[Senate Hearing 115-135]
[From the U.S. Government Publishing Office]
S. Hrg. 115-135
OPPORTUNITIES TO IMPROVE AMERICAN ENERGY INFRASTRUCTURE
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HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 14, 2017
__________
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
CORY GARDNER, Colorado JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama CATHERINE CORTEZ MASTO, Nevada
Colin Hayes, Staff Director
Patrick J. McCormick III, Chief Counsel
Brianne Miller, Senior Professional Staff Member and Energy Policy
Advisor
Angela Becker-Dippmann, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Rich Glick, Democratic General Counsel
C O N T E N T S
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OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska.... 1
Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from
Washington..................................................... 3
WITNESSES
Koplin, Hon. Clay, Mayor of Cordova, Alaska, and CEO of Cordova
Electric Cooperative, Inc...................................... 21
Leahey, Jeffrey, Deputy Executive Director, National Hydropower
Association.................................................... 27
Bird, Stefan, President and Chief Executive Officer, Pacific
Power, a Division of PacifiCorp................................ 48
Leopold, Diane, President and CEO, Dominion Energy, Dominion
Resources...................................................... 59
Zindler, Ethan, Head of Americas, Bloomberg New Energy Finance... 70
Imhoff, Carl, Manager, Electricity Market Sector, Pacific
Northwest National Laboratory.................................. 79
O'Sullivan, Terry, General President, Laborers' International
Union of North America......................................... 91
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
American Gas Association:
Statement for the Record..................................... 168
American Public Power Association:
Statement for the Record..................................... 173
American Rivers:
Statement for the Record..................................... 175
American Whitewater:
Statement for the Record..................................... 184
Bird, Stefan:
Opening Statement............................................ 48
Written Testimony............................................ 50
Responses to Questions for the Record........................ 133
(The) Business Council for Sustainable Energy:
Statement for the Record..................................... 190
Cantwell, Hon. Maria:
Opening Statement............................................ 3
Article from the Houston Chronicle entitled ``Hacked: Energy
industry's controls provide an alluring target for
cyberattacks'' dated 3/2/2017.............................. 6
Citizens for Responsible Energy Solutions:
Statement for the Record..................................... 196
Dahlmeier, Hon. Linda:
Letter for the Record........................................ 202
(The) Hydropower Reform Coalition:
Statement for the Record..................................... 205
Imhoff, Carl:
Opening Statement............................................ 79
Written Testimony............................................ 82
Responses to Questions for the Record........................ 157
Koplin, Hon. Clay:
Opening Statement............................................ 21
Written Testimony............................................ 24
Responses to Questions for the Record........................ 123
Leahey, Jeffrey:
Opening Statement............................................ 27
Written Testimony............................................ 30
Responses to Questions for the Record........................ 126
Leopold, Diane:
Opening Statement............................................ 59
Written Testimony............................................ 61
Responses to Questions for the Record........................ 142
Murkowski, Hon. Lisa:
Opening Statement............................................ 1
Northwest Public Power Association:
Letter for the Record........................................ 213
O'Sullivan, Terry:
Opening Statement............................................ 91
Written Testimony............................................ 93
Responses to Questions for the Record........................ 165
Trout Unlimited:
Letter for the Record........................................ 215
Zindler, Ethan:
Opening Statement............................................ 70
Written Testimony............................................ 73
Responses to Questions for the Record........................ 150
OPPORTUNITIES TO IMPROVE AMERICAN ENERGY INFRASTRUCTURE
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TUESDAY, MARCH 14, 2017
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:05 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Lisa
Murkowski, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
ALASKA
Chairman. Good morning. The Committee will come to order.
I want to thank, not only our committee members, but our
witnesses that are here today. Some people have suggested that
perhaps today is not a good day to be at work. I think it is a
great day to be at work.
[Laughter.]
And appreciate the inconveniences some may have gone
through to make sure that we are beginning this hearing to
discuss infrastructure as it relates to the energy sector.
Senator Cantwell and I were just remembering that, I
believe, we were the only committee operating when we had a big
snow dump last year. The hearing at that point in time was to
focus on issues of the Arctic. We will have an opportunity to
talk about that a little bit more as it relates to
infrastructure as well. This is our first hearing on
infrastructure in this new Congress. I am certain it will not
be our last.
We are planning today to look at lands, water and resource-
related infrastructure, well, that will come next week, and
then infrastructure will also be a prominent theme at hearings
we have planned on our foreign mineral dependence,
cybersecurity and other issues.
What I hope we can all agree on, through all of these
hearings, is the types of infrastructure within our committee's
jurisdiction are critically important to our country's growth
and our prosperity.
The United States has some of the most robust and reliable
energy infrastructure in the world. It allows us to harness
energy and move it from where it is produced to where it is
utilized. Without it, there would be no fuel when we pull up to
the station and there would be no light when we flip on a
switch. Energy infrastructure is central to our way of life and
our standard of living, but it is almost always an afterthought
until it breaks down on us.
We have seen that too often in recent years, making this a
perfect time to look at our options to either rebuild, or in
many cases, build energy infrastructure for the first time.
The reality is that we have our work cut out for us, but
that work can be made less difficult, take less time and cost
less money if we engage in real solutions.
Much of our nation's infrastructure is privately owned and
maintained. Upgrading it and building new infrastructure is an
expensive and time-consuming process. Hundreds of projects,
representing billions of dollars of investment are currently
navigating the federal labyrinth of permitting. Multiple
agencies, numerous forms and duplicative requirements make this
process cumbersome and could delay projects for years.
Of course, the federal permitting process is also layered
on top of state and local permitting processes with little to
no apparent coordination at times, which only adds to the
difficulty of getting to yes with a project.
I am glad that the President has made infrastructure a
national priority. I look forward to working with him and his
Administration, as well as members of the Senate, to develop a
broad infrastructure package. I certainly hope that package
will include provisions that streamline the permitting process
for all energy projects.
President Trump has already taken some notable first steps
by restoring regulatory fairness for projects like the Keystone
XL project.
I had an opportunity last Friday to meet with Prime
Minister Trudeau. I think it is fair to say that he is pleased
that the United States is taking another look at this important
project.
But we all recognize that there is a lot to do. Developing
and constructing new energy infrastructure projects can help
make energy cleaner, cheaper and more abundant, and it can have
a tremendous impact on our rural communities.
I am pleased that Mr. Koplin, Clay Koplin, the Mayor of
Cordova and the CEO of Cordova Electric Cooperative, is here
with us this morning to discuss how energy development in our
home state has transitioned communities away from diesel power,
lowered our costs and made energy delivery more affordable.
What Mayor Koplin has been able to do over the years with his
focus on small hydro has really made a difference, not only for
Cordova, but those other communities that look to Cordova as an
example.
I also want to point out that when Congress considers an
infrastructure package, our committee will, in many ways, be
ahead of the curve on a potential contribution to it. During
the development of our bipartisan energy bill last year we
dedicated a significant amount of time to these challenges. Our
members brought forward a number of good ideas to strengthen
our energy infrastructure, including streamlining the
permitting process for LNG exports, enhancing electricity
delivery and improving the regulatory process for hydro
relicensing and licensing itself.
I was pleased that we were able to incorporate many of
those ideas into the bill that passed the Senate last year with
85 votes. I am well aware that they are still available to us
to enact into law in this new Congress.
I would like to say that energy is good. You all have heard
that. This morning I would add to it that energy infrastructure
is good and that it belongs in any conversation that we have
about roads, bridges and airports.
This is an important subject and I am, again, thankful that
our witnesses were able to join us this morning.
Senator Cantwell, I would welcome your opening remarks.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Madam Chair. Thank you so much
for holding this important hearing and to all our witnesses for
being here today. You should be commended for making your way
through the snow to help us.
When Americans wake up in the morning, they flip on the
light switch, they turn on the hot water in the shower, they
grab their fully-charged cell phone before heading out the door
and fill up their cars at a gas station. The average person
probably does not give much thought to the vast network of
energy infrastructure that produces, transports and delivers
energy to our homes and businesses.
It is not an exaggeration to suggest that our economy, our
national security and our way of life depend on the reliable,
secure and efficient operation of energy infrastructure. And it
has served our nation well. In fact, the National Academy of
Engineers named electrification as the greatest engineering
achievement of the 20th century.
As the first two installments of the Department of Energy's
Quadrennial Energy Review have pointed out, we are facing
severe challenges that threaten to disrupt America's access to
that reliable and affordable energy.
First, our hydroelectric dams, power plants, electric
transmission lines and pipelines are aging. The pace of
investment has not always been sufficient to keep these
facilities in good working order. According to the GridWise
Alliance, our aging infrastructure is responsible for
approximately 25 percent of all power outages in the U.S. The
Electric Power Research Institute (EPRI) estimates that the
power outages and reductions in power quality cost the U.S.
economy as much as $20 billion annually.
Second, much of our energy infrastructure is also
susceptible to increasing severe storms, flooding, drought and
wildfires. We have experienced numerous fires in the Northwest
where we have had so much burn up, including many transmission
lines. It's a real issue, and the Chair and I are going to
continue to work on that.
Third, our electric grid is being stressed, due in part to
technology innovations, such as smart appliances and solar
rooftops, which improve the consumer's experience but rely on
operations for which the grid was not originally designed. As
we move from one-way to two-way communication, this is a very
important issue.
In addition, we do not have enough electric transmission
capacity to access the growing demand for electricity from
remotely-located wind and solar farms, which are now cost-
competitive with conventional electric generation.
Finally, there is the issue of cybersecurity that keeps me
up at night thinking about potential hacks from Russians or
foreign actors, as we see large-scale attacks happening in
other places. If we do not make the necessary investments to
prevent and defend against and minimize the impact of these
cyberattacks, our enemies may succeed in causing a widespread
blackout or devastation to our economy that is so important to
millions of Americans.
Chairwoman Murkowski and I put together a bipartisan energy
bill last year that made needed investments in our energy
infrastructure and our workforce and doubled the amount of
funding to protect us against cyberattacks and improved the
security of our energy supply chain. We need to know where
these products are coming from. We passed that bill 85-12 and
then spent several months negotiating a conference report with
the House.
Unfortunately, Speaker Ryan and the House of
Representatives, in my opinion, dropped the ball in
implementing this important energy legislation that would have
helped our country move forward. I hope this year the Speaker
will finally recognize that protecting our electricity grid and
making needed investments requires serious attention.
Today, I am also calling on the Trump Administration to
protect the public from growing cyber threats that Russia and
other foreign actors pose against our energy assets. That is
why today, I am sending a letter to make sure that we clarify
the DOE's role as a lead agency in our nation's cybersecurity
matters, both on the defense side and on the response side, to
hacking of our critical energy infrastructure. This is very
important because we have heard rumors the President may issue
an Executive Order expanding the Department of Homeland
Security's role in this matter. I equate this to seeking
medical attention and seeing a doctor, when in reality you need
a dentist, because what you have is an oral problem. We need
the right experts doing the right things to protect us.
Although digitization of the grid offers tremendous
benefits, it also makes the grid more susceptible to
cyberattacks. This particularly troubling issue increases the
concerns that we have about foreign actors and their
capabilities of doing significant damage to the grid.
As Admiral Rogers, Director of the NSA and the Commander of
the U.S. Cyber Command during the Obama Administration,
recently told Congress, ``Russia holds the cyber capability to
cripple our infrastructure.'' And according to a recent NBC
News report, the Russians have conducted more than a dozen
significant cyberattacks against foreign countries, including
the U.S. In addition, the Department of Homeland Security and
the FBI recently published a Joint Analysis Report documenting
Russian malicious cyber activity in the United States.
We all know that they hacked into three Ukraine
distribution utilities knocking power out to more than 225,000
customers. It appears that might have been done again two
months ago, when a utility in northern Kiev reported that the
grid was brought down as a result of a cyberattack.
Fortunately, the U.S. has not yet been successfully
attacked that way. But we do know that there are frequent
attempts to hack our utility systems. Just recently the Houston
Chronicle published a report about our U.S. oil and gas
pipelines and how susceptible they are to hackers using new
malware that disrupts the control system. The story goes on to
detail that these hackers could increase the flow of oil and
gas in the manner that could potentially cause an explosion.
Madam Chair, I would like to enter that article in the
record.
Chairman. Accepted.
[The information referred to follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cantwell. Thank you.
Our grid and our economy and way of life have increasingly
become more dependent on our electricity grid and smart
equipment. We need to make sure that we are deploying energy in
new ways safely and efficiently.
The electrification of our economy requires a more robust,
smarter, modern electricity grid to accommodate the 21st
century. By reducing overall energy consumption and
facilitating consumer access to cleaner grid modernization, we
also can make improvements in the competitiveness of our U.S.
economy.
The World Economic Forum estimates that the digital
transformation of the electricity technology will create $1.3
trillion in economic value over the next ten years. So to me,
it is imperative that the U.S. lead in this effort.
As the Quadrennial Energy Review pointed out, we need to
invest in the workforce that's needed, approximately 200,000
workers with STEM skills will be needed for the electricity
grid of the future. Our energy bill last year would have
created a Department of Energy Workforce Advisory Committee to
make sure we have the curriculum established to get those
workers for the future.
Madam Chair, I look forward to hearing our witnesses on
these important issues and continuing to make investments in
the energy infrastructure that we need for our nation. Thank
you very much.
Chairman. Thank you, Senator Cantwell.
You remind us about the important issue of cybersecurity,
not only as it relates to our energy sector, but really, all
aspects of our economy. But on a morning like today when people
are thinking about the physical aspects of our energy grid,
because I would venture to say that with the snow and ice you
have got some power lines that are down somewhere, not at my
house, but you have got some power lines that are down
somewhere. When people are inconvenienced or are without what
they have come to expect or they realize that capacity is
limited, it is less, their energy sources, are less reliable,
they look to us to say what have you done to fix it? We are
going to have an opportunity to discuss that here this morning.
As I mentioned earlier, Mr. Clay Koplin is the Mayor of
Cordova, Alaska. He is the CEO of Cordova Electric Cooperative.
He has come a long way to be here with us this morning and I
look to him as one of Alaska's energy experts. I appreciate
that you're with us here this morning, Mayor.
He will be followed by Mr. Jeffrey Leahey, who is the
Deputy Executive Director for the National Hydropower
Association. We appreciate your leadership in the hydrospace
which is very, very important to us.
Mr. Stefan Bird is with us. He is the Chief Executive
Officer for Pacific Power. Thank you for joining us.
He will be followed by Diane Leopold, who is the CEO and
President of Dominion Energy. Good morning to you.
Mr. Ethan Zindler will follow Ms. Leopold, and Mr. Zindler
is the Head of Policy Analysis for Bloomberg New Energy
Finance. Good morning.
Mr. Carl Imhoff is next, the Manager of the Electricity
Market Sector for Pacific Northwest National Laboratories. We
thank you for your good work.
The panel will be rounded out this morning by Mr. Terry
O'Sullivan, who is the General President of Laborers'
International Union of North America. We look forward to your
comments as we talk about energy and those workers that provide
these opportunities for us.
With that Mayor Koplin, if you want to lead off the panel
and we will just go through. I would ask each of you to keep
your remarks to no more than five minutes. We do have a larger
panel than usual this morning, but your full comments will be
incorporated as part of the record. Thank you.
STATEMENT OF HON. CLAY KOPLIN, MAYOR OF CORDOVA, ALASKA, AND
CEO OF CORDOVA ELECTRIC COOPERATIVE, INC.
Mr. Koplin. Thank you.
Good morning, Chairman Murkowski, Ranking Member Cantwell
and members of the Committee. I'm Clay Koplin, Mayor of Cordova
and a CEO of Cordova Electric Cooperative and have expertise in
developing energy infrastructure and the values that it can
deliver.
Cordova is located in Prince William Sound near Anchorage,
and the community has rebounded from a series of economic
disasters that defines its resilience. Our current status
includes a ranking as the 13th largest seafood delivery port in
the country and the largest commercial fishing fleet in the
State of Alaska.
Socially it ranks as the number one high school in the
state and the safest community in the State of Alaska.
So, energy infrastructure in the community includes a smart
grid boasting 100 percent LED lighting, 100 percent underground
power lines with a high renewables contribution. This ascension
has resulted from strategic infrastructure investments in a
collaborative of local partnerships. These successes have
attracted the interest of the national laboratories and around
resilience, smart grid, microgrid and demonstration of best
practices.
In 2006 we had 48 inches of rain in three days and
fortunately FEMA showed up with a federal disaster declaration
that allowed the project to rebuild and make you whole. And
then FERC showed up to assist and regulate.
The problem is those two lead agencies and their inherent
conflict were followed by a regulatory dog pile that kind of
left Cordova Electric at the bottom of the stack holding the
football. Fortunately, Senator Murkowski's office and her staff
got everybody back onto the field, playing as a team, and after
five long years and $22 million, had us to the finish line and
our project back in operation.
But on a positive note, during that flooding our 100
percent underground power lines allowed not a single outage in
the community.
So, what are the ways that we could improve the way that we
develop infrastructure? Execute local game plans to add
resilience and value; invest in projects, not in processes; and
promote federal facilitation to deliver higher value from these
projects.
I give you an example of a local game plan of converting to
100 percent underground power lines. And that's just an example
in the tens of millions of dollars of social value that that
added to our community of a local initiative.
But we also need a federal role of investing in projects by
participating in both funding the infrastructure, but also
sending experts in the field to derive value, not only from the
projects themselves but for their own agencies. The whole team
has to take the field. Now we can't just have blockers out on
the field while we have the quarterbacks and the salary cap
stars strategizing and criticizing from the sidelines.
Cordova Electric's two initial hydroelectric projects had
construction timelines and costs doubled during construction
due to regulatory posture and a lack of accountability. These
projects should have been developed by a team effort working in
the field together right through the final whistle on the
project. The dated traditional approach is to craft a perfect
game plan for success. Now the problem is that injuries and
fouls and other teams' changes in strategy undermine that plan.
So what we need is an agile approach that expects those
kinds of fouls and injuries and tricks by the other team and
relies on the agility, the talent and the close communication
between the team, including the federal agencies that can coach
us to quickly adapting to changing conditions.
There's a football team a little north of here in Foxboro,
Massachusetts that's perfected that adaptation game, and I
think there's some lessons that we might be able to learn in
our infrastructure investments.
Cordova is poised to proceed with a Crater Lake Water and
Power Project right now that's been designed to build an agile
team and an agile project management structure. It will
probably succeed with or without federal assistance to deliver
water to a growing industry, renewable energy, emergency and
commercial water supply, recreational, educational, self-
sufficiency and commercial business opportunity value streams
all from one project. That's the kind of shared cost/shared
benefit projects that we should be looking at with our
infrastructure investments and it exemplifies Cordova
Electric's aspiration to be a leader in environmental
stewardship in a new age of energy.
The project probably would be under construction now if
hydro had been classified as renewable and we had access to the
crab spawning to build it, but we'll use RUS and other
mechanisms to get the project built. We want to finance this
long-life asset for a sustained, balanced score card return on
investment of all those value streams.
Unfortunately, the concept of a public/private partnership
may not work so well for energy infrastructure investments,
like we'd hope. Private equity tends to price to risk, and
unfortunately, regulatory is one of the biggest risks of
building a project.
In summary, I encourage local, strategic game plans that
make sense investing in both financial and agency staff
resources out in the field so that we can have successful
outcomes for all players and which will consistently deliver
the better social, economic and environmental values that we
all want from these projects.
Thank you for this opportunity to testify. I'd encourage
any questions you might ask and I'd strongly encourage a field
hearing in Cordova so that you can actually see these solutions
and successes on the ground and not just hear about them.
Thank you.
[The prepared statement of Mr. Koplin follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman. Thank you, Mayor. We will look at the opportunity
for my colleagues here. The Mayor has indicated this is great
little community with safe, good schools. It is also without
access to the road system. Population about--
Mr. Koplin. 2,300.
Chairman. 2,300 people.
But when you think about what it means to take a community
of 2,300 people off of diesel and put it on renewable available
hydro, it makes all the difference.
Sorry, I do not mean to be editorializing, I just get
excited about Cordova because it is a great community.
Senator Franken. Sounds like a great place for a field
hearing.
Chairman. I think that is a wonderful suggestion, Senator
Franken. We might have to take the Mayor up on that.
Let's go to Mr. Leahey.
STATEMENT OF JEFFREY LEAHEY, DEPUTY EXECUTIVE DIRECTOR,
NATIONAL HYDROPOWER ASSOCIATION
Mr. Leahey. Good morning, Chairman Murkowski, Ranking
Member Cantwell and members of the Committee. I am Jeffrey
Leahey, Deputy Executive Director of the National Hydropower
Association (NHA). I'm pleased to be here to discuss the
importance of hydropower to the U.S. electric system, its
untapped growth potential and the policy issues that need
addressing to realize that growth.
Today our existing U.S. hydro fleet is made up of almost
2,200 plants and provides six to seven percent of all U.S.
electricity and close to half of all renewable generation,
making hydropower the single largest provider of renewable
electricity. In addition, another 42 pump storage plants make
up almost 97 percent of U.S. energy storage. The system also
contributes to cleaner air and provides other benefits
including river management for fish and habitat protection,
flood and drought management, water supply, irrigation and
others. Hydro also provides many grid benefits, peaking
generation, load following, reliability and more. With the
growing need for these services, U.S. hydropower has expanded
in recent years with a net capacity increase of close to 2,000
megawatts since 2005.
Hydro projects also bring economic benefits where they are
located. The industry employs a sizable workforce of 150,000
and access to low cost, clean, reliable power attracts many
high-tech firms and manufacturers to regions with hydropower.
And hydro can do even more. The myth is that hydro is all
tapped out. However, I urge the Committee to review the new
hydropower vision report by the Department of Energy released
last year. It highlights the significant potential to expand
U.S. hydropower with the right policies in place. Fifty
gigawatts of growth is possible by 2050.
For example, only three percent of our 80,000 dams generate
electricity. A 2012 assessment found over 12 gigawatts of
potential with eight gigawatts available at the top 100 sites.
Eighty-one of the top 100 sites were located on Corps of
Engineers' dams.
Some projects though, are not pursued over concerns about
the uncertain, duplicative and lengthy licensing process. For
example, one NHA member reports that their new project at a
Corps dam in Iowa will come online in 2018 having started
development in 2005, 13 years earlier.
Turning to existing hydro projects, owners can get more
power out of their plants through upgrades in efficiency
improvements. This allows for increased generation and can have
added benefit of improved environmental performance.
Looking at pump storage, these projects can rapidly shift,
store and reuse energy when there is corresponding system
demand and facilitate the integration of intermittent,
renewable resources. As more intermittent generation is added
to the grid, the need for pump storage is increasing. Right
now, about 15,000 megawatts of proposal are before FERC.
However, Congress needs to address the challenges existing
asset owners and developers face. Water is a public resource
and the industry recognizes the need for thorough project
reviews. But the process can be a cause of delay.
Again, using non-powered dams as an example, FERC issues
the license but construction cannot begin until other approvals
from the federal dam owners are in place. Processes like these
and others are not always coordinated, are sequential rather
than in parallel.
Also holding back hydro is its limited recognition or lack
thereof as a renewable. State renewable portfolio standards and
other environmental markets often contain restrictions on the
amount of eligible hydropower.
Federally, programs for renewable energy procurement or
development on public lands either exclude hydro completely or
restrain its participation. When hydro is not valued as a
renewable it creates economic disadvantage. The renewable
energy tax credits are a clear example.
The 2015 PATH Act creates a competitive imbalance between
wind and solar and other renewables. The hydropower credits
were extended through 2016, now expired, while the wind and
solar credits were extended for years longer. Competing for
investment dollars, this tipped the scales against hydropower.
NHA also highlights R&D investment for technology
innovation. The DOE Water Power Office is one of the smallest
in the Department, and the hydropower R&D program routinely
receives the least funding followed closely by the marine
energy program.
One last policy area to consider is that of regional
electricity markets. Often the grid benefits of hydro and pump
storage are not valued and compensated under existing power
markets, and project proponents do not receive the full benefit
of the services they provide.
While my testimony today focused on hydro's benefits and
growth opportunities, I want to take a moment on dam safety.
As with other infrastructure, U.S. dams and its associated
infrastructure are aging and in some cases, are in need of
reinvestment. However, it is important to note that hydropower
dams are highly monitored and regulated by FERC or the federal
dam owners themselves. The hydropower industry believes
protecting lives and property are the top priority and we work
cooperatively with FERC's division of dam safety and
inspections.
NHA also has a committee of ONM and Dam Safety
professionals who discuss technical information and best
practices and we run our operational excellence program. This
web-based tool shares information across the industry so asset
owners can learn from one another to meet the highest standards
of performance. Certainly, NHA supports continued investment in
both the civil works and power sides of the industry as part of
any discussion into hydropower infrastructure needs.
With that, let me conclude and thank the Committee for this
opportunity to testify and I look forward to your questions.
[The prepared statement of Mr. Leahey follows:]
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Chairman. Thank you, Mr. Leahey.
Let's go to Mr. Bird. Welcome.
STATEMENT OF STEFAN BIRD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, PACIFIC POWER, A DIVISION OF PACIFICORP
Mr. Bird. Chairman Murkowski, Ranking Member Cantwell and
members of the Committee, I greatly appreciate the opportunity
to appear before you today as you consider the need for
investment and modernization of U.S. energy infrastructure.
My name is Stefan Bird, and I'm the President and CEO of
Pacific Power. Pacific Power, together with Rocky Mountain
Power, comprise PacifiCorp which together serve 1.8 million
customers across six Northwestern states. PacifiCorp owns and
operates a diverse portfolio of resources totaling
approximately 11,000 megawatts and includes hydroelectric
power, coal power, natural gas, geothermal, wind and solar and
biomass resources. We integrate those resources and serve our
customers across the largest, privately-owned grid in the
Western U.S. that totals 16,500 miles of high voltage
transmission across ten Western states.
Your opening comments, Chairman Murkowski and Ranking
Member Cantwell, were right on point, certainly in regard to
the need for transmission infrastructure investment. And so,
I'm going to abbreviate my opening comments and really move to
the focus of my comments this morning in regard to streamlining
and modernizing our permitting structure to keep pace with our
need for advancements in energy infrastructure.
As the largest transmission owner in the Western U.S.,
PacifiCorp has long supported measures to better coordinate the
existing federal permitting and citing processes from major
electric transmission projects on public lands to reduce the
uncertainty for project applicants and to streamline the
approval process.
For the past ten years, we've been actively permitting
several stages of a $6 billion, 2,000-mile transmission
infrastructure expansion, we call Energy Gateway. And some of
those stages are already constructed and operating.
The purpose of Energy Gateway is to improve reliability and
access to some of the lowest cost renewable resources in the
Western United States. An important benefit is the hundreds of
living wage construction jobs and the millions of dollars in
property and sales tax revenue these projects contribute to the
communities they are cited.
To give you an idea of the delays we experience, consider
the record of decision we received on the last day of the
previous Administration for our Gateway West transmission
segment. It described the long and torturous review and
approval process beginning with our initial application in May
2007, almost ten years for a project designed to bring clean
energy to our customers and to relieve congestion constraints
on our system. Without PacifiCorp's Energy Gateway and other
regional transmission projects, which must cross public lands,
some of our nation's largest and best energy resources will
remain unable to contribute as they wait for transmission lines
to be cited and built.
The most critical path items to achieving this objective is
schedule predictability within the federal permitting process.
To achieve this goal, we believe an effective federal
permitting process should have: A, a single point of
accountability establishing a lead agency rather than having
the company deal with multiple agencies; B, have clear and
permanent deadlines--changing deadlines by bureaucrats render
business decisions uneconomic and meaningless; and C, avoiding
redundant and unnecessary views every time there's a new
government policy change, essentially grandfathering of prior
action. In other words, as new policies and guidance are rolled
out, the new policy guidance should clearly state that projects
already under NEPA review are grandfathered under the policy in
place at application. Ten years to permit a transmission
infrastructure project, by any measure, is far too long.
While building new, modern infrastructure is vital to our
nation's economic goals. It is also critical to keep trees away
from power lines. We believe that integrated vegetation
management is an environmentally sound and cost effective way
of keeping trees from power lines and we suggest the Forest
Service adopt a policy of integrating, utilizing integrated
vegetation management on federal lands throughout the country.
To provide an understanding of how difficult it can be to
obtain permission and access to provide necessary vegetation
management, my company's facilities cross 33 different national
forests. Each national forest is divided into three or four
districts, each with independent decision-making authority.
That means PacifiCorp foresters may have to work individually
with well over 100 different governing authorities for the U.S.
Forest Service alone. Add that to the number of regions of the
BLM, National Parks and Federal Wildlife Refuges, and one can
understand how working with federal agencies can be so
uncertain and time consuming.
Investment in new transmission systems, upgrading older
systems to be smarter and more efficient and accessing and
maintaining the grid means energy security, economic
opportunity and good jobs and wages for our country.
PacifiCorp wants to be part of creative and collaborative
solutions that will help create the next American
infrastructure expansion.
I want to thank you again for the opportunity to
participate in this hearing. PacifiCorp and Berkshire Hathaway
Energy look forward to working with you further on these
important issues.
[The prepared statement of Mr. Stefan Bird follows:]
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Chairman. Thank you, Mr. Bird.
We next turn to Ms. Diane Leopold. Welcome to the
Committee.
STATEMENT OF DIANE LEOPOLD, PRESIDENT AND CEO, DOMINION ENERGY,
DOMINION RESOURCES
Ms. Leopold. Good morning, Chairman Murkowski, Ranking
Member Cantwell and Committee members. I am Diane Leopold,
President and CEO of Dominion Energy, the natural gas unit of
Dominion Resources. I also chair the Interstate Natural Gas
Association of America, although, I am not here in that
capacity.
Thank you for inviting me to testify on the immense and
well-documented economic, environmental and security benefits
of expanding America's energy infrastructure. These investments
improve our quality of life, global competitiveness and
national security.
Our projects employ private capital, not taxpayer dollars.
Dominion alone is working on about $16 billion in
infrastructure projects. However, to make these beneficial
investments we need certainty from federal agencies, not a
rubber stamp, but a rational path forward with clear processes,
reasonable schedules and reasonable decisions. The result will
be a cleaner environment, lower electricity and natural gas
bills for consumers and businesses and more economic
opportunity. Three of our projects illustrate the opportunities
and challenges.
Our $4 billion Cove Point Natural Gas Liquefaction Project
is an addition to an existing LNG import terminal in Maryland.
It has 3,700 workers on-site, including 3,000 skilled craft
professionals. This exceeds the original forecast. Thousands
more new jobs will come from producing, processing and
transporting natural gas to the terminal and there will be $40
million annually in new local taxes. Cove Point will provide a
small portion of America's abundant natural gas to India and
Japan, two vital, global partners. This strengthens our global
footprint and reduces their dependence on less friendly gas
producing nations. Shipments from Cove Point will reduce the
U.S. trade deficit by about $5 billion while having a
negligible impact on domestic energy prices.
Federal and state permitting took about three and a half
years, requiring more than 55 federal, state and local permits
and reviews. This exhaustive process now looks simple compared
with what we faced with the much-needed Atlantic Coast
Pipeline, or ACP. ACP is a $5 to $5.5 billion, privately
financed, 600-mile, underground utility project. Starting in
Senator Manchin's home state of West Virginia, it will bring
gas from the Appalachian region to Virginia and North Carolina.
Local electric and natural gas utilities urgently need more
natural gas. Today, large business customers must have service
curtailed on very cold days so residential customers won't
literally be left out in the cold. Lack of natural gas is also
slowing the shift to cleaner electricity and is strangling
economic development.
Two independent economic studies make ACP's case. One
projects over 17,000 construction jobs. The other estimates
$377 million in annual savings on utility bills resulting in
more disposable income, a stronger economy, better quality of
life for families and businesses, large and small.
ACP requires more than 18 major federal permits and
authorizations, plus numerous other federal, state and local
approvals. The process is already approaching three years and
has a September 28th deadline to complete federal
authorizations. A date that is later than it needed to be and
not as certain as it should be.
To understand the delays, let me share some examples.
To protect the view from the Blue Ridge Parkway and
Appalachian National Scenic Trail, we proposed boring under a
mountain for nearly one mile using a much more costly method to
ensure no disturbance or interference with the parkway or
trail. The National Park Service took 14 months to review our
22-page application just to survey. We're still waiting for a
decision on construction. And 21 of the 600 miles of ACP will
cross national forests, just as hundreds of miles of natural
gas pipelines run safely through national forests today. We
rerouted 95 miles to meet its concerns though the Forest
Service continues to move the goal posts with changing
requirements and standards.
Similarly, our Skiffes Creek electric transmission line has
been under Army Corps of Engineer's review for five years. The
line is needed to provide reliable electricity on the Virginia
peninsula when two aging coal units close to meet EPA
regulations. This region hosts the world's largest shipyard, as
well as eight military and DOE facilities.
Unfortunately, the Corps has not been able to complete the
required consultation with the Advisory Council on historic
preservation, the National Park Service and other parties. The
project neither directly impacts Park Service lands nor
requires a Park Service permit.
We were encouraged by the provisions of this Committee's
legislation the Senate approved last year to help critical
infrastructure projects advance. In particular, we support
concurrent NEPA review by FERC and other permitting agencies,
including agencies working with FERC's extensive NEPA process,
rather than conducting duplicative reviews.
We also support an expectation that agencies notify
applicants when their permits are complete to help stay within
the timeline.
Chairman Murkowski and members of the Committee, the energy
industry is poised to accelerate development of critical
infrastructure serving the national interest. We're dedicated
to safety and environmental protection. We believe in
transparency and following regulatory processes. But to commit
billions in private capital, we need a reasonable regulatory
path to success if we follow the process.
Thank you.
[The prepared statement of Ms. Leopold follows:]
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Chairman. Thank you, Ms. Leopold.
Mr. Zindler, welcome.
STATEMENT OF ETHAN ZINDLER, HEAD OF AMERICAS, BLOOMBERG NEW
ENERGY FINANCE
Mr. Zindler. Thank you.
I'm going to move a little quickly and skip some of the
early remarks to make sure I finish on time here.
And thanks for the opportunity, once again, to participate.
I am here today in my role as an analyst for Bloomberg New
Energy Finance, which is a division of the financial
information provider, Bloomberg LP. My remarks today represent
my views alone, not the corporate positions of Bloomberg LP and
of course, they're not investment advice.
My testimony today will focus on the next generation of
energy technologies and the infrastructure that will be
critical to accommodate them. I think there are many on the
panel here who can talk in real depth and expertise about our
current challenges so I'll try not to be redundant with those.
The U.S. is transforming how it generates, delivers, and
consumes energy. These changes are fundamentally empowering
businesses and homeowners, presenting them with expanded
choices and control.
Consumers today can, for instance, analyze and adjust their
heating, air-conditioning and electricity use over their smart
phones thanks to smart meters and smart thermostats.
Consumers in much of the country can choose their
electricity supplier and may opt for ``green choice'' plans.
They can produce power themselves with rooftop solar
photovoltaic systems. They can even store it locally with new
batteries.
Consumers can choose to drive vehicles propelled by
internal combustion engines, electric motors or some
combination of both of those. And that car can be powered by
gasoline, by diesel, electricity, ethanol, perhaps even
methanol, natural gas or hydrogen, and electric vehicle drivers
who own homes can turn their garages into fueling stations
simply by using the outlet on the wall.
Realistically speaking, few Americans today have the
inclination or income to become high-tech energy geeks, but
that is changing as prices associated with these technologies
plummet. In the case of electric vehicles, such cars can be
appealing simply because they perform better.
We at Bloomberg New Energy Finance believe that further
growth and eventual mass adoption of these technologies is not
possible, it's not probable, but it's inevitable given rapidly
declining costs.
For instance, the price of a photovoltaic module has fallen
by 90 percent since 2008, to approximately 40 cents per watt
today. For millions of U.S. businesses and homeowners, ``going
solar'' is already an economic decision, and last year the U.S.
installed far more solar generating capacity than it did any
other technology.
By the end of the next decade, cost competitiveness for
distributed solar will arrive most places in the United States
and without the benefit of subsidies.
Similarly, the value of contracts signed to procure U.S.
wind power have dropped by approximately half as the industry
has deployed larger and more productive wind turbines. Wind,
last year, surpassed hydro-electricity to become the fourth
biggest generator in the U.S. We expect current wind capacity
to at least double by 2030. Many of these new energy
technologies are, of course, variable. In other words, if
there's no wind, there's no wind power. If there's no sun,
there's no solar-generated power. Thus, the growth in these and
other new energy technologies will be accompanied by
unprecedented sales of new batteries of various shapes and
sizes.
Utilities such as Southern California Edison and others
have already begun piloting large-scale batteries in certain
markets while providers such as Stem and Tesla offer so-called,
``behind-the-meter'' storage solutions for businesses and
homeowners.
In the past five years, lithium-battery prices have fallen
by at least 57 percent and we expect another 60 percent drop by
2025. That will contribute to 9.5 gigawatt/hours of battery
capacity in the U.S., up from 1.7 today.
Continuing battery price declines will also make electric
vehicles for the first time a viable option for middle-class
U.S. consumers without the benefit of subsidies.
The new, empowered consumer poses inherent challenges to
the traditional command-and-control/hub-and-spoke models of
conventional power generation and power markets. We have
already seen examples around the globe where incumbent
utilities were caught flat-footed by rapid clean energy build-
outs. In some cases it has been heavy subsidies for renewables
that have catalyzed this change, but more recently, simple low
costs are allowing wind and solar to elbow their way onto the
grid.
So, where does this leave infrastructure in this
conversation? First, conceptually, we must accept that the
empowered consumer is here to stay. To some degree, this
acceptance is already underway in the private sector where
companies that once focused mainly on large-scale power
generation are merging with consumer-
facing utilities or buying smaller solar installers and battery
solution providers. And second, policymakers should look to
promote
infrastructure that accommodates a new, more varied, more
distributed world of energy generation and consumption.
Policy-makers may also seek to facilitate the development
of high-voltage transmission lines across the U.S. It has long
been an adage that the U.S. is the home to the ``Saudi Arabia
of wind'', but a lot of that resource might as well be in Saudi
Arabia given how difficult it can be to build across state
transmission.
Investment is also needed at lower voltages as well. Our
passive, one-directional, electricity distribution system is
under strain as new distributed generation capacity comes
online.
Now finally, policymakers may consider ways to support
electric vehicle charging stations. As sales of such cars grow,
consumers are already putting greater pressure on certain
distribution nodes around the country.
And lastly, the changes afoot will require what might be
best
described as infrastructure software. Most importantly and
pressingly, this must include the reform of electricity markets
to take into account the new realities of 21st century power
and supply and demand. It may also include expanded programs to
educate, excuse me, educate energy professionals to the new
realities of the energy markets. And, yes, of course, it could
include some forms of software to improve energy monitoring and
optimize system performance.
In closing, I would reiterate that none of this needs be
done at the exclusion of investing in traditional energy
infrastructures being discussed by others on the panel;
however, any rational discussion about energy infrastructure
today must do more than take into account the current
situation. It must also consider where we're going to end up
tomorrow.
Thank you.
[The prepared statement of Mr. Zindler follows:]
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Chairman. Thank you, Mr. Zindler.
Mr. Imhoff, welcome.
STATEMENT OF CARL IMHOFF, MANAGER, ELECTRICITY MARKET SECTOR,
PACIFIC NORTHWEST NATIONAL LABORATORY
Mr. Imhoff. Thank you and good morning.
Thank you, Chairman Murkowski and Ranking Member Cantwell
and also the Committee members for the leadership of this
Committee in helping drive the nation's energy future forward.
My name is Carl Imhoff. I lead the Grid Research Program at
the Pacific Northwest National Laboratory (PNNL) in Washington
State. I also Chair, jointly with NREL, the DOE Grid
Modernization Laboratory Consortium. It's a group of 13
national labs that, along with over 100 partners from industry,
industry groups such as Gridwise Alliance and universities,
supports the Department's Grid Modernization Initiative.
PNNL has long supported the power system innovation and
reliability for the Northwest and for the nation.
The laboratory led DOE industry collaborations in deploying
next generation transmission sensors to help avoid blackouts,
and in California alone avoided outages result in an estimated
savings of about $360 million annual to consumers.
PNNL also led a demonstration to test transactive control
in the Pacific Northwest validating smart grid benefits and new
control approaches of Avista Corporation in Spokane, who also
has a footprint, and consumers in Idaho and Alaska. They
implemented a distribution automation and smart metering
projects that reduced consumer outages by ten percent,
shortened the duration of those outages by 21 percent and
delivered 1.5 million avoided outage minutes in just the first
year of operation.
These two examples illustrate some of the high return on
investment achieved by utilities and national labs across the
country when combining their efforts and new infrastructure
innovation with private, public validation.
The DOE grid modernization initiative is an important
source of innovation for the nation's efforts in terms of
modernizing infrastructure. It's an innovative cross-cut effort
spanning multiple DOE program offices, develop new concepts,
tools, platforms and technologies to support grid
modernization. A portfolio of ADA projects was funded for up to
three years, beginning in FY'16.
Today I offer three primary points. First, that the
electric sector is fundamental to a secure energy
infrastructure and it's comprised of 21st century assets that
go well beyond steel and concrete. Secondly, the electric
infrastructure is changing dramatically and a modern grid
requires the addition of a new metric, a metric of flexibility
to add to the pantheon of reliability, affordability and
security. Grid flexibility will be vital to an effective
infrastructure in the future. And then third, there are
substantial opportunities for low hanging fruit, if you will,
of improving the infrastructure via public/private partnership.
And I'll share some examples for these.
The grid infrastructure spans the nation providing
essential services to the U.S. economy through over three and a
half thousand utilities, but it also serves small, remote
communities that must provide, oftentimes, their own electric
services predominately through local diesel generation and
microgrids.
The new digital revolution is increasingly important to our
economy creating new consumer services, businesses and jobs.
But there is more to infrastructure than cables, towers and
generators. Utilities rely on major control centers to operate
the power system, requiring investment in software,
communications and controls. Sensor networks that provide real-
time sensing, both locally and across entire interconnections,
are emerging to dramatically improve reliability and asset
management.
Finally, utilities, vendors, universities and DOE
laboratories maintain a network of research and testing and
workforce training infrastructure necessary to support the
revitalization of the grid. These 21st century assets are as
critical as towers and wires when it comes to electric
infrastructure modernization.
Trends toward distributed resources and the smart grid edge
and reshaping utility business models as well. Today we have
about two billion intelligent, connected devices at the edge of
the grid. Utilities expect that to grow to 20 billion by 2025
and one of the big challenges is a number of those devices will
be on the customer side of the meter, outside the direct
control of utilities. So, it's changing dramatically, the
business model.
Second, the emerging of distributed resources is
accelerating faster than many in the industry expected it to.
It includes distributed generation like photovoltaics, smart
loads, demand response, electric vehicles and energy storage.
These changes collectively require the grid to become more
flexible and yet deliver more flexibility to a combination of
better generator controls, better coordination across the
boundary between transmission and distribution to engage smart
loads at scale and energy storage.
Finally, the proliferation of internet and digital devices
throughout our economy has increased the challenges of
cyberattack on the electric infrastructure. The electric grid
is under regular reconnaissance and cyberattack activities from
both foreign-state and non-state actors.
The electric industry, in partnership with the government,
has responded strongly to address these challenges including
improving best practices through self-assessment and launching
the Electric Sector Coordinating Council. In addition, PNNL
developed the Cyber Risk Information Sharing Program (CRISP)
with DOE and is now supporting NERC in the deployment of the
program to utilities nationwide. The CRISP program provides
cyber threat intelligence to identify tactics, techniques and
procedures used by advanced threat actors from nation states as
well as professional hackers.
In closing I offer three recommendations. First, consider
in your deliberations adding the metric of grid flexibility to
the fundamental metrics for outcomes for the grid of the
future. Second, leverage the recent substantial base of
successful demonstration system demonstrations that jump start
the electric infrastructure modernization. Topics that have a
wide base of lessons learned in successful business case
development include, distribution automation, advanced
metering, conservation of voltage reduction and the use of
distribution management system software.
This last item is what enables utilities to know where
outages are. Today, more than half of our utilities still have
to wait for a phone call to inform them of an outage and
broadening the penetration of distribution management system
software would have great impact.
And then lastly, include public/private partnership to
conduct infrastructure pilots at the regional level. These
pilots can rapidly validate the emergency new modernization
concepts and tools emerging from industry, the DOE research
portfolio and elsewhere.
With that, I'll stop.
Thank you.
[The prepared statement of Mr. Imhoff follows:]
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Chairman. Thank you, Mr. Imhoff.
Mr. O'Sullivan, welcome to the Committee.
STATEMENT OF TERRY O'SULLIVAN, GENERAL PRESIDENT, LABORERS'
INTERNATIONAL UNION OF NORTH AMERICA
Mr. O'Sullivan. Thank you very much.
Chairman Murkowski, Ranking Member Cantwell and members of
the Energy and Natural Resources Committee, on behalf of the
500,000 strong, proud and united men and women of the Laborers'
International Union of North America (LIUNA), I want to thank
you for the opportunity to testify here today. It's both an
honor and a privilege to do so.
As the people who build, repair and maintain our nation's
critical energy infrastructure, LIUNA members support a
reasonable, rational, fact-based, energy policy. We support
regulatory reform that streamlines the permitting process,
allows reviews by separate agencies and entities to proceed
concurrently and provides for timely, definitive decisions that
enable approved projects to proceed without delay.
LIUNA joins others in the energy industry in calling for
the swift filling of vacant spots on the Federal Energy
Regulatory Commission.
LIUNA also supports the responsible exploration and
development of energy resources within the Arctic National
Wildlife Refuge, ANWR.
Permitting energy production on just one-tenth of one
percent of ANWR's total acreage will create tens of thousands
of good paying, family supporting jobs over the next few
decades. Its royalties, lease payments and corporate income
taxes will generate billions in state and federal revenue that
could be reinvested in our failing infrastructure.
Chairman Murkowski, for decades your state has demonstrated
that natural resource development can co-exist with nature,
building family sustaining careers while maintaining a natural
beauty of wild places. Your state has shown that there is no
need to pit jobs against the environment. Yet, on his way out
of office, President Obama removed key Arctic and Atlantic
offshore areas from future leasing, destroying good jobs. LIUNA
hopes that Congress and President Trump will reverse this, what
we consider, a bad decision.
Developing sound, thoughtful energy policy that takes into
consideration the men and women who work in the energy sector
should be a bipartisan agenda creating millions of new jobs
across many sectors of the economy while modernizing our vital
energy infrastructure and ensuring America's energy
independence. The American society, as civil engineers, has
given our energy infrastructure a grade of D plus. The men and
women of LIUNA and other building trades union are eager to go
to work to address this problem, yet opposition to almost every
energy project, especially pipelines, has threatened to derail
all serious attempts to address this issue.
It also threatens the creation of good, middle class jobs.
For workers in communities throughout the United States,
pipeline projects and other energy projects are lifelines. It's
not the pipelines that are dirty, it's the politics.
Today, LIUNA has more than $50 billion worth of pipeline
work under contract. Tens of thousands of highly trained, safe,
skilled building trades members will be put to work for years
to come on projects such as the Keystone XL pipeline, the
Dakota Access pipeline, the Atlantic Sunrise pipeline, the
Rover pipeline, Atlantic Coast pipeline, Sable Trail pipeline,
Penneast pipeline and the Cove Point LNG facility that was
talked about earlier. And these are just the tip of the
iceberg.
Although these jobs, like all construction jobs, are
temporary by nature, anyone who has a clue about the work we do
knows that by stringing together one temporary job after
another construction workers are able to create a career
allowing them to provide for their families and save for their
retirement. At a time when it's harder and harder to succeed
without a college education and a debt that goes with it, LIUNA
and other building trades unions are one of the few places
where a high school graduate can enter an apprenticeship
program, learn a trade, become a qualified journeyperson and
build a rewarding, middle-class career.
LIUNA does not deny climate change. In fact, we are one of
the few unions that supported cap and trade legislation. But we
take issue with ``keep-it-in-the-ground'' pipeline opponents
who ignore the reality that these resources continue to be
pulled out of the ground anyway and transported by means that
are riskier and less environmentally sound than pipelines.
Rather than wasting time and resources fighting over
individual pipeline and energy projects, we believe it's time
to embrace a comprehensive, rational, common sense energy
policy that provides for the safe and responsible development
of all domestic sources of energy, including wind, solar, hydro
and nuclear. Unleashing these resources will create economic
opportunities in communities across the country while making us
less dependent on energy from nations that seek to undermine
the American ideals of freedom and liberty.
Finding realistic, environmentally responsible solutions to
our energy infrastructure problems isn't a Republican issue or
a Democratic issue. It's not a conservative issue or a liberal
issue. It's an American issue.
Thank you for the opportunity to offer this testimony. I
look forward to any questions you might have and to working
with you, Chairman Murkowski and with the entire Committee in
the future.
[The prepared statement of Mr. O'Sullivan follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman. Thank you, Mr. O'Sullivan. I think it is a good
way to wrap up by reminding us that when we are talking about
infrastructure, whether it is pipelines, whether it is hydro,
whether it is what we're doing with our smart grid, it, at the
end of the day, is an opportunity for us to create good jobs.
I think, if there has been a common thread throughout the
testimony that we have heard, it is that the regulatory process
is one that, unfortunately, can yield uncertainty, can yield
delays and that adds to cost. So I want to just speak to
everyone and direct my questions in that vein this morning.
Let me begin with you, Mr. Koplin, and then I will
incorporate Mr. Leahey in this as well. When we are talking
about small projects, you mentioned the possibility for Crater
Lake there in Cordova. What barriers do you have in front of
you as you work to develop a small scale hydro facility in your
community? How can Cordova move forward more readily, more
quickly, with this from a regulatory perspective? If we could
clear things out of the way, what would it be?
Mr. Koplin. I'm going to give you a little longer answer.
Our utility co-chairs, statewide co-chair, the State
Utility Organization and, in general, the biggest barrier is
regulatory to developing any renewable.
Fortunately for us in this case, we broke down the biggest
barrier by getting the site declared by FERC as non-
jurisdictional. So that gives us the opportunity to, frankly,
develop this as an agile project and a team that can work
together through the finish line. Otherwise we wouldn't be
doing it.
We literally had been told by the Forest Service that it
was on their land, so we hadn't even considered this project
until we found out it was private property.
Chairman. Yes, which made all the difference, all the
difference in the world.
Mr. Koplin. Yup, go or no go.
Chairman. Yes.
Let me ask you, Mr. Leahey, when you provided your
testimony you talked about the fact that only three percent of
the existing dams out there are actually electrified. When we
think about opportunities, it is not like we need to go out and
build a brand-new dam here. We have an opportunity to really do
so much more with what we have in place.
Now, I understand that FERC and the Corps have entered into
an MOU to facilitate the development of these non-powered dams.
Do you think those MOUs are sufficient? Is there more that we
can be doing here in Congress to help facilitate the
electrification aspect?
Mr. Leahey. Sure.
We believe that the MOU is going to be a step in the right
direction and will solve some of the problems, but the problem
is generalized for hydro licensing.
While FERC is the issuer of the license, they are not the
only ones who are involved. There are many state and federal
resource agency approvals that are needed in order to get a
final approval done. We believe all of this, all of those, are
important and are part of the process, but they're all
independent authorities.
And so, it's very hard to enforce timelines. It's very hard
to provide that certainty either in a relicensing of an
existing project or a new project going forward.
With respect to non-powered dams and the Corps facilities,
I also think there could be some additional work that could be
done within the Corps itself in streamlining some of its
approval procedures to make that internal work that they do, as
well as the external work, in coordination with the Corps much
more coordinated.
Chairman. We would like to work with you on defining and
outlining that.
The reality that the hydro sector is facing right now, not
only with the licensing of a new dam but the relicensing of
existing facilities is something that, just, most people would
say is mind boggling. Ten years and millions of millions of
dollars for a relicensing. Now, you compare this with a natural
gas plant developer who can move through this regulatory
process in a couple years.
Why is it that when it comes to hydro the regulatory
process is so much more difficult and then the bigger question
is what can we do to address it?
Mr. Leahey. Right.
Well, again, as I talked about there are so many different
agencies and statutes that are involved in the relicensing of
the project because water is a public resource and many
interests are involved in the use of that water, and rightfully
so that those people are involved.
Again, however, coordinating all of that and the meetings
and the studies and the information that has to be put together
to do that kind of work takes a lot of time and cost. And if,
as Clay mentioned, if people are not all, sort of, rowing in
the same direction then you can see delays in the process.
And so--
Chairman. Delays and then cost.
Mr. Leahey. And then additional costs.
Chairman. Right, yes.
Mr. Leahey. And again, how that lines up with tax credits
that have short-term extensions that we've seen and a process
that could take five, ten years or longer, provides no
certainty to utilities, developers or investors.
Chairman. It is absolutely something we have got to work
on.
Senator Cantwell had to take a meeting just briefly, but
she will be back to the Committee.
Let's turn to Senator Franken.
Senator Franken. Thank you, Madam Chair.
It seems to me there is something, sort of, looming over
this whole hearing that should be mentioned. When I read the
testimony of the experts gathered here today it was clear that
federal investments in R&D have paid off handsomely in the past
and are vital to our continued success as a nation and
grappling with our future energy needs.
I believe it was the last hearing we had in this room, we
were considering the nomination of Rick Perry to be the new
Secretary of Energy. On that day, it was leaked that the
Administration planned to gut our federal commitment to energy
R&D, a process that also severely threatens the energy R&D
infrastructure and expertise that we so carefully built up at
our national labs. It is striking me that there is no one from
the Administration at this hearing today.
I just am raising that because so much of what we are
talking about is at least related, in a very strong way, to R&D
that has been done by the Energy Department. We are in a
situation where the future of energy and our planet is related
to renewable energy. We have received testimony on hydro and
other renewables, such as solar power, and there are all kinds
of renewable energy and energy efficiency technologies and
energy storage that are part of our infrastructure.
The Chinese are spending $361 billion through 2020 on
energy R&D, and I do not want them to beat us. I want them
buying our technology and not us having to buy theirs. But I am
very worried about this Administration's commitment to R&D.
Mr. Zindler, you noted in your testimony that last year we
installed more solar capacity than any other electricity
generation technology. In the past ten years, we have installed
more renewable energy capacity than anything else.
Your company tracks investment and deployment in the clean
energy sector. In recent years this sector has shown
significant growth. Do you have a sense of how many people are
currently employed in the clean energy sector?
Mr. Zindler. So, well one thing we don't actually do is
count jobs ourselves, but there are certainly others that have.
One of the estimates from the Solar Foundation, which is an
industry group, is that they are employing, I think, about
250,000 to 300,000 people in the solar industry today.
Senator Franken. That is solar.
Mr. Zindler. Solar alone, wind another, maybe 90,000 or
100,000 jobs.
In terms of the dollars, which is something that we do
track, the U.S. has attracted over half a trillion dollars in
renewable/clean energy investment over the last 10 or 12 years
or so which is certainly a lot of money. But in the context of,
as you point out, you know, China typically is investing about
twice that amount per year or somewhere in the neighborhood of
$100 to $120 billion over the last several years.
Senator Franken. What kind of growth are you projecting in
the future for solar in particular?
Mr. Zindler. So, I mean, look, we have our own long-term
forecast--the EIA does, Shell, others do as well. We're
certainly more optimistic and bullish about these technologies
than others have been, but I'll also point out we have
typically been more optimistic and bullish and we've been wrong
on the low side. In other words, there's been more solar build
than people, than most people, would have predicted five years
ago, already.
And last year the majority of new investment that went into
power generating and equipment around the world was in lower
carbon technologies, not in conventional fossil generation.
Senator Franken. That is good.
Mr. Zindler. So already that shift--
Senator Franken. Well, that is good.
Mr. Zindler. That shift is taking place to some large
degree. And we think, you know, solar represents a very small
slice right now of generation in the U.S., maybe one to two
percent, but we think capacity for solar could get up to as
high as 25, 27 percent over the next 25 years. It's a long way
to go, but it's also a long amount of time to get there.
Senator Franken. Well unfortunately, I have run out of time
here, but I just think that we have to continue this commitment
to doing research and development and including in the valley
of death and all that stuff we did. We still have the $40
billion in the Loan Guarantee Program. I think we should use
it.
I want to thank all of the witnesses today for your
testimony. Thank you, Madam Chair.
Chairman. Thank you, Senator Franken.
Senator Daines.
Senator Daines. Thank you, Madam Chair.
Ms. Leopold, in your written testimony you discussed the
Cove Point Project and its importance to bring American energy
to allies overseas, specifically to Japan and India.
In Montana, we have more recoverable coal than any state in
the United States. I am struck by some stats the U.S. Chamber
provided a while back that show in the course of the next 33
years, between now and 2050, the energy demand in the world
will increase by 84 percent from where it is today. We are
going to add 1.6 billion people to the planet.
The question is how are we going to meet the needs as we
look at an 84 percent increase in energy demand in the next 33
years? Thirty-three years seems like a long ways away until I
realize I graduated from college 33 years ago, it doesn't seem
that far away now.
Montana coal is low in sulfur content. It is cleaner than
Indonesian coal. Our allies would very much like to depend on
U.S. resources and natural resources instead of being dependent
on countries around the world that are not always friendly.
Here is some perspective. If you look at the global leaders
in fossil fuel resources, the global leaders, number one is the
United States; number two is Russia; number three, Saudi
Arabia; number four is China; number five is Iran. Our allies
are asking, ``Can we depend on you, the United States, for our
future energy security instead of these other nations right
now'' that if I were allies, I would be very hesitant to
continue to develop relationship and dependence on them.
So I believe energy security is center to our national and
economic security. The question is can you discuss the
importance of expanding access to our allies overseas for
abundant American energy resources?
Ms. Leopold. Thank you, Senator.
Obviously I'm not an expert on coal export facilities, but
what I can share with you is while we were negotiating with our
partners, our customers, for Cove Point in India and Japan, it
was a significant piece of what they were trying to look at. It
was not solely price. It was looking at their long-term
national security. When they looked at the countries that they
could get exported natural gas from--Japan does not have a lot
of natural resources on their own. They must import some type
of fuel to be able to meet their needs, especially after their
nuclear issues. And India is a very largely expanding economy
and has choices on where they get it from.
Senator Daines. By the way, on the Japan point, I think,
needs to be made that there are 2,400 coal-fired plants on the
drawing board right now. Two-thirds will be in India and China
going forward.
So this nonsense that somehow fossil fuels are going to go
away in the course of the next 30 years is just, it is
nonsense. We are either going to be a part of this equation or
we are not. And well, 54 nuclear plants in Japan following the
Fukushima issue and incident. They are going to replace about
45 coal- and natural gas-fired plants. That is where it is
headed.
Excuse me.
Ms. Leopold. Their coal-fired generation is at a much
higher capacity factor than it used to be.
Senator Daines. Right.
Ms. Leopold. So they are looking to bring in more natural
gas to be able to serve their needs.
Senator Daines. Right.
Ms. Leopold. And so, what I would tell you is, is the
countries that you mentioned are the options that they have on
the table realistically, along with a few others. And so, it
seems not only in our allies' national interest to want to look
toward us, but it's also in our national interest.
Senator Daines. Thank you.
Mr. O'Sullivan, I was pleased that President Trump took the
bold and much-needed action to move forward with the Keystone
pipeline. It is a major piece of our nation's infrastructure.
It will create $80 million a year in tax revenues for a lot of
struggling Eastern Montana counties.
Our region also has other needs like approval of rights-of-
way across federal land for gas gathering lines to help
producers capture flaring gas. It seems to be a common theme
from several witnesses today that there needs to be more
coordination among federal agencies in the permitting process
and more certainty in that process.
I strongly support these efforts. They are also resulting
in good paying family wage jobs that are currently at risk.
My question, number one, is how does uncertainty in project
timelines and approvals like we saw with the Keystone XL
pipeline affect the workforce? Second question, can you expand
on the importance of Keystone XL project to your members?
Mr. O'Sullivan. Well, Senator, it's critically important.
I mean, we represent middle-class jobs. We work with
companies that are represented at this table and across the
United States in creating those middle-class family supporting
jobs.
The Keystone pipeline, to me, is a prime example of a
permitting process that doesn't work. I mean, my view, and not
to be, I'm not being political, but when the State Department
says something five times in five reviews, it was pretty clear
to me and pretty clear to those that I probably represent, that
until it got the way that somebody wanted it to be, they were
going to drag their feet and drag out the permitting process
for Keystone pipeline.
That pipeline would put about 3,900 members of my
organization, just the laborers, to work. We're one of 14
building trades unions, so it's critically important to their
livelihood.
As I talk, Senator, about our ability to piece together,
project by project, these are huge job opportunities for our
members. They're huge projects for our members.
It's not typical. My average member works on probably
anywhere from five to seven construction projects a year.
Senator Daines. Right.
Mr. O'Sullivan. And so, projects like this that are multi-
year, that create opportunities for them to work for 7 months,
for 12 months, for 14 months, on one project, are--we view
those as a real plum and a real golden opportunity for those
that we represent.
Senator Daines. Thank you, Mr. O'Sullivan, because it is
important that point is made, because sometimes the folks on
the side of this issue will say well, these are not permanent
jobs. I am the son of a contractor. You keep food on the table
stringing together a bunch of temporary construction jobs.
Thank you.
Chairman. Thank you, Senator Daines.
Senator Hirono?
Senator Hirono. Thank you, Madam Chair.
A number of you have, as the Chair mentioned, talked about
regulatory delays and that we should have concurrent regulatory
review as opposed to sequential. So, is there anything in the
various laws that apply to these agencies that prevent them
from entering into MOUs or whatever other arrangements they can
make to promote concurrent review?
Mr. Leahey. I'll take that one.
Senator Hirono. Mr. Leahey?
Mr. Leahey. Yes, the agencies can enter into MOUs and that
does happen on occasion. At the end of the day they are working
under their statutory authorizations for the types of work that
they have to do.
We've also found, generally, that even direction from
Washington, DC, does not always filter out into the regions.
And so, the person who might be working on your project in
Hawaii or a project in California or wherever may not have the
same view of cooperation as what has been coming down from
headquarter staff.
Senator Hirono. Well, what--
Mr. Leahey. So, I think it's an attitude that needs to
look--
Senator Hirono. Yes.
What I am getting at, are there any statutory prohibitions
that result in subsequent or sequential review as opposed to
people just not being on the same page at these various
agencies?
Mr. Leahey. In hydro, not necessarily statutory, that I'm
aware of statutory prohibitions, but there certainly have been
court cases and others that say the Federal Energy Regulatory
Commission, for another, can't force another agency to act on
its timeline. That the agency, because of its independent
authorities under another statute, can work under the timeline
that it decides.
Senator Hirono. Yes, but that still does not prevent them
from entering into an MOU, such as the example of FERC and the
Corps of Engineers coming together.
I think, Ms. Leopold and Mr. Bird, you both also mentioned
the regulatory process. Should we just encourage more MOUs
among agencies so that we can have a concurrent review?
Ms. Leopold. Well I guess I would say--
Senator Hirono. Ms. Leopold?
Ms. Leopold. Thank you.
I guess I would mention two aspects there.
For the natural gas pipelines, FERC is meant to be the lead
agency and the other federal agencies are cooperating agencies.
And while they still have full discretion for their expertise,
FERC is meant to work together with them to develop a schedule.
So two things that can happen here. The first is some
agencies may choose not to be a cooperating agency and they
could go do their own NEPA analysis. Having better definitions
around the role of a lead agency and the role of cooperating
agencies would certainly be helpful.
Senator Hirono. Okay.
Ms. Leopold. The second aspect that can come into play is,
I guess what I'd call a do loop, where one federal agency will
say, I'm pencils down. I can't process your permit until this
agency finishes the work. And then that agency says, well, we
can't until some other agency. And it's very hard to break that
deadlock. So, any clarification on being able to have that
concurrency of review.
Senator Hirono. I think if we can hear some very specific
ways, as opposed to generalizations, how we can have more
concurrent review, it would be helpful for me, at least.
For Mr. Zindler, tomorrow the White House is expected to
release its budget outline and Bloomberg News reported that
DOE's Office of Energy Efficiency and Renewable Energy which is
currently funded at $2.1 billion a year could see its funding
cut by at least $700 million. That is a huge part of its
budget. As I observed to Secretary Perry during his nomination
hearing, DOE has been a key supporter of Hawaii's efforts to
transition from importing oil to renewable energy, including a
goal of 100 percent electric renewable energy by 2045.
My question, Mr. Zindler, can you comment on the importance
of public investment in clean energy technologies, like funding
provided by DOE, and what the impacts would be on the pace of
clean energy technology innovation if these programs experience
major funding cuts?
I am running out of time so you have to keep your answer
short.
Mr. Zindler. I'll be real quick and just say that outlook
in the short, short run we see a strong pipeline of wind and
solar and other renewable projects that will be built over the
next several years, frankly regardless of the budget cuts.
In the long run, that office and other offices at DOE have
played a very important role in thinking about the next
generation of technologies and supporting the research and
development that needs to go on.
To be clear, if we look out 25 years our very optimistic
assessment is based on the assumption that there will be
technology advancement going forward. And the question is
whether or not the U.S. wants to lead in that or we want to
allow some other country to take the lead on that. So certainly
those programs have been vital to supporting that kind of R&D
work.
Senator Hirono. Well, that is not exactly where this
Administration is going.
Thank you, Madam Chair.
Chairman. Thank you, Senator Hirono.
Senator Cassidy.
Senator Cassidy. Thank you.
Mr. O'Sullivan, I am from Louisiana and there are so many
working families that have the kind of jobs you are describing
and they just make a good living. As you say, it is one job
after another, but they are always steadily working. Hats off
to you for your testimony and for representing the folks whom
you represent.
Ms. Leopold, wait, it took you 14 months to get a permit to
do a survey?
Ms. Leopold. Yes, we actually completed the survey in one
afternoon. It was for one-tenth of a mile.
Senator Cassidy. Did they give you any feedback as to why
it took 14 months to survey one tenth of a mile?
Ms. Leopold. We met with them quite a few times. We
resubmitted an application, we answered questions, and we
eventually got our right to survey.
Senator Cassidy. Now I feel like there is a back story
which you must diplomatically, because you are on national TV,
so to speak, not convey. That is just mind-boggling that an
agency would be so inefficient, ineffective, that something as
harmless as a survey which is not a permission to go forward
rather just a survey, would take 14 months. As my daughter
would say, OMG. I am truly flabbergasted.
Now Mr. Zindler, I really enjoyed your testimony, as I
enjoyed all of your testimony. You mentioned that there has
only been 1.5 gigawatts of high voltage direct current
transmission over a preceding number of years. But I know that
eight years ago, when the Obama Administration came in, both
through the stimulus package as well as through regulatory
changes which allowed utilities to bill ratepayers for such
lines, there was a concerted effort to put them in. What
happened?
Mr. Zindler. So actually, some of my other panelists may
want to comment on this as well, but I guess I would argue that
the challenges around building transmission isn't really
necessarily always related to funding and to whatever stimulus
efforts or infrastructure efforts, if you want to call that
now; it is related often to the nuts and bolts of getting
permitting done across state lines.
Senator Cassidy. Wait, so the green initiative of the green
President was thwarted by permitting?
Mr. Zindler. I would say anybody on this panel would
probably tell you that building large scale power
infrastructure has issues regarding permitting, whether it's
green, yellow, purple, whatever color you want to call it.
Senator Cassidy. I will just say, again, now quoting Pogo,
``We've met the enemy, and he is us.'' It is incredible.
Okay. You mentioned in your testimony the need to reform
electricity markets but you stopped, period, new paragraph,
different topic. What kind of reforms do we need to the
electricity market?
Mr. Zindler. It's a good question and of course, I stopped,
period, because that's incredibly complex and boring topic. But
I could go on all day about it.
But I would say this, and Mr. Imhoff identified this. As we
enter a new era of power generation where we have sources of
generation literally coming from people's roofs, coming from
small projects here and there and not producing when we want
them to, necessarily. So you can't, sort of, just send a signal
and say okay, turn on the solar power. We need to build a
market that reflects that and takes a look--
Senator Cassidy. So let me ask.
In a sense this is a passive versus an act of right. I
think I have that right, although I am not an attorney. So, you
are generating solar. You have a right to sell it on to the
grid, at least getting avoided cost. In the meantime, you are
putting a nuclear power plant out of business.
But you need that for base generation. Now there does seem
to be a quandary we have developed in which you're given a
right to sell back to the grid but doing that disrupts the
business model of those who've made billion dollar investments
for carbon free energy that provides base load to industry. Do
you follow my point?
Mr. Zindler. I follow, but I don't agree with your point.
Senator Cassidy. No, I'm not even sure it's an agree or
disagree. That is an observation.
Mr. Zindler. I would say that, first of all, your point
about nuclear being challenged by current market conditions is
a very good one. And I think you're right that we have 100
gigawatts of nuclear power online, by our estimate maybe a
third of it is facing very challenging economic conditions
right now in being profitable.
The challenges that it is most often facing come from low-
priced natural gas and the impact that that's having on pricing
which, by the way--
Senator Cassidy. I thought that stuff in Illinois was from
subsidized wind coming out of Iowa.
Mr. Zindler. Listen, you could--there are different people
who will tell you different reasons. I will tell you that
generally speaking we're talking about 30 or 35 gigawatts of
nuclear across the country and you look at the wholesale effect
of lower natural gas prices--
Senator Cassidy. Let me ask though, specifically of
Illinois, I am told that it is the subsidized rate in Iowa
which actually sometimes pays a user to use their electricity
that is--and I see this gentleman nodding his head--what is
undermining what is happening in Illinois.
Mr. Zindler. There are different--I'm not going to speak to
the Illinois example. I think it's certainly fair to say that
there are different pressures.
I would agree with the basic point that is if we want to
think about a 21st century U.S. energy economy that does
generate power in a low carbon way, I think your point is
entirely well-taken that nuclear has to be part of the picture.
And I also think there hasn't been an entirely rational
discussion about it to date.
Whether that means you need to go and pick on some other
technology, I don't necessarily agree with that, but I think
looking at nuclear and how you may understand the value that it
provides and the importance of keeping it online, I definitely
would agree with that point.
Senator Cassidy. I thank you. It has been a very
stimulating panel, thank you all.
I yield back.
Chairman. Thank you, Senator Cassidy.
Senator Duckworth.
Senator Duckworth. Thank you, Chairwoman Murkowski and
Ranking Member Cantwell, for convening this important
conversation.
As you know the Trump Administration has called for a
trillion-dollar infrastructure package. I am very encouraged by
the bipartisan conversations we are having on the scope and
breadth of this package, and I am very much supportive that any
type of an infrastructure package includes an energy title to
go with it.
I am looking for several things when it comes to this
infrastructure package, when it comes to energy. I think we
need to support greater use of clean energy, including nuclear.
Illinois has more nuclear reactors than any other state in the
nation. We also need to have strong ``buy America'' and labor
standards that support construction jobs and go further in job
creation by reviving our manufacturing sector. We also need
energy that is affordable.
President O'Sullivan, I was very much encouraged by your
passionate discussion of the jobs that could be created by the
pipelines for your members. Could you speak a little bit to the
Administration's proposed new rule saying that the pipelines
would not have to buy/use steel manufactured in America? What
would it do to your brothers in labor and unions, such as the
Steel Workers Union, if we rely on Chinese steel and the steel
that is being illegally dumped in this country?
Mr. O'Sullivan. Senator, when we had the meeting with the
President and Keystone pipeline was brought up, I anticipated
there was going to be a problem with that one because
TransCanada had already bought the pipeline from India,
actually. When the President mentioned buy American steel going
forward, I always anticipated that the TransCanada, the
Keystone pipeline, was going to be a potential issue but I
guess that that became a reality.
But the commitment to build pipe in the United States going
forward, we are certainly encouraged about that. I mean, we
love building the pipe manufacturing facilities and the United
Steel Workers, our brother and sister steel workers, operate
them.
Keystone aside, pipe was already on the ground, already
purchased. We anticipated that one would be pushed aside, but
going forward we're encouraged that we can build more pipe
manufacturing facilities and that they will be built union and
they will be operated union.
Senator Duckworth. So beyond the pipe that has already been
purchased, and future pipe, would you support a buy America
requirement for that, for example, the Dakota Access pipeline
as well, because we have steel workers who have been unemployed
for months now, laid off, because of the illegal dumping of
Asian steel and manufacturers here in this country?
Mr. O'Sullivan. We would unequivocally support that,
Senator.
Senator Duckworth. Thank you.
Mr. Zindler, I would like to chat a little bit about the
electricity-generating states in the country. You know,
Illinois is a leading net exporter of electricity to other
states. We have extensive wind resources, but we also have
nuclear. We are second in the Midwest in installed renewable
power capacity and third in the region for biofuels production
capacity.
I have heard from stakeholders across my state, small town
mayors and Fortune 500 companies, that in order to fully
realize the benefits of our generating potential, we must build
new transmission lines.
Mr. Zindler, in your testimony you make similar
observations about the need for transmission. In your view,
should we be concerned that the budget cuts the Trump
Administration is seeking from our government agencies will
make it harder, not easier, to get the federal permitting
approval that industry seeks? Even if we throw out every
standard, don't we need the personnel and expertise to execute
these reviews?
Mr. Zindler. I guess I can't really comment, having not
seen what this budget is going to be. I will say this, that
certainly there are--I think under the last eight years the
U.S. Department of Energy has focused more and more of its
attention on next generation technologies and how to facilitate
that, both by funding through the labs, but also efforts and
outreach.
So, I do think that the personnel is a critical part of
this question. I think Mr. Imhoff could probably comment more
about that at the lab level. But your point is very well taken,
although, like I said, we really would want to see what the
actual programs are that get cut potentially.
Senator Duckworth. Well, so if they cut the inspectors and
there were fewer to go through to execute the review process.
Would that make it harder?
Mr. Zindler. That wouldn't be great news.
Senator Duckworth. Okay, thank you.
Mr. Bird, as you know our transmission system is privately
owned, not publicly owned. What type of policies would help
industry to invest in new transmission lines outside of federal
permitting reviews? For example, would state revolving funds be
useful? Are there investments in workforce that need to be
made?
Mr. Bird. Again, I think as my colleague mentioned earlier,
you know, funding is really not the primary constraint for us
to expand our transmission infrastructure. It's really working
through the permitting process. That's the key thing.
I think I would comment that there are other transmission
owners and operators that we connect to that are also important
to manage the entire reliability of the grid and even serve our
own customers. And so, there are entities like the Bonneville
Power Administration, for example, and other public entities
that might benefit from some sort of public financing
opportunity that could be a possibility. But again, our key
constraint is, frankly, really getting through the permitting
process to bring good projects, you know, into being.
Senator Duckworth. Well, let's hope the hiring freeze and
the budget cuts do not affect the folks who actually do that
review.
Thank you. I am out of time. Thank you, Chairman.
Chairman. Thank you, Senator.
Senator Gardner.
Senator Gardner. Thank you, Chairman Murkowski, for holding
this hearing today, and thanks to the witnesses for your
expertise and your participation in the hearing.
I know Senator Cantwell brought this up in her opening
comments. She was talking a little bit about cybersecurity
concerns, but I, too, have read the article that was in the
Houston Chronicle--the title of the article was ``Opportunities
to Improve American Energy Infrastructure.''
It talked about, I think, a subject called ``Hacked,
cybersecurity experts easily infiltrate energy company's
networks.'' It was a story about how, for just a couple hundred
bucks, a security team, using a blanket and a couple of 16-foot
ladders, were able to hike a fence, go into the computer
network building of a power plant and basically infiltrate the
network that way. That was just a way for the team at the plant
to test its security and make sure that they were doing it
right.
The Senate has held 20 hearings this year in nine different
committees on cybersecurity. One of the concerns that I bring
to this Committee, to this hearing and to the industry is the
cybersecurity risks in the energy sector. A big concern of mine
is how we have to have infrastructure conversations that
include a dialog on protecting and recovering electricity,
critical infrastructure from cybersecurity threats.
Mr. Imhoff, I will start with you. I know that the National
Renewable Energy Laboratory (NREL) works with PNNL in the Grid
Modernization Laboratory Consortium. Thank you for your work
with the consortium, and obviously, your lab's role in cyber
resilience of the grid.
A concern is about the process for recovery of the
electricity grid should there be a widespread outage from a
cybersecurity or cyberattack. Could you describe the process
for conducting exercises with the industry regarding potential
cyberattacks?
Mr. Imhoff. Happy to, Senator, and thank you for all the
good support we get from NREL and the overall good
modernization effort.
The industry has, as driven by the NERC-set requirements,
incident plans that they put in place to deal with cyber
issues. They have conducted over the last several years four
national exercises, called Grid X. These exercises are designed
around specific scenarios of threat.
These exercises are led by NERC, and their member utilities
are invited to come in and participate in this artificial
exercise and demonstrate how they would implement their
incident response plan.
These exercises include participation from federal
officials, including the Department of Energy and other federal
entities, Department of Defense and others who have
infrastructure in these locations. It also includes law
enforcement and vendor community, et cetera. It is a very large
stakeholder group, a multi-day activity, with very complex
scenarios where they basically exercise and test their incident
response plans, extract lessons learned and look for how they
can improve them into the future.
We are currently designing Grid XV. PNNL helps drive those
activities. We participate as an infrastructure with
substantial national security information, all within our
firewalls and we are--we monitor and drive the activity. So,
it's a large national exercise.
And then I would add to that conversation, Senator, that
with the FAST Act, the authority for it rests with the
Department of Energy in terms of those emergency response
activities. The President needs to make a declaration of an
event. The Secretary then needs to identify what the path
forward is going to be. There is dialog, consultation with
industry in that activity, and then the utilities would begin
to implement their incident response plans accordingly. So,
that's the high level, general approach that I can share with
you.
Senator Gardner. What percentage of industry has
participated in such an exercise?
Mr. Imhoff. I don't know the exact percentages. We have
three and a half thousand utilities. I'm guessing you're having
30 to 60 utilities participate in those exercises.
But the utility industry is like a wedding cake, with lots
of layers. And the risk in cyber events tends to be higher in
those entities that have a broader span, PacifiCorp, Pacific
Power, Bonneville and others, the Western Coordination Council,
et cetera. They're all at the table and playing. You may not
have a small, municipal utility from Eastern Washington
participating so I think while it's small in fraction in
number, it's probably a large fraction in terms of those
strategic partners that need to be there.
Senator Gardner. What more ought we be doing in terms of
the cyber structure, cybersecurity structure, that government
can use to help utilize with industry?
Mr. Imhoff. Excuse me, could you repeat the question?
Senator Gardner. Yes, how can we work, how can the Federal
Government better work with industry to create a more proper or
better cybersecurity system?
Mr. Imhoff. So, several dimensions.
One of the key issues is around training and workforce
development. And so, what the Federal Government can bring to
bear is advanced techniques and concepts that are developed in
support often on the high side of the activity. We can bring
those tools, techniques and concepts available and forward to
industry. And that's what's going on in the CRISP Program
today.
The government can also bring its fundamental science in
deep learning and advanced computation to help develop better
situational and awareness tools that take advantage of the
broad sensed information that we're now receiving from the
utilities.
General Electric reported two weeks ago, at a House
hearing, that only two percent of this vast digital data flow
coming in off the grid is actually being utilized and analyzed.
So, we have opportunities for better leveraging advanced
computer, advanced analytic concepts, visualization, to give us
a better state of awareness in terms of what's going on with
the grid, where is the risk. And that's a process where, I
think, the Federal Government could deliver those tools to the
private sector to enhance security.
Senator Gardner. Great. Thank you.
Thank you, Madam Chair.
Chairman. Thank you, Senator Gardner.
Senator Cantwell.
Senator Cantwell. Thank you, Madam Chair.
Following up on those same questions, Mr. Imhoff, that my
colleague from Colorado asked. In our energy bill we really
tried to focus on the workforce side since there's a huge
shortage of workforce well prepared to help us on
cybersecurity. So we definitely want to do that and also on
that supply chain that we talked about earlier. We want to make
sure that we know where the supply chain is coming from, where
the products are coming from.
You talked a lot about distribution, automation and
management control systems. When you think about Homeland
Security, protecting or thinking about how to harden our
targets on a critical side or, you know, in the old days we had
a pipeline that we might want to protect. Now we have an entire
network that is increasingly linked as our economy has become
more and more wired.
The points of contact are very diffused and coming up with
this critical infrastructure network that we can defend against
both various small malware attacks, you know, such as the one
that happened in Vermont against a utility up there (people
believe that was some sort of Russian malware) and then the
state attack response where a foreign entity actually does
something like what has happened in Ukraine. You mentioned a
few of the tools that we need. Why do we need DOE to play more
of a leadership role of this area?
Mr. Imhoff. Well, I think that the solution is very much a
partnership between DOE and industry. So it's a joint, kind of,
community that needs to work together on this activity.
There's a lot of just fundamental blocking and tackling
that needs to transpire. When DOE conducted the modernization
four or five years ago, all of the investment grants required
cyber protocols as standards put in place, a phenomenal benefit
to the small and midsized utilities who don't have the large
engineering staffs and all that deal with cybersecurity. So it
really raised the bar in terms of small and midsized utilities
understanding good practice around cybersecurity.
I think there remains a lot of opportunity for training and
education and demonstration to raise the bar to good, basic
practice of both around cyber operations, even around simple
things like supply chain acquisition language. The small
utilities that are just now moving into the advanced metered
would be told to have the right language in their acquisition
to reduce their vulnerability to the supply chain risk.
Another big issue that I would raise, and it really fits
the energy infrastructure question, is the very tight and
increasingly tight dependence between energy and our
communication networks. Ten years ago it was pretty easy for
PacifiCorp to run their system with not a lot of
communications. Today's communication is very fundamental. It's
a real-time operation and situational awareness. And as we have
the explosion of the devices at the edge, we need to rethink
how do we provide those communications and how do we make them
secure?
There's, today the practice is an application brings us the
communications with it. Tomorrow, we think we need to look at a
different architecture, more of a layered architecture,
infrastructure architecture, around communications that will
serve multiple applications. It's easier to secure. It's easier
to train so that it's implemented to maintain effectively.
So these are some of the changes we probably need to think
about and frame.
And here again, I think, is a very good partnership between
some of the fundamental science knowledge coming out of the
government linked with the very good work of our vendor
community. And this just goes to the world and many others. It
could bring to bear in terms of how do we re-architecture and
provide the traffic capacity that we need for a more
distributed, more intelligent and more digital energy future.
Senator Cantwell. So we could have a bulk attack like we
have seen in other places?
Mr. Imhoff. Well, there's a wide range of attack scenarios
that could be applied, and we need to design systems and have
the human training to resist those.
The current, for instance, you mentioned the Ukraine
activity. I was not personally involved in that diagnosis, but
I do know that most of the NERC requirements have a defense in
depth activity that would have been very resistant to what
occurred in that case. There again, architecture, training,
preparation, incident response planning, I think, are the ways
that we help defend.
Senator Cantwell. And this is why I want DOE to make sure
they are playing a leadership role. I want to make sure when
the President puts out an Executive Order, he doesn't say that
that is for the Homeland Security Department.
What you just described is a key responsibility that only
DOE can carry out because you are talking about this system. To
me it is worrisome that these attacks happen. Every time there
is some story line in a movie or TV show about cyber, I always
am constantly asking my staff for an analysis of whether that
really can happen or not.
I find it very interesting that most of those plots involve
attacks against energy systems. Why do they attack the energy
system? A disruption of our energy supply would make us so
vulnerable.
So thank you for your testimony and outlining those things.
I think it was very clear about why we need a more aggressive
role by DOE and all of these cyberattack issues.
Thank you.
Chairman. Thank you.
Senator King.
Senator King. Thank you, Madam Chair. I apologize for my
lateness. I was at an Armed Services Committee hearing.
Mr. Imhoff, the grid, if Edison woke up tomorrow, would
look pretty much the way he envisioned it and saw it developing
100, more than 100, years ago. Don't we need to be thinking
about the grid in a different way, at least in terms of the
potential of distributed energy, that is, generation at the
factory or at the home level and also load management, demand
management? These are things that can fundamentally change the
grid from the model of big plant wires and passive receiver of
the power. Is that something that you think we need to be
thinking about?
Mr. Imhoff. Absolutely, Senator.
You're right. Many of the same components that Edison was
familiar with are still there and they're still, in most cases,
performing very well. But we have a transition to much more
distributed activity, particularly down at the distribution
system level.
And pretty soon it's going to challenge our ability to
control those devices. It's going to challenge our ability to
communicate with those devices, and oftentimes the grid
reliability coordinators can't actually see what's going on at
that level. Twenty years ago, it didn't matter. They were,
distribution and transmission, were separate worlds.
Senator King. But in Maine, for example, we have smart
meters. Isn't that part of the answer? My sense is we have the
technology. It just isn't utilized.
Mr. Imhoff. Well, so the nation has 64 million in smart
meters this year. That's about a 50 percent penetration. Most
of the utilities I talk to have extracted much more value out
of that investment than they estimated going in. So it's
delivered a lot of value in terms of customer choice,
reliability management and other things. At the national level,
we have 2,000 phasor measurement units that are networked
across the U.S. We can see the system like never before.
Senator King. And that gives us the potential to do things
like load shifting.
Mr. Imhoff. Yes.
Senator King. Load management. And we don't have to cook
our water at four o'clock in the afternoon.
Mr. Imhoff. That's right, but we need some new approaches
for how we control and how we communicate, interact, with these
resources.
Senator King. Well, I would point out that one of the
things people always talk about is energy costs. Everybody
focuses on the energy. Again, in Maine, the cost of
distribution and transmission is now equal and in some cases
more than the cost of the energy itself. We need to be thinking
about how to make the grid more efficient and perhaps how to
avoid future infrastructure investments that may be unnecessary
given the role of distributed resources.
Mr. Imhoff. Correct.
The DOE initiative that we mentioned earlier, the Grid
Modernization Initiative, has some projects looking at next
generation tools and platforms that connect across distribution
and transmission operations. So we can actually run that system
closer to the edge, get better asset utilization. That gives,
that would keep the delivery system more affordable and lets
you exchange value across that membrane.
We did conduct six workshops around the country for grid
modernization--Austin, Atlanta, Minneapolis, Boston, Seattle.
And we come--had a common feedback that increasing, there's so
much going on at the lower distribution level in terms of
photovoltaics and demand response and other things, that the
bulk system operators reliable for reliability are now saying
that they need to be able to see down into that system and vice
versa, the distribution companies want to be able to see what's
going on with the bulk system. Our digital opportunities mean
we need to have a better exchange of information and operate in
a more unified fashion.
Senator King. But as you know the grid is, by definition,
an inefficient animal because it is designed for the hottest
day, the most use of the year. It's like building a church for
Christmas and Easter and you have a lot of empty pews the rest
of the year. There is a lot of slack in the grid. It is that
target of opportunity, it seems to me, that we need to be
thinking about in terms of things like demand management.
One more quick point before we leave. I am really worried
about grid vulnerability to cyberattack. Ukraine was a warning
shot. How many warning shots do we need?
Somebody observed the other day that we are looking at the
longest wind up for a punch in the history of the world. We
know it is coming. And I know everybody says well, we are
working on it and we have the architecture and everything else.
I am just worried that we really don't have the sense of
urgency that, I believe, is called for in this situation. I am
going to mention a bill that Senator Risch and I have sponsored
before this Committee to have your lab examine the idea of
analog, putting in some of the grid architecture, some old
fashion analog switches because that is one of the things that
saved them in the Ukraine, that they had to--they weren't as
fully digitized as we are and therefore, in one sense, less
vulnerable. Do you have a thought on that?
Mr. Imhoff. So, there are several different approaches
being considered. One is the use of analog systems, the other
is looking at separate networks, and the other is looking at
creating air gaps between certain networks. Some of these have
been tried in various venues in the past.
I acknowledge that in the case of Ukraine, it was a bit of
a backstop for them that was helpful. It remains to be seen
whether that's the right path to go forward as a nation. If you
move into some of those directions, you let go of some of the
other benefits you're getting from the digital systems.
Senator King. And our bill does not mandate that we move
forward. It mandates that your lab and utilities, on a
voluntary basis, study this as an option. It does not require
anything.
Madam Chair, my time has expired. I will yield, but I would
like a second round, if possible.
Thank you.
Chairman. Thank you, Senator King.
Senator Cortez Masto.
Senator Cortez Masto. Madam Chair, thank you. I also
apologize for my tardiness. I am also attending the Banking
Committee hearing, so I appreciate you being here today,
appreciate the written comments ahead of time, that was very
helpful.
I just have a few questions, starting with Mr. Bird. Nevada
has the most public lands of any state in the nation. You
brought up a salient point in your comments, written comments,
that there is sometimes tension between protecting public lands
and expanding access to renewable energy through expanded
transmission lines. Do you believe that collaborative agency
implementation of the westwide corridors has improved that
issue?
Mr. Bird. Thank you, Senator.
My first comment would be we've seen, you know, good
examples of coordination amongst federal and state agencies.
The best example of that was in our energy gateway project in
the Sigurd to Red Butte, a 170-mile project in Utah, you know,
that crossed federal lands.
In that state there was very good planning and coordination
up front by the agencies and then that was executed and that
was a project that was then permitted on a timely basis. We
were able to get it completed and provide the value that it
needed to customers.
I'm not as familiar with the western corridor, specific
questions, so I'd like to follow up with that, you know,
following the hearing today, if I could.
Senator Cortez Masto. No, I appreciate that. Again I
apologize for being late and you may have already talked about
this, but how do you think federal agencies can better provide
schedule certainty to meet the permitting targets?
Mr. Bird. And again, thank you for the question.
I think that is really the most important issue that we
have. Schedule certainty is, frankly, much more important than
how long it takes.
I mean, I've described the process that took ten years with
our Gateway West Project and what was particular to causing
that long delay was the fact that we had to restart the
permitting process all over again as soon as a new policy or
guideline was issued. That's what really contributed to a very
long delayed project that would otherwise bring in tremendous
amounts of new clean energy and relieve constraints.
So that really is fundamental to our recommendation that,
you know, there would be a policy enactment that would provide
deadlines and accountability, single point of accountability.
That's how we run our business. You know, I ask a single
person, that's going to be responsible to deliver a project, on
schedule, on budget, you know, if we could get more of that
incorporated into how the Federal Government operates in a
permitting process, that would be much appreciated.
Senator Cortez Masto. Thank you.
And then Mr. Zindler, geothermal is a very important energy
industry in my state, like the FORGE Geothermal Project that I
recently had the opportunity to visit. They are concerned about
their exclusion from the investment tax credit as well as the
production tax credit. What incentives should be available to
support the renewable energy sector, especially as the ITC and
PTC are phased out?
Mr. Zindler. That's a very good question. And as you know
there was an extension for the wind and solar industries, I
believe, at the end of 2015, but not for some of the other
technologies.
I would, sort of, caveat this by saying that the ITC or the
tax credits for geothermal were never a perfect fit anyway
because of the long lead time that it takes to explore a
geothermal resource to determine whether or not it's sufficient
and then make the determination to go forward with developing a
project.
So, the long timelines associated with that process don't
necessarily fit and on again, off again schedule on the tax
credits which is what we'd seen previously. So, that wasn't a
great fit to begin with, but of course, not having it at all is
certainly worse.
Senator Cortez Masto. Right.
Mr. Zindler. And I think that's really where the industry
is today.
But geothermal, in particular though, we have seen other
kinds of examples in other countries in other contexts where
they're trying to figure out a way to, sort of, offset the
early risk associated with doing exploration. And that is
something, I think, that is important to the specific, but very
important to the geothermal industry to, sort of, oversimplify
it and with geothermal the developer and the explorer has a lot
of the risk that's similar to exploring, say, for oil or gas.
But the upside is not as high because you can't sell what you
get out of there at the same price.
A rational way to try and support the industry that we've
seen in other places is to try to help defray some of the early
stage risk that's associated with geothermal, and that might be
something at least worth considering in the U.S. context.
Senator Cortez Masto. I appreciate that, thank you. And I
see my time is almost up.
Let me also just make a comment about cyberattack issues.
In the State of Nevada, as Attorney General, I chaired a
Technology Crime Board. This was one of the issues that we
focused on because it is real and it is just a matter of time,
and a concern of mine as well and something I would like to
see, working with the industry, how we address this.
There is no doubt in my mind. There are attacks that have
already occurred, will continue to occur and we need to be very
proactive and work together to address this issue.
So, thank you.
Chairman. Thank you.
I have, probably, a wrap up comment, but I know Senator
King, you had asked for a second round.
Senator Cantwell, do you have another question?
Senator Cantwell. I wanted to get Ms. Leopold or Mr. Imhoff
on the record about the larger benefits of pumped storage to
the grid, if any of you have any comments about that, or Mr.
Zindler.
Mr. Imhoff. So, pump storage fits in that category that I
called flexibility. Back in the old days in the West when we
had lots of excess storage capacity, they just used that pump,
the hydro system, for a lot of the flexibility in the system.
Pump storage is an awesome resource for maintaining grid
reliability. I think the big challenge is just the siting
issues, you know, the economics behind pump storage, I think,
are very challenging today. But, as a part of a grid
infrastructure for reliability, it's a phenomenal resource for
reliability surfaces and flexibility.
Senator Cantwell. Anybody else? Yes?
Ms. Leopold. I would just add that it very much can partner
with a diverse set of energy resources, such as renewables, to
be able to use that at the times when it is available and then
be able to use the hydro at other times.
So, I very much echo that comment, but it really does add
to a lot of flexibility, both for grid reliability as well as
partnering for increased renewables.
Mr. Leahey. And I would just add that there is, right now,
about 15,000 megawatts of proposed pump storage projects,
different sites across the United States, mostly in the West.
One of the reasons why we are seeing that is because of
integration of intermittent renewables.
Projects are now being asked to do more, and they're
responding. Years ago, my utility members telling me they never
would have considered pumping during the daytime, you would
always pump at night or on the weekends. Now in California,
with as much solar penetration as there has been, they're
actually using some of that solar energy to pump during the
day.
So the grade is changing, the world is changing and pump
storage, I think, has a tremendous role to play. Even though
traditionally it's been grid, large grid storage, we are now
looking at smaller sized facilities as well.
Senator Cantwell. And what geographic region do you think
can look at projects like that?
Mr. Leahey. Well, you know, the proposed projects right now
are across, I think, something like 10 or 12 states. Obviously,
you have to have certain characteristics. You have to have the
head differential between the upper and the lower reservoir.
But again, I think, we're looking at a variety of different
projects. There's even a project in Hawaii that they're looking
at as well.
So, I think, you're, we're looking at traditional projects
which were larger scale projects, but we're also looking at
some new technologies that the DOE has been looking at as well
that would be smaller in size and scale.
Senator Cantwell. Well it just strikes me, as we look at
battery storage that some very smart people are working on,
there is a basic storage technology that is already proven here
and can provide that flexibility and reliability. I definitely
think we should focus more on what it can do for us in
providing that flexibility to the grid. So thank you.
Mr. Leahey. We would agree.
Senator Cantwell. Thank you, Madam Chair.
Chairman. Thank you.
Senator King.
Senator King. On the point of storage which, I think, is
one of the key issues going forward. I became familiar with a
really fascinating project in, I think it is in Nevada.
It is called Solar Reserve where it is a solar facility
with concentric rings of mirrors, a tower in the middle, but
the key is that in that tower at the top where all the energy
is concentrated, is molten salt which stays liquid at over
1,000 degrees. The salt is heated up. It is then pumped down
into a heat exchanger and it can hold its heat overnight.
So this is essentially a solar plant that is also a base
load plant. It can deliver power 24 hours a day/seven days a
week which is, I believe, a kind of breakthrough in the
technology. Molten salt apparently has much better
characteristics for this than water which vaporizes at 212
degrees. So this is very interesting, and I think this is a lot
of work going on in batteries and in other kinds of things.
The question I wanted to ask, Mr. Leahey, is that for
example, in Maine we have something like 700 dams, very small a
lot of them, a megawatt or so. A lot of them are facing
relicensing at high cost. Do you have some thoughts on how we
cannot lose sight of hydro as a clean energy source and be sure
that the regulatory system is tailor made to the size and
potential impacts of the projects?
Mr. Leahey. That's a great question.
There are approximately 400 projects that are coming up for
relicensing, existing projects by 2030, representing over
18,000 megawatts of capacity. That's a tremendous amount of
capacity in the existing hydropower system that if you lose
flexibility, if you lose capacity or if projects start to get
surrendered because of cost concerns, you're going to have to
replace that clean, renewable power with something else. And
will it be renewable or will it be low carbon? Who knows?
I know Maine does have this issue. I've spoken with
Kennebunk Power and Light, who have a very small project. And
smaller projects, in particular, face, in many ways, the same
licensing process that the larger projects have but they don't
have the economies of scale. In that sense, a lot of
transactional costs get placed onto those projects because of
the long timeline, some of the duplication of effort that is in
that system.
So I think, this Committee, and I commend Senator
Murkowski, Senator Cantwell and the entire Committee on what
they tried to do for hydro licensing last year. I think a lot
of what was proposed in that bill would have helped projects
like those in Maine.
Senator King. If you have any further thoughts about how
this, and we don't want to give up the regulatory regime all
together, but how we can scale the requirements to the size of
the project so that we don't lose these resources, many of
which have been in place for 100 years.
It is a settled ecosystem. In fact, there would be as much
or more environmental disruption if the dam came out than if
you can maintain it. So to the extent that you can provide
thoughts and suggestions, any of you, on the licensing
challenges so that we can right size the regulations, if you
will.
Mr. Leahey. I would be happy to follow up with your staff
and look at this more closely.
And again, I think there are different types of hydropower
projects, as I highlighted in my written testimony, from new
builds to small conduit projects to marine energy. And I think,
looking at those individual technology types and trying to
determine what is the appropriate scope of review of those
projects, it may not be necessary to give the same kind of
scope of review that you would give to a large, new build
project that you would be proposing, as opposed to, building on
a conduit on an existing dam or something like that.
Senator King. Thank you.
Thank you, Madam Chair.
Chairman. Mr. Koplin?
Mr. Koplin. Senator King, if I could just share something
actionable there.
If you could take one representative from each of the
federal and state agencies that are going to touch those
projects and find champions in those departments that are
advocates of hydro and put together a working team that they
could go out in the field and be that economy at scale, that
that's all they work on.
The FERC did something similar on their side, I think back
in the 80's or 90's. They had a whole bunch of licenses that
came due at the same time. They hired a contractor to handle
the FERC side.
It's a trillion-dollar question. How do you streamline the
regulatory process? I'm not sure that you can if you have bad
actors out in the field and I've seen those in state agencies.
I've seen them on the federal side. But if you can get the
people who really have the agility and the desire to promote
those projects and get them out in the field where they can
still execute their responsibility to the environment and to
the other stakeholders, I think you can achieve economy at
scale that would be orders of magnitude, frankly.
Senator King. Particularly because you are developing
projects that are, themselves, environmentally beneficial. It's
not like you are building something that would be necessarily
damaging. We are talking about clean energy and renewable
energy here.
Mr. Koplin. Exactly, and that's--the accountability has
been mentioned a couple times.
We had non-governmental organization, I think this is a
good, little story that fiercely opposed one of our
hydroelectric projects, but they never read a plan set when we
offered them. They never came out in the field and looked at
the project site. They advertised nationally and got well
intended funding to oppose the project. And at the end of the
day, three years later, we actually hired them to re-vegetate
some of the project. Once they saw it, they were impressed and
actually approached us and asked if they could partner on
future projects.
So, people have to--there has to be an accountability to
actually see what's going on and be answerable to their
opposition, I guess.
Senator King. And let's be clear, nobody here is advocating
abandoning regulation or giving a free pass to any project.
Again, it is a question of having the regulation meet the
specifics of that situation and particularly, given the scale
of the project, you do not require 10,000 pages for a home
mortgage at a bank, although, I fear, we are heading in that
direction sometimes. But it is a question of right sizing the
regulation, I think.
Thank you.
Thank you, Madam Chair.
Chairman. Thank you, Senator King.
I know that a couple of our witnesses have to leave at
12:15, but I just wanted to ask Senator Cortez Masto, if you
had any further--
Senator Cortez Masto. No.
Chairman. Okay.
I want to thank our witnesses for being here today. I think
there was great discussion, a lot, certainly, on cyber which is
on everyone's mind.
The discussion about renewables is always important and I
think, particularly, when we hear some of the discussion about
where the winners and losers are with some of the policies that
we lay down.
We know that we have got production tax credits that are
still out there for wind and for solar, but you mentioned the
geothermal aspect of it.
We also talk about hydro and the fact that because it is
not designated as renewable, it misses out on some of these
opportunities.
I think it was very important, as we talk about the
infrastructure, to recognize the potential for jobs and job
creation. And Mr. O'Sullivan, I appreciate your testimony.
Mr. O'Sullivan. Thank you.
Chairman. Whether it's how we build out pipelines, whether
it's how we access amazing resources like ANWR or other energy
sources around the country, these are jobs and this is our
economic future here, so it is good to hear.
I will say, though, that some of what we heard today about
the regulatory impediments to our infrastructure, we can have
as many shovel ready projects as we can possibly line up on
paper, but when we meet the regulatory overlay or delay or just
the bureaucracy that, unfortunately, hits and causes that
uncertainty, causes increased costs, it really does complicate
so much of what we do.
And to hear your comments, Ms. Leopold, about a 14-month
process to get a permit to survey--a survey that takes
basically a day. It just reminds us of what we are dealing with
with hydro relicensing, ten years and I am told relicensing
costs of tens of millions of dollars, $20 to $50 million, in
that range for relicensing of an existing facility.
We saw what happened to Shell a couple years back, seven
years and $7 billion into a project that they walked away from.
Conoco-Phillips, the NPRA was looking at about seven years to
permit a bridge, three of that for the review of the bridge,
four of that for litigation. It causes you to wonder how we get
anything done around here.
I think, Mr. Koplin, you kind of summed it up when you
said, ``Our little project is at the bottom of the regulatory
dog pile.'' Sometimes it must make you feel just like that. How
do you crawl out from underneath it?
I think part of our job here is to, again, we don't want to
abandon the regulations that allow for safety and good
environmental considerations, but we want to allow for a
process that is a workable process and one that is fair to the
investors and fair to the project and fair to the workers that
want to create them.
So this has been a good discussion. I appreciate it all.
Again, thank you all for making it through the weather to
be here today and to contribute to the testimony.
Senator Cantwell.
Senator Cantwell. I would just feel remiss if I did not say
to Mr. O'Sullivan, three days before St. Patrick's Day, and
he's wearing a green tie--we're not going to be here on St.
Patrick's Day--Happy St. Patrick's Day.
Thank you.
[Laughter.]
Chairman. We stand adjourned.
[Whereupon, at 12:13 p.m. the hearing was adjourned.]
APPENDIX MATERIAL SUBMITTED
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