that are granular in time and location. Further, RTOs and ISOs post
resource offer data, subject to an appropriate lag period and masking
procedures to ensure the protection of competitively-sensitive
information. Further, FERC's open access policies also require public
utility transmission providers to publicly post information on
available electric transmission capacity. While these and other
requirements provide a significant amount of transparency in pricing
and other relevant data, if confirmed, I would continually evaluate
ideas to provide additional transparency.
17b. As you see it, how, do capacity markets affect local and state
resource decisions?
Answer. The impact of capacity market design elements on state and
local resource decisions, including state generation resource portfolio
policies, was a key topic of discussion at FERC's September 2013
technical conference on centralized capacity markets, in post-technical
conference comments, and in a recent technical conference focused on
the NYISO markets. The Commission continues to evaluate these issues.
In addition, these issues are pending before the Commission in a number
of contested proceedings. As a result, I am hesitant to comment
directly on how capacity markets may impact state and local resource
choices. If confirmed, I look forward to carefully evaluating these
issues.
17c. Do you believe a three-year capacity market commitment period
used by RTOs is the appropriate time period to capture the value of
capacity?
Answer. The Commission has given each RTO/ISO the flexibility to
choose the forward procurement period and commitment period that best
meets its regional needs and best fits its capacity market or other
resource adequacy construct. Some RTOs/ISOs use a three-year forward
procurement period and one-year commitment period, while others procure
capacity on a shorter timeframe, such as a month ahead or day ahead.
FERC staff noted in a paper released last year that ``[t]he length and
duration of the forward and commitment periods have implications for
encouraging competitive entry of new resources and efficient market
exit of existing resources, balancing risk between suppliers and
customers, and the stability of prices''. For example, a longer forward
procurement period provides more lead time for the construction or
activation of capacity resources, but can increase risks to customers
given that load forecasts are generally more accurate closer to the
period when capacity resources are needed. As I noted at the hearing, I
am cognizant of the diversity of the regions and the ability of each
region to develop market design features that work best for them, and
if confirmed as a Commissioner, I would consider this and other
capacity market design issues with that in mind.
17d. Do you believe the RTO capacity markets are attracting and/or
retaining baseload power resources?
Answer. Baseload generation is an important part of the nation's
resource mix and will continue to operate in the future. The organized
capacity markets have been attracting and retaining baseload resources.
For example, PJM's base residual action for 2017/2018 procured about
4,800 MW of new combined cycle generation. The centralized capacity
markets in place in some RTOs/ISOs are designed to procure sufficient
capacity to meet the region's reliability needs and provide necessary
price signals to facilitate the entry of new capacity resources when
needed, the retention of existing capacity resources when economic, and
the retirement of older and less efficient capacity resources. To date,
the capacity markets have met these goals, procuring sufficient
capacity to meet reliability needs and attracting and retaining
baseload, mid-merit and peaking resources. However, FERC has continued
to evaluate the performance and design of capacity markets,
particularly as the resource mix evolves in response to low natural gas
prices, state and federal policies encouraging the entry of renewable
resources and other specific technologies, and the retirement of aging
generation resources. If confirmed, I would support Commission efforts
to continue this evaluation.
Question 18a. Presidential Permit Authority--What do you think of
proposals to transfer Presidential Permit authority for cross-border
oil pipelines from the State Department to FERC?
18b. If FERC were given Presidential Permit authority for oil
pipelines, what kind of rules and resources would the commission have
to put in place in order to effectively exercise such authority? How
long would it take to put these in place?
Answer (a-b). If I am confirmed and Congress chooses to grant the
Commission additional authority over such pipelines, I will work to
ensure that the Commission faithfully executes that additional
authority.
Responses of Colette Honorable to Questions From Senator Heinrich
Electric Energy Storage
Question 1. The cost of electric energy storage is dropping
precipitously. Do you foresee a greater role for energy storage in the
bulk power system?
Answer. I do foresee a greater role for energy storage in the bulk
power system. As our energy supply becomes more diverse, and as more
renewables are integrated, the ability to develop widely deployed
storage capability will allow for greater fuel diversity and grid
reliability.
Question 2. How can FERC promote deployment of energy storage in
competitive wholesale markets where it is cost effective compared to
alternative power sources?
Answer. FERC is resource- and fuel-neutral, and thus does not
promote the deployment of any particular resource in the competitive
wholesale markets it regulates. FERC does, however, have a role in
ensuring that there are not unreasonable barriers to the participation
of resources in competitive wholesale markets. FERC has continuously
assessed whether existing wholesale market rules and operational
practices erect barriers to the participation of storage and other new
and emerging technologies, and has required changes in those market
rules to remove such barriers and ensure that all resources can compete
on a level playing field. For example, the Commission has encouraged or
required RTOs and ISOs to revise certain minimum megawatt size and run-
time requirements in their tariffs that it found created unreasonable
barriers to the participation of storage and other small resources, and
also required the RTOs and ISOs to reform compensation practices that
failed to appropriately compensate fast-responding resources like
energy storage based on their performance. If confirmed, I would
support continuing efforts to assess whether existing wholesale market
rules and practices result in unreasonable barriers to new and emerging
technologies like energy storage.
Question 3. How can FERC encourage electric energy storage to
participate in competitive auctions for ancillary services in organized
wholesale markets?
Answer. As noted in my answer to Question 2, FERC's primary role is
to ensure that market rules and tariffs do not create unreasonable
barriers to the participation of energy storage and other new emerging
technologies and allow all resources to compete on a level playing
field in wholesale markets. With respect to the participation of
electric energy storage in ancillary services markets, the Commission
can remove regulatory barriers to energy storage by ensuring that the
requirements ISOs and RTOs use to determine whether a resource can
supply ancillary services are appropriate. Further, the Commission can
ensure that resources receive compensation for providing ancillary
services that reflects the value of the service provided. For instance,
some resources, including energy storage, can provide higher quality
frequency regulation service. In Order No. 755, the Commission required
ISOs and RTOs to pay resources that provide frequency regulation
service based on the resource's performance.
Wholesale Demand Response
Question 4. Do you agree that demand response at times of high
power demand in organized regional markets can help lower costs to
consumers and reduce emissions?
Answer. As a general matter, I agree that demand response can
benefit consumers and help to address the issues noted in your
question. With respect to the Commission's role in regulating demand
response, I note that the U.S. Court of Appeals for the District of
Columbia Circuit (D.C. Circuit) on May 23, 2014, issued a decision
vacating Order No. 745, the Commission's final rule on compensation for
demand response resources participating in organized wholesale energy
markets. In that decision, the D.C. Circuit addressed the Commission's
jurisdiction over demand response in those markets. On July 7, 2014,
FERC filed with the D.C. Circuit a petition for rehearing en banc of
that May 23, 2014 decision, which was denied. On December 5, 2014, the
Solicitor General at the U.S. Department of Justice indicated that he
has authorized the filing of a petition for a writ of certiorari
seeking review at the U.S. Supreme Court of that May 23, 2014 decision.
The extent of FERC's legal authority to regulate demand response in
organized wholesale energy markets will be determined in this ongoing
litigation.
Question 5. In competitive wholesale power markets, does generating
and transmitting additional power have any advantages over reducing
demand, or are consumers best served when the two compete on equal
footing?
Answer. The issue of demand response resources' participation in
organized wholesale electric markets, including both energy markets and
capacity markets, is likely to come before me if I am confirmed as a
member of the Commission. For that reason, it would be inappropriate
for me to prejudge how the Commission should address that issue.
Question 6. Do you consider market-based rates for power to be just
and reasonable in an organized multi-state wholesale energy or capacity
market if demand response is excluded and generation is the only option
allowed to compete?
Answer. The issue of demand response resources' participation in
organized wholesale electric markets, including both energy markets and
capacity markets, is likely to come before me if I am confirmed as a
member of the Commission. For that reason, it would be inappropriate
for me to prejudge how the Commission should address that issue.
Similarly, I am hesitant to prejudge issues that may arise if demand
response resources are excluded from those markets.
Transmission Planning and Siting
Question 7. The country is shifting generating resources toward
more natural gas and renewables. How do you think the FERC can best
promote the investment in new interstate transmission capacity that
will be required to assure continued reliability of the bulk power
system?
Answer. The Commission has taken a number of actions to enhance the
efficient development of transmission infrastructure for all resources.
This includes providing for regional transmission planning and cost
allocation through Order No. 1000 and, providing additional flexibility
totransmission developers to allocate new transmission capacity, and
proposing to establish a more efficient process for generators to
obtain priority rights to use transmission capacity on their
interconnection facilities. Finally, last year, the Commission
streamlined the interconnection process for small generating facilities
and adopted reforms to its small generator interconnection procedures
in response to changed circumstances in the industry.
In addition, I believe that FERC has used financial incentives to
encourage necessary investment in transmission infrastructure for
reliability. Existing transmission rate structures have provided
incentives to promote transmission buildout, but FERC should remain
vigilant in overseeing the provision of these incentives to ensure that
they are provided judiciously, and in a way that does not inhibit
investment in other areas.
Question 8. Arkansas is split between two of the nation's
transmission planning regions, MISO and SPP. As chairman of the PSC in
Arkansas, how do you see your role versus FERC's in supporting regional
planning and cost allocation for siting new interstate transmission
capacity?
Answer. From my experience as a state regulator for more than seven
years, I have participated strongly in both the MISO and SPP
transmission planning regions. State regulators have traditionally
participated in transmission planning processes to ensure that their
respective state's consumers pay only those costs that are just and
reasonable, and in the public interest. This is carried out through a
robust collaborative process, with cooperation among the states. If
confirmed, I would see my role at FERC as supporting the regional and
interregional processes through collaboration and cooperation, and
providing the necessary guidance and certainty while properly observing
the diversity of the states and regions.
Cyber Security
Question 9. The security of the grid system is another major
concern. Do you think the FERC has sufficient authority to protect the
bulk-power system and critical electric infrastructure against cyber
security threats and vulnerabilities?
Answer. NERC's rules allow it to develop a standard quickly to
address an emerging issue. However, in the case of a national security
emergency requiring immediate action, the Commission's authority does
not allow it to author standards or to require quick action to protect
the United States from a national security threat to the reliability of
the electric grid. Any new legislation should address several key
concerns, including allowing the federal government to take action
before a cyber or physical national security incident has occurred,
ensuring appropriate confidentiality of sensitive information
submitted, developed or issued under new authority, and allowing cost
recovery for costs entities incur to mitigate vulnerabilities and
threats. This authority need not necessarily be given to FERC.
Question 10. Many cybersecurity threats could require a quick
response. Do you think Congress should designate one federal agency
with the clear and direct authority to respond in the event of an
emergency involving a physical or cyber threat to the bulk-power
system?
Answer. See my response to Question 9.
Responses of Colette Honorable to Questions From Senator Flake
Question 1. What role do you believe FERC should play in helping to
modernize and harden the infrastructure and systems of the electric
grid and increase system resiliency?
Answer. First, FERC plays an important role in overseeing the
reliability of the grid through approving and enforcing mandatory
reliability standards for the bulk-power system. These standards cover
cybersecurity, geomagnetic disturbances, and, most recently, physical
security. I also believe that FERC should work cooperatively with
regulated entities, other governmental agencies, and the states to
increase system resiliency by sharing information and best practices to
allow industry to identify potential physical and cyber threats to the
grid and develop solutions to those potential threats.
Question 2. Last month, the director of the National Security
Agency and the Commander of the U.S. Cyber Command, Admiral Michael
Rogers, told the House Intelligence Committee that critical
infrastructure systems in the United States, such as those that are
used to run the electric grid, are vulnerable to cyber threats from
countries like China. He further acknowledged that the United States is
not prepared to manage that threat. What role do you believe FERC
should play in addressing the aforementioned cyber threats to the
electric grid?
Answer. See my response to question 1.
Question 3. In your opinion, how effective is FERC's process for
permitting of natural gas infrastructure in terms of timing, addressing
all the issues, adequacy of FERC resources, and relationship to other
agencies involved?
Answer. As a state regulator with experience in transmission
siting, I am very aware of the impact of the permitting process on
applicants and economic development. FERC's process results in over 90
percent of applications being acted on within a year of the filing of a
complete application. In addition, I would note that these applications
are rarely unopposed and FERC staff, in their review, must address all
comments and interventions. This results in a complete environmental
document which, in turn, results in an order that is defensible in
court, if appealed. This provides a great deal of regulatory certainty
to project applicants. Nevertheless, if confirmed, I look forward to
discussing ways to streamline FERC's processes so that they provide
timely review.
Question 4. As Chairman of the Arkansas Public Service Commission,
you joined the Interim Director of the Arkansas Department of
Environmental Quality in submitting comments to the EPA on their
proposed Clean Power Plan. In that submittal, you state that, ``The
2030 Arkansas goal, which is the sixth most stringent in the United
States, is technically flawed and is unattainable under the
contemplated timeframe. The Agencies urge changes in the Proposed Rule
to avoid unreasonable and inequitable results that may include
disruptions to electric service and significant cost impacts in
Arkansas and in neighboring states.'' You further note that the
``proposed rule should be clarified and changed in various ways to
better enable compliance.'' Please comment on the difficulties you see
with the CPP as it applies to Arkansas--particularly with regard to the
``unreasonable and inequitable results that may include disruptions to
electric service and significant cost impacts.''
Answer. During my tenure as Chairman of the Arkansas Public Service
Commission, I have expressed support for the Administration's efforts
to reduce greenhouse gas emissions and to improve the environment. In
fact, with regard to the Clean Power Plan, there has been an
unprecedented and significant amount of outreach employed by EPA at
local, state, regional and national levels. On October 28, 2014, after
engaging in significant outreach to a broad range of stakeholders, the
EPA issued a notice of data availability (NODA) to, in part, seek
comment on the potential technical challenges described by some
stakeholders associated with achieving all of the reductions that
states would be required to make as early as 2020. In the NODA, EPA
requests comment on two approaches that stakeholders have offered to
address these issues and explains how EPA's June 2014 proposal requests
comment on the option of early reductions. As a state regulator, I have
had numerous opportunities to offer feedback and comments about the
proposed rule informally, through the formal comment period, and
additionally with regard to the ``glidepath'' after the EPA issued a
Notice of Data Availability. After the issuance of the EPA proposed
Clean Power Plan, the EPA sought comments on the Proposed Plan and its
impact on the states. As Chairman of the APSC, I co-convened a
statewide workshop with the director of the Arkansas Department of
Environmental Quality to study the impact of the Proposed Rule on
Arkansas. The workshop was comprised of a diverse array of
participants, which included representatives from both regional
transmission organizations that operate in Arkansas: MISO and SPP. The
APSC's comments included the results of that collaborative effort in
Arkansas, and it included comments that our goal, as included in the
Proposed Rule, is too stringent for Arkansas to attain by the interim
goal timeline of 2020 or 2030. Both regions conducted studies and
modeling of the potential impact of the Proposed Rule on their
respective footprints, and both issued comments raising the potential
for reliability to be negatively impacted based upon decisions that
utilities or generators could make regarding coal-fired generation
plants in their respective fleets. In addition, the utilities and plant
operators in Arkansas expressed concern about cost impacts if required
to displace coal-fired units and replace that generation with more
expensive baseload capacity. This is the rationale underlying the
statement regarding the results that may impact reliability and cause
significant cost impacts in Arkansas. Having said that, I do believe it
is prudent for our country to reduce greenhouse gas emissions and other
pollutants that negatively impact our environment, and that now is the
time to undertake this effort. I also believe that the proposed rule
allows states to design state plans to take into account resource
adequacy and reliability.
Responses of Colette Honorable to Questions From Senator Barrasso
Question 1. EPA and opponents of natural gas have asked FERC to
radically expand the environmental review process for interstate
natural gas pipelines, natural gas compressor stations, and liquefied
natural gas (LNG) export terminals. They want FERC to assess the so-
called ``upstream'' and ``downstream'' effects of these facilities.
EPA and opponents of natural gas want FERC to try to assess whether
a single pipeline or LNG export terminal will contribute to climate
change. They also want FERC to try to assess whether a single gas
pipeline or LNG export terminal would increase gas demand, and if so,
gas production. They even want FERC to determine where gas production
may or may not increase.
To its credit, FERC has rejected EPA's requests. In August, Cheryl
LaFleur, the Chairman of FERC, said that: ``[W]e do not do a cradle-to-
grave, molecule-by-molecule analysis of where . . . a fuel is coming
from, what's going to happen . . . when [a ship] goes off to the other
side of the earth and what other fuel it displaces.
We don't believe that's in our authority or in our role under [the
National Environmental Policy Act]. NEPA is a permitting statute.''
I applaud FERC for rejecting EPA's request for what is effectively
a climate change litmus test on American exports. Such a test would
devastate American exports and the good-paying jobs they create.
Last year, Ross Eisenberg of the National Association of
Manufacturers testified before this committee. He explained that:
``using NEPA to require a cradle-to-grave . . . analysis that assesses
the impact of cargo . . . would create a very dangerous precedent that
could be used to block exports of all types,'' including automobiles,
civilian aircraft, and heavy equipment (e.g., construction vehicles,
etc.).
Do you agree with Chairman LaFleur that NEPA does not authorize
FERC to try to assess the so-called ``upstream'' and ``downstream''
effects of natural gas pipelines, compressor stations, and LNG export
terminals? If not, why not?
Answer. While I do not believe NEPA is a permitting statute, I
agree with Chairman LaFleur regarding the Commission's implementation
of NEPA in this regard.
Question 2. A. What would you say are the greatest challenges
facing the bulk power system? B. What do you see as the top priorities
for FERC in regulating this system?
Answer. The most pressing threats to continued reliable operation
of the nation's power grid are resilience threats. They are the most
challenging, in my opinion, because of the risk to the grid, and
potential for great or widespread disruption or harm to the grid. In
order to properly mitigate these risks, state and federal regulators
and other stakeholders must be vigilant constantly to ensure that our
collective planning supports risk-based resilience investments, which
support the traditional reliability work that has been underway for
decades. Resource adequacy is an important issue at this time.
Commission-approved rates can have an effect on this issue, and the
Commission has been considering or making changes to jurisdictional
rates to address this issue. Another issue is the growing use of
natural gas as a fuel for electric generation. The Commission has made
significant efforts to address this issue, most recently by directing
RTOs and ISOs to report on their efforts to address fuel assurance. On
both of these issues, the States also have significant roles and are
working to address the issues. Finally, the increased use of renewable
resources means the grid may operate somewhat differently than it has
in the past, and the industry is working hard to ensure that its
operating practices and procedures adapt accordingly. In each of these
areas, work is ongoing and will continue as appropriate to meet the
challenges.
Reliability is of vital importance to both FERC and state
regulators, and has been a top priority for me in my daily work as
Chairman of the Arkansas PSC and as President of NARUC. If confirmed as
a Commissioner at FERC, it will continue to be a top priority. Equally
important is to ensure that FERC-jurisdictional rates are just and
reasonable and that markets send the proper signals to encourage
investment and innovation while providing regulatory certainty.
Question 3. If confirmed, would you push for FERC to have a role in
reviewing and approving state plans submitted to EPA under the carbon
standards for existing power plants in order to ensure that those plans
do not undermine electric reliability? If not, why not?
Answer. While I have not studied any specific proposal, I do
support the creation of a means by which reliability concerns can be
taken into account should they arise.
Question 4. Do you think that EPA is positioned to analyze the
reliability impacts of its own power sector regulations without active
assistance from FERC?
Answer. The EPA's proposed rule contained a reliability analysis
and offered flexibilities that will allow states to design state plans
to take into account resource adequacy and reliability. However, as EPA
considers the comments it has received, I think it is important that
EPA consult with experts in reliability, such as the Commission, NERC,
and regional transmission organizations and independent system
operators.
Question 5. Everyone agrees that enforcement is a critical
component of FERC's mission. We can also agree that those who violate
the law should be prosecuted. However, it is equally important that
FERC respects the due process rights of the targets of FERC
investigations. William Scherman, a former General Counsel at FERC, and
others argue that FERC has failed to do this in recent years.
In September of this year, Senator Collins and I sent a letter to
the Department of Energy's Inspector General (IG), asking that he
examine FERC's enforcement program. Senator Casey-a Democrat-has also
asked the IG to review FERC's enforcement program. You can see that
these are bipartisan concerns. In October, the IG notified me that he
will review FERC's enforcement program.
In the meantime, FERC should take steps of its own to address our
concerns. FERC should hold what are known as technical conferences on
its enforcement program.
Technical conferences would allow the public and regulated entities
to discuss their concerns directly with the Commissioners. Technical
conferences would help the Commissioners craft any needed reforms to
the enforcement program.
If confirmed, would you push for convening technical conferences on
FERC's enforcement program? If not, why not?
Answer. I believe it is important for an enforcement program to be
fair and transparent. If confirmed, I look forward to discussing the
issues raised concerning the Commission's enforcement program and
considering what, if any, reforms are necessary. If confirmed, I commit
to gain a better understanding of the issues associated with the
enforcement program, and to consider any number of ways to address
these concerns, including technical conferences, if necessary.
Responses of Colette Honorable to Questions From Senator Lee
Question 1. What are your views on the relative threat EPA's Clean
Power Plan for curbing carbon emissions at existing power plants may
pose to maintaining grid reliability as the regulation goes into effect
and coal plants are inevitably retired? What should FERC do in
response, if anything?
Answer. During my tenure as Chairman of the Arkansas Public Service
Commission, I have expressed support for the Administration's efforts
to reduce greenhouse gas emissions and to improve the environment.--I
believe the impact on reliability as the Clean Power Plan is executed
varies by state and region. Clearly, the work occurring regionally will
be important to ensure reliability as the regulation goes into effect
and coal plant retirements take place. I believe that the proposed rule
allows states to design state plans to take into account resource
adequacy and reliability, in conjunction with the work occurring
regionally. As I noted at the hearing, I have, in conjunction with the
Arkansas Department of Environmental Quality, convened a workshop to
discuss EPA's proposed Clean Power Plan with more than 20 stakeholders
of diverse perspectives, including our regional organizations. I think
it is important to explore the important issues raised by the proposed
rule, particularly how it might affect reliability. If confirmed, I
look forward to discussing these issues more in depth with NERC and my
colleagues.
Question 2. What do you believe is the proper role for FERC with
respect to EPA rulemakings generally and EPA's Clean Power Plan in
particular? For instance, during EPA's rule-setting process, should
FERC defer to EPA's judgment on the reliability impacts associated with
its proposal and get engaged to ensure reliability is protected only
after the rule is finalized and being implemented? If so, how do you
believe such an approach is consistent with FERC's statutory
responsibility to ensure grid reliability?
Answer. My understanding is that FERC staff has had discussions
with the EPA and provided input to the EPA on its proposal before its
issuance through the Office of Management and Budget (OMB) interagency
review process from a reliability perspective. I believe it is
appropriate for FERC to provide input to EPA on the reliability impacts
both through the OMB review process and through discussions directly
between FERC and EPA.
Question 3. In your view, has the level of consultation and
coordination between FERC and EPA been sufficient? Or do you believe a
formal, documented federal interagency process should be established to
ensure that EPA's forthcoming 111(d) final rule does not adversely
impact grid reliability?
Answer. In both my roles as the Chairman of the Arkansas Public
Service Commission and the National Association of Regulatory Utility
Commissioners, I have convened meetings to discuss these rules. I
understand the importance of coordination on matters that can affect
the electric industry. GAO recently issued a report recognizing that
FERC, EPA and the Department of Energy jointly conduct regular meetings
with key industry stakeholders concerning EPA regulations. I fully
support any effort by FERC and EPA to coordinate on issues concerning
the reliability of the grid. If confirmed, I would discuss this issue
with my colleagues, including whether FERC should use formal processes
such as public conferences to explore these issues in detail and
provide for discussion of reliability concerns.
Question 4. Should FERC insist that EPA include a ``reliability
safety value'' mechanism in the final rule in case utilities and states
need more time to meet the rule's requirements without hurting system
reliability?
Answer. While I have not studied any specific reliability safety
valve proposal, my understanding is that staff from FERC discusses
issues concerning the proposed rule with the EPA. I believe it is
important for FERC to continue this relationship and discuss
reliability issues with the EPA and other interested stakeholders. If
confirmed, I will continue to participate in the discussions on this
rule and be a productive part of FERC's mission to ensure reliability.
While a state regulator, I have also benefitted from an unprecedented
and significant level of outreach employed by EPA at local, state,
regional and national levels. I have had numerous opportunities to
offer feedback and comments about the proposed rule informally, through
the formal comment period, and additionally with regard to the
``glidepath'' after the EPA issued a Notice of Data Availability.
Question 5. Should FERC be given the role of monitoring the
reliability impacts from the various state implementation plans, and
advising on mitigation measures if a reliability problem is assessed?
Should FERC be required to certify that the simultaneous implementation
of the state compliance plans will not harm reliability before those
plans can be executed?
Answer. FERC should monitor the reliability impacts from the
various state implementation plans. After the EPA issued its MATs rule,
FERC, EPA and the Department of Energy have monitored industry progress
responding to EPA regulations, including jointly conducting regular
meetings with key industry stakeholders. I believe that this is a good
model to look to in determining how to monitor any impacts from state
plans stemming from the Clean Power Plan.
Question 6. As a FERC Commissioner, how would you weigh costs to
customers in your evaluation of whether a particular proposed
reliability standard provides an adequate level of reliability
protection?
Answer. Federal Power Act section 215 does not explicitly identify
costs as a consideration, but does require the Commission to consider
whether a proposed reliability standard is ``just, reasonable, not
unduly discriminatory or preferential, and in the public interest.'' I
cannot at this time offer a legal opinion on how this language applies
to the question you ask but, subject to legal interpretation of this
language, I believe the consideration of proposed standards could
include a wide range of factors, including well-supported information
on costs. I would note, also, that the NERC process is based on voting
by stakeholders and they are likely to informally consider a proposed
standard's foreseeable costs to them as part of their decision-making,
regardless of subsequent processes.
Question 7. As you know, states view themselves as the front line
for service quality issues, including cost recovery. What vision do you
have for the boundaries between FERC and the states for reliability
issues?
Answer. Reliability is of vital importance to both FERC and state
regulators, and has been a top priority for me in my daily work as
Chairman of the Arkansas PSC and as President of NARUC. As NARUC
President, I oversaw the collaborative effort among the state economic
regulators and the commissioners at FERC to ensure that we are working
together through workshops on reliability. If confirmed, I hope to
continue these collaborative efforts on reliability.
With respect to the boundaries, FERC has jurisdiction over the
bulk-power system and recently approved a definition of this term that
establishes uniform criteria to determine what elements of the electric
grid are subject to the FERC-approved mandatory reliability standards.
In doing so, it approved a process to add elements to, or remove
elements from, the scope of coverage on a case-by-case basis. An entity
can also seek a FERC ruling on whether a facility is a local
distribution or transmission facility. This process of identifying bulk
electric system elements should help create a clearer boundary between
FERC and the states for reliability jurisdiction.
Question 8. What do you believe are the most pressing threats to
continued reliable operation of the nation's power grid and are those
risk being appropriately mitigated? If not, what needs to happen in
your opinion?
Answer. The most pressing threats to continued reliable operation
of the nation's power grid are resilience threats. They are the most
challenging, in my opinion, because of the risk to the grid, and
potential for great or widespread disruption or harm to the grid. In
order to properly mitigate these risks, state and federal regulators
and other stakeholders must be vigilant constantly to ensure that our
collective planning supports risk-based resilience investments, which
support the traditional reliability work that has been underway for
decades.
Question 9. Does FERC have the authority under the Federal Power
Act to regulate demand response?
Answer. The U.S. Court of Appeals for the District of Columbia
Circuit (D.C. Circuit) on May 23, 2014, issued a decision vacating
Order No. 745, the Commission's final rule on compensation for demand
response resources participating in organized wholesale energy markets.
In that decision, the D.C. Circuit addressed the Commission's
jurisdiction over demand response in those markets. On July 7, 2014,
FERC filed with the D.C. Circuit a petition for rehearing en banc of
that May 23, 2014 decision, which was denied. On December 5, 2014, the
Solicitor General at the U.S. Department of Justice indicated that he
has authorized the filing of a petition for a writ of certiorari
seeking review at the U.S. Supreme Court of that May 23, 2014 decision.
The extent of FERC's legal authority to regulate demand response in
organized wholesale energy markets will be determined in this ongoing
litigation.
Question 10. If the D.C. Circuit's decision in Electric Power
Supply Association v. FERC (EPSA) is upheld (whether through a denial
of petition for certiorari or on the merits), how should FERC implement
the decision?
Answer. If confirmed as a member of the Commission, this issue may
come before me. Therefore, it would be inappropriate for me to prejudge
how the Commission should implement the D.C. Circuit's EPSA decision,
if that decision is upheld.
Question 11. Do you believe that the decision in EPSA also calls
into question FERC's jurisdiction over demand response participation
and compensation in capacity and ancillary services markets?
Answer. Market participants in the PJM and ISO New England regions
have filed complaints at the Commission challenging participation by
demand response resources in those regions' capacity markets.
Similarly, it is my understanding that comments filed in at least that
PJM-related proceeding raise the issue of whether and how demand
response resources may participate in ancillary services markets.
Because these issues would be likely to come before me if I am
confirmed as a member of the Commission, it would be inappropriate for
me to prejudge how the Commission should address these issues.
Question 12. In your view, has FERC's demand response compensation
policy adversely impacted baseload generation units or impaired grid
reliability? How so?
Answer. The issue of demand response resources' participation in
organized wholesale electric markets is likely to come before me if I
am confirmed as a member of the Commission. For that reason, it would
be inappropriate for me to prejudge how the Commission should address
that issue.
Question 13. As a policy matter, do you believe Order No. 745
justifiably treated demand response resource providers preferably to
other capacity resources, such as generation?
Answer. The issue of demand response resources' participation in
organized wholesale electric markets, including both energy markets and
capacity markets, is likely to come before me if I am confirmed as a
member of the Commission. For that reason, it would be inappropriate
for me to prejudge how the Commission should address that issue.
Question 14 . What are your views on treating behind-the-meter
generation differently than traditional generation in terms of how it
is compensated and held accountable to deliver as promised? For
instance, do you believe behind-the-meter generation is analogous to
demand response resources and should receive comparable compensation
pursuant to Order No. 745?
Answer. It is difficult to generalize about appropriate
compensation for behind-the-meter generation because the owners of such
equipment use it in many different ways. The manner in which behind-
the-meter generation is used and related circumstances may be relevant
to determining what compensation is appropriate.
Question 15. FERC took unprecedented action and sued the Idaho
Public Utilities Commission under Section 210(h) of the Public Utility
Regulatory Policies Act (PURPA) in federal court. Under what
circumstances, if any, should FERC take similar action in the future?
How much deference should FERC give state regulators on legally
enforceable obligation determinations under PURPA?
Answer. I would hope that such action would be rare. FERC and the
Idaho Public Utilities Commission (Idaho PUC) signed a Memorandum of
Agreement to resolve this matter which reflects that PURPA establishes
a program of cooperative federalism, with FERC establishing regulations
and states implementing them in a manner that accommodates local
conditions. I hope that in the future, FERC and the states can work
cooperatively on these issues and, if confirmed, I look forward to
discussing them with my state colleagues.
Question 16. In light of the due process allegations questioning
the fairness and transparency of FERC's enforcement program, do you
believe any procedural or substantive reforms are in order?
Answer. I believe it is important for an enforcement program to be
fair and transparent. If confirmed, I commit to gain a better
understanding of the issues associated with the enforcement program,
and to consider any number of ways to address these concerns.
Question 17. Many have argued that the definition of market
manipulation in electric and gas wholesale markets is too vague,
causing uncertainty and confusion for participants. This ambiguity,
when combined with powerful enforcement tools and the potential for
significant penalties, appears to have the potential to chill
investment and reduce liquidity in these markets. Do you agree that
this a logical outcome of such policies? Could the combination of
ambiguity and exposure to significant penalties have a negative impact
on consumers? Please provide a full explanation.
Answer. The Commission's regulations defining market manipulation
were patterned on the Securities and Exchange Commission's core anti-
fraud and anti-manipulation rule because EPAct 2005's prohibition
against fraud and manipulation was patterned on and specifically
references the Securities and Exchange Act of 1934. The Commission has
issued settlement agreements and orders that have explained the scope
and application of the rule. However, because the Commission's
authority to prohibit market manipulation is relatively new, it is
important to consider whether further guidance is needed. If confirmed,
I look forward to discussing the issues raised concerning the
Commission's enforcement program and considering what, if any, reforms
are necessary.
Question 18. In general, how does the inclusion of banks or large
financial institutions in commercial energy enterprises affect utility
ratepayers? How might the exit of large banks from these commercial
businesses impact the functioning of electricity markets?
Answer. The participation of entities of all kinds, including
energy companies and financial institutions, can benefit markets in
numerous ways. However, I would expect all market participants in
electricity markets, including banks or large financial institutions,
not to engage in market manipulation and to follow market rules and
work cooperatively with FERC and grid operators.
Question 19. Do you believe that market manipulation can occur
where there has been no independent violation of a FERC regulation,
rule, order, tariff, or ISO/RTO market rule? If so, please provide an
explanation, including some examples. Also, if so, please reconcile
your answer with traditional notions of due process.
Answer. The Commission's Order No. 670 states that ``[i]f a market
participant undertakes an action or transaction that is explicitly
contemplated in Commission-approved rules and regulations, we will
presume that the market participant is not in violation of the Final
Rule.'' However, the Commission has made clear an entity need not
violate a specific tariff provision to violate the market manipulation
rule because ``[N]o list of prohibited activities could be all-
inclusive.'' One example is the activities discussed in the
Commission's JP Morgan settlement.
Question 20. Are there steps the Commission can take to clarify the
definition of market manipulation so as to provide sufficient notice to
market participants?
Answer. As I said in response to Question 17, because the
Commission's authority to prohibit market manipulation is relatively
new, it is important to consider whether further guidance is needed. If
confirmed, look forward to discussing the issues raised concerning the
Commission's enforcement program and considering what, if any, reforms
are necessary.
Question 21. Should the target of an investigation have access to
transcripts of FERC depositions? If not, why?
Answer. The Commission regulations require that subjects of
investigations be given access to their deposition transcripts. I
understand that the timing of such access has been a matter of
discussion, and, if confirmed, I look forward to discussing the issue
with my colleagues.
Question 22. Do you believe that FERC should adopt any limits on
the scope of its discovery requests; i.e., data requests, document
requests, depositions?
Answer. My years of experience working in litigation have given me
substantial experience with all phases of discovery. Ensuring that the
markets are free from fraud and market manipulation is an important
aspect of the Commission's work. Such fraud and market manipulation
poses a significant threat to the markets the Commission oversees.
Therefore, I believe the Commission should be able to thoroughly
investigate allegations of misconduct to ensure just and reasonable
rates. However, I believe that the enforcement program should be fair
and transparent. If confirmed, I look forward to discussing these
issues with my colleagues and determining if further action is needed.
Question 23. Should FERC be required to provide the target of an
investigation (or subsequent administrative adjudication in a show
cause proceeding) be given access to third-party materials obtained in
the course of the investigation?
Answer. It is my understanding that in a FERC investigation, there
is no right to discovery by the subject of an investigation at the
investigative stage. However, the subject of an investigation will have
discovery rights during adjudication of the matter at issue. My
understanding is that it is the practice of the Commission's
enforcement staff to provide any relevant third party materials to the
subject of an investigation prior to the issuance of an Order to Show
Cause.
I believe that the enforcement program should be fair and
transparent and I am open to ways to address these concerns.
Question 24. Are FERC's existing procedural rules regarding ex
parte communications and separation of functions sufficient to ensure
that the target of an investigation receives a full and fair hearing
before an impartial decision-maker?
Answer. The Commission provides that the subject of an
investigation may communicate in writing with the Commission at any
time throughout the course of an investigation. However, if confirmed,
I look forward to discussing the issues raised concerning the
Commission's enforcement program and considering what, if any, reforms
are necessary.
Question 25. Should FERC adopt an intent requirement for its rules
prohibiting false or misleading statements to FERC, an ISO/RTO, or
other FERC-jurisdictional entities?
Answer. It is my understanding that false or misleading statements
can be relevant to different kinds of violations, so the answer may
depend on the context of a specific case. If confirmed I look forward
to reviewing this issue and discussing it with my colleagues.
Question 26. Please describe your views on interstate cost
allocation. In what circumstances should ratepayers in one state be
allocated the costs for transmission projects that will benefit
ratepayers in other states?
Answer. I believe that, in the context of the work of regional
transmission organizations or independent system operators, interstate
cost allocation allows for the planning and development of necessary
interstate transmission lines. An interstate cost allocation to those
areas that benefit from a line allows customers in those areas to
collectively share in the cost of the construction, thereby bringing
costs down for the entire region. When deciding issues of cost
allocation, the Commission applies the principles of ``cost causation''
and ``beneficiary pays'' that developed over several years of
Commission and judicial decisions. In Order No. 1000, for example, the
Commission established a set of guiding principles for developing ex
ante cost allocation mechanisms that apply to projects selected in a
regional plan for purposes of cost allocation. Two of the central
tenants of those principles are: (1) the costs of new transmission
facilities must be allocated in a manner at least roughly commensurate
with benefits received, and (2) those who do not benefit from
transmission facilities, either at present or in a likely future
scenario, must not be involuntarily allocated the costs of such
facilities. These principles draw in part from a recent decision of the
U.S. Court of Appeals for the Seventh Circuit (Seventh Circuit), which
stated that ``[t]o the extent that a utility benefits from the costs of
new facilities, it may be said to have `caused' a part of those costs
to be incurred'', and required that the Commission ``compar[e] the
costs assessed against a party to the burdens imposed or benefits drawn
by that party'' and articulate why ``the benefits are at least roughly
commensurate'' with the costs. Under these principles, whether
ratepayers in one state can be allocated the costs for transmission
projects that will benefit ratepayers in other states depends on the
extent to which ratepayers in the first state also derive benefits from
those projects.
Question 27. Can a transmission line utilizing local renewable
electricity resources produced in one state under a renewable/clean
energy standard be shown to have regional benefits in another state
without such a mandate?
Answer. As explained in my response to question 26, whether the
costs of a transmission facility can be assessed to a party depends on
a determination of whether that party derives benefits from the
facility. In addition, such cost allocation decisions will depend on
how the region in question has defined the regional benefits that will
be considered. The principles-based approach to cost allocation adopted
by the Commission in Order No. 1000 provided each region with
significant flexibility to develop ex ante cost allocation mechanisms
that fit the region's needs, including flexibility to define the
benefits that will be considered in those mechanisms, so long as they
satisfy the broad cost allocation principles.
Question 28. In the recent Entergy-ITC merger proceeding, the
Arkansas PSC and other state commissions expressed concerns that the
merger would result in higher rates for Arkansas ratepayers. Please
describe your concerns regarding the rate increases and the increased
rate of return on equity requested by ITC.
Answer. In the federal proceeding, although the Arkansas PSC took
no position on the merger application itself, it did raise concerns
regarding the return on equity. The filing referenced the fact that in
the past five years, capital costs in the US have slightly deceased. In
addition, because the ITC Midsouth Companies' capital structure is
comprised of less common equity that the proposed rate construct of 60
percent common equity/40 percent debt, ITC's effective allowed return
on equity would be greater than 12.38 percent. In fact, with the
imputed common equity ratio of 60 percent, their rate of return would
be in excess of 14.7 percent, according to computations by agency
experts.
Question 29. Are rates pursuant to an ISO/RTO auction mechanism
protected under the Mobile-Sierra doctrine? In answering this question,
please describe your views on the application of the Mobile-Sierra
doctrine.
Answer. I recognize the importance of regulatory certainty in the
electric and natural gas industries. The Mobile-Sierra doctrine, with
its history developed over decades of court precedent and cases before
FERC, contributes to regulatory certainty by establishing a presumption
that agreements with certain characteristics that are reached by
electric or natural gas companies satisfy the just and reasonable
standard of the Federal Power Act or the Natural Gas Act, respectively.
The markets operated by RTOs or ISOs (and component auction
mechanisms) are run pursuant to detailed market rules approved by FERC.
My understanding is that those market rules differ in a number of
respects, including whether the above-noted Mobile-Sierra presumption
would attach to the results of a particular type of RTO or ISO auction.
If confirmed, I commit to consider carefully proposals on this issue
that may come before the Commission.
Question 30. In your experience as a state regulator, has FERC ever
overstepped its jurisdiction and intruded into areas of appropriate
state regulation? If so, please provide examples.
Answer. From my perspective, there will always be areas of tension
among regulators who share concurrent jurisdiction in certain areas.
Where Congress has not given comprehensive and exclusive jurisdiction
to either federal or state regulatory bodies to act exclusively, there
will be areas, e.g., the use of demand response in the context of a
regional capacity market, where it will be imperative for both
regulators to work constructively and cooperatively with one another.
If confirmed, I will commit to do so, and to follow the law.
Responses of Colette Honorable to Questions From Senator Risch
Question 1. Last year, FERC took the unprecedented action and sued
the Idaho Public Utility Commission under Section 210(h) of the Public
Utility Regulatory Policies Act (PURPA). The FERC Commissioners
realized that this suit was not in their best interest and they were
able to reach an agreement out of federal court with the Idaho PUC. How
do you believe FERC should work with the states to avoid another
situation like Idaho was involved in?
Answer. I believe that FERC should work collaboratively and
constructively with the states, and that litigation should be a last
resort. It is imperative that state and federal regulators respect one
another's authority in an effort to achieve mutually beneficial
results. A failure to do so erodes the confidence that all participants
have in the respective processes and weakens the credibility of the
overall regulatory process. As NARUC President, I have supported such
cooperative efforts as the FERC-NARUC Collaborative, technical
conferences and workshops included within the NARUC Conferences that
allow for open dialogues regarding pressing energy issues.
Question 2. As a state regulator, what do you believe the
relationship between FERC and state regulators should be?
Answer. The relationship between FERC and state regulators should
be a positive, progressive and evolving one. In all candor, this
relationship is not one free from tension. But if both regulators work
cooperatively and collaboratively, I am confident that together we can
achieve positive results to overcome challenges that are in the public
interest and serve our constituencies well.
Question 3. What do you believe is FERC's role in relation to the
Bonneville Power Administration?
Answer. I understand that the Commission's relationship with
Bonneville Power Administration (Bonneville) is different from that it
has with public utilities under the Federal Power Act. Standard Federal
Power Act ratemaking authorities do not apply to Bonneville. While the
Commission does have jurisdiction over Bonneville pursuant to section
211A of the Federal Power Act to require an unregulated transmitting
utility to provide transmission services, I agree with the Commission's
statements that FERC should not take the exercise of its section 211A
authority lightly, and that that authority should be used rarely.
Finally, section 215 of the Federal Power Act gives the Commission
authority over Bonneville with respect to mandatory reliability
standards.
Responses of Colette Honorable to Questions From Senator Heller
Question 1. There is a general consensus that our nation must
increase investment in the U.S. transmission system, in an effort to
promote grid reliability and resiliency as well as access remote areas,
like those in rural Nevada, that are particularly suitable for
renewable energy development like solar and geothermal generation.
In your view, what type(s) of transmission projects should FERC
encourage and why? What ideas to you have on policies FERC could pursue
to achieve this goal?
Answer. The Commission has taken a number of actions to enhance the
efficient development of transmission infrastructure for all resources.
This includes providing for regional transmission planning and cost
allocation through Order No. 1000, providing additional flexibility to
transmission developers to allocate new transmission capacity, and
proposing to establish a more efficient process for generators to
obtain priority rights to use transmission capacity on their
interconnection facilities. Finally, last year, the Commission
streamlined the interconnection process for small generating facilities
and adopted reforms to its small generator interconnection procedures
in response to changed circumstances in the industry. The Commission
can also provide appropriate transmission incentives to those projects
that deserve them.
In addition, I believe that FERC has used financial incentives to
encourage necessary investment in transmission infrastructure for
reliability. Existing transmission rate structures have provided
incentives to promote transmission buildout, but FERC should remain
vigilant in overseeing the provision of these incentives to ensure that
they are provided judiciously, and in a way that does not inhibit
investment in other areas.
Question 2. Some players within the industry have expressed
concerns raised that FERC's ROE policies may lead to diminished
transmission investment, for instance by making it harder for
prospective transmission developers to secure financing at reasonable
rates. What is your perspective on this criticism? Do you share such
concerns?
Answer. I appreciate that, in setting rates, the Commission must
strike a balance between the need for just and reasonable rates for
consumers and the need for utilities to earn a just and reasonable
return to maintain existing facilities and attract new investment. I
believe the Commission has struck that balance. However, each rate
determination must be based on the facts and circumstances of each case
and, if confirmed, I will work with my colleagues to ensure we strike
the right balance in each case. The Commission must strike this balance
whether it is setting base ROE or addressing transmission incentives.
Question 3. In its recent ROE determinations, do you believe FERC
has struck the proper balance between ensuring just and reasonable
rates for customers and providing a return for transmission investors
that is adequately compensatory to assure capital attraction? If not,
what reforms do you believe are in order? What is your perspective on
FERC's current transmission incentive policies?
Answer. Issues related to FERC's recent ROE determinations remain
pending, including on rehearing. For this reason, it would be
inappropriate for me to prejudge how the Commission should act on those
issues. In general, however, FERC's recent ROE determinations appear to
me to strike a balance between the traditional ratemaking methodologies
and also respond to current economic conditions. I applaud FERC's
efforts to creatively address challenges in the ratemaking process and
allow utilities the opportunity to earn a fair rate of return on their
investments.
I believe that FERC has used financial incentives to encourage
necessary investment in transmission infrastructure for reliability.
Existing transmission rate structures have provided incentives to
promote transmission buildout, but FERC should remain vigilant in
overseeing the provision of these incentives to ensure that they are
provided judiciously, and in a way that does not inhibit investment in
other areas.
Question 4. As the West's energy supply mix further diversifies,
what actions should FERC take, if any, to promote greater regional
coordination and more efficient dispatch services that will be
essential to ensuring that variable energy resources like wind and
solar power generation are cost-effectively integrated into the western
electric grid? What role can geothermal resources in states like Nevada
play in those efforts?
Answer. More efficient dispatch services and regional coordination
can help cost-effectively integrate all resources into the electric
grid. The Commission's regulations remove barriers to the integration
of variable energy resources by requiring each public utility
transmission provider to: (1) offer intra-hourly transmission
scheduling; and, (2) incorporate provisions into the pro forma Large
Generator Interconnection Agreement requiring interconnection customers
whose generating facilities are variable energy resources to provide
meteorological and forced outage data to the public utility
transmission provider for the purpose of power production forecasting.
Further, the Commission reformed its market-based rate authority rules
such that transmission providers should have greater access to the
reserve services needed to maintain reliability, including integration
of variable energy resources. If confirmed, I look forward to exploring
other opportunities to facilitate more efficient bilateral trading.
In 2013, Geothermal resources generated 0.4 percent of electricity,
with Nevada producing approximately 17 percent of the U.S. geothermal
power. In its recent Annual Energy Outlook 2014, EIA projects electric
production capacity from geothermal resources will continue to grow,
almost doubling over the next decade and quadrupling by 2040. According
to EIA, Nevada has the country's largest amount of potential geothermal
resources.
Question 5. As a state regulator, how much control do you think
state regulators should have over the design of ISO/RTO capacity
markets in hybrid regulated regions where utilities remain vertically
integrated but participate in ISO/RTOs?
Answer. From my perspective, state regulators should participate in
regional processes to ensure just and reasonable rates, and to serve a
consumer protection function for the benefit of each state's consumers.
Each region has the proper knowledge base, through the work of seasoned
expert engineers and planners, to design and run capacity markets. I
also recognize that there are different market constructs based upon
the diverse composition of market participants, and that each region
should be allowed to design and operate a market that works best for
them.
Question 6. What measures can FERC take to help maximize renewable
energy production in resource-rich Western states like Nevada?
Answer. In addition to removing barriers to the participation of
renewable resources in the Commission-jurisdictional markets, as
discussed in response to Question 4, the Commission has also taken
action taken a number of actions to enhance the efficient development
of transmission infrastructure for all resources. This includes
providing for regional transmission planning and cost allocation
through Order No. 1000, providing additional flexibility to
transmission developers to allocate new transmission capacity, and
proposing to establish a more efficient process for generators to
obtain priority rights to use transmission capacity on their
interconnection facilities. Finally, last year, the Commission
streamlined the interconnection process for small generating facilities
and adopted reforms to its small generator interconnection procedures
in response to changed circumstances in the industry.
Question 7. What actions do you believe FERC should be taking to
address electric reliability and fuel supply availability concerns that
are the result of the increasing role natural gas is playing in meeting
our nation's electric generation needs?
Answer. FERC has taken affirmative steps to improve the
coordination of communications and scheduling between the two
industries and address reliability risks that can result from a lack of
effective coordination. For example, in 2013 the Commission issued a
Final Rule to affirmatively allow interstate natural gas pipelines and
electric transmission operators to share non-public operational
information to promote the reliability and integrity of their systems.
Electric transmission operators reported that the enhanced
communications facilitated by this rule were vital in maintaining
reliability during last the Polar Vortex events of last winter. In
addition, in March of 2014, the Commission proposed changes to the
natural gas operating day and scheduling practices used by interstate
pipelines to schedule natural gas transportation service. The
Commission also initiated investigations under section 206 of the FPA
to determine whether the day-ahead scheduling practices of the RTOs and
ISOs align with any revisions to the natural gas scheduling practices
that may be adopted by the Commission in a Final Rule stemming from the
proposal. The Commission is currently considering responses to the
proposal. If confirmed, I will carefully review the record developed in
these proceedings to identify potential reforms that would improve gas-
electric coordination and address potential reliability risks.
In addition, last year, FERC held a technical conference that
discussed, among other things, pricing of fuel security into the
wholesale power markets. The Commission recently directed the regional
transmission organizations and independent system operators to file
reports on their efforts to address the need for generator access to
sufficient fuel supplies and the firmness of generator fuel
arrangements. The Commission has also acted in several individual
proceedings to put in place a number of market rule and tariff changes
that can help address fuel assurance concerns, including clarifying the
obligations of capacity resources with respect to fuel procurement, and
providing greater fuel cost recovery certainty. If confirmed, I look
forward to reviewing the fuel assurance reports and to discussing any
additional ways to advance needed natural gas infrastructure.
Question 8. What actions, if any, should FERC take to incentivize
the procurement of firm pipeline services needed to support
construction of new pipeline capacity?
Answer. See response to Question 7.
Question 9. Do you believe regional infrastructure concerns
regarding gas-fired generator fuel availability are better addressed by
market-driven solutions and/or tailored wholesale electric regional
market reforms or by FERC prescribing broad regulatory solutions?
Answer. As I noted in response to Question 7, the Commission
recently directed the regional transmission organizations and
independent system operators to file reports on their efforts to
address the need for generator access to sufficient fuel supplies and
the firmness of generator fuel arrangements. If confirmed, I look
forward to reviewing the fuel assurance reports and to discussing any
additional ways to advance needed natural gas infrastructure.
Question 10. Do you believe the Notice of Proposed Rulemaking
(NOPR) issued in RM14-2-000 is likely to accomplish FERC's stated
policy goal of improving coordination of gas and electric scheduling?
If so, how? Couldn't FERC pursue more cost-effective solutions that
alleviate FERC's concerns if they were readily available?
Answer. In response to the NOPR you reference in your question, the
NAESB filed in September a set of alternative proposed changes to
natural gas scheduling practices that it developed through an industry
stakeholder consensus process. In late November, the Commission
received comments from the public on its NOPR proposals and the
alternative proposals submitted by NAESB. I am reluctant to prejudge
the issues raised in response to the NOPR. If confirmed, I will
carefully review the record in considering what next steps on
coordinating gas and electric scheduling practices may be appropriate.
Question 11. In light of the broad concerns that have been raised
about the widespread impacts and substantial costs associated with
FERC's proposal, would you support FERC doing a cost-benefit analysis
prior to finalizing the NOPR in RM14-2-000?
Answer. As I noted in response to question 10, in response to the
NOPR the Commission has received a set of alternative proposals from
NAESB as well as a number of comments from the public on the NOPR and
the NAESB alternative. While I am reluctant to prejudge any of the
issues before the Commission in this rulemaking, if confirmed, I will
carefully review the record in considering appropriate next steps.
Responses of Colette Honorable to Questions From Senator Baldwin
Rail-related grid reliability issues
Question 1. Many of our coal plants have struggled to get the
shipments of coal necessary to ensure stable, affordable, and
predictable electricity. This fall, coal stocks were critically low at
several coal plants in the region. I have pressed the Surface
Transportation Board to resolve this rail service issue, as have our
utilities. However, as the situation continues, it threatens the health
and safety of Wisconsin residents. We know that FERC can play a role in
helping solve these problems and I'm hopeful that as a Commissioner,
you would be willing to help address these issues.
1a) How does inadequate rail service impact our energy supply and
energy consumers?
Answer. Inadequate rail service, and in particular diminishing coal
supplies can impact the operation of the grid in many ways, including
local and potentially regional reliability issues, resource adequacy
and wholesale rates.
1b) What commitments will you make to assure that FERC engages with
the Surface Transportation Board to ensure these reliability issues are
addressed?
Answer. If confirmed, I would support efforts by all affected
parties to resolve this issue. This includes collaboration between the
Surface Transportation Board and FERC to monitor this issue and share
any relevant information.
1c) How do you view the value of technical conferences, where FERC,
the STB and industry convene to find solutions to supply issues that
threaten grid reliability?
Answer. If confirmed, I would support a discussion between the
relevant stakeholders, including FERC, the STB and industry, given its
potential impact to the reliable operation of the electrical grid.
Information on this topic would help the Commission understand the
duration of the issue, likelihood of any reliability issues and whether
this issue is likely to reoccur.
Commitment to emergency propane actions
Question 2. Last winter, at the height of the propane supply
shortage in the Midwest, FERC took action to ensure that propane
shipments were prioritized on batched pipelines. This action eased the
supply crisis. It is critical that FERC be prepared to use its
emergency authority as a tool for the federal government to respond to
future crises.
2a) How do you think the emergency authority and process for
invoking this authority currently functions?
Answer. Last year FERC used its authority under the Interstate
Commerce Act for the first time ever to determine that an emergency
existed requiring immediate action and issued an order directing
Enterprise to provide seven days of priority treatment for propane
shipments to help alleviate the propane shortage. In conjunction with
the emergency order, FERC Staff conducted alternative dispute
resolution discussions with the National Propane Gas Association,
Enterprise, and other interested parties to determine if a longer-term,
voluntary solution to the propane shortages could be achieved, which
led to an agreement to extend the emergency order. In this way, the
Commission was able to use its authority and work with industry to help
to address the supply shortage in a way that did not impact industry
and other suppliers.
2b) Does FERC have all of the tools it needs to respond to quickly
to similar crises in the future?
Answer. Because the Commission has only used its authority one
time, I think it is too soon to say whether the Commission would need
additional authority. I think it will be important to monitor the
propane markets and evaluate whether the Commission's current authority
is sufficient before determining if additional tools are needed. If
confirmed, I commit to continue to monitor the propane issue in the
Midwest and to entertain the prospect of using the Commission's
authority under the Interstate Commerce Act in order to ensure
reliability in the future.
Natural Gas Infrastructure Issues
Question 3. Many Wisconsin manufacturers and utilities are planning
to increase their use of natural gas in the coming years. They are
doing this to take advantage of low prices, to update their
manufacturing processes, and to reduce pollution. This shift to natural
gas is not unique to Wisconsin-it is a transition felt in many places
across the country. As this transition happens, the cumulative
increases in domestic demand will require a careful review.
FERC plays an important role in ensuring that this transition will
be smooth and successful. As Commissioner, how will you work to ensure
that the cumulative increases in demand for natural gas are modeled and
considered in infrastructure planning and build out?
Answer. Natural gas pipeline companies file applications with FERC
seeking authority to construct facilities and provide transportation
service to their customers, including manufacturers and utilities.
Pipeline companies typically conduct open seasons and then design
projects to meet that need. In reviewing a pipeline project
application, FERC considers, among other things, the demonstrated need
for the project. FERC has an excellent track record of processing
applications to build needed new facilities; since 2003, FERC has
certified 93.1 Bcfd of capacity in new pipelines and expansions. If
confirmed, I will work with my fellow Commissioners and FERC staff to
continue to process applications for natural gas pipeline projects in a
timely manner.
______
Responses of Colette Honorable to Questions from Senator Portman
Question 1. Do you agree that baseload power plants, the ``always
on'' energy resources vital to reliable operation of the grid, deserve
additional consideration for the irreplaceable reliability benefits
they provide?
Answer. Baseload generation is an important part of the nation's
resource mix and will continue to operate in the future. The organized
capacity markets have been attracting and retaining baseload resources.
For example, PJM's base residual action for 2017/2018 procured about
4,800 MW of new combined cycle generation. The Commission is resource-
and fuel-neutral. My concern is that all resources are fairly
compensated for the value they provide the system. These resources
depend critically on revenues earned in the energy markets. The
Commission's ongoing price formation effort is exploring whether energy
and ancillary service prices appropriately reflect the costs to serve
load. If confirmed, I look forward to discussing the issues explored in
the price formation proceeding.
Question 2. Would you commit, if confirmed, to supporting a FERC
effort to model the cumulative effect of EPA regulations on the
reliability and affordability of our nation's electric grid?
Answer. My understanding is that staff from FERC discussed issues
concerning the proposed rule with the EPA. I believe it is important
for FERC to continue this relationship and discuss reliability issues
with the EPA and other interested stakeholders. Yesterday, the
Commission announced that it plans to hold a series of technical
conferences to discuss implications of compliance approaches to the
Clean Power Plan proposed rule, which will focus on issues related to
electric reliability, wholesale electric markets and operations, and
energy infrastructure. I believe this is an important step in
discussing issues that may arise as a result of the proposed EPA
regulations. If confirmed, I will continue to participate in the
discussions on this rule and be a productive part of FERC's mission to
ensure reliability.
Question 3. Some of my constituents are voicing concerns as to the
forecasted ``mismatch'' between the number of coal-fired and nuclear
units that are likely to be retired VS the magnitude and timing of new
capacity that EPA is anticipating will come on line to meet capacity
needs.
To illustrate, it's my understanding that in PJM (a 13-state
regional transmission organization (RTO) that includes Ohio), approx.
25,000 MW--40,000 MW (megawatts) of coal-fired and nuclear generation
are at risk of retirement. In Ohio, more than 6,000 MW are due to be
retired in 2015 alone-with only 1,200 MW of new capacity slated to come
on line in that same timeframe.
Given that we narrowly averted rolling brownouts and blackouts last
winter---but which nevertheless resulted in significant price
volatility for retail consumers, as well as disruptions in
manufacturing operations across the country,--what responsibility do
you believe FERC has, and/or what role should FERC play, in addressing
this imbalance / misalignment?
Answer. The Commission is resource- and fuel-neutral. However,
maintaining diversity in our nation's energy sources and generation
fuel supply is important to ensuring reliability and just and
reasonable rates for consumers. In Arkansas, I worked to promote
diversity in our state's energy resources, helping us achieve some of
the lowest electricity rates in the country, and, as President of
NARUC, I proactively engaged with my peers across the country and with
industry on the security and diversity of our energy supplies. To
continue to achieve fuel diversity, appropriate planning by industry
and continued proactive engagement among regulators and industry will
be needed. The electricity industry is already including fuel diversity
in its future planning, and FERC has appropriately focused attention on
the need for increased coordination between the natural gas and
electricity industries, and, in a recent order, generator fuel
assurance concerns in organized wholesale markets. In addition,
traditional state integrated resource planning and the resource
adequacy constructs adopted in many regions can provide additional
tools to address fuel and resource diversity. If confirmed, I would
work with my fellow Commissioners to continue these efforts and explore
new ways to collaborate with other regulators and industry on these
issues.
Question 4. Should FERC have a formal role in reviewing and
approving the state implementation plans called for by the Clean Power
Plan to ensure affordable and reliable energy?
Answer. While I have not studied any specific proposal, my
understanding is that staff from FERC discusses issues concerning the
proposed rule with the EPA. I believe it is important for FERC to
continue this relationship and discuss reliability issues with the EPA
and other interested stakeholders. Yesterday, the Commission announced
that it plans to hold a series of technical conferences to discuss
implications of compliance approaches to the Clean Power Plan proposed
rule, which will focus on issues related to electric reliability,
wholesale electric markets and operations, and energy infrastructure. I
believe this is an important step in discussing issues that may arise
as a result of the proposed EPA regulations.
Question 5. The national council of grid operators recently called
on the EPA to require states to identify the reliability impacts of
their plans on neighboring states and their region. As a former state
regulator yourself, do you think state regulators will be in a position
to determine how their state's implementation plan will impact the
greater reliability of the grid?
Answer. Yes. As Chairman of the APSC, I co-convened a statewide
workshop with the director of the Arkansas Department of Environmental
Quality to study the impact of the Proposed Rule on Arkansas. The
workshop was comprised of a diverse array of participants, which
included representatives from both regional transmission organizations
that operate in Arkansas: MISO and SPP. I think it is through efforts
like these that state regulators can determine how their state's
implementation plan will impact the reliability of the grid. However,
while I have not studied any specific proposal, my understanding is
that staff from FERC discusses issues concerning the proposed rule with
the EPA. I believe it is important for FERC to continue this
relationship and discuss reliability issues with the EPA and other
interested stakeholders. Yesterday, the Commission announced that it
plans to hold a series of technical conferences to discuss implications
of compliance approaches to the Clean Power Plan proposed rule, which
will focus on issues related to electric reliability, wholesale
electric markets and operations, and energy infrastructure. I believe
this is an important step in discussing issues that may arise as a
result of the proposed EPA regulations.
Question 6. As the EPA determines in the final rule what is
required of states to comply with the Clean Power Plan, should the EPA
reduce the compliance challenges and potential electric grid
reliability concerns by recognizing and giving credit to states for
reductions in greenhouse gas emissions that have already occurred in
those state over the last several years?
Answer. In November 2013, the National Association of Regulatory
Utility Commissioners passed a resolution titled, ``Resolution on
Increased Flexibility with Regard to the EPA's Regulation of Greenhouse
Gas Emissions from Existing Power Plants,'' in which NARUC urged EPA to
credit ``early movers,'' comprised of those states and/or regions which
have already taken steps to reduce greenhouse gas emissions. I agree
that, if possible, such efforts should be recognized.
Question 7. Commissioner Moeller has requested a formal role for
FERC in the development of the Clean Power Plan, especially with
regards to reliability implications. If confirmed, would you support
greater FERC involvement in examining reliability implications of EPA
regulations?
Answer. At FERC, my understanding is that staff from FERC discusses
issues concerning the proposed rule with the EPA. I believe it is
important for FERC to continue this relationship and discuss
reliability issues with the EPA and other interested stakeholders.
Yesterday, the Commission announced that it plans to hold a series of
technical conferences to discuss implications of compliance approaches
to the Clean Power Plan proposed rule, which will focus on issues
related to electric reliability, wholesale electric markets and
operations, and energy infrastructure. I believe this is an important
step in discussing issues that may arise as a result of the proposed
EPA regulations. If confirmed, I will continue to participate in the
discussions on this rule and be a productive part of FERC's mission to
ensure reliability.
Question 8. What are your views on how RTO-administered capacity
markets are working? Specifically, are these markets supporting the
development of a diverse array of electric generating facilities in
light of the pending coal plant retirements, while minimizing adverse
impacts on consumers?
Answer. The centralized capacity markets in place in some RTOs/ISOs
are designed to procure sufficient capacity to meet the region's
reliability needs and provide necessary price signals to facilitate the
entry of new capacity resources when needed, the retention of existing
capacity resources when economic, and the retirement of older and less
efficient capacity resources. To date, the capacity markets have met
these goals, procuring sufficient capacity to meet reliability needs
and attracting and retaining baseload, mid-merit and peaking resources.
For example, PJM reports that its base residual action for 2017/2018
procured approximately 5,900 MW of new generation resources, the
highest quantity of new generation procured in a single auction since
the market began. However, FERC has continued to evaluate the
performance and design of capacity markets, particularly as the
resource mix evolves in response to low natural gas prices, state and
federal policies encouraging the entry of renewable resources and other
specific technologies, and the retirement of aging generation
resources. If confirmed, I would support Commission efforts to continue
this evaluation.
Question 9. If not, what steps would you take to improve or modify
them?
Answer. As noted in my response to Question 8, to date the
centralized capacity markets in place in some RTOs/ISOs have met the
goals they are designed to achieve. However, in response to the
significant changes taking place in the resource mix, FERC continues to
evaluate the performance and design of these markets and the RTOs/ISOs
continue to propose improvements or modifications to the markets to
ensure that they will continue to achieve their objectives. If
confirmed, I would support Commission efforts to continue its
evaluation of capacity market performance and design, and would
carefully consider RTO/ISO proposals to reform those markets.
Question 10. Do you agree with Commissioners LaFleur and Moller
that FERC should be a source of reliability expertise to the EPA?
Answer. Yes.
Question 11. Do you agree that we will need to continue to rely on
coal to generate electricity for the foreseeable future?
Answer. I believe that baseload generation, including coal-fired
generation, is an important part of the nation's resource mix and will
continue to operate in the future.
Question 12. What are your thoughts on the fuel transition
currently taking place in the utility sector? Do you share Chair
LaFleur's concerns about increasing price volatility?
Answer. Abundant and low cost supplies of domestic natural gas can
provide positive benefits for consumers and the environment and will
become increasingly important for compliance with proposed
environmental regulations. Increased reliance on natural gas for
electricity generation, however, can create infrastructure and
coordination challenges that industry, state regulators and FERC must
continue to address to maintain reliability. For example, pipelines and
other natural gas infrastructure must be expanded to keep pace with the
needs of both local distribution companies and gas-fired generators.
The events of last winter showed that infrastructure constraints in the
Northeast and in other areas of the country can result in volatile and
often higher electricity and natural gas prices for consumers, and can
negatively impact the delivery of fuel to gas-fired power plants. Using
its authority under the Natural Gas Act to approve the siting and
construction of interstate natural gas pipeline infrastructure, FERC
has an excellent track record of quickly and efficiently processing
applications to build needed new facilities. In addition, as FERC staff
has noted in quarterly reports to the Commission (posted on the
Commission's website), there are ongoing efforts at the regional level
by reliability planning authorities, RTOs/ISOs, and state regulators to
collaboratively asses their unique infrastructure needs. All of these
efforts should continue.
Increased use of natural gas for electricity generation also
requires increased coordination of communications and scheduling
practices between the two industries. Since 2012, FERC has proactively
engaged with the electric and natural gas industries, NARUC, NERC and
other stakeholders to identify and address these coordination
challenges. FERC has also taken affirmative steps to improve the
coordination of communications and scheduling between the two
industries and address reliability risks that can result from a lack of
effective coordination. For example, in 2013 the Commission issued a
Final Rule to affirmatively allow interstate natural gas pipelines and
electric transmission operators to share non-public operational
information to promote the reliability and integrity of their systems.
Electric transmission operators reported that the enhanced
communications facilitated by this rule were vital in maintaining
reliability during the events of last winter. In addition, in March of
2014, the Commission proposed changes to the natural gas operating day
and scheduling practices used by interstate pipelines to schedule
natural gas transportation service. The Commission also initiated
investigations under section 206 of the FPA to determine whether the
day-ahead scheduling practices of the RTOs and ISOs align with any
revisions to the natural gas scheduling practices that may be adopted
by the Commission in a Final Rule stemming from the proposal. The
Commission is currently considering responses to the proposal. If
confirmed, I will carefully review the record developed in these
proceedings to identify potential reforms that could improve gas-
electric coordination and address potential reliability risks.
Question 13. Commissioner Tony Clark recently expressed concern
with the timeline EPA has proposed for the Clean Power Plan, arguing
that the timeline was ``front-loaded.'' He was quoted as saying:
``There doesn't seem to be anybody who thinks that you can do it either
in a cost-effective manner or even maybe that it's physically feasible
because you're talking about a lot of transmission and a lot of gas
pipelines being built, and doing it [in] the next couple of years just
can't physically happen.''
Do you agree with his concerns regarding the interim targets for
the Clean Power Plan?
Answer. I am unable to agree with Commissioner's Clark quote as I
have not undertaken an assessment of the collective positions of the
various states and regions nationwide. As President of NARUC, I have
had the opportunity to interact with state regulators from all over the
country who have diverse perspectives regarding the Clean Power Plan
and its impact on reliability and costs. I have expressed support for
the Administration's efforts to reduce greenhouse gas emissions and to
improve the environment. As a result, Arkansas has filed comments
indicating that its proposed goal may be difficult to reach by 2020.
However, I note that on October 28, 2014, after engaging in significant
outreach to a broad range of stakeholders, the EPA issued a NODA to, in
part, seek comment on the potential technical challenges described by
some stakeholders associated with achieving all of the reductions that
states would be required to make as early as 2020. In the NODA, EPA
discusses approaches that stakeholders have offered to address these
issues and requests comment both on the concept of phasing in
reductions over time and possible approaches to effectuating such a
phase-in.
Appendix II
Additional Material Submitted for the Record
----------
National Rural Electric Cooperative Association,
Arlington, VA, December 2, 2014.
Hon. Mary L. Landrieu,
Chair, Energy and Natural Resources Committee, U.S. Senate, Washington,
DC.
Dear Chair Landrieu:
On behalf of the National Rural Electric Cooperative Association
(``NRECA''), I express our support for the President's nomination of
Colette Honorable to serve as a Commissioner on the Federal Energy
Regulatory Commission.
NRECA is the national service organization for more than 900 not-
for-profit rural electric cooperatives and public power districts that
provide electric energy to over 42 million people in 47 states. NRECA
members serve 19 million businesses, homes, schools, churches, farms,
irrigation systems, and other establishments in 2,500 of 3,141 counties
in the United States. NRECA's members include consumer-owned local
distribution systems and 65 generation and transmission cooperatives
that supply wholesale power to their distribution cooperative owner-
members. Our members exist to serve and provide reliable electric
service to their ownermembers at the lowest reasonable cost.
Colette D. Honorable's experience as a state regulator gives her a
unique perspective on those areas where federal and state interests
converge such as reliability and resilience. As the current chair of
the Arkansas Public Service Commission, Chair Honorable has overseen
regulations advancing energy efficiency and consumer protection. She
has also built on her experience with notable leadership at the
National Association of Regulatory Utility Commissioners and National
Petroleum Council. As a FERC CCommissioner, these qualities will serve
our nation well as demand for reliable and affordable energy services
continues to rise.
It is our sincere hope that Chair Honorable's nomination will move
quickly and successfully through the Committee and that members on both
sides of the aisle will support her by helping to ensure a successful
confirmation by the full Senate.
Sincerely,
JoAnn Emerson,
CEO, NRECA.
______
Arkansas Electric Cooperative Corporation,
Little Rock, AK., December 2, 2014
Hon. Mary L. Landrieu,
Chair, Energy and National Resources Committee, 304 Dirksen Senate
Building, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Energy and National Resources Committee, 304 Dirksen
Senate Building, Washington, DC.
Dear Senator Landrieu and Senator Murkowski:
On behalf of the Electric Cooperatives of Arkansas, I would urge
the United States Senate Energy and Natural Resources Committee to
recommend confirmation of President Obama's nomination of Colette
Honorable, current Chairman of the Arkansas Public Service Commission
(APSC), to serve on the Federal Energy Regulatory Commission (FERC).
Chairman Honorable has proven herself to be a highly skilled, fair and
reasonable lutility regulator; very professional in her dealings with
all parties and stakeholders; and very foresightful in her
understanding of the many complex issues facing both the electric and
natural gas industries.
As the President and CEO of Arkansas Electric Cooperative
Corporation and Arkansas Electric Cooperatives, Inc., I represent over
500,000 electric cooperative members in 74 of Arkansas' 75 counties.
Collectively, our membership represents approximately 30 percent of the
state's population and 60 percent of its land mass. We serve many of
the state's low income households and struggling businesses, and are
focused on ensuring that our electric service is both reliable and
affordable. Currently, our wholesale electric rate to our members is
the second lowest of any electric cooperative generation and
transmission provider in the country. We advocate regulatory policy and
approaches that will ensure our ability to continue to provide reliable
and affordable electricity for generations to come. Under the Federal
Power Act, FERC has the responsibility to ensure both reliable electric
transmission service and just and reasonable wholesale electric rates.
Chairman Honorable's record as both the Chair of the APSC and President
of the National Association of Regulatory Utility Commissioners (NARUC)
demonstrates her substantial relevant experience and ability to fulfill
the critically important responsibilities of the FERF.
Nationwide, there are over 42 million electgric cooperative members
being served in 47 states. These cooperative members represent
approximately 12 percent of the nation's population. With Colette's
significant legal and regulatory background in both the electric and
natural gas industries, along with her commitment to the principles of
affordability and reliability, we believe that she is uniquely suited
to serve our entire nation as the next member of the Federal Energy
Regulatory Commission. Therefore, we respectfully urge your committee
to approve her nomination and submit it to the full Senate for
confirmation.
If you have any questions that I can answer or need any further
examples of Chairman Honorable's experience and qualifications to serve
on the FERC, please feel free to contact me.
Most Sincerely,
Duane Highley,
President and CEO, Arkansas Electric Cooperative Corporation.
______
New England Conference of Public Utilities Commissioners,
December 3, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington,
DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building,
Washington, DC.
Dear Majority Leader Reid and Minority Leader McConnell:
We are writing in support of the nomination of Chairman Colette
Honorable to serve as Commissioner on the Federal Energy Regulatory
Commission. As Chair of the Arkansas Public Service Commission and
President of the National Association of Regulatory Utility
Commissioners, Chairman Honorable has a deep understanding of the
importance of maintaining reliable, resilient and affordable energy in
service to our nation's citizens. Chairman Honorable has the reputation
of being a pragmatic regulator and has earned strong bi-partisan
support among her colleagues.
We respectfully request that you and your colleagues on the Senate
Energy and Natural Resources Committee favorably report the nomination
of Chairman Colette Honorable with a recommendation to confirm.
Sincerely,
Margaret E. Curran,
President.
Sarah Hofmann,
Executive Director.
______
MID-ATLANTIC CONFERENCE OF REGULATORY UTILITIES
COMMISSIONERS, MACRUC,
December 4, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington,
DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building,
Washington, DC.
Dear Majority Leader Reid and Minority Leader McConnell:
We are writing in support of the nomination of Chairman Colette
Honorable to serve as Commissioner on the Federal Energy Regulatory
Commission. As Chair of the Arkansas Public Service Commission and
President of the National Association of Regulatory Utility
Commissioners, Chairman Honorable has a deep understanding of the
importance of maintaining reliable, resilient and affordable energy in
service to our nation's citizens. Chairman Honorable has the reputation
of being a pragmatic regulator and has earned strong bi-partisan
support among her colleagues.
We respectfully request that you favorably support the nomination
of Chairman Colette Honorable.
Sincerely,
Robert F. Powelson,
President.
Mary Anna Holden,
Second Vice President.
______
SOUTHEASTERN ASSOCIATION OF REGULATORY UTILITY
COMMISSIONERS,
Austin, TX., December 2, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washing, DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building,
Washington, DC.
Dear Majority Leader Reid and Minority Leader McConnell:
In addition to our letter of support for Chairman Collette
Honorable to serve on the Federal Energy Regulatory Commission, the
Southeastern Association of Regulatory Utility Commissioners (SEARUC)
would like also to share with you the action taken by SEARUC on
November 17, 2014. At the business meeting of SEARUC held that date,
the *commissioners attending unanimously voted to support the
nomination and confirmation of Chairman Honorable to serve as a FERC
Commissioner.
---------------------------------------------------------------------------
* All other commissioners signatures have been retained in
committee file.
---------------------------------------------------------------------------
Sincerely,
Commissioner Kenneth W. Anderson, Jr.,
President, SEARUC.
______
Western Conference of Public Service Commissioners,
December 4, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington,
DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building,
Washington, DC.
Dear Majority Leader Reid and Minority Leader McConnell:
We are writing in support of the nomination of Chairman Colette
Honorable to serve as Commissioner on the Federal Energy Regulatory
Commission. As Chair of the Arkansas Public Service Commission and
President of the National Association of Regulatory Utility
Commissioners, Chairman Honorable has a deep understanding of the
importance of maintaining reliable, resilient and affordable energy in
service to our nation's citizens. Chairman Honorable has the reputation
of being a pragmatic regulator and has earned strong bi-partisan
support among her colleagues.
We respectfully request that you favorably support the nomination
of Chairman Colette Honorable.
Sincerely,
______
Mid-America Regulatory Conference,
Milwaukee, WI., December 4, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington,
DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building,
Washington, DC.
Dear Majority Leader Reid and Minority Leader McConnell:
The nomination of Chairman Colette Honorable to serve as
Commissioner on the Federal Energy Regulatory Commission will be before
you. As Chair of the Arkansas Public Service Commission. President of
Mid-America Regulatory Conference and President of the National
Association of Regulatory Utility Commissioners. Chairman Honorable has
a deep understanding of the importance of maintaining reliable,
resilient and affordable energy in service to our nation's citizens.
Chairman Honorable has the reputation of being pragmatic regulator and
has earned strong bi-partisan support among her colleagues.
We respectfully request that you favorably support the nomination
of Chairman Colette Honorable. The enclosed *list of state regulatory
leaders fully endorse this recommendation.
---------------------------------------------------------------------------
* The list of state regulatory leaders have been retained in
committee file.
---------------------------------------------------------------------------
Sincerely,
Phil Montgomery,
President.