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93–745 2015

STATE PERSPECTIVES: QUESTIONS CONCERNING 

EPA’S PROPOSED CLEAN POWER PLAN 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 9, 2014 

Serial No. 113–172 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

(III) 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

STEVE SCALISE, Louisiana 

Vice Chairman 

RALPH M. HALL, Texas 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. Jerry McNerney, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 5 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 104 

WITNESSES

Kenneth W. Anderson, Jr., Commissioner, Public Utility Commission of 

Texas ..................................................................................................................... 7 

Prepared statement .......................................................................................... 10 

Tom W. Easterly, Commissioner, Indiana Department of Environmental Management ................................................................................................................. 25 

Prepared statement .......................................................................................... 27 

Henry R. Darwin, Director, Arizona Department of Environmental Quality ..... 31 

Prepared statement .......................................................................................... 34 

Kelly Speakes-Backman, Commissioner, Maryland Public Service Commission ........................................................................................................................ 37

Prepared statement .......................................................................................... 39 

David W. Danner, Chairman, Washington Utilities and Transportation Commission .................................................................................................................. 48 

Prepared statement .......................................................................................... 51 

Travis Kavulla, Commissioner, Montana Public Service Commission ................ 56 

Prepared statement .......................................................................................... 59 

SUBMITTED MATERIAL

Petitioners’ motion filed September 3, 2014, State of West Virginia v. United 

States Environmental Protection Agency, submitted by Mr. McKinley *

U.S. Energy Information Administration tables, submitted by Mr. Whitfield ... 106 

Statement of the National Association of Home Builders, submitted by Mr. 

Whitfield ............................................................................................................... 111 

Subcommittee memorandum .................................................................................. 114 

Letter of August 19, 2014, from the State of Mississippi Department of 

Environmental Quality to the U.S. Environmental Protection Agency ........... 120 

* The information has been retained in committee files and is also available 

at http://docs.house.gov/meetings/IF/IF03/20140909/102623/HHRG-113- 

IF03-20140909-SD010.pdf 

(1) 

STATE PERSPECTIVES: QUESTIONS CONCERNING EPA’S PROPOSED CLEAN POWER 

PLAN 

TUESDAY, SEPTEMBER 9, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in room 

2123, Rayburn House Office Building, Hon. Ed Whitfield (chairman 

of the subcommittee) presiding. 

Present: Representatives Whitfield, Hall, Shimkus, Terry, Latta, 

Olsonm McKinley, Gardner, Kinzinger, Griffith, Barton, Upton (ex 

oficio), McNerney, Tonko, Yarmuth, Green, Capps, Barrow, Castor, 

and Waxman (ex oficio). 

Staff Present: Nick Abraham, Legislative Clerk; Gary Andres, 

Staff Director; Charlotte Baker, Deputy Communications Director; 

Sean Bonyun, Communications Director; Leighton Brown, Press 

Assistant; Allison Busbee, Policy Coordinator, Energy and Power; 

Patrick Currier, Counsel, Energy and Power; Tom Hassenboehler, 

Chief Counsel, Energy and Power; Brandon Mooney, Professional 

Staff Member; Mary Neumayr, Senior Energy Counsel; Chris 

Sarley, Policy Coordinator, Environment and Economy; Peter Spencer, Professional Staff, Oversight; Jean Woodrow, Director, Information Technology; Phil Barnett, Minority Staff Director; Alison 

Cassady, Minority Senior Professional Staff Member; Caitlin 

Haberman, Minority Policy Analyst; and Alexandra Teitz, Minority 

Chief Counsel for Energy and Environment. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. I would like to call the hearing to order this 

morning and certainly want to welcome our witnesses, and I will 

be introducing each one of you after our opening statements. 

And at this time, I would like to recognize myself 5 minutes for 

an opening statement. 

This morning’s hearing focuses on EPA’s proposed Clean Power 

Plan which would impose Federal limits on carbon emissions from 

each state’s electricity system. This is our third hearing on the subject, and the previous two hearings left many questions unanswered about EPA’s legal authority to impose this sweeping global 

warming agenda under a rarely used provision in the Clean Air 

2 

Act, about the feasibility of implementing EPA’s unprecedented 

and highly complicated scheme, and about the potential adverse 

impacts on electricity costs, reliability, and economic growth. 

Recently, the President has been criticized by a lot of people for 

being indecisive relating to ISIS, immigration reform, Ukraine, national security, and other issues. The one issue where he has not 

been criticized for being indecisive has been addressing climate 

change. He has made it very clear that he thinks it is the number 

one issue facing mankind today. 

Those of us who disagree with him on this issue do not deny climate change. We simply suggest that his priorities are wrong, and 

after having spent the last month back in our districts, I think it 

was reinforced to many of us that there are many significant issues 

more important to American people as well as the world today than 

climate change. For example, if you went to Liberia where they had 

the Ebola outbreak, I don’t think they would say climate change is 

the most important issue. Clean water, healthcare access, jobs, economic growth, all of those things are vitally important to not only 

the American people but people throughout the world. 

Now, the end of this month the United Nations is going to have 

their climate change policy. There have been all sorts of news stories recently about heads of states will not be attending from 

China, from India, from Germany, and many countries like Australia have recently abolished their carbon tax policies in that 

country. So, it is not about denying climate change. It is about the 

priorities that at this particular time in our history. 

Now, the President is being more aggressive through EPA than 

any recent memory of EPA actions. There has been a plethora of 

regulations coming out that has been pretty damaging to our economy, and many people are of the firm belief that our economy is 

still sputtering because this administration has created so much 

uncertainty and obstacles to economic growth. 

And as you know, we are one of the few countries in the world 

where you cannot even build a new coal powered plant because it 

is so costly and the technology is not available to meet the stringent standards and emissions standards set by EPA. 

Even in Europe, which is viewed as most—they have more renewable energy produced from electricity than any other area of 

the world, they are building coal plants because the natural gas 

prices coming from Russia are so high that they have that flexibility. We don’t have that flexibility in America because of this Administration. 

And so now, today, we are going to be addressing the federalization of the electric generating system by this EPA setting standards for emissions for every state in the country of CO2, and yet, 

we don’t—America, we don’t have to take a back seat to anyone on 

being concerned about our environment. Our CO2 emissions are the 

lowest they have been in 20 years. 

And so, as Congress, we have the responsibility and we are delighted to have you here today because you represent the states, 

and some of you are fully supportive of the Obama Administration’s policies and some of you are not, but we want to know what 

you think. This is a complex rule. It is not going to be easy to deal 

3 

with, and it is going to bring forth a lot of unanswered questions, 

and it definitely is having an impact on economic growth. 

So we look forward to your testimony. I will tell you that in Kentucky, our environmental protection state group has been trying to 

cooperate with the Obama Administration and EPA, and our 

Democratic attorney general who is running for governor sued him 

just a couple of weeks ago because he is so upset about it. 

So it is one thing for the President to want to be a world leader 

in addressing climate change, but why should America be pushed 

out further than any other country in the world, and that is what 

we want to try to address today, and we look forward to your testimony. 

At this time, I would like to recognize the gentleman from California, Mr. McNerney, for his 5-minute opening statement. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

This morning’s hearing focuses on EPA’s proposed Clean Power Plan, which would 

impose federal limits on carbon dioxide emissions from each state’s electricity system. This is our third hearing on the subject and the previous two hearings left a 

great many questions unanswered—about EPA’s legal authority to impose this 

sweeping global warming agenda under a rarely-used provision in the Clean Air Act, 

about the feasibility of implementing EPA’s unprecedented and highly complicated 

scheme, and about the potential adverse impacts on electricity costs, reliability and 

economic growth. 

The last hearing focused on FERC, and I must say that I was disturbed to learn 

the extent that FERC was being bypassed by EPA in its attempt to consolidate control over the manner in which electricity is generated and consumed in the United 

States. Today, we will hear from the states, whose primary role in overseeing the 

electric sector for their citizens is also being jeopardized by EPA’s proposed rule. 

It is important to remember that EPA has no energy policy-setting authority or 

expertise. These responsibilities reside primarily with the states or other federal 

agencies, and EPA’s role historically has been confined to regulating emissions from 

electric generating units. Never before has the agency sought to set standards that 

extend to nearly every aspect of electricity generation, distribution, and use. And 

never before has EPA—or any other federal agency—proposed to exert ultimate authority—including enforcement authority—over state decision-making in the electric 

sector. But EPA is doing so now with the Clean Power Plan. And aside from the 

fundamental legal issues, there is a long list of concerns about the workability of 

this scheme. 

EPA has tried to spin its proposal as a helpful list of sensible steps for states to 

take—what it calls ‘‘building blocks.’’ To the extent that some of these policies make 

economic sense, states should be free to take those actions in the interest of their 

citizens. But they shouldn’t be compelled to undertake actions and measures that 

may impose increased costs and other harms. Make no mistake: the Clean Power 

Plan is coercive—either a state comes up with a plan that meets with EPA’s approval, or EPA will impose its own Federal Implementation Plan. 

And I must add that the provisions in the Clean Power Plan affecting coal-fired 

generation are especially destructive when viewed in the context of all the other regulations targeting this energy source. EPA’s latest proposed rule adds to the cumulative burden that is making it nearly impossible to keep coal in the energy mix. 

Indeed, we are already seeing coal-fired capacity being retired at an alarming rate— 

much faster than EPA’s projections—and this raises serious concerns about electric 

reliability, not to mention all of the jobs that depend on coal. The President’s direct 

assault on coal is also a likely contributor to rising residential electricity prices that 

the Energy Information Administration recently reported. 

EPA also likes to tout its proposed rule as being ‘flexible’ but it would actually 

undercut each state’s flexibility to respond to changing circumstances because after 

an implementation plan is approved by the EPA, a state will have ceded authority 

over its energy sector to the federal government. For example, if a state legislature 

decides that its renewable portfolio standard (RPS) is problematic, that legislature 

would be prevented from amending it without first obtaining EPA permission. If the 

State amends or freezes it without permission it may be subject to EPA enforcement 

4 

or subject to a private party lawsuit. As it is, states are constantly considering modifications to their energy policies to better meet consumer needs, but under EPA’s 

proposal each state will be stuck with a rigid federal plan and won’t be able to easily adapt to changing circumstances. 

Unlike EPA, state-level officials are the ones who are held accountable to their 

consumers and businesses, and bear the responsibility of keeping electricity affordable and reliable. They have to deal with all the implementation challenges, including resolving the conflicts between the Clean Power Plan and their own state laws 

and regulations. That is why their views on the Clean Power Plan are so vitally important and why this hearing is critical to gathering the perspective necessary to 

understand the challenges confronting the states. 

OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

I thank the panelists for coming today. I know it is a lot of work 

to prepare and coming out here, so I thank you for that effort. 

As the chairman said, this is our third meeting on the EPA’s 

Clean Power Plan but it is our first opportunity to hear directly 

from state officials who will be responsible for helping to implement the plan. 

Let me start off by saying that it is getting more and more difficult to deny climate change. Climate change is already here. You 

can see it if you watch changing weather patterns here in the 

United States and around the globe. We need to face up to this 

problem and start taking the steps necessary to keep this phenomenon from becoming a global catastrophe. 

Moreover, the steps to curb carbon emissions will have many 

beneficial effects, including economic and public health. We have 

the opportunity now for the United States to be the leader in the 

carbon pollution reduction. The Clean Air Act clearly gives the EPA 

administrator the authority to put in place measures to reduce carbon dioxide production, and this authority has been upheld in the 

courts. This administration has the responsibility and the duty to 

take action. 

This being the case, what would be the best way to go about reducing carbon emissions? The electric power generation sector is 

the biggest source of CO2 emissions, and it makes sense to have 

fossil fuel plants operating as efficiently as possible. Coal-fired 

power plants have the highest CO2 emissions per kilowatt hour energy produced, so they should be cleaned up and incentives should 

be given to other sources when possible. Unfortunately, this committee has not fully gotten behind carbon capture and sequestration. In fact, this committee has done quite a bit to prevent carbon 

capture and sequestration which limits the options for coal-fired 

power plants. 

We should also encourage as much input from the states and 

from industry as possible to make sure that no region is unfairly 

impacted and to encourage each state, to the extent practical, to 

utilize any renewable sources that are available in their region. 

In addition, states need flexibility to meet these goals, taking 

into account local resources and existing power infrastructure and 

to foster regional cooperation. The EPA has done these things, and 

its Clean Power Plan will accomplish each of these goals: flexibility, 

5 

regional and state focus, and reduction in pollution, energy efficiency. 

Looking to the future, as our country incorporates cleaner energy 

sources such as natural gas and develops more renewable energy 

sources, we must ensure that our electric infrastructure is able to 

meet those changes. Working to protect reliability for consumers 

will come from creating a more effective electric grid, identifying 

ways to be more efficient, instituting demand response programs, 

improving transmission and distribution systems, and other technological innovations will all help to modernize the grid and create 

one that is more resilient. This is a critical issue that we need to 

address moving forward. 

I look forward to hearing from our witnesses and appreciate 

them taking the time again to be with the committee this morning, 

and I would like to recognize my colleague from Texas, Mr. Green. 

Mr. GREEN. I would like to thank Congressman McNerney for 

recognizing me, and thank the chair and ranking member for holding the hearing today. 

I want to thank our public utility commissioners for coming and 

testifying today. I specifically want to acknowledge our Texas public utility Commissioner Kenneth Anderson. By way of background, 

Commissioner Anderson attended Georgetown University just down 

the road before he came to his senses and went back home to SMU 

to have his—to get his law degree. He served the State of Texas 

in many capacities, and I would like to thank him for his thoughtful work he has done over the years. 

Recently, finalizing the existing source performance standard 

created a proposal that would help states meet the requirements 

of the rule. The proposal suggests four blocks that address power 

plant efficiency, fuel switching, and renewable and electric energy 

efficiency. 

It is no secret that Texas is leading the nation in many of these 

areas. Thanks to the Permian Basin and Eagle Ford Shale, we 

have been the leader in fuel switching. If Texas were its own country, and we once were, it would be the third largest gas producer 

in the world. Texas has more than 14,000 megawatts of wind 

power. Solar power will grow from 200 megawatts to 1,100 

megawatts by 2017, making Texas the number 1 state in solar 

growth. 

Texas has solar companies competing directly in the wholesale 

market. Houston and Texas cities are leading the Nation in commercial efficiency, electric energy efficiency; however, EPA’s plan 

has required Texas to do twice as much. The rule has raised some 

questions for both state and Federal agencies, and we need to get 

the answers, and I appreciate the hearing today, and again, thank 

our panel, and I yield back my time. 

Mr. WHITFIELD. Thank you very much, and at this time I would 

like to recognize the gentleman from Texas, Mr. Barton, for 5 minutes. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. 

6 

I too want to welcome PUC Commissioner Kenneth Anderson to 

us. We have an all star panel of local and state officials here. This 

could be one of the better hearings on this subject because we are 

going to hear directly from those that are closest to the issue and 

the implementation of this proposed regulation if it is to be implemented. 

As Congressman Green pointed out, Commissioner Anderson has 

a diverse background and a very experienced background in various regulatory issues in Texas. He has been appointed at local 

level by the Dallas County Commissioner’s Court, and he has been 

appointed to various positions of authority by Governor Bill 

Clements, Governor George Bush, and of course now, Governor 

Rick Perry. We are very glad to get his expertise, as Congressman 

Green pointed out. If this regulation is implemented, Texas will 

bear a disproportionate share of the cost, 25 percent of the entire 

country’s reductions has to be in Texas, and as Gene pointed out, 

we are leading the Nation in job growth and economic growth and 

leading the Nation in energy and production, so this is an important issue for every, every Texan. 

In terms of the broader perspective, as Chairman Whitfield 

pointed out in his town hall meeting, I have had numerous town 

hall meetings and chamber of commerce meetings, in various home 

builders, real estate meetings in my district this past month. Global warming did come up, climate change did come up, but in every 

instance, it was in the negative sense of, why is EPA trying to regulate navigable water streams? Why is EPA trying to do things 

that make it very difficult for us to do business? 

It is a fact that climate change is happening, but all you have 

to do is go to any natural history museum and see that the climate 

has always been changing. It is debatable what causes it, but it is 

a fact that it is happening. People like myself and the chairman 

would say, we should try to make our energy sector more efficient, 

we should try to make our industrial sector more efficient. To the 

extent you do that, and you put cost in the equation, you will have 

less energy consumed to get more output, and if in fact man is partially responsible for the change in the climate, you are going to get 

that benefit, but to focus on climate change as the dominant factor 

is self-defeating. 

You ask somebody in India or Africa, are you not going to put 

in a power plant because of the CO2 emissions, they will laugh at 

you, as they should. Would we not have built the transcontinental 

railroad in the 1850s and 1860s because we were worried about climate change? Or the interstate highway system in the 1950s and 

1960s because we were worried about climate change? It is an 

issue, but it should not be the dominant issue. 

So, Mr. Chairman, today’s hearing is going to be very interesting 

because, as I said at the beginning, this is an opportunity for the 

members of this subcommittee to hear directly from the regulators 

and the implementers that are most responsible for implementing 

these regulations if in fact they do become permanent. 

With that, I yield back. 

Mr. WHITFIELD. Thank you, Mr. Barton. 

7 

And Mr. Waxman wants to give an opening statement, and he 

is testifying over on the Senate side, and when he comes over, we 

will take the appropriate step to allow him to do that at that time. 

So at this time, we would like for—I am going to introduce each 

of you individually as your time comes to give your 5-minute opening statement. And once again, I really appreciate all of you being 

here. You-all are out there on the frontline, so we know that you 

will provide some insights to all of us that will be helpful. 

And so, Mr. Anderson, you will be the first one to give an opening statement, and he has already been introduced, but he is the 

commissioner of the public utility in Texas, and Mr. Anderson, you 

will be recognized for 5 minutes. 

I would remind all of you that on the table there is the little light 

system, and green means go and red means stop, so you are each 

recognized for 5 minutes, and Mr. Anderson, thank you for being 

here, and you may proceed. 

STATEMENTS OF KENNETH W. ANDERSON, JR., COMMISSIONER, PUBLIC UTILITY COMMISSION OF TEXAS; TOM W. 

EASTERLY, COMMISSIONER, INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT; HENRY R. DARWIN, DIRECTOR, ARIZONA DEPARTMENT OF ENVIRONMENTAL QUALITY; 

KELLY SPEAKES–BACKMAN, COMMISSIONER, MARYLAND 

PUBLIC SERVICE COMMISSION; DAVID W. DANNER, CHAIRMAN, WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION; AND TRAVIS KAVULLA, COMMISSIONER, MONTANA 

PUBLIC SERVICE COMMISSION 

STATEMENT OF KENNETH W. ANDERSON 

Mr. ANDERSON. Thank you, Mr. Chairman, and members of the 

subcommittee. I appreciate the opportunity to appear before you 

today to discuss the proposed rule. A couple of important points 

that I want to make at the beginning. 

First, I am not really here to debate carbon or climate change. 

It is really my focus both today and as a member of the commission, is to address how the EPA has chosen to address the issue 

of carbon, and I actually want to give them credit for recognizing, 

at least in my experience the first time, that the states are different and are in different positions. 

Nevertheless, the more than 600-page proposal, in addition to all 

the supporting data, is complex and it raises a number of complex 

issues and questions and problems. An introductory point is the 

ERCOT which is our grid operator in Texas, the PECT, the commission, and the stakeholders in Texas are studying the rule, analyzing the data, and attempting to formulate their comments, but 

because of the complexity of the rule, we are still in the early 

stages, and in fact ERCOT, last month we asked ERCOT to do an 

in-depth analysis of the potential impacts under various scenarios 

of the proposed rule. They are not going to have that study done 

until late this year, December, and so it is going to make informed 

comments, definitively informed comments a difficult proposition. 

And so it bears keeping in mind that my remarks today, which 

will be focused on Texas, remain necessarily qualified in that they 

8 

reflect only a preliminary assessment, of the proposed Clean Power 

Plan. 

Let me give you a little background for those who don’t know. We 

are a little different in Texas, of course, we are always proud of 

that, we are the only state in the union that has parts of its state 

in all three grids, the western interconnect, the eastern interconnect, and ERCOT. With respect to ERCOT, our grid, it covers 

three quarters of the state and about 85 percent of the electricity 

consumed. Because it is an intrastate grid and it is not 

synchronically connected to other grids, we are proud that ERCOT 

is non-FERC jurisdiction. 

The PECT regulates both the wholesale as well as retail service 

within ERCOT. It is an island which also implicates reliability. We 

are disproportionately affected by the proposed rule. If we read the 

proposal the right way or correctly, we could be responsible for as 

much as 25 percent of the reduction nationwide while we only 

produce about 11 percent of the energy in this country. 

One of the reasons that the rule is going to be a problem is that 

it gives us no credit for the substantial investment in renewables. 

It has been principally wind, but it is not just the actual wind itself 

but in the infrastructure necessary to transmit that wind into the 

load serving areas of the state. We just recently completed a $6.9 

billion, 3,600-mile transmission project in order to bring wind from 

West Texas into the load serving vicinity centers of the state. 

In addition, our market, as the chairman indicated regarding the 

proposed blocks, that are proposed by the EPA, block 1, for example, the improvement in efficiencies of coal-fired power plants, most 

of those efficiencies have already been achieved in ERCOT. The 

reason is our wholesale market in ERCOT is very competitive and 

has been ruthless, frankly, in squeezing out efficiencies in power 

plants. If power plants are not operating at their most efficient, 

they are forced out of the market. 

We in fact, over the last decade or more than a decade, have 

caused the retirement of over 13,000 megawatts of old, old units, 

mostly the old steam units, but the fact of the matter is those were 

dirty inefficient plants, and the ERCOT market basically made 

them uneconomical. 

The remaining building blocks 2 and 3, the 70 percent utilization 

rate for compliance cycles as well as a block 3 which would basically require us to increase our renewables by another 150 percent, 

so that would take our installed capacity from what will be in a 

couple of years, we expect 15 to—between 15- and 18,000 

megawatts of wind, and it is a little unclear how much solar we 

will have, but we are seeing it—we are seeing the development of 

utility scale solar. We will see that grow between 25- and 30,000 

megawatts. The problem is that during parts of the seasons in 

Texas, our load is as low as 25,000 megawatts. 

We have a very peaky system. In the summer it can be as high 

as 68,000. In the evenings, in the fall and spring as low—below 

25,000. 

Here is our dilemma. You could have a situation result where for 

hours in the evenings during the spring and fall, which is when 

wind in Texas, West Texas wind is blowing at its strongest, would 

literally—you will not only back off all your gas plants but you 

9 

could very well back off the nuclear plants. If they can’t back off, 

and frankly, they are not designed to ramp. 

Mr. WHITFIELD. Mr. Anderson, excuse me, our lights are not 

working, but I have let you go about a minute and 40 seconds over, 

but—— 

Mr. ANDERSON. I apologize. I look forward to answering any 

questions. 

Mr. WHITFIELD. Yes. Well, thank you. It is a complicated issue, 

and it is hard to cover all the issues in 5 minutes, but we will be 

asking you some questions also, and we have your testimony. 

[The prepared statement of Mr. Anderson follows:] 

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93745.015
25 

Mr. WHITFIELD. So our next witness is Mr. Tom Easterly, who 

is the commissioner for the Indiana Department of Environmental 

management, and Mr. Easterly, thank you very much for being 

with us, and we look forward to your testimony, and you are recognized for 5 minutes. 

STATEMENT OF TOM W. EASTERLY 

Mr. EASTERLY. Thank you, Chairman Whitfield and Ranking 

Member Rush, sort of, and members of the committee. 

Good morning. My name is Thomas Easterly. I am the commissioner of the Indiana Department of Environmental Management, 

also known as IDEM, and I also bring you greetings from Governor 

Pence of Indiana, and I appreciate the opportunity to share with 

you Indiana’s current perspective on the Environmental Protection 

Agency’s proposed 111(d) regulations for fossil fueled electric generation units. 

Indiana will be significantly impacted by EPA’s proposed 111(d) 

regulations because we are the most manufacturing intensive state, 

that means manufacturing as a percent of our GDP, and more than 

80 percent of our electricity is currently produced by coal. We have 

a 300-year supply of that coal in our state. 28,000 Hoosiers are employed in the coal industry, and as Governor Pence has frequently 

stated, Hoosiers know that coal means jobs and coal means lowcost energy. 

We recognize that we need all forms of energy to power our economy and the Pence administration is working toward an updated 

energy plan for the state that will continue to foster greater use of 

renewables and other energy sources, but at the same time we 

know that coal is crucial for Hoosier energy resources and should 

continue to be promoted. 

My mission at IDEM is to protect Hoosiers in our environment. 

In examining how the proposed 111(d) regulations further our mission, I have come to the conclusion that this proposal will cause 

significant harm to Hoosiers and actually to most residents of the 

U.S. without providing any measurable offsetting benefits. 

For these reasons, I requested that EPA withdraw this proposal. 

Instead, EPA and the Obama Administration should work with 

states to produce an energy policy that both provides for reliable 

and affordable energy, as well as a healthy environment. This necessarily requires a balanced regulation that allows the use of all of 

our fuels in the most efficient manner. 

In the long run, a program focusing on the most efficient use of 

all of our sources of energy, including coal, nuclear, natural gas, 

wind, solar, and others will promote economic prosperity by keeping energy affordable and reliable. 

The most ironic impact of the proposed regulations is that they 

are likely to increase the worldwide greenhouse gas emissions by 

decreasing international competitiveness of U.S. businesses 

through the increased energy cost. We are very sensitive to this 

issue in Indiana. Competitive businesses have been investing at 

cost-effective energy savings activities for decades. 

Under this proposal, the total cost of the products produced in 

the U.S. will need to increase, eroding our international competiVerDate Nov 24 2008 12:33 Apr 07, 2015 Jkt 037690 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-172 CHRIS
26 

tiveness and resulting in the loss of manufacturing jobs in Indiana 

and the Nation. 

When these businesses close, our U.S. emissions will decrease 

but worldwide greenhouse gas emissions will increase as our businesses move to areas with less efficient and more carbon intensive 

energy supplies. 

In addition, U.S. EPA predicts that this proposal will increase 

the cost of natural gas and the per kilowatt hour cost of residential 

electricity by around 10 percent in the next 6 years. In Indiana, our 

state utility forecasting group has already predicted a 30 percent 

increase in Indiana electrical cost from other recent EPA regulations, not including this one, and that group is presently studying 

the expected impact of this rule on top of the other ones on our energy rates, but it will no doubt find that our rates will increase. 

Increases in energy costs hit the poor, elderly, and most vulnerable in our society first. I worked for a utility and every year, unfortunately, people died because they lost their electricity and they 

did not get it reconnected and they could not survive. At a time 

when Indiana is doing all that it can to grow its economy and create jobs, the EPA’s proposal creates a very real possibility that increased energy costs will slow our economic progress and raise people’s utility bills. 

In Indiana, we are obviously concerned about the economic impact of EPA’s proposed rules on businesses and consumers, but we 

also have more technical questions. We want to make sure that the 

rule does not result in unintended consequences such as reduced 

reliability, which would be brownouts, or worse than that, blackouts, or not having all of the necessary infrastructure in place to 

convert from coal to natural gas. 

The fact that this misguided policy will harm Hoosiers and other 

people in our country while actually increasing the worldwide level 

of the very emissions it is designed to decrease, compels Governor 

Pence and me to oppose the proposed regulations. 

Thank you for the opportunity to share our views, and welcome 

your question. 

Mr. WHITFIELD. Thank you very much, Commissioner Easterly. 

[The prepared statement of Mr. Easterly follows:] 

27 


93745.016
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93745.017
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93745.018
30 

Mr. WHITFIELD. And Mr. Darwin, before I call on you, Mr. Waxman has arrived, and he has another commitment as well, so at 

this time I am going to introduce him, recognize him for his 5- 

minute opening statement. 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

I apologize to interrupt the flow of the witnesses, but I was delayed at another hearing on the Senate side, and now I have to go 

to another hearing of our committee on the House side. 

In June, Administrator McCarthy issued a tremendously important proposal to limit carbon pollution from power plants, and we 

are going to hear today and are already hearing from some of the 

state officials who will be responsible for developing and implementing the state plans to control this pollution. Climate change 

is not a simple problem, but there are some basic facts that we 

have to keep in mind to help us how to figure to move forward. 

One, climate change from carbon pollution is real. It is harming 

us now. It is going to get worse. How much worse depends on us. 

Two, controlling carbon pollution is not without costs, but the benefits of action far outweigh those costs. I think America would be 

better off if we cut our carbon pollution. Three, there is no single 

action that will fix the problem. We have to tackle it on multiple 

fronts. Even within the power sector there are many different ways 

to meet our energy needs with far less carbon pollution. 

Every day Americans are dealing with the impacts of climate 

change from carbon pollution, and you need look no further than 

the state of California. Last year was the driest year that California has ever seen. The current drought threatens water supplies 

for drinking water and irrigation of valuable crops. Wild fires because of the hotter and drier climate, more frequent and more intense. In the midwest, toxic algae blooms are threatening our 

drinking water, All along the eastern Gulf Coast, climate change 

is fueling more extreme weather and dangerous storms, and climate-driven sea level rises threatening extensive coastal infrastructure. 

These are just a few of the growing costs of carbon pollution. We 

know we must act, and EPA’s Clean Power Plan tackles the largest 

single source of carbon pollution in America today. Substantially 

cutting carbon pollution from these uncontrolled power plants isn’t 

all we have to do to fight climate change, but it is absolutely critical. 

Cutting carbon pollution from power plants is also a good investment. Unchecked climate change will be hugely expensive. But 

there are a lot of low cost measures we can take right now. I look 

forward to hearing from Washington and Maryland representatives 

today, two states that have already cut their power plant carbon 

pollution. They found, through actual experience in renewable energy that they have had a big economic benefit for their states. 

EPA’s analysis supporting the Clean Power Plan show that the 

benefits of the proposal far outweigh the cost by at least 6 to 1 and 

possibly by as much as 12 to 1. 

We know there is no silver bullet for cutting carbon pollution. 

Many types of action will be needed. EPA’s Clean Power Plan recognizes this fact as well. It establishes the goal and leaves it to the 

31 

states and affected industries to figure out how to get there in all 

the ways that work best for their particular circumstances. 

I will close with one final point. Just saying no isn’t an option 

here. We must cut carbon pollution, and we can do so cost effectively. Those who have concerns with EPA’s Clean Power Plan 

have the responsibility not just to critique but to propose alternative ways to achieve the goal. If you don’t like the Clean Power 

Plan, what is your plan? We have a profound moral responsibility 

to leave our children and grandchildren an inhabitable planet, and 

the Clean Power Plan is a critical step to protect their future. 

Thank you, Mr. Chairman. Yield back the balance of my time, 

and my apologies to the witnesses. I will try to get back here later, 

but I am probably going to be required in the other committee for 

the balance of the time, but I will try to be back and forth. I have 

suggested cloning but nobody likes the idea of having two of me. 

One is enough. Thank you, Mr. Chairman. 

Mr. SHIMKUS. I second that. 

Mr. WHITFIELD. We will miss you, Mr. Waxman. 

Mr. WAXMAN. I will come back. 

Mr. WHITFIELD. At this time, I would like to recognize Mr. Henry 

Darwin, who is the director of the Arizona department of environmental quality. Thank you for being with us, and you are recognized for 5 minutes. 

STATEMENT OF HENRY R. DARWIN 

Mr. DARWIN. Mr. Chairman, members of the committee, I greatly 

appreciate the opportunity to offer testimony today. 

I must first caveat my remarks by saying that as an environmental lawyer with almost 20 years experience, I do not believe the 

Clean Air Act provides EPA with the authority to regulate greenhouse gasses as it proposes to do in this Clean Power Plan. With 

that said, I believe it is in the best interest of Arizona to work with 

EPA to develop a final rule that results in energy reliability, 

achievable goals, and adequate flexibility. 

The 6th largest state in the country, Arizona encompasses some 

of most geologically diverse regions in the Nation, from our desert 

floors to high plateaus, to pine forested mountainous regions. As 

one might expect, these differences result in diverse climates that 

have quite different energy demands. For example, the mountainous regions of our state often experience sub-zero temperatures 

in the winter; whereas, the summertime highs at the desert floors 

have been known to reach temperatures of 120 degrees. 

As you can imagine, electricity plays a crucial role in the protection of public health in Arizona, whether it be through heating and 

cooling or the delivery of Colorado river water to the central portions of our state. About 5 million people representing 80 percent 

of Arizona’s population live in the desert lowlands. During the hot 

summer months, electricity consumption peaks as needs for cooling 

residences, schools, hospitals, and other work places increase. 

The Central Arizona Project is a 336-mile long system of aqueducts, tunnels, pumps, and pipelines that deliver Arizona’s share of 

the Colorado River to central Arizona, including Phoenix and Tucson. It is both the single largest resource of renewable water supVerDate Nov 24 2008 12:33 Apr 07, 2015 Jkt 037690 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-172 CHRIS
32 

plies in Arizona and the largest consumer of power from the Navajo generating station located on tribal land. 

When our energy production is not sufficient during peak use, 

Arizona will also import electricity from out of state to meet energy 

demands. In its proposed Clean Power Plan, EPA uses a nationwide set of assumptions to develop two emissions reduction goals 

for each state, an interim goal that is to be achieved between 2020 

and 2029, and a final goal reached by 2030. 

In the supporting documentation, EPA maintains that each 

state’s goals will preserve grid reliability and achievability without 

great difficulty through flexible compliance options that the rules 

offer. 

Despite EPA’s efforts, the Clean Power Plan still presents three 

challenges for Arizona. Compared to baseline levels in 2012, Arizona must achieve almost 52 percent reduction in emissions intensity by 2030. This is the second most stringent reduction target in 

the country. 

To comply with the interim goal by 2020, more than 75 percent 

of Arizona’s total reductions must occur by 2020. The energy needed to deliver Colorado River water to central Arizona is generated 

on the Navajo reservation where there is currently no proposed 

rule or goals. 

One of my department’s stated goals is to support environmentally responsible economic growth. In our experience, this is 

best achieved through collaboration. We believe that building partnerships with those who have diverse perspectives is the key to 

finding creative solutions. We believe that we can work with EPA 

to adjust the program so that Arizona can overcome its challenges 

and make significant emission reduction contributions without sacrificing Arizona’s economic wellbeing. 

To that end, we have chosen a path different from other states. 

Where some are chosen to immediately issue legal challenges to 

EPA’s proposal, Arizona is acting to collaborate with those stakeholders in Arizona who will be most impacted by the rule, our governor’s energy office, the state public utility commission, and EPA 

to find an outcome that is workable for the state’s current future 

energy needs. 

EPA’s proposed goals for Arizona were based upon an assumption that all out of our existing coal power generation could be immediately transferred to existing natural gas power plants by 2020. 

Many of these existing natural gas power plants are only used in 

the summer during peak energy demand and remain idle during 

winter months when energy demand is low. Arizona has already 

reached out to EPA to explain how energy flows into and out of Arizona, and that is most appropriate to consider peak demand when 

determining when an existing facility is truly under-utilized. After 

all, electricity generated at a facility in the winter cannot offset the 

need for electricity during peak demands experienced in the middle 

of the summer. 

By our calculations, switching from coal to natural gas by 2020 

is the only building block available to Arizona for meeting EPA’s 

proposed goals. As we explained to EPA, this implementation issue 

is at odds with their stated intent that states be provided flexibility 

amongst the building blocks in achieving the goals. 

33 

Furthermore, committing to achieve over 75 percent of the second most stringent final goal by—in the Nation by 2020 would be 

putting Arizona’s energy reliability and public health at risk, which 

EPA also clearly does not intend by its proposed rule. 

To their credit, EPA has listened to our concerns and has suggested appropriate data-driven analyses could result in adjustments to the Clean Power Plan. On August 22nd, we provided EPA 

with a technical demonstration that EPA’s goals do not provide sufficient flexibility. My staff has informed me that EPA is looking at 

the data and is planning to discuss the problem later this week. It 

is also my understanding that EPA will soon propose a rule for 

power plants located on tribal land. 

Because our energy needs are so intertwined, Arizona and the 

Navajo Nation have a great interest in working together to develop 

a multi-jurisdictional plan that will work for both areas. We look 

forward to their proposal. 

In the end, should EPA choose not to make adjustments to the 

final rule based upon our real implementation concerns, litigation 

remains an option for Arizona. In the meantime, we are hopeful 

that through collaboration, EPA and Arizona can develop a solution 

that is environmental responsible, economically sustainable, and 

provides energy reliability so that we can prevent expensive and 

time-consuming legal challenges. 

Thank you for this opportunity to provide testimony. I am happy 

to answer questions you might have. 

Mr. WHITFIELD. Thanks, Mr. Darwin, very much. 

[The prepared statement of Mr. Darwin follows:] 

34 


93745.019
35 


93745.020
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93745.021
37 

Mr. WHITFIELD. And at this time I would like to recognize Kelly 

Speakes-Backman who is a commissioner with the Maryland Public 

Service Commission. 

Thank you very much for being with us today, and we look forward to your testimony. 

You are recognized for 5 minutes. 

STATEMENT OF KELLY SPEAKES-BACKMAN 

Ms. SPEAKES-BACKMAN. Thank you, sir, I will start my own stopwatch, so I can be sure—— 

Mr. WHITFIELD. Be sure and turn your microphone on now. 

Ms. SPEAKES-BACKMAN. I think it is on now. Thank you. 

Well, thank you Chairman Whitfield and other members of the 

committee for this opportunity to provide comments today on EPA’s 

proposed Clean Power Plan. 

I am speaking today in the context of my role as the commissioner of the Maryland Public Service Commission and also one of 

nine states that participates in the regional greenhouse gas initiative. 

Maryland welcomes the release of the Clean Power Plan which 

seeks to reduce carbon dioxide emissions from power plants under 

section 111(d) of the Clean Air Act. If there is one message I can 

leave with you today it is that it is possible to achieve pollution reductions while supporting economic goals. These two objectives are 

not mutually exclusive. 

RGGI states have been collaboratively operating market mechanisms for 6 years which has supported the reduction of carbon pollution and maintained grid reliability with a positive impact to rate 

payers and overall our economies. Our perspective is that EPA’s 

proposed plan presents an opportunity to take an important step 

in the development of an advanced energy infrastructure that delivers cleaner air, smarter energy use, and local jobs. 

EPA conducted an unprecedented amount of outreach to states 

and other key stakeholders during the development of this proposed rule. As a result, the proposal recognizes the diversity of initiatives and programs that states are already pursuing to reduce 

carbon pollution and increase the efficiencies of both energy use 

and production. 

EPA has also recognized the importance of grid greater reliability 

which is a priority and legal obligation for my states and for my 

fellow colleagues up here on this table today, and for all other 

states for this matter. In our view, EPA has constructed a proposed 

rule which provides the flexibility for states to devise plans which 

suit state-specific reliability requirements and resources. 

This proposed rule also provides the ability for states to work together as regions which more closely aligns to the nature of our 

electricity grid. 

But perhaps most important in regards to reliability is the gradual transition that is presented in this plan. The interim compliance goals start in 2020, and the compliance with each state rate 

is not mandated until 2030. That gives us 16 years in a long term 

compliance timeframe to allow markets to adjust to the known and 

38 

measurable forthcoming requirements which serves to minimize potential reliability impacts. 

Our nine states represent 16 percent of the U.S. economy and 

comprise a total gross domestic product of 2.4 trillion U.S. dollars. 

Since 2005, we have experienced a 40 percent reduction specific to 

power sector carbon dioxide pollution even as our regional economy 

has grown by 7 percent. 

Of course, these significant reductions are due to a combination 

of factors, including market forces such as the increasing abundance of natural gas in our region and the overall economy, the 

RGGI programs and other state policies and programs that we 

have put in place. We held our 25th auction last week, and with 

this latest auction, each state will reinvest its share of $87.8 million in revenues in accordance with our own state-specific energy 

programs. Through 2013, RGGI states have invested more than $950 million in proceeds and energy efficiency clean and renewable energy, 

energy programs that have helped low income consumers, and in 

Maryland, we have invested more than $230 million of that 

through last year. 

As to the Clean Power Plan, EPA has allowed groups of states 

to implement a regional emission budget using the most cost-effective measures available, and these cost-effective measures are 

available to a larger geographical boundary than just our individual state. That will allow also for potential emission increases 

in some specific locations that are required, that have more energy 

efficiency resources available. 

Even as we formulate our comments for October, Maryland is 

still reviewing and analyzing the plan. We think the basic structure of this rule is sound. We will have many technical suggestions 

and questions for EPA on the proposed rate methodology, the 

translation of rate targets to a single regional mass target, and 

rule enforceability. These comments will basically be posed in three 

general areas. 

First, is the plan designed to recognize states for early action 

whether through energy efficiency programs, renewable energy programs, or other strategic energy initiatives? 

Second, the RGGI experience demonstrates that cost-effective reductions are possible even beyond what is proposed by the EPA. 

We will explore those questions and find out and ask questions 

that ask certainly are there more opportunities for even greater reductions in a cost-effective manner. 

And third, does the plan provide for transparent, verifiable, equitable, and enforceable emissions reduction carbon target for all 

states? 

We look forward to working with EPA on these, and other states 

on these questions. We think the proposed plan is workable, and 

we think the EPA should be commended for developing a proposed 

rule that recognizes the diversity among states, provides a flexible 

approach to compliance, and considers the sometimes competing 

but not necessarily exclusive objectives of reliability, affordability, 

environmental soundness, and economic growth. Thank you. 

Mr. WHITFIELD. Thank you very much. 

[The prepared statement of Ms. Speakes-Backman follows:] 

39 


93745.022
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93745.023
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93745.024
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93745.025
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93745.026
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93745.027
45 


93745.028
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93745.029
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93745.030
48 

Mr. WHITFIELD. At this time I recognize the Honorable David 

Danner who is the chairman of the Washington Utilities and 

Transportation Commission, and Mr. Danner, thanks for being 

with us. You are recognized for 5 minutes. 

STATEMENT OF DAVID W. DANNER 

Mr. DANNER. Thank you, Chairman Whitfield and Mr. 

McNernery, and members of the committee. I appreciate the opportunity to share a perspective from the Pacific Northwest on the Environmental Protection Agency’s Clean Power Plan. I wanted to 

make three points this morning. 

First, that carbon pollution is affecting Washington’s environment and its economy today. We must address this pressing problem now. 

Second, EPA, to its credit, has used existing law to develop a proposal that I believe creates an effective structure and workable 

structure for achieving significant carbon reductions in the energy 

sector. 

Third, Washington has already taken significant steps to address 

carbon pollution in its own laws and policies, and based on this history, we are confident that states can achieve significant carbon reductions under EPA’s approach without compromising reliability or 

imposing undue costs on consumers, and I would like to address 

each of those points in turn. 

First, in Washington state, we are already seeing firsthand the 

effects of carbon pollution. Ocean acidification is severely affecting 

our shell fish industry. Pine bark beetle populations are booming 

and they are devastating large tracts of forest land in northeast 

Washington. Large forest fires have increased from an average of 

6 per year in the 1970s to 21 per year in the last decade, and the 

cost of fighting these fires are expected to rise 50 percent higher 

than current expenditures by the 2020s. With increased temperatures, we can expect other impacts in the years to come. Rising sea 

levels, reductions in summer streams flows which affect urban 

water supplies, farm irrigation in summertime, hydro-power production. 

Second, we have been eager for strong federal action to address 

carbon pollution for quite some time and now we have it. Using 

section 111(d) of the Clean Air Act, EPA has proposed an effective 

structure for achieving significant reductions in the energy sector. 

The key to EPA’s proposed rule is the flexibility it gives to states 

in developing plans to reduce power plant carbon emissions. I am 

very concerned about the environmental consequences of carbon 

pollution, but as an economic and safety regulator, I must also be 

confident that the final rule does not compromise electric system 

reliability or impose undue costs on consumers. 

EPA undertook considerable outreach to the states, and it is 

clear to me they listened to, heard, and understood the concerns of 

regulators about reliability and cost. Moreover, keep in mind that 

at this point EPA has given us a proposal, not a finished product, 

and they have requested that states and other stakeholders give 

this proposal a hard look and provide comments and recommendations. 

49 

My agency is in the process of reviewing those proposed rules, 

consulting with our regulated utilities, and other stakeholders to 

ensure that we can achieve emissions reductions EPA has proposed, and at this point, we are cautiously that we—excuse me. We 

are consciously optimistic that we can. 

Third, we can do this without hurting the economy. I have heard 

the arguments of reducing carbon pollutions would adversely affect 

the Nation’s economy, but our experience in Washington is different. Washington has already taken action in its own laws. 

In 2011, then Governor Christine Gregoire signed legislation to 

put in effect an agreement under which TransAlta Corporation can 

close its 1,300-megawatt Centralia coal plant by 2025. This agreement allows an orderly transition over time that avoided immediate layoffs and disruption of the economy. We also, our voters, by 

initiative in 2006, approved a requirement that electric utilities 

pursue all cost-effective conservation and by 2020 meet at least 15 

percent of their load with non-hydro renewable energy such as 

wind, solar, and geothermal. 

In the last biennium, the states investor-owned utilities have 

saved nearly a million megawatt hours of electricity, enough to 

power all the residents of Tacoma, Washington for a year. And our 

state RPS, our Renewable Portfolio Standards, also has seen significant results. The IOUs have acquired enough clean electricity 

to power 183,000 homes. 

So, of course, when we approved that initiative, people said, well, 

it is going to affect the economy. Well, here is what we see. The 

costs of complying with the act resulted in impacts to consumers 

of about 1 percent or about a little more than $1 a month, and that 

is half of the lowest estimates put forward by the initiatives opponents and in return, renewable energy developers have invested 

more than $8 billion in Washington, creating some 3,800 jobs. The 

conservation standard, too, is providing dramatic results. By definition, cost-effective conservation is less costly than any other energy 

resource, and conservation reduces consumers’ bills. 

The energy conservation standards in Washington created thousands of jobs. The Washington employment security department 

data for 2011 listed more than 37,000 jobs involved with increasing 

energy efficiency, 96 percent of those in the private sector. Based 

on Washington’s experience, I believe the proposed rule, when finalized and implemented, will further investment nationwide in 

low carbon resources and energy efficiency, and this greater investment in turn will spur technological advances and further lower 

costs to consumers. 

Washington does have a relatively small carbon footprint compared to other states, but that doesn’t mean that EPA let us off 

easily. They assigned Washington the highest percentage reduction 

targets of any state, 72 percent, and we agree the proposed rule is 

complex. We are still taking a hard look at the numbers, but we 

believe the structure is sound. 

EPA does not ignore the complexities in the energy sector. It has 

given states broad discretion in achieving the targets. It encourages 

states to work regionally, and Washington is ready and willing to 

engage with others in the northwest by identifying the best strategies for reducing carbon pollution. 

50 

Thank you for the opportunity to testify before you, and I welcome any questions. 

Mr. WHITFIELD. Thank you very much, Mr. Danner. 

[The prepared statement of Mr. Danner follows:] 

51 


93745.031
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93745.032
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93745.033
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93745.034
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93745.035
56 

Mr. WHITFIELD. At this time, I would like to recognize the gentleman from Montana, Travis Kavulla, who is a commissioner with 

the Montana Public Service Commission. 

And Mr. Kavulla, you are recognized for 5 minutes. Thanks for 

being with us. 

STATEMENT OF TRAVIS KAVULLA 

Mr. KAVULLA. Thank you, Mr. Chairman, and Mr. McNerney, 

and committee members. It is great to be with you here today. I 

am going to leave aside the topics as well with climate change, 

which is real and the legal authority of the environmental—— 

Mr. WHITFIELD. Mr. Kavulla, is your microphone on? 

Mr. KAVULLA. I believe it is, Mr. Chairman. Perhaps I will just 

pull it closer. I also leave aside the question of legal authority of 

the EPA to do to this, which is best addressed by the courts. 

Instead, I want to focus squarely on specifics of the EPA’s proposed rulemaking where the rubber hits the road, in other words, 

between the EPA’s assumption of what the power industry is capable of where that coincides with the reality of on-the-ground examples, and let me first begin with the comment on reliability. 

No reliability analysis of the EPA’s proposed best system of emission reduction has been conducted for the western interconnection 

which encompasses 11 states spanning from California to Montana. 

Transmission planners of the Western Electricity Coordinating 

Council, which under FERC and NERC is responsible for adopting 

and enforcing reliability standards for this large slice of the continent, have told state regulators that they cannot accomplish such 

an analysis by the October comment deadline, so propositions that 

this rule results in a reliable grid or propositions to the contrary 

are simply speculation at this point. There is no time before the 

October comment deadline to say whether or not it is reliable. 

As to the specifics of how state goals for carbon reduction are established by the EPA, as the subcommittee is aware, the EPA’s 

proposed regulation sets forth individual state mandates based on 

what the EPA assumes are feasible accomplishments in four areas. 

Efficiency improvements at power plants, the increased operation 

of existing natural gas combined cycle plants that displace coal, the 

construction of renewable energy generators, and increased energy 

efficiency on the part of consumers. 

These four building blocks, as the EPA calls them, are in general 

already being used by states to varying degrees for a variety of 

purposes, including carbon reduction. Yet, the EPA essentially ignores the details of a state situation and instead applies a cookie 

cutter formula that uses sweeping regional or national assumptions 

about the degree to which each individual building block is achievable. 

Let me share with you a few examples. First, as Commissioner 

Anderson pointed out, the EPA assumes carbon emitting power 

plants that are subject to the rule would be able to achieve a 6 percent efficiency improvement. In other words, that 6 percent less 

fuel would need to be burned to obtain the same amount of electricity. This assumption is applied uniformly across the country, reVerDate Nov 24 2008 12:33 Apr 07, 2015 Jkt 037690 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-172 CHRIS
57 

gardless of whether a given power plant has or has not made these 

upgrades already. 

Ironically, the many power plants that have already made such 

upgrades are penalized by the proposed rule because it is assumed 

that a further 6 percent reduction can be made against the 2012 

baseline data the EPA uses. 

Montana’s 2,100-megawatt Colstrip facility, the second largest in 

the American west, has made the efficiency improvements that the 

EPA contemplates, obtaining 4 to 5 percent efficiency upgrades out 

of a total 6 percent the EPA speculates is possible and yet it receives no credit for these efficiency upgrades. 

Another example in a similar vein is the Big Stone power plant 

in South Dakota which also serves my constituents in Montana. 

Big Stone is in the process of upgrading its air quality control system at a cost of nearly $400 million. In order to control the emissions that cause haze, however, 8 megawatts of the plant’s production will have to be dedicated to running the pollution control 

equipment causing carbon emissions to increase. In other words, to 

comply with one EPA rule endangers Big Stone’s ability to obtain 

the efficiency upgrades that are assumed possible by this proposed 

EPA rule. 

The second building block of the EPA simply adds error upon 

error. The EPA assumes that this facility, Big Stone, could be substantially replaced with natural gas-fired electricity generated at 

the Deer Creek generating station hundreds of miles away. There 

is one obvious problem with this. The plants are owned by different 

people, they didn’t participate in the same markets together, and 

there are no existing transmission rights that tie the two plants together and to consumers who consume power from those power 

plants. 

Second, as a practical matter, the reduction that EPA assumes 

relative to Big Stone would result in the plant operating at 23 percent of its capacity. Its minimum run level is 40 percent. This is 

a point where engineering simply runs up against the reality of the 

EPA’s proposal. 

Finally, the EPA assumes that renewable energy can be increased in order to reduce the operation of coal-fired energy in an 

offsetting manner. Coal plants are not engineered or designed to 

cycle in this way to integrate renewable energy. Moreover, long distance transmission lines, such as the one that runs from the 

Colstrip plant in Montana to points hundreds of miles west and 

supplies energy to states like Washington is dependent on the 

physical inertia that is put onto the grid by the operation of these 

large prime movers. 

The reliability coordinator in the west has suggested that the 

past de-rating of this transmission grid would result from the absence of that inertia. I leave you with one final thought. The much 

heralded flexibility that the proposed EPA rule provides to states 

is a meaningless concept if the underlying goal, a number which 

is inflexible, has been calculated using generic assumptions that 

are misleading or false when applied to the facts of a specific state 

in the specific part of the transmission grid. 

I am happy to take questions. 

Mr. WHITFIELD. Mr. Kavulla, thanks for your testimony. 

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[The prepared statement of Mr. Kavulla follows:] 

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Mr. WHITFIELD. And thank all of you for your testimony, and as 

I said, for being with us today. 

At this time I would like to recognize myself for 5 minutes of 

questions. 

One of the common things that we have heard from EPA when 

they have come to talk about this rule is the flexibility given to 

States. 

And both Ms. Speakes-Backman and Mr. Danner stress that as 

well. 

But listening to the other four of you, Mr. Darwin, you specifically said you don’t have a lot of flexibility when you have one option. And that is one of the things that really concerns us, is that 

it is easy to say you have flexibility. But when the reality is you 

only have one or two options, then that is not flexibility. 

Do you agree with that assessment, Mr. Anderson, or do you 

think that the State of Texas is given sufficient flexibility to deal 

with this issue? 

Mr. ANDERSON. Well, to the extent that we have to use the building blocks themselves—and there is some question about that—the 

fact of the matter is that use of any—of block 1, 2 and 3 will work 

cross-purposes. 

Mr. WHITFIELD. Will work cross-purposes. 

Mr. ANDERSON. Will work at cross-purposes. An example—and 

Travis actually gave a good example. But for example, in Texas, if 

in fact, in the evenings, whether it is summer or fall, you are supposed to use more renewables out of block 3, then that will cause 

co-plants to have to either be turned off or back down. 

Mr. WHITFIELD. So these four building blocks, whether it sounds 

perfectly fine, there is a lot of inconsistencies about it and, if you 

take one action, you may be detrimental in another way. And I 

think most of you would agree with that. 

Mr. ANDERSON. You can actually cause more pollution. 

Mr. WHITFIELD. Now, let me ask you this, how did EPA—we 

have heard a lot about that they have discussed this in great detail 

with the States. 

How did they determine the final goal for each State? Can someone explain that to me? How was that determined? Does anyone 

know? 

Mr. KAVULLA. Sure. I believe I can take this. I am sure Commissioner Speakes-Backman can speak to it as well. They established 

the, ‘‘best system of emission reduction,’’ or BSER, which uses the 

four building blocks. Within those building blocks, there are certain 

assumptions of what each State, a region, or a nation is capable of. 

For instance, it is assumed that every State in the Union is capable 

of a 1.5 percent annual, cumulative energy efficiency savings resulting in a little north, I think, of a 10 percent energy efficiency 

goal altogether. That is a national assumption. That is applied—— 

Mr. WHITFIELD. So would I be wrong if I said these are assumptions that EPA has made? 

Mr. KAVULLA. They are the assumptions and they are the predicate of the actual State number, although a State can choose to 

comply. 

77 

Mr. WHITFIELD. And these States are really diverse. I mean, 

Kentucky and California have almost nothing in common. I mean, 

we have very diverse States. 

So here they are, federalizing the electricity system based on assumptions. Now, someone made the comment there has not really 

been a reliability study in their area. Who stated that? 

Mr. Kavulla. Is that the case that reliability is key? 

Mr. KAVULLA. That is correct, Mr. Whitfield. The Western Electricity Coordinating Council has told State regulators that it has 

not able to conduct a reliability analysis of the building blocks 

taken at face value. 

Mr. WHITFIELD. Do the rest of you feel like that the reliability 

issue has been adequately addressed? FERC told us that EPA really did not work with them closely on reliability issue relating to 

this rule. 

Ms. SPEAKES-BACKMAN. Mr. Whitfield, I would love to respond to 

that. The Organization of PJM States, Inc., or OPSI has made a 

formal request of our own ISO. I think part of that is to do 

with—— 

Mr. WHITFIELD. But has the ISO completed the study? 

Ms. SPEAKES-BACKMAN. They have not yet completed the study. 

Mr. WHITFIELD. Have not completed the study. OK. 

Let me ask you this, how many of you feel like you can give an 

adequate response with a comment by the October deadline set by 

EPA? 

Ms. SPEAKES-BACKMAN: I feel—— 

Mr. WHITFIELD. Do you feel like you have adequate time to meet 

this? 

Mr. ANDERSON. That will be impossible in the case of Texas. 

Mr. WHITFIELD. Impossible for Texas. 

Mr. EASTERLY. We won’t be complete. 

Mr. WHITFIELD. You won’t be complete in Indiana. 

Mr. DARWIN. Well, we are planning on submitting our comments 

by October 16th. 

Mr. WHITFIELD. You are planning to do it. OK. 

Ms. Speakes-Backman. 

Ms. SPEAKES-BACKMAN. We are shooting for October 15th, sir. 

Mr. WHITFIELD. Mr. Danner. 

Mr. DANNER. Yes. We are going to file our comments and—— 

Mr. WHITFIELD. Mr. Kavulla. 

Mr. KAVULLA. We will be able to submit comments. We will not 

be able to make conclusions about the reliability implications. 

Mr. WHITFIELD. OK. And I would assume that all of you would 

welcome a delay. I mean, they just issued this 600 rather complicated complex rule in July, and they want these comments by 

October. Would most of you support a request for an extension for 

time to give a comment. 

If you would—if you don’t want any more time, raise your hand. 

[Nonverbal responses by Texas, Indiana, Arizona and Montana.] 

Mr. WHITFIELD. OK. You don’t want any more time. 

OK. My time is expired. I wish I had more time. 

But, Mr. McNerney, I recognize you for 5 minutes. 

Mr. MCNERNEY. Speaking of running out of time, Mr. Chairman. 

78 

I thought your testimony was good. There was a lot of variety, 

a lot of variance in what you are saying. 

Ms. Speakes-Backman and Mr. Danner both testified that the 

proposed plan has flexibility—sufficient flexibility and either 

causes no harm to the local economy or actually improves the local 

economy. Would you affirm that that is essentially what you said? 

Ms. SPEAKES-BACKMAN. Yes, sir. That is exactly what—I can 

only speak for myself. 

Mr. MCNERNEY. Right. 

Ms. SPEAKES-BACKMAN. But as I heard Chairman Danner, he is 

also saying the same. 

But not only have we not done detriment, but we also did a review of our RGGI program, and the residential commercial and industrial impacts for the RGGI region were all less than 1 percent 

impact on retail rates. And for Maryland, specifically, it was a positive impact. 

Mr. MCNERNEY. Mr. Danner. 

Mr. DANNER. Yes. And I would agree that we see benefits. We 

are going to file comments—we do have some technical considerations. In fact, some of the things that he identified are things that 

we see as technical considerations. And EPA has asked for those 

comments, and EPA is going to consider those comments. So we 

don’t have a finished proposal here. 

But that said, yes, we see benefits that are coming from this proposal. And remember, too, that there are costs to the economy of 

taking no actions. So a delay is not something we would want. 

Mr. MCNERNEY. Now, would you expand on how Washington 

State was able to accomplish this, despite the opponent’s contending that the prices would skyrocket under your plan. 

Mr. DANNER. Well, it was the voters. The voters actually by initiative approved a renewable portfolio standard and a conservation 

standard. And now that we have implemented the renewable portfolio standard, we see that the cost impacts on consumers are very 

modest and the conservation standard we see that they are actually getting savings. 

And with regard to the shut down of the coal plant, it is something, if you do an orderly transition—— 

Mr. MCNERNEY. Right. 

Mr. DANNER. [continuing]. Then, basically, you are able to plan 

for it. In fact, transmission planners work on a 10-year planning 

horizon for the most part; and 2030 is 16 years away. Plants close 

with some regularity. They close because of commercial decisions 

and planned outages and unplanned outages, and transmission 

planners have to respond to that on an ongoing basis. So we see 

that these are technical issues we can raise, but we need to push 

ahead. 

Mr. MCNERNEY. Thank you. Mr. Darwin, one of the things you 

said, I believe, is that—I believe you said it—was that initially 

there wasn’t much—that you had a feeling that EPA wasn’t really 

giving you the flexibility or listening to your inputs, but in the last 

few months, that they were actually listening to your inputs and 

you feel like they are going to move forward with some of your 

comments. Is that correct? 

79 

Mr. DARWIN. That is correct. Some of the assumptions they made 

in their plan simply don’t work for Arizona. And when we have explained to EPA why they don’t work, they seem to be listening. The 

fact of the matter is, is that they have assumed that we don’t use 

all of our natural gas capacity when you have taken an annual average. Well, what that fails to recognize is the fact that during our 

peak summer months, we are nearing our capacity. 

Mr. MCNERNEY. Right. 

Mr. DARWIN. So that is something that they just simply didn’t 

take into consideration when making their assumption. So we are 

hoping that, given that and the deadline that they have set for us 

by 2020, which we have to obtain 75 percent of our goal by 2020, 

that given those two assumptions, that those two factors, that they 

would give us and others in our similar circumstance some relief 

in that area. And they have given us some indication that they 

will. 

Mr. MCNERNEY. Good. I am glad to hear that. 

One of the problems I heard from some of the panelists is that 

prior reductions aren’t being taken into consideration. I think Mr. 

Anderson mentioned that and Mr. Kavulla mentioned that, and so 

I think that is something we need to take up with the EPA. How 

do we fairly take into consideration prior achievements in terms of 

the energy efficiency and the intensity of carbon reduction per kilowatt hour. So that is something we should take up with the EPA. 

Thank you for your testimony on that. 

Flexibility and time. I mean, I think with the timeline that goes 

out to 2030, that you should have enough time to make an early 

transition, if this is required. Is that not—is that not reasonable, 

Mr. Kavulla? Is that time frame still too short? 

Mr. KAVULLA. It is because there are two goals. There is 2020 interim goals, and then there is 2030 goals. For instance, by the 2020 

deadline, it is assumed that this natural gas dispatch will have replaced a substantial amount of coal generation for States with underutilized natural gas generators that run only for peak demands 

for air-conditioning. The assumption that those would run for 70 

percent may have transmission implications that are even less 

than the 10-year planning horizon that transmission planners typically undertake. As well, transmission planners would often take 

20 years for major redesigns of this grid. 

Mr. MCNERNEY. So there should be some more flexibility in 

terms of the 2020 time frame. Would that be something that would 

help this—— 

Mr. KAVULLA. Absolutely. 

Mr. MCNERNEY. OK. Thank you. 

Mr. WHITFIELD. Thank you, Mr. McNerney. 

So our stenographer, I would just ask that when I asked the 

question what States needed additional time, the four that needed 

additional time were Texas, Indiana, Arizona, and Montana. The 

two that did not need additional time were Maryland and Washington. And as I said, I needed more time, too, but that is oK. 

At this time, I would like to recognize the gentleman from Texas, 

Mr. Barton, for 5 minutes. 

80 

Mr. BARTON. Thank you. This is just out of curiosity. It is not 

my main line of questioning. But, Mr. Anderson, what percent of 

Texas electricity is generated by hydro? 

Mr. ANDERSON. It is a fraction. 

Mr. BARTON. Is it 1 percent? 

Mr. ANDERSON. I am not even sure it is 1 percent. 

Mr. BARTON. OK. 

The gentleman from Washington State, what percent of your 

State’s electricity is generated by hydro? 

Mr. DANNER. Well, it depends on the year. Sometimes we have 

high flows. Sometimes we have low flows. But it is basically around 

60 to 70 percent. 

Mr. BARTON. Sixty to 70 percent. I just thought we would put 

that in the record. Since they said they weren’t going to be impacted in Washington by the—— 

Mr. DANNER. So may I comment on that, Representative Barton? 

I—— 

Mr. BARTON. Well, I asked the question—if you comment very 

briefly—— 

Mr. DANNER. OK. 

Mr. BARTON. [continuing]. Because that is not my main line. 

Mr. DANNER. Well, I want to say that every State’s target is also 

different. And EPA recognized that we were a high hydro State, 

and that is why we have the highest percentage reduction requirement of 72 percent. 

Mr. BARTON. Well, bless their hearts. 

Mr. Anderson, how much input did EPA ask from the PUC before they issued their proposed regulation? 

Mr. ANDERSON. I actually looked into that, and the answer is 

none. 

Mr. BARTON. None? 

Mr. ANDERSON. Nor did they recount to ERCOT, our grid operator. 

Mr. BARTON. Zip? Nada. 

Mr. KAVULLA. There was no contact, no questions. 

Mr. BARTON. Largest energy producing State in the country, and 

they asked for no input. What about ERCOT? You said none for 

them. 

Mr. ANDERSON. No. I asked that question before coming up. 

Mr. BARTON. All right. What about TCEQ. 

Mr. ANDERSON. There may have been conversations. I don’t 

know. 

Mr. BARTON. But it’s safe to say it’s minimal? I mean, none is 

none, but—— 

Mr. ANDERSON. That has been our experience. 

Mr. BARTON. OK. Now, since it has been released, the gentleman 

from Arizona said that they have gone back to EPA, and they seem 

to be listening. 

What is your perception of how well EPA is listening to Texas 

these days? 

Mr. ANDERSON. Well, from the proposal itself, I would say not 

very. But to be honest, we haven’t reached—— 

Mr. BARTON. We want you to be honest. 

81 

Mr. ANDERSON. We have not reached out to EPA yet, because, 

frankly, we are still trying to digest the rule. Now, we may try to 

file some comments by October 16. My point was that we won’t 

have good, steady data relating to costs or reliability until the end 

of the year. 

Mr. BARTON. But just to be clear on the record, the State that 

has got to reduce over—get over 25 percent of the total reductions 

wasn’t asked or apparently given an opportunity to have any input 

before they put out their regulation. 

Mr. ANDERSON. Well, we did file—the EPA asked earlier this 

year for comments. And the TCEQ, our environmental agency in 

Texas, as well as the PUC, filed joint comments, laying out—laying 

out areas that we thought the EPA—— 

Mr. BARTON. Now, is that before or after they released their proposal. 

Mr. ANDERSON. That was before they released the rule. 

Mr. BARTON. So they had some inquiry. 

The gentleman from Montana, I thought your testimony was extremely illuminating and fact based, very practical. 

What has been EPA’s response, if any, to the realities of your 

testimony when you go to them? Do they say, Yes, you are right 

about that? We need to include it. Or do they just yawn, or have 

you even attempted to interact with them? 

Mr. KAVULLA. Well, Mr. Barton, they have been open to listening 

and having meetings, but their proposal itself exists in written 

form and, of course, they don’t make any commitments to you 

about the—what you counter propose to them until you actually see 

the proposed regulation or, next year, the final regulation. So simply put, I don’t know. 

I will give you an example. I have been able to arrange a 

Webinar for the EPA to explain its modeling software, which as I 

described in my written testimony, does not include a transmission 

reliability analysis. And after a week or two delay, they were able 

to set it up for us. So I am grateful to them for that. 

Mr. BARTON. OK. This is kind of a generic question. But most of 

the EPA health-based standards, there is a standard parts per million or some metric standard. Is there such a standard in this regulation for CO2? 

Mr. EASTERLY. No. That is one of the challenges with the CO2

issue; there is not clear goals. So the goals are to reduce this and 

reduce that. But overall, how we are going to reduce our greenhouse gas emissions across the country, there is not a plan for 

the—— 

Mr. BARTON. There is not even the facade of an attempt to say, 

this is what we think the health standards should be, which is the 

entire purpose of the Clean Air Act. And in this case, it is, again, 

nada, zip, nothing. 

Mr. EASTERLY. That is correct. That was in some of our comments on—— 

Mr. BARTON. With that, Mr. Chairman, I yield back. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from Texas, Mr. Green, 

for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

82 

And, Mr. Anderson, just—before EPA released the—they did ask 

generally for comments. Is that true? 

Mr. ANDERSON. Yes, they did. 

Mr. GREEN. But they didn’t contact our State agency, for example, or ERCOT or the Public Utility Commission or—but generally, 

they did—— 

Mr. ANDERSON. They didn’t—— 

Mr. GREEN. [continuing]. Before the release of the rule? 

Mr. ANDERSON. They didn’t reach out to the staffs to ask about 

how the grid worked in Texas, for example. 

Mr. GREEN. Yes. Well, obviously, we need to work with EPA on 

that because I know their issue is not reliability, but it is our issue. 

And we will make sure about that. 

In your testimony, you said Texas receives no credit for previous 

renewable investments. That is a concern I voiced repeatedly two 

to three times, Texas will lead the Nation in nonhydro-renewable 

energy power. And that is what worries me. Our energy power, 

what we used to get out at the Highland Lakes in the Austin area, 

the droughts reduced all that. 

So what challenges does Texas renewable energy market face in 

the next decade that would prohibit growth as envisioned by the 

EPA? 

Mr. ANDERSON. Really, I don’t see a lot of challenges, other than 

the production tax credit. But we are still going to see renewable 

development, I think, in Texas. The—I was actually trying to be 

kind when I said we didn’t get any benefit. Actually, we are being 

penalized because they are asking us to effectively double down 

on—— 

Mr. GREEN. Well, and that is what I said earlier, and that is our 

problem. We are not getting credit for what we have already done. 

And we are going to continue to do it, but the problem is this new 

rule makes it so much more difficult. And maybe sitting down with 

Texas, which I would like them to do and work it out. 

Your testimony doesn’t mention building block 4, energy efficiency and demand-side response. Can you quickly share your comments or thoughts about that—— 

Mr. ANDERSON. We will have—well, our—we do have an energy 

efficiency program, and we were one of the earliest to implement 

it actually in the 1990s. 

But our energy efficiency standard in Texas is a little different 

from most States. It is focused on peak saving in the summer. 

Mr. GREEN. Yes. 

Mr. ANDERSON. Because, again, in the summers we—it is hot. 

Mr. GREEN. And it is also based on the number of kilowatt 

hours—— 

Mr. ANDERSON. Yes. 

Mr. GREEN. [continuing]. And not a percentage. 

Mr. ANDERSON. And it is—it is based on kilowatt hours and a 

percent of the peak in August in effect. 

Mr. GREEN. Which is—— 

Mr. ANDERSON. We would have to redesign the program entirely. 

And it is not clear, frankly, what we can obtain in a redesign. 

Mr. GREEN. Well, I am pleased to read your comments that, in 

August, Texas regulators prepare a plan to address EPA’s ESPS 

83 

rule. And but because the rollout of the carbon issue was just a disaster for the business community and the folks that I represent in 

the Houston area, because EPA was having to issue permits that 

they don’t do. And we are still working through that backlog, but 

I am glad the legislature decided this last session to do better. 

Could you further elaborate on those comments? Why would 

Texas—what should Texas do to prepare? 

Mr. ANDERSON. Well, in terms of the compliance, one of the problems, if the rule is adopted in the form that it is proposed or substantially in the form that it is proposed, is the 2020 interim target. I would just point out that whether it is to build a new combined cycle plant or to build transmission to integrate the renewables that would have to be integrated, you just can’t get there. 

We build transmission faster than about anywhere in the country, but it’s still 5 or 6 years from inception to it being energized. 

A combined cycle power plant takes anywhere from—and this is 

not counting permitting—it takes anywhere from 20—from 24 

months to 36 months. 

Mr. GREEN. OK. I am concerned about the timeline, and that is 

where you ended there, the implementation timeline. And I know 

the Texas delegation wants to make sure that we get credit for that 

investment, but we also have time to build in. And that is all I ever 

ask EPA, if this is going to be the standard, to give us time to either capitalize it or get there, whether it is a private business or 

a government agency like you have. 

What about the EPA’s time frame concerns you the most? 

Mr. ANDERSON. Again, the actual infrastructure that has to go 

in. 

Mr. GREEN. Yes. 

Mr. ANDERSON. It—they are basically asking the country as a 

whole, and certainly Texas, to redesign—redesign a system that 

evolved over 100 years and do it in 14 years or so. 

Mr. GREEN. Well—— 

Mr. ANDERSON. That is a pretty short time frame. 

Mr. GREEN. And I am out of time, but I appreciate that because—give us some time, and we will do it. But and that is true 

with the public sector and the private sector. If it is going to make 

us have cleaner air, we want to do it. But you can’t do it in a short 

time. You have to give us some flexibility to grow into it. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from Illinois, Mr. 

Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

It is great to have you all here, and I know some of you were 

commenting on the purpose of the hearing. But I want to put 

things also in perspective. I think Joe Barton raised it. 

Mr. Easterly, you mentioned commissioners—you mentioned that 

we don’t really know what the health goal is because we don’t CO2

parts per million effect on human health. 

We do know what the goal of—and that is to kill coal and coal 

generation in this country. I mean, and I go back to the president 

of the San Francisco Chronicle editorial board, which he said we 

are going to make it so expensive that they are going to have to 

leave the business. So that is the goal. 

84 

This is also an example of regulators legislating. And I know my 

colleague, Mr. Waxman is here—who was here in 1992, carbon dioxide, this debate was part of the legislative record and was rejected under the Clean Air Act, the whole debate. Legislators, the 

elected representatives of this Nation, rejected that we should regulate carbon dioxide in the Clean Air Act. Hence, now we moved 

because of a lawsuit to the Supreme Court, which then empowered 

the EPA to make a, quote-unquote, ‘‘endangerment finding’’—a 

fraudulent endangerment finding on the health and human impact 

where they did a global health and human impact, but not this CO2

parts per million as you mentioned or as Joe mentioned and you 

kind of alluded to. 

So that is why we are here, because we have got regulators legislating that is going to impact the whole country. 

Mr. Danner, you make a great statement about Washington 

State. Please send our regards to your Governor, good friend, 

served on this committee. But you made an argument in response 

to how your State as respond. And good for you. 

But using a regulatory agency to enforce rules and regulations 

not passed by the Congress of the United States and place that on 

the backs of individual States is really part of this national debate 

of who is really running our national government? Is it legislators 

with signed pieces of legislation by the President to make laws and 

then regulators enforcing the law? Or are we allowing the course 

and the regulators to now be the legislative branch and the law enforcers of our country? And so this is a bigger battle. This is example A of an excessive, large Federal bureaucracy that is out of control. And I use this all the time, as a former teacher, understanding the separation of powers. This is a perfect example of how 

we have lost the ability on separation of powers. 

Mr. Danner, my understanding is that Washington State currently imports power from other States, including coal-fired generation. How much power do you import? 

Mr. DANNER. Well, our—we are part of the Bonneville Power 

System, so the public utilities in Washington State, which are 

about half the utilities, get power from Bonneville. For the most 

part, that—most of it is inside Washington. 

Mr. SHIMKUS. Right. 

Mr. DANNER. But there are dams and other facilities outside. Our 

investor-owned utilities also have facilities in and out of the State. 

About 30 percent comes from coal plants in Montana. 

Mr. SHIMKUS. So let me ask. Just let me focus on the coal. So 

if these coal power plants shut down, what happens to rates in 

Washington State? 

Mr. DANNER. Actually, we go through an integrated resource 

planning process every 2 years where we look out—— 

Mr. SHIMKUS. So unchanged? 

Mr. DANNER. [continuing]. Into the future. 

Mr. SHIMKUS. Unchanged, if these power plants shut down? 

Mr. DANNER. Well, the impact on rates right now if these power 

plants shut down. We are seeing that there will be rate impacts, 

but it will probably be—it is unclear yet. We are still going through 

the process—— 

Mr. SHIMKUS. OK. Let me go to—— 

85 

Mr. DANNER. No, no. Let me—let me—— 

Mr. SHIMKUS. But I need to go to Mr. Kavulla. I will come back, 

but I am running out of time. 

Mr. Kavulla, same kind of question, what do you—how would 

you comment if your power plants have to shut down based upon 

these—— 

Mr. KAVULLA. So one of the odd things about this, Mr. Shimkus, 

is that this very large facility I was referring to, the 2,100 megawatt coal strip facility, is mainly dedicated to providing power to 

out-of-State utilities. I don’t know what the bill impact on their 

utilities would be. It would be substantial for Montana’s share of 

that. Our regulated utility has a lot of undepreciated accounts associated with that coal plant. 

Mr. SHIMKUS. And, Mr. Danner, if you were not shutting down 

your only coal-fire power plant, could you comply with these regs, 

even—that the EPA has passed upon you? 

Mr. DANNER. No. We could not. 

Mr. SHIMKUS. OK. 

And Mr. Kavulla, how do you envision EPA enforcing the building block—we were talking about building block number 4—relating to increased energy efficiency. You quote in the previous testimony, ‘‘There would be thousands of consumers performing small 

discrete actions.’’ What do you mean by that? 

Mr. KAVULLA. I just mean that energy efficiency is something 

that happens when someone plugs in a light bulb, replaces their refrigerator. If a State plan includes the compliance target for energy 

efficiency, it may be difficult to both verify and then enforce compliance if those targets fall short. Unless there is a point of compliance, like a particular utility, it could be difficult. In my experience 

of measuring and evaluating the robust energy efficiency programs 

that Montana already has in place, the reports to measure and 

verify the savings run into the hundreds, almost a thousand pages. 

It is very—it is not like plugging on something to a power plant 

to measure a reduction in emissions. It is a much more difficult 

measurement task. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from California, Mr. 

Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Today we woke up to see the Washington Post in this town, announced on the front page, ‘‘CO2 rising at much faster rate report 

finds.’’ Scientists have found that levels of carbon pollution in the 

atmosphere surged last year due to both rising emissions and the 

diminishing ability of oceans to absorb extra carbon dioxide. This 

development threatens to further speed up the already alarming 

rate of warming the planet. 

Do any of you here today disagree that we must cut our emissions of carbon pollution to try to slow climate change? 

Seeing none, I am pleased to see that State officials aren’t wasting our time trying to deny the science. Unfortunately, my colleagues do that instead of you. 

Some States have not only recognized the danger of climate 

change, but also led the way in doing something about it, including 

my own State of California, Washington, the Northeastern States 

86 

in the Regional Greenhouse Gas Initiative, and others. So I am 

pleased to have two of these States here represented, Maryland 

and Washington. 

These States have already acted to reduce carbon pollution from 

power plants. EPA has used your achievements to inform the Clean 

Power Plan, and you can help address some of the fears and concerns that we are hearing from other States. 

Commissioner Speakes-Backman, you testify with the authority 

of experience. Can States cut carbon pollution without economic 

harm? In fact, could we actually see economic benefits from the 

Clean Power Plan? 

Ms. SPEAKES-BACKMAN. Thank you for the question, Mr. Waxman. Absolutely. We found, in our experience, that we have reduced carbon pollution in our region by 40 percent, while our economy has grown by 7 percent. That has meant a $1.6 billion in net 

economic gain for our region from 2005 to 2012. 

Mr. WAXMAN. Well, let me ask you, is this something that can 

be done only by States with very clean power generation portfolios, 

or can States who rely heavily on coal also cut carbon pollution? 

Ms. SPEAKES-BACKMAN. In fact, Maryland is one such example 

that was a majority coal when we began this—when we began this 

work on energy efficiency, renewable energy, and participation in 

the RGGI States. We were 56 percent coal, and we have gone to 

44 percent. Our renewables, natural gas and energy efficiency has 

also decreased our carbon footprint. 

Mr. WAXMAN. Some States support cutting carbon pollution, but 

argue that their particular targets will be too hard to achieve. 

Every State still has the opportunity to comment on the proposal. 

But Washington’s situation can be informative here. 

Chairman Danner, you have the highest proposed target of any 

State, a 72 percent reduction in carbon pollution. Is this doable, 

and if so, how? 

Mr. DANNER. Well, yes, it is doable. We are still looking at the 

numbers. We have questions. We have technical questions, but we 

think we can. 

Mr. WAXMAN. And you will have a conservation standard, renewable portfolio standard? 

Mr. DANNER. Yes, we do. 

Mr. WAXMAN. Are these measures that you are adopting, can 

they be adopted by other States as well? 

Mr. DANNER. Yes, they can. 

Mr. WAXMAN. Another complaint we hear is that we don’t know 

precisely how the Clean Power Plan will be implemented and thus 

we don’t know if there may be reliability problems. My understanding is that many States have urged EPA to give them wide 

latitude to design their own programs. 

Does anyone on the panel want EPA to reduce the flexibilities for 

State compliance in the final rule? I assume nobody wants that. 

So let’s be fair. You can’t demand freedom to design your own 

program while criticizing EPA for not spelling out precisely how 

the carbon reductions will be made. 

We have also heard today that it isn’t clear how States should 

handle power markets that cross state borders. Well, one way the 

Clean Power Plan addresses this is to allow States to form regional 

87 

programs and give them extra time to do so. This and many other 

concerns we have heard today would not arise under a national 

market-based program adopted by Congress. But in the absence of 

such a program, I commend EPA for using its existing authority 

under the law, as upheld by the U.S. Supreme Court to propose an 

effective, reasonable, and flexible approach to cutting carbon pollution. 

That is the end of my comments and questions, Mr. Chairman. 

I yield back my time. 

Mr. WHITFIELD. Thank you, Mr. Waxman. 

At this time, I recognize the gentleman from Nebraska, Mr. 

Terry, for 5 minutes. 

Mr. TERRY. Thank you, Mr. Chairman. 

And I do think it is appropriate to question the practicality of the 

rule without being accused of being a denier. 

Let me just start with Mr. Easterly and Mr. Darwin. I am curious, on one of the four buckets or categories is the making fossil 

fuel plants more efficient. In your jurisdiction, Commissioners, 

what is the percentage or rate or measurability of the inefficiency 

of the plants that are currently running? 

My—I am being sarcastic. The reality is I don’t understand this 

bucket because I would think that all plants are trying to run as 

efficiently as possible. So how do they make those gains? Mr. Easterly. 

Mr. EASTERLY. We are concerned about that. The power plants, 

there are constraints under the Clean Air Act about when you can 

make an efficiency improvement and not be subject to other additional requirements. But they have had, for a long time, an incentive to produce the power with the least amount of energy necessary. 

Now, this rule goes on an output basis, which is good from a 

science standpoint, but it penalizes people, as we heard for the Regional Haze Rule and for, in our case, the Clean Air Mercury Rule. 

Additional emission controls that people have to put on the power 

plants will reduce their net output. And if you do carbon sequestration, that reduces your net output by 20 to 25 percent. So there are 

substantial practical problems with how you actually increase thermal efficiency of a plant. 

And the other one I think you have heard in the testimony is, 

as you let the plant cycle up and down, they are less efficient. They 

are most efficient running at a fixed rate, and that is how you get 

your highest thermal efficiency. So we are very concerned that this 

is not achievable. 

Mr. TERRY. Mr. Darwin. 

Mr. DARWIN. I think what Commissioner Easterly said was completely accurate, and it would apply in Arizona as well. 

Mr. TERRY. All right. Then this question is for Commissioner 

Speakes-Backman and for Commissioner Kavulla. So, in your respective opinions, has the EPA done a sufficient analysis of natural 

gas infrastructure to assume that existing natural gas plants can 

be run at a 70 percent capacity factor, question number one, and 

did the EPA reach out to your State to determine whether sufficient natural gas infrastructure is available to meet the demand for 

natural gas electric generation? 

88 

Commissioner Speakes-Backman. 

Ms. SPEAKES-BACKMAN. Thank you, sir, for the question. I think 

the 70 percent capacity factor is part of that. The building block 

is a question actually that we do have on it from a technical basis. 

Mr. TERRY. OK. 

Ms. SPEAKES-BACKMAN. So I think it is a fair question. I am ultimately saying that I agree with the fact that the rule is sound, that 

the structure of it is sound, but there are questions still that we 

have on a technical basis, including the natural gas capacity factor 

of 70 percent—— 

Mr. TERRY. OK. 

Ms. SPEAKES-BACKMAN. [continuing]. And the ability to get natural gas into the Northeastern and Mid-Atlantic region. 

Mr. TERRY. I appreciate that. Commissioner Kavulla. 

Mr. KAVULLA. I am happy to say I agree with the Commissioner. 

Mr. TERRY. All right. 

Mr. KAVULLA. I think this is a big technical question, and it rises 

to the level of probably being in the top 5 or 10 problems outstanding with the rule. 

To answer you directly, no. It is my understanding that the EPA 

has not conducted either an electric transmission or a gas transmission reliability analysis of its best system of emission reduction. 

Mr. TERRY. All right. 

Ms. SPEAKES-BACKMAN. Sir, I would just like to add to that. Although I am not sure if they did their own reliability study, I do 

know that the Organization of PJM States are working to get a 

modeling done on reliability and cost impacts. 

Mr. TERRY. All right. 

Ms. SPEAKES-BACKMAN. I think that is part of working together 

on this rule that is so important. 

Mr. TERRY. And determining what the State’s infrastructure is 

for natural gas is part of that, I would assume? 

Ms. SPEAKES-BACKMAN. Absolutely. 

Mr. TERRY. Mr. Kavulla, yes? You are nodding yes. 

Mr. KAVULLA. Yes. 

Mr. TERRY. I will answer for you. 

Then, in my last 60 seconds, how will wind and other renewable 

generation be treated with regards to out-of-state sale of electricity? Under the proposed rules, States using the renewable energy will get the credit, but not the States generating it. Can credit 

be given using renewable energy certificates? And to the same two 

speakers. Commissioner Speakes-Backman. 

Ms. SPEAKES-BACKMAN. Well, sir, I think your questions are brilliant. It is one that we have as well, as to who gets the credit. 

Mr. TERRY. Yes. 

Ms. SPEAKES-BACKMAN. Is it the generating facility or is it the 

facility with the demand—or the state of the demand? I think it is 

an excellent question, one that we still have outstanding. 

Mr. TERRY. OK. 

Mr. KAVULLA. I agree with the commissioner. This is a major ambiguity and even a point of self-contradiction in the proposal. I will 

say, as I put forward in my written testimony, that a State like 

Montana is assessed with all of the penalty associated with carbon 

from emitting generators that export to other States. I would hope 

89 

that we would get the credit from renewable generators that are 

intended to offset or green the portfolio in our State. 

Mr. TERRY. All right. Thank you. My time is up. 

Mr. WHITFIELD. At this time, I recognize the gentle lady from 

California, Mrs. Capps, for 5 minutes. 

Mrs. CAPPS. Thank you, Mr. Chairman, for holding this hearing 

and to our witnesses for your testimony, each of you. 

You know, it is no secret that carbon emissions from the power 

sector are causing our planet’s climate to change in an unprecedented rate. We know the communities across the country are already experiencing the impacts of climate change. My State of California, our farmers and ranchers and businesses, are suffering due 

to the severe drought, and consumers are now paying higher prices 

for food. 

Even if you attribute some of this to cyclical changes, you can’t 

deny that communities across the country are facing damaged infrastructure and erosion from extreme weather of all kinds and sea 

level rise. These impacts have very real costs for consumers and 

our economy as well. 

Mr. Danner, would you elaborate on this, please. How is climate 

change impacting our public infrastructure and who ultimately 

pays for these costs? 

Mr. DANNER. Well, I think that you mentioned some of them. 

And I mentioned them in my earlier testimony. Sea level rise is 

something that is going to affect us. We are going to have to relocate businesses and homes that are located on shorelines. We are 

going to have to harden our seawalls and our shipping facilities. 

I mentioned before that the pine bark beetle infestation is growing because we have longer summers now and that we don’t have 

the winter die-off of the insects. And this is going to effect our lumber industry. We are having more forest fires. That affects not only 

the lumber industry but the recreation industry. And so we are 

going to be seeing more of this. 

Our shellfish industry is actually under a severe attack right 

now—— 

Mrs. CAPPS. Yes. 

Mr. DANNER. [continuing]. Because of ocean acidification, the 

shells won’t form in the young oysters. And, of course, the ski resorts. It is going to have an impact on urban water system. It is 

going to have a supply on salmon. It is going to have a supply on 

fishers, and so—and irrigators. So there are going to be a lot of impacts down the road, and some of them have started already. 

Mrs. CAPPS. Thank you. 

And, Ms. Kelly Speakes-Backman, climate change is making, as 

we just heard some of them, and creating significant costs for consumers and our Nation’s infrastructure. The American people are 

frustrated—many of my constituents are—by the lack of action in 

Congress to address these issues because they understand that 

these costs will only increase in the future if we don’t take action 

now to combat climate change. 

How do you view the long-term costs—and I am speaking now 

long-term costs of climate change compared to those existing under 

carbon reduction plans, such as the Regional Greenhouse Gas Initiative? 

90 

Ms. SPEAKES-BACKMAN. Thank you for the question. 

We look at not only the direct energy cost, but we look at, when 

we are analyzing the costs and benefits of energy, some of the external issues, such as the diminished spending that residents are 

taking because they are taking on energy efficiency programs. 

And we use these energy efficiency programs within the Maryland Public Service Commission by making sure that they are cost 

effective. So we have a very rigorous analysis, a recorder, of what 

is a cost-effective energy efficiency program. And we have thereby 

done—we have thereby decreased the impact to consumers by 1.5 

percent in Maryland with respect to the RGGI programs. 

Mrs. CAPPS. So regulating carbon pollution now not only helps 

avert some high cost of climate change. It also creates direct benefits for consumers. 

Would you go on to say—briefly, so I can ask others as well— 

what benefits have consumers in Maryland seen from your efforts 

to reduce carbon? 

Ms. SPEAKES-BACKMAN. Well, I am going to have to look up my 

notes because we have quite a few to list out. And I believe I have 

them in my written comments. 

In Maryland, we invested $230 million up through last year. And 

the reinvestment of the auction proceeds from RGGI have helped 

more than 104,000 low-income Maryland families pay their energy 

bills. It has helped energy efficiency upgrades of 4,320 low-income 

apartments alone. And that is not to mention 3,100 families and 

106 businesses in Maryland to install solar, wind, and geothermal 

systems. 

Mrs. CAPPS. So, Mr. Danner, just nod or say yes or no in answering. You have seen similar benefits in Washington? And then a follow up to both of you. Do you think consumers will continue to see 

these benefits under EPA’s Clean Power Plan? 

Mr. DANNER. Yes and yes. 

Mrs. CAPPS. Yes and yes. 

Ms. SPEAKES-BACKMAN. Yes and yes. And, in fact, Regional 

Greenhouse Gas Initiative, we just initiated some changes to our 

program which will—what we think these changes will do are they 

will project—they are projected to add an additional $8 billion into 

our gross regional product. 

Mrs. CAPPS. Thank you very much. I yield back. 

Mr. WHITFIELD. The gentlelady’s time has expired. 

At this time, I recognize the gentleman from Ohio, Mr. Latta, for 

5 minutes. 

Mr. LATTA. Well, thank you very much, Mr. Chairman, and 

thanks very much for holding this hearing. It is another good hearing. Thanks very much to all of our witnesses for being here. 

It is kind of interesting because, when I look around this committee room with the members and the States that they represent, 

the national manufacturers, I was looking at the States with the 

highest and lowest shares of manufacturing employment, many are 

represented in this room. Indiana being—being number one. Michigan being at four. And I hate to admit it, after saying that, since 

I border both those States, that Ohio is number seven. 

91 

But it also points out the fact that there is another CNBC report 

that came out, the top four States in 2009 and 2013 for manufacturing job creation: Michigan, Texas, Indiana, and Ohio. 

And when the testimony was given by Mr. Easterly talking about 

your co-usage in the State, I know that I had a report done several 

years ago that you are still at over 80 percent coal—Ohio is over 

70 percent—and what would do to our manufacturing base in our 

respective States. Because, again, bordering both Michigan and 

Ohio, I know—because I am out in my district all the time and 

going through manufacturing plants, I have got people working in 

both those States and visa versa. So we want to make sure that 

people are out there working and that they are employed. 

And if I could, just run down the line with everyone, just ask 

questions real quick and try to get responses because I would like 

to ask several questions to everyone. And this is for all—for everyone, that the EPA’s proposed Clean Power Plan rule assumes the 

rule would be finalized by June 2015 and States will file their initial compliance plans by 2016. 

And starting with Mr. Kavulla, if I could with you—and we will 

just go right down—would development of the State implementation plan require time and significant coordination among different 

State agencies? And if yes, which agencies? 

Mr. KAVULLA. Certainly, it would require coordination between 

the Public Service Commission, the Department of Environmental 

Quality, the self-governing electric cooperatives, and public power 

entities of the State of Montana, possibly the Governor’s Office, the 

Department of Commerce, the utilities themselves, which are not 

agencies. And then if there was to be a multistate plan, since we 

do have these large exporting generators possibly with the Washington Utilities Transportation Commission, the Oregon Public 

Utilities Commission, the Idaho Public Utility Commission, a variety of others, perhaps as many as a dozen or two dozen. 

Mr. LATTA. Thank you. 

Mr. DANNER. Yes. Thank you. 

We are already meeting with our State Department of Commerce 

and our Department of Ecology. So interagency coordination is already underway, and we are working with our regulated utilities 

and other stakeholders. 

Ms. SPEAKES-BACKMAN. We are also currently working with our 

Department of Environment. We also coordinate certain energy 

issues with the Maryland Energy Administration, which is our energy office. We also need coordination with other States because we 

will be participating. As EPA has recognized RGGI as a compliance 

mechanism, we will be coordinating with eight other States in 

Maryland. 

In addition, we will be coordinating with our ISO and our fellow 

States within the PJM Region to understand what this means for 

our reliability and our cost structures. 

Mr. LATTA. Thank you. 

Mr. DARWIN. I think, in Arizona, it is much of the same. The only 

thing I would add—and this is not unique to Arizona—is that we 

will have to go before our State legislature as well. And that is, at 

times, a time-consuming process on educating them on the issues 

and making—helping them make an informed decision. And having 

92 

to develop a plan so quickly puts us in a very difficult situation of 

having to get the decisions from them on such a time frame. 

Mr. LATTA. Thank you. 

Mr. EASTERLY. We both need to coordinate with our utility regulators, our utility consumer counselors, our MISO, our Midwest 

States ISO. And we have this group called the Midcontinent States 

Energy & Environment Regulators to try and figure this out for all 

of us. But we have an 18-month rulemaking process. You usually 

get 3 years to develop a plan. We can’t do it in a year. 

Mr. ANDERSON. Whatever is ultimately adopted is likely to require a change in law with Texas State law. Our legislature only 

meets every other year in odd number years. This next year, it 

meets in January until the end of May. The rule doesn’t come out 

until afterwards. The next time they meet won’t be until 2017. It 

will make coming up with a plan and actually get the authority to 

implement it a challenge. And then we have the same problems 

with respect to the 2020 deadline of actually doing anything meaningfully in order to get to the first threshold. 

Mr. LATTA. Thank you very much, Mr. Chairman. 

My time has expired, and I yield back. 

Mr. WHITFIELD. The chair at this time recognizes Mr. Tonko of 

New York for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

Chairman Danner, Commissioner Anderson has raised an issue 

that I have heard raised many times in the context of debates 

about carbon pollution and how the problem should be addressed, 

if it is to be addressed at all, and that is fairness. I think carbon 

pollution must be addressed for the reasons you have stated in 

your testimony. The social, the environmental, and the financial 

consequences are severe already and will become worse if we don’t 

act now. 

Commissioner Anderson points out correctly that Texas, like a 

number of States throughout the country, has taken steps to diversify energy resources, improve efficiency, and lower carbon emissions. Your State is one. New York is another. 

Some States, however, have done very little. With this rule, EPA 

has proposed steps that require all States to take action, as we 

have heard here. Something that I believe is not only fair, but long 

overdue. But the rule doesn’t offer a lot of credit to the States that 

have already taken action. 

My question is, should this proposal be revised to require more 

reductions of the States that have historically done little and be a 

bit more lenient in the targets for States that have already been 

doing their part to address this national and global problem? 

Mr. DANNER. Thank you for the question. I—yes. We are—in our 

comments, we will be making the case that we think that we—that 

States that have been early adopters whose citizens have already 

paid for some of this energy efficiency and renewable energy should 

be getting credit for it in the standard that EPA sets. 

Mr. TONKA. And, Commissioner Speakes-Backman and Commissioner Anderson, would you also like to comment, please? 

Ms. SPEAKES-BACKMAN. Yes, sir. I agree that we will be making 

comments, not only on whether or not we agree with the specific 

baseline of 2012, but is a single year the proper analysis? Perhaps 

93 

2012, if some of us recall in the Northeast and the Mid-Atlantic 

States, perhaps 2012 as a specifically stormy year due to extreme 

storms was not perhaps the best—it was an anomaly. And so we 

are going to ask those sorts of questions. 

But we are also going to ask questions around whether early actions are being properly credited. 

Mr. TONKA. Commissioner Anderson. Thank you. 

Mr. ANDERSON. Well, it is probably surprisingly, but I agree with 

my colleagues. I believe that the early adopting States—— 

Mr. TONKA. Thank you. I recognize—— 

Mr. ANDERSON. [continuing]. Not get credit. 

Mr. TONKA. OK. Thank you. 

And I recognize that we have a variety of views about EPA’s proposal being represented on our panel here today. EPA took considerable time in developing this proposal, and I understand the 

Agency did conduct extensive outreach and sought input from 

many of the industry, the regulatory community, and in different 

regions and States. 

I would like each of you to comment about that process itself. If 

you weren’t contacted by EPA, did you make an effort to reach out 

to EPA? Any of you that—— 

Mr. ANDERSON. We did in response to solicitation generally. In 

Texas, our environmental agency, as well as the commission, we 

filed joint—last spring, joint early comments. 

Mr. TONKA. Anyone else? Any of the other States? 

Mr. EASTERLY. EPA certainly spent time with, I would say, all 

of the State environment regulators. But at the end of the day, 

they didn’t take all of our advice. I think that is a fair way to put 

it. 

Mr. TONKA. OK. So you were—there was an interaction, though? 

Mr. EASTERLY. Yes, there was. 

Mr. TONKA. And the same is true with Commissioner Darwin? 

Mr. DARWIN. Yes. We met with EPA and our Corporation Commission met with EPA prior to the proposal. 

Mr. TONKA. Do your organizations believe that some action at 

the national level is needed to address carbon emissions or not? 

Mr. DANNER. Yes. 

Ms. SPEAKES-BACKMAN. Yes. 

Mr. EASTERLY. I still believe we need a plan. We are doing scatter-shot actions that don’t fit together to achieve any particular 

goal and is putting certain, in our case manufacturing, at risk 

without a plan to actually make a difference across the country. 

Mr. TONKA. So is that an answer—to have a carbon emission 

plan, should there be a national plan? 

Mr. EASTERLY. There needs to be a plan. As people have said, the 

CO2 continues to increase a couple of parts per million a year. This 

rule, for all of its pain, will cut that by less than 1 year’s increase. 

So it is really not going to make a big difference until we figure 

out how we are going to get our arms around the whole issue. 

Mr. TONKA. So you are saying yes to a national plan that really 

reduces carbon emission tremendously? 

Mr. EASTERLY. And we have to say what that plan is and the 

costs—— 

Mr. TERRY. OK. 

94 

Mr. EASTERLY. [continuing]. And benefits of that compared to not 

doing it. 

Mr. TONKA. OK. So, in other words, a proposal—a national proposal to reduce carbon emissions would be acceptable to your organizations? 

Ms. SPEAKES-BACKMAN. Yes, sir. 

Mr. DANNER. Yes—— 

Mr. KAVULLA. I am not—I am not sure what that is without 

knowing the details, Mr. Tonka. 

Mr. TONKA. Well, a national plan is a national plan to reduce 

carbon emission. The concept, is that something that is worthy and 

required—— 

Mr. KAVULLA. I mean, the—— 

Mr. TONKA. [continuing]. At a national level. 

Mr. KAVULLA. The present national plan attempts to address an 

intractable problem of geopolitics with a goal that, even if realized, 

would result in miniscule reductions and no real benefit. 

Mr. TONKA. That is this plan. But, ultimately, should there be 

a national plan to reduce carbon emission? 

Mr. KAVULLA. It is a real problem, and it needs to be addressed 

either national or international treaty level. 

Mr. TONKA. Thank you, everyone. 

Mr. KAVULLA. To make—— 

Mr. WHITFIELD. The gentleman’s time is expired. 

At this time, I recognize the gentleman from Texas, Mr. Olson, 

for 5 minutes. 

Mr. OLSON. I thank the chair. 

And welcome to our witnesses. A special Texas howdy to Commissioner Anderson. 

Following the example of Chairman Emeritus Dingle, my question would be yes-or-no questions on basic issues. 

So, first of all, yes or no. And I will start with you, Commissioner 

Anderson. Do you believe that this rule as currently written is 

workable for Texas, yes or no? 

Mr. ANDERSON. No. 

Mr. OLSON. No. 

Commissioner Easterly from Indiana, yes or no? 

Mr. EASTERLY. We haven’t found a way to meet it yet. 

Mr. OLSON. Director Darwin from Arizona, yes or no? 

Mr. DARWIN. No. 

Mr. OLSON. Commissioner Speakes-Backman, Maryland? 

Ms. SPEAKES-BACKMAN. Yes. 

Mr. OLSON. Yes. 

Chairman Danner, Washington? 

Mr. DANNER. Yes. 

Mr. OLSON. And Commissioner Kavulla—— 

Mr. KAVULLA. No. 

Mr. OLSON. [continuing]. Montana? No. 

OK. Next round of questions. Two of you said yes, Maryland and 

Washington. 

But Commissioner Speakes-Backman and Chairman Danner, do 

you recognize why these four States—Texas, Arizona, Indiana, and 

Montana—might not agree with you a little bit different? Understand why they are opposed? 

95 

Mr. DANNER. Yes. I understand. But they are raising technical 

issues that I think are similar to some of the issues that we have, 

but these are issues that we are going to put in our comments. And 

we don’t see them as any reason to delay consideration of this proposed rule, which is, at this point, just a proposed rule. 

Ms. SPEAKES-BACKMAN. I would agree with that. I think I have 

agreed with some of my colleagues up here at the table on some 

of the specific technical issues that they have asked, especially the 

Honorable Kavulla. That was fun. 

But I also think that there is a big difference between the four 

building blocks that they have laid out in terms of how to meet this 

specific goal and the structure of the plan and the mechanism of 

compliance. And I think that mechanism of compliance and how 

they set this out is structurally sound. 

Mr. OLSON. OK. So it sounds like you understand their rationale 

why this program doesn’t work for these new rules, maybe unworkable, again, for Texas, Arizona, Indiana, and Montana. For Maryland and Washington State, all go forward? 

Mr. DANNER. Well, I am not going to speak whether it is workable for them or not. 

Mr. OLSON. OK. 

Mr. DANNER. I know they are making a case that it is not, but 

I have to look into it more. 

Mr. OLSON. OK. That is what I was trying to understand. 

Another question, starting again with you, Commissioner Anderson: Do you agree that this rule will add to the reliability challenges facing the grid in Texas? 

Mr. ANDERSON. It has potential, particularly, if we utilize the expansion of renewables, just because of the tremendous variables 

that occur. And, in fact, it will require more gas to back that renewable up, which will in turn increase the amount of carbon emissions. 

Mr. OLSON. Mr. Easterly, Indiana’s perspective? 

Mr. EASTERLY. Yes. We are going to lose an amount of generation 

that we don’t have a way to replace. 

Mr. OLSON. Director Darwin, Arizona? 

Mr. DARWIN. It is not my area of expertise, but from what I have 

been told, if the rule is finalized as proposed, it would create reliability concerns. 

Mr. OLSON. And Commissioner Speakes-Backman, Maryland? 

Ms. SPEAKES-BACKMAN. I belive that we are already facing reliability and resilience issues related to climate change and related 

to other external threats and forces that we need to pay very close 

attention to. And utility regulators, economic regulators are well 

suited to work on those issues. 

Mr. OLSON. And Chairman Danner, Washington State. 

Mr. DANNER. I think I already answered the question. 

Mr. OLSON. I thought so. 

Commissioner Kavulla, Montana? 

Mr. KAVULLA. Simply put, no reliability analysis has been conducted for the western interconnection by the appropriate bodies, 

so I am unable to reach any conclusions for a variety of—— 

96 

Mr. OLSON. Yes. And your testimony said you cannot state studies of that because it hasn’t been addressed. Isn’t that a real big 

problem? 

Mr. KAVULLA. My speculation—— 

Mr. OLSON. [continuing]. If you set a goal for 2015, a major problem, huh? 

Mr. KAVULLA. My speculation would be that it would, but I am 

not a transmission engineer and no study has been performed, sir. 

Mr. OLSON. I am not one either, so thank you for your answer. 

One final yes-no question, again, with you Commissioner Anderson. In the mercury rule, EPA included a reliability valve to pause 

the rule’s implementation if the grid is threatened. Should they 

consider that system now for this rule, this new rule, yes or no? 

Yes or no? 

Mr. ANDERSON. Yes, they should. 

Mr. OLSON. Mr. Easterly, Chairman? 

Mr. EASTERLY. Yes. 

Mr. OLSON. Dr. Darwin? 

Mr. DARWIN. Yes. 

Mr. OLSON. Commissioner Speakes-Backman? 

Ms. SPEAKES-BACKMAN. I think it is worthy of consideration. 

Mr. OLSON. There we got another yes. Chairman Danner? 

Mr. DANNER. I actually think they already have some processes 

where they can review decisions they have made and make alterations, but I think it is something that should be looked at. 

Mr. OLSON. Thank you. And my final question again, this one for 

Mr. Anderson, my home commissioner. 

As you know, Texas has made huge changes to our grid. Coal 

plants have been closed and the existing ones are among the most 

efficient in the country. We built the most winded America and the 

power lines to move it. We have increased our use of natural gas, 

and last Friday, regarding CO2 emissions, I helped break ground 

on the project in my home district called ‘‘The Petra Nova Project.’’ 

It is a project from NRG where they are going to get—they are actually going to tap into a power plant there, capture CO2, 90 percent captured, put down a pipeline, goes 80 miles downstream and 

being used to produce more oil, and that is what is happening 

there in Texas. 

So my question is, and this is about carbon, CO2 emissions. You 

mentioned ERCOT, as a really efficient market you said the words 

ruthless, and our generators have risen to the challenge. If EPA 

said to the state of Texas, good work, now go reinvent your fleet 

again? 

Mr. ANDERSON. I would just point out that—and this is in a 

study that was released by the Energy Information Agency this 

month that between 2000 and 2011, Texas had the largest reduction in CO2 emissions in the country by metric ton, over 9 percent, 

and actually accounted for, during that same time period, of over 

13 percent of the Nation’s reduction in CO2, all while the economy 

grew by over a third in Texas. 

So it is—I go back to, it is not like we are not doing anything. 

It is not like Texas has buried its head in the sand. We have made 

enormous investments in order to get more efficient, and the EPA 

now is asking us to double down. 

97 

Mr. OLSON. It is not just CO2. It is—— 

Mr. WHITFIELD. The gentleman’s time is expired. 

Mr. OLSON. Ozone—I am sorry, Mr. Chairman, a couple of 

points. Ozone, sulphur dioxide and nitrous dioxide as well. We reduced those emissions dramatically, half the national average, double the national average. 

I yield back. Thank you. 

Mr. WHITFIELD. At this time I recognize my colleague from Kentucky Mr. Yarmuth for 5 minutes. 

Mr. YARMUTH. Thank you very much, Mr. Chairman. I thank all 

the witnesses for a very interesting discussion. 

You know, Mr. Shimkus took us back down memory lane to talk 

about what happened back in 1992 and so forth in the Congress 

and also subsequently in the courts, but he stopped before 2009 

when we actually debated this very subject in the context of the 

Waxman-Markey legislation. 

And I raise that because at the time, with many of us from states 

that derive most of their energy from coal, Kentucky derives 92 

percent of its energy from coal, we are very concerned to make sure 

that any proposal that dealt with carbon emissions did so in a way 

that didn’t affect our consumers and our businesses and our economy, and we worked very diligently to shape that proposal in a 

way that I think accomplished that. 

Of course, it passed the House, was killed by the Republicans in 

the Senate, which is why we are here now, why EPA had to act 

without congressional activity and when I was considering that bill 

in 2009, what I was saying to my constituents was I wasn’t sure 

we could trust EPA to be particularly sensitive to Kentucky’s situation and Indiana’s situation and Illinois and so forth, so I thought 

it was better to work through the legislative system, but what I 

have actually gleaned from the testimony today is that EPA actually has been pretty responsive to the individual needs of states. 

Mr. Kavulla, you said they have. Mr. Darwin, you said they had, 

and I know that was the case in Kentucky because Kentucky submitted a plan for reducing carbon emissions in our state and as a 

way of encouraging EPA to provide flexibility and show how we 

could do it, and I think our officials in Kentucky are relatively satisfied that they do have the flexibility to create a plan that will accomplish both significant reductions of carbon emissions without— 

and not hurt our economy. 

And I was interested to hear Mr. Danner talk about job creation. 

I think you said about 3,000 jobs attributable to this program in 

Washington? 

Mr. DANNER. To renewables, and to conservation is more like 37- 

and-a-half thousand. 

Mr. YARMUTH. That is great. And I am not sure, Commissioner 

Speakes-Backman, that you mentioned employment estimates if 

there are any. I know you talked about economic impact, but you 

have any measure of job creation? 

Ms. SPEAKES-BACKMAN. Yes, sir. In our region, we have 16,000 

job years. 

Mr. YARMUTH. Sixteen. Which is interesting to me because again, 

back in 2009, I was talking about—to our state officials and our energy cabinet then, they were neutral on the legislation. They did 

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*The information has been retained in committee files and is also available at http:// 

docs.house.gov/meetings/IF/IF03/20140909/102623/HHRG-113-IF03-20140909-SD010.pdf 

not take a position on Waxman-Markey. But they said they 

thought that if it were passed, that it would mean tens of thousands of new jobs in Kentucky. 

So I think what your experiences have shown and what at least 

our states’ estimates were is that we can do this without not just 

not hurting the economy, we can actually stimulate the economy. 

And this goes to something that I am very much interested in, 

and that is, we have had a discussion just in the last few minutes 

about, you know, the impact on overall carbon emissions and 

whether this is just a drop in the bucket throughout our country 

and the world. 

But is there anybody who doubts that if we were to—if we do 

something significant in this area, whether it be something like a 

cap and trade under Waxman-Markey or the EPA proposal, whatever it ends up, the rule, whatever it ends up being, that this will 

set off a new era of innovation and experimentation that will ramp 

up at a much faster rate the reductions that we can achieve? Mr. 

Danner, you look like you are poised to answer. 

Mr. DANNER. Yes. I mean, we have already seen that, too, because all this investment has led to innovation, and you are seeing 

more distributed generation, more rooftop solar. The price of solar 

has come way down. The price of wind has come way down, and 

we are seeing that the conservation is even going down, so we are 

seeing it over and over and over again. 

Mr. YARMUTH. Ms. Speakes-Backman. 

Ms. SPEAKES-BACKMAN. I would just agree with Mr. Danner in 

that we have seen new technologies, we have seen new applications, not even just by the end user but from our utilities themselves. They are looking at new ways to increase efficiency on their 

distribution grid. 

Mr. YARMUTH. OK, well once again I appreciate all of your input 

and your work. Thank you for your service. 

And I yield back, Mr. Chairman. 

Mr. WHITFIELD. Thank you very much. At this time I would like 

to recognize the gentleman from West Virginia, Mr. McKinley for 

5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman, and thank you to the 

panel for your patience in dealing with all this today. 

What I would like to do is ask unanimous consent that this, for 

the record, Mr. Chairman, this is a petitioner’s motion to set a consolidated briefing schedule and expedite consideration of the lawsuit dealing with this measure. 

Mr. WHITFIELD. Without objection. *

Mr. MCKINLEY. Thank you. 

Mr. Chairman and for the rest of you, it is—what I have heard 

here not only on this rule, this proposed rule but so many other 

rules that we have had before us in this committee, shows the big 

divide in America over this, and I am—not only on this one but the 

rational consolidation of this and the implementation of it, but all 

these rules that the EPA is proposing. 

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I thought when the President ran that he was saying he wanted 

to unify this country, that there wasn’t going to be a red state and 

a blue state but we were just going to be an American state and 

we were all going to work together, but yet I see one rule after another dividing us, and I don’t see anything coming from this rule 

that unifies us. 

It just causes more division, and quite frankly, I think it is policies like this that are thrown out that maybe are ill-conceived, 

maybe there is shortcomings with it, that long term, maybe there 

is some advantage to it, but it feeds into that, that attitude of 

America, of the dysfunction in Congress and distrust of government. It fuels that, and I have got—I would love to see how can 

we work together rather than proposing these things that we know 

are contradictory. 

But there is a phrase that Speaker Boehner uses often from—he 

is quoting—paraphrasing a fellow by the name of Maxwell who 

says, ‘‘He who thinks he leads but has no followers is merely a man 

taking a walk,’’ and I think that is a little bit of what is going on 

now because the rest of the country or the rest of the world doesn’t 

seem to be following our lead. If we want to address this, that is 

fine, that is a noble thing, but the rest of the world is saying we 

are not buy into this. 

When China is saying they are going to increase their CO2 emission by 60 percent, in India by 50 percent, in Germany, switching 

over from nuclear to coal, 22 power plants, the rest of the world 

is out there, and then you have to couple that with the fact that, 

the sheer numbers. I must be missing something as an engineer in 

Congress because I know that if we totally stopped the burning of 

coal all across America, not just cut down the CO2, just stop burning coal, stopped it totally, the total CO2 emission around the 

world, manmade CO2, anthropogenic, would only decrease by 2⁄10ths of 1 percent. 

Now you are saying on this, what this President is doing in this 

proposed rule, he says I want to reduce it by another 30 percent. 

30 percent of 2⁄10ths is 6⁄100ths of 1 percent, and we are trying to 

say that is a measurable benefit to our—the world and our economy by reducing it by 6⁄100ths of 1 percent? All I can think is—so, 

I really want to get back to you from Montana because you talked 

in the morning another direction with this. 

I was listening to Barton talk about 10 percent of the power in 

America comes from Texas. Well, West Virginia is not far behind. 

We are 5 percent of all the power in America comes from West Virginia, 97 percent of that is produced by coal. 

We export 56 percent of the power that we create in West Virginia. I don’t know how we are going to comply without someone 

getting hurt. Some jobs are going to be lost in West Virginia when 

97 percent is produced by coal. 

So my question to you, Mr. Commissioners, what picture do 

you—what would you suggest will look like West Virginia if we 

have to embark on this and reduce our CO2 emissions in West Virginia by 30 percent? 

Mr. KAVULLA. I have not studied—— 

Mr. MCKINLEY. Or 20 percent, whatever that final number is? 

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Mr. KAVULLA. Right. I mean, the job implications for producing 

states like yours and mine are no doubt significant. 

Mr. MCKINLEY. Are we doing to lose jobs? 

Mr. KAVULLA. Well, certainly, if it resulted—— 

Mr. MCKINLEY. I would be—— 

Mr. KAVULLA. [continuing]. In a coal plant closure, absolutely. 

Mr. MCKINLEY. Is it—can you think—is it really measurable 

around the world? I want to work on climate change. I acknowledge 

there is climate change. I just want make sure we are following the 

right plan and quit just making a simplistic approach at attacking 

coal as the simple answer to this, because if it is only we are going 

to reduce 6/100ths of 1 percent of the emissions of the globe, I don’t 

know that that is worth the risk that we are putting to our economy, especially here in the United States, and more provincially, 

in West Virginia, the First District of West Virginia. 

Mr. KAVULLA. I agree with you, Mr. Congressman. I don’t know 

if the energy efficiency jobs, the renewable jobs would be nearly 

enough to offset what we would lose in terms of producing jobs, and 

I don’t know about the second tier, third tier effects on things like 

manufacturing that rely on that energy production. I just don’t 

know. 

Mr. MCKINLEY. I have run over my time, but thank you, Mr. 

Chairman, for—— 

Mr. WHITFIELD. The gentleman’s time is expired. 

At this time I recognize the gentlelady from Florida, Ms. Castor 

for 5 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman, and thank you to all the 

witnesses for being here today. 

About 3 weeks ago, a number of the top climate scientists in 

Florida sat down with our Governor Rick Scott and urged him and 

state leaders in Florida to take action to reduce carbon pollution. 

They said if we do not, we are going to face some very serious costs 

and consequences. They pointed out the potential consequences to 

our tourism industry, to our barrier islands and our beaches from 

the rising sea levels, danger to our drinking water supplies from 

saltwater intrusion. 

Remember, Florida is a fragile peninsula, to our local infrastructure, the pipes, the water pipes, wastewater pipes that cost our 

local governments quite a lot to maintain, from sea level rising and 

flooding. So the scientist said we can’t wait, we have to act now. 

Unfortunately, Governor Scott shrugged off their advice. This 

seems particularly unwise for a state like mine that has such great 

vulnerabilities. 

I want to know, Commissioner Speakes-Backman, how difficult 

will it be for a state to achieve goals under the Clean Power Plan 

if a state resists, if it delays, if it ignores carbon pollution reduction? It seems like it could end up costing the citizens of my state 

a whole lot of money. 

Ms. SPEAKES-BACKMAN. There is absolutely a cost to inaction, 

and that is measured through a number of different areas. There 

are environmental causes, there are public health problems that 

arise. There are also costs to consumers on the loss of energy and 

electricity in their systems, the loss of water. 

101 

We are in the midst right now of evaluating and giving a dollar 

value to that, those losses. What does it cost a customer to be out 

for 4 days, 5 days, 10 days because of a major storm? We have 

worked through these issues in practicality, unfortunately, and so 

this is something that I think is absolutely important for us to consider when we are looking at what the cost is. 

Ms. CASTOR. And another reason for Florida and other states not 

to delay is that I think the Clean Power Plan is likely to create 

jobs, particularly in clean energy and energy efficiency technologies. I see a great benefit to my local economies. We are the 

sunshine state and yet we produce less solar power and have less 

jobs in renewable energy than Georgia and New Jersey and other 

states. That seems backwards to me. 

And energy efficiency under the Clean Power Plan is one of the 

important building blocks. Chairman Danner, you have discussed 

all of the great work in Washington state. Could you talk a little 

bit more about how long your state has been at it to improve energy efficiency and reduce demand, and even though you have 

made good progress, can you do more? 

Mr. DANNER. Thank you. We have been at it for—well, the voter 

initiative was in 2006, and so we have had measures before that, 

but 2006 is when we really got going, and I think that our compliance with the Clean Power Plan is going to be so much easier because we got a headstart, that we were able to work ahead, and 

it just—it is part of our culture in Washington state now. 

And the job numbers that I talked about earlier, we got a headstart on that, too. We are really seeing the benefits. But we do 

have more to do. The test for conservation is we want it to be costeffective and so the fact that our—we have a hydro-program so our 

energy costs are actually lower in Washington, we have less room. 

In some of the states that have higher costs of power, there is a 

lot more room for cost-effective conservation. 

Ms. CASTOR. And the best thing about energy efficiency, and 

Commissioner Speakes-Backman, you talked about this in Maryland and with the RGGI plan, is that it can be a win-win situation 

for states and consumers, you can actually put money back into the 

pocket of consumers. 

One of the issues is that in many states, the business model for 

electricity is backwards now. It does not reflect the challenges that 

we face in the reduction of carbon pollution, and somehow many 

other states are going to have to realize their model is upside 

down. They have got to incentivize conservation and energy efficiency rather than the sale of the kilowatt hour; isn’t that correct? 

Ms. SPEAKES-BACKMAN. It is the least cost resource that we 

have, to turn things off and to use energy more efficiently, so absolutely I would agree with you 100 percent. 

Maryland itself is on a path to decrease its energy use per capita 

by 15 percent by 2015, and the RGGI states themselves, we will 

reduce carbon. We are on a trajectory, because of the 2014 changes 

that we have made in our program, we are on a trajectory to reduce our carbon from power plants by 50 percent by 2020. So, it 

is possible, and we are reinvesting those dollars that are—those 

revenues that are being generated back into an energy system 

which is making it a positive for our states. 

102 

Ms. CASTOR. Thank you very much. 

Mr. WHITFIELD. The gentlelady’s time is expired. 

At this time I recognize the gentleman from Virginia, Mr. Griffith for 5 minutes. 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. 

I do appreciate that and appreciate the witnesses being here. 

I will tell you that I share some of the concerns that Representative McKinley raised in his questions about the cost of jobs and the 

indirect jobs related to the manufacturing facilities whose electric 

prices go up, but the manufacturers, whether they are in this country, or in another country will figure out a way to get their energy 

at a reliable, reasonable cost. 

Mr. Easterly, I noted that in your testimony you indicated that 

there were real concerns in Indiana, and I share those concerns 

representing southwest Virginia, that it is not the wealthy, it is not 

the big manufacturers who will pay first as the electric prices go 

up after wave after wave of new regulations have been applied to 

them by this EPA, but that the poor, the elderly, and most vulnerable in our society, I am looking at your comments here that are 

written, will be the ones that will pay first and that they are going 

to end up having their utility bills raised. 

And then I think in your oral comments you made some reference to concerns about people having their power turned off because they couldn’t pay their bill, and then the costs that might be 

associated with that when they don’t have the best of health or otherwise. Could you expand on that, when there are concerns and 

these rates go up? 

Mr. EASTERLY. Every winter at least—actually, I know it happens more than just in Indiana. There are people that didn’t get 

their electricity reconnected the summer before and they—some of 

them die. And similarly in the summer, I remember in Illinois in 

the late 1990s, and the heat wave, 700 people died because of heat. 

We know as a society what to do. Air-conditioning is absolutely 

available and power is available, but it is an economic issue. 

Mr. GRIFFITH. It becomes an economic issue, and you know what 

is really sad about this is that when we first started discussing this 

when I was first elected, Lisa Jackson, who was then head of the 

EPA, came in and I said to her when you made a health determination that CO2 was dangerous to health, and she talked about 

how the temperatures would go up and that would cause problems, 

I said, did you ever think about the people who won’t be able to 

afford to heat their homes in a cold winter? And she said, well, we 

have programs to take care of that. 

In my area, and I have talked to a number of people about it, 

typically, particularly in a cold winter, that money starts running 

out around the end of February, first part of March. Has that been 

your experience as well? 

Mr. EASTERLY. As I understand it, but I don’t actually run that 

program. 

Mr. GRIFFITH. I understand, but you—anecdotally, you have 

heard of that happening. That creates some concern for me as well. 

When we add these new regulations, you also referenced in your 

next paragraph another thing that I have been concerned about. 

The possibility as we lose more facilities that are generating elecVerDate Nov 24 2008 12:33 Apr 07, 2015 Jkt 037690 PO 00000 Frm 00108 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-172 CHRIS
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tricity, particularly with the new rules coming on that are putting 

a lot of pressure on the coal-fired power plants, that there is a real 

possibility or you indicate there might be reliability issues, and in 

parenthesis you said brownouts. 

I am concerned about rolling brownouts. Do you have that concern as well? 

Mr. EASTERLY. Yes, we have that concern. I think you heard it 

from most of the interconnects here. 

Mr. GRIFFITH. I have. And it raises another issue that has come 

up this year in my district and in other parts of Virginia. There are 

two different companies trying to build gas pipelines, and of course, 

the communities are concerned, and sometimes I think the EPA 

thinks that these pipelines can just pop up without any trouble. 

Of course, you have got do go through all kinds of regulations, 

both EPA regulations, local regulations, state regulations, and so 

forth to build a new gas pipeline in the area, and I am wondering 

if any of you-all have experienced that in your state? 

I guess Texas has got plenty of pipelines, but are you experiencing difficulties where even where people want to use the natural 

gas, there is difficulty in putting the pipeline in, or in relationship 

to manufacturers, we have noticed that sometimes the manufacturers want the natural gas but they are not on the short list to get 

a natural gas pipeline put in. If each of you could answer that, 

starting with you, Mr. Anderson? 

Mr. ANDERSON. We really don’t have a shortage of gas infrastructure in our state or electric infrastructure as a general rule. 

Mr. GRIFFITH. All right. Mr. Easterly. 

Mr. EASTERLY. We are an importer, and we do not have enough 

for this plan and I want—I will just give me a second. When I 

worked for a utility, and before that a steel company, we were 

working on this millennium pipeline to bring gas to New England. 

It can’t cross the Hudson River. For decades that pipeline project 

has been going forward and not made the impact that it needs. 

Mr. GRIFFITH. So it took decades to try to get that done and it 

hasn’t been able to make the impact, but the EPA is requesting 

that the states have their plans ready by next year sometime; isn’t 

that correct? 

Mr. EASTERLY. That is correct. 

Mr. GRIFFITH. And if it is going to take decades to put the pipeline in to do what the EPA is asking you, if one of your options 

is to go to natural gas, that is not going to work, is it? 

Mr. EASTERLY. It is going to be difficult. 

Mr. GRIFFITH. It is going to be difficult. I will tell you we have 

the same problem with some of the new technologies like chemical 

looping where it is not going to be ready in time to meet the EPA 

standards. 

Mr. Chairman, if we could get a quick yes or no from each of the 

remaining. 

I am out of time, and I apologize that I took too long. 

Mr. DARWIN. Yes, it would create a problem, and it is important 

to note that in states like Arizona, we have to achieve so much of 

our goal by 2020. We have to reach 75 percent of our goal by 2020, 

and that means we have to rely upon the assumptions that are behind building block 2, which is about converting from coal generaVerDate Nov 24 2008 12:33 Apr 07, 2015 Jkt 037690 PO 00000 Frm 00109 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-172 CHRIS
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tion to natural gas generation, so infrastructure is absolutely a 

need, and assuming that we can have that infrastructure in place 

by 2020 just isn’t a fair assumption. 

Mr. GRIFFITH. All right. Ms. Speakes-Backman, have you-all had 

any problems in Maryland. I know you are a much smaller state 

than Arizona and Texas and some of the others? 

Ms. SPEAKES-BACKMAN. At this time we have had no problem 

with natural gas. 

Mr. GRIFFITH. Yes, ma’am. 

Mr. DANNER. Yes. We are looking at there will be some natural 

gas expansion, but we are on track. 

Mr. GRIFFITH. On the long track or on the right track? 

Mr. DANNER. Well, it is a modest expansion, so it is—and then 

we have some LNG and CNG facilities that are coming on, and we 

are just seeing that is going on fine. 

Mr. GRIFFITH. All right. 

Mr. KAVULLA. Infrastructure is always a problem, electric transmission or natural gas anything. 

Mr. GRIFFITH. And it is hard to justify seeing these regulations 

that require plans by next year and major compliance by 2020. 

Mr. Chairman, I yield back. Thanks for your patience. 

Mr. WHITFIELD. The gentleman yields back, and that concludes 

today’s hearing. 

Everyone has had the opportunity to ask questions, and I want 

to once again thank the members of the panel for taking time from 

your very busy schedules to come and visit with us, and we appreciated your perspectives and look forward to working with you as 

we move forward on this rather complicated issue that the country 

is going to be trying to undertake. 

And without objection, I want to enter into the record, number 

1, the hearing memo for today which we normally don’t do but because it has the interim and the final goals for each state on its 

emissions prepared by EPA, we want to put that in. 

And second of all, I have a September 2nd, 2014, EIA report entitled ‘‘Residential Electricity Prices are Rising,’’ and it goes through 

the various regions of the country, and I might say that in New 

England the rates went up the most in the first half of 2014 by 

11.8 percent, and then we have the EIA state-by-state average retail electricity prices for June for each region, and I would like to 

enter this into the record. And then the record, we will keep it open 

for 10 days for any additional materials. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. But once again, I thank all of you, and we look 

forward to working with you, and that will conclude today’s hearing. 

[Whereupon, at 12:25 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Every state has its unique electricity needs. In Michigan we have significant electricity demand from our extensive manufacturing sector as well as that from other 

businesses and consumers. And we have very cold winters where electric reliability 

can literally be a matter of life and death. Other states also have particular circumstances that their own state governments are best equipped to address. I am 

especially troubled by the prospect of a federal takeover of state electricity planning 

105 

that is embodied in EPA’s proposed Clean Power Plan, and it is critically important 

for this subcommittee to hear from state-level officials to more fully understand the 

implications of EPA’s plan. 

Since its enactment in 1970, the Clean Air Act has balanced the state and federal 

role. In fact, the statute contains a Congressional finding that air pollution prevention and control is the primary responsibility of state and local governments. Under 

the Clean Air Act, EPA focused on regulating smokestack emissions from electric 

power plants, while most other energy planning decisions were left to the states. 

For nearly 45 years, this balance has worked relatively well. We have seen dramatic improvements in air quality while keeping electricity affordable and reliable. 

But now, EPA’s Clean Power Plan is threatening this balance by shifting nearly all 

authority to EPA. If this proposed rule becomes final, it will be bureaucrats in 

Washington who will be micromanaging electricity production and use in each state. 

For the first time, EPA would have substantial control over how electricity is generated, transmitted, and consumed. No longer would states have the last word on 

items such as the best mix of coal, natural gas, nuclear, and renewables to meet 

electricity needs. Instead, each state would have to submit to EPA a plan to bring 

its electricity system into compliance with the new federal requirements. And if 

EPA rejects a state’s plan, it will impose its own plan, the details of which the agency has not yet revealed. And all of these new burdens will be placed upon states 

at a time when they face many other economic challenges and budgetary constraints. 

It is difficult to imagine this new level of federal control as anything other than 

bad news for affordable electricity prices and jobs. And it may be even worse news 

for electric reliability, a subject that is the primary jurisdiction of agencies other 

than EPA, as FERC recently confirmed at our last hearing. 

For manufacturers, affordable energy is vital to remaining globally competitive. 

We are currently seeing the tremendous benefits of affordable domestic natural gas 

for our manufacturers. But high electricity costs and uncertain supplies could negate the natural gas advantage. 

EPA’s regulatory scheme can harm future economic prospects in many ways. 

Manufacturers deciding whether to locate a new facility in the U.S. or abroad will 

take into account the fact that most of America’s global competitors are not burdening their electric systems with any overreach like the Clean Power Plan. The 

plan’s impacts on states’ individual competitiveness, and their ability to lure new 

jobs and development, will also likely complicate how much states can band together 

to effectively ration their energy use to meet the plan’s goals. 

We have been down this road before with the recent health law. And one clear 

lesson from all of the health law’s unpleasant surprises is that policymakers should 

look before they leap. That is why we need to hear directly from state-level energy 

officials about the proposed Clean Power Plan. These are the people in the best position to anticipate the potential problems implementing this radical agenda, and I 

am pleased that we have a variety of state perspectives represented here today. 

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