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93–274 2015

FERC PERSPECTIVES: QUESTIONS CONCERNING 

EPA’S PROPOSED CLEAN POWER PLAN AND 

OTHER GRID RELIABILITY CHALLENGES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JULY 29, 2014 

Serial No. 113–168 

( 

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. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 4 

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

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

Prepared statement .......................................................................................... 6 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

WITNESSES

Cheryl A. Lafleur, Acting Chairman, Federal Energy Regulatory Commission 9 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 86 

Philip D. Moeller, Commissioner, Federal Energy Regulatory Commission ...... 17 

Prepared statement .......................................................................................... 19 

Answers to submitted questions ...................................................................... 114 

John R. Norris, Commissioner, Federal Energy Regulatory Commission .......... 29 

Prepared statement .......................................................................................... 31 

Answers to submitted questions ...................................................................... 132 

Tony Clark, Commissioner, Federal Energy Regulatory Commission ................ 37 

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

Answers to submitted questions ...................................................................... 145 

Norman C. Bay, Commissioner, Federal Energy Regulatory Commission ......... 46 

Prepared statement .......................................................................................... 47 

Answers to submitted questions ...................................................................... 162 

SUBMITTED MATERIAL

Report entitled, ‘‘Addressing Climate Change Without Legislation,’’ University 

of California, Berkeley School of Law, 1 submitted by Mr. Waxman ............... 8 

Statement of American Public Power Association, submitted by Mr. Whitfield 78 

Majority memorandum ............................................................................................ 82 

1 The report is available at http://docs.house.gov/meetings/IF/IF03/20140729/ 

102558/HHRG-113-IF03-20140729-SD008.pdf. 

(1) 

FERC PERSPECTIVES: QUESTIONS CONCERNING EPA’S PROPOSED CLEAN POWER 

PLAN AND OTHER GRID RELIABILITY CHALLENGES 

TUESDAY, JULY 29, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:01 a.m., in room 

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

of the subcommittee) presiding. 

Present: Representatives Whitfield, Shimkus,Pitts, Burgess, 

Latta, Olson, Gardner, Kinzinger, Griffith, Barton, Upton (ex officio), Rush, McNerney, Tonko, Yarmuth, Green Capps, Doyle, Barrow, Matsui, and Waxman (ex officio). 

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

Staff Director; Charlotte Baker, Deputy Communications Director; 

Sean Bonyun, Communications Director; Matt Bravo, Professional 

Staff Member; Leighton Brown, Press Assistant; Allison Busbee, 

Policy Coordinator, Energy and Power; Annie Caputo, Professional 

Staff Member; 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; Jeff Baran, Staff Director for Energy and Environment; Phil 

Barnett, Staff Director; Caitlin Haberman, Policy Analyst; and Alexandra Teitz, 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 I certainly want to thank all of the FERC commissioners for 

joining us at this morning’s hearing in which we are going to get 

your perspectives on questions relating to EPA’s proposed Clean 

Power Plan and its impact on reliability, as well as other challenges. I know that you all have a very busy schedule, and we do 

appreciate very much your being with us this morning to explore 

this very important issue. 

At this point, I would like to recognize myself for 5 minutes for 

an opening statement. As I said, this is our second hearing on 

2 

EPA’s proposed Clean Power Plan, which would change the way 

electricity is generated, transmitted and consumed in each State. 

Our first hearing focused on the EPA itself, and I must say that 

it was obvious from that hearing that EPA does not have the expertise on the intricacies of electric markets and reliability implications of this radical transformation that they are proposing for the 

electric generation sector. 

As I noted before, we are also seriously concerned with this proposed rule; for one thing, EPA’s unprecedented use of the Clean Air 

Act is questionable on legal grounds. Legal experts, and we always 

know there are conflicting legal experts, but many legal experts see 

nothing in the Clean Air Act that empowers EPA to commandeer 

State decisionmaking authority over how each State produces, delivers, and uses electricity. 

The EPA is also embarking on a comprehensive effort to Federalize electric generation, even though the Agency, as I said, has 

absolutely no energy policy setting authority or expertise. That is 

why it is important today to hear from the Federal body that actually does have that authority and expertise. Although, I might add 

that the top-down command and control efforts of EPA go far beyond even FERC’s jurisdiction. 

As a preliminary matter, I would like to better understand 

FERC’s level of participation in this proposed rule. Is FERC an 

equal partner with EPA, a junior partner or hardly a partner at 

all in promulgating this rule? And what would be FERC’s role in 

implementing this rule? We are also interested in tapping into 

FERC’s considerable expertise on electric reliability. As I suspect, 

many reliability concerns with this proposed rule that have not 

been considered by EPA. 

As it is, the Agency has already promulgated a number of different rules that have contributed to coal-fired power plant shut 

downs. This proposed rule would lead to more of the same. So we 

are interested in learning from FERC whether it believes coalusing states can abruptly and quickly move away from this baseload source without raising significant reliability concerns. 

I am also worried by many of the assumptions of EPA that they 

make as to how States can meet electricity demand while complying with the rule. For example, the Agency suggests that States 

can easily ramp up natural gas-fired generation to help meet the 

target goals, but we know from the experience of last winter that 

several regions of the country have natural gas pipeline capacity 

constraints. 

Similar questions about EPA’s optimistic assumptions regarding 

the ability of renewables to help fill the void, especially given the 

many challenges that come with integrating intermittent resources 

into the grid. And the limitations of renewables will be exacerbated, if affordable and reliable base-load supplies, like coal and 

nuclear and even natural gas, face a constrained future as they do 

under the Obama Administration. 

Overall, we see great risk in EPA trying to overrule the State’s 

choices as to the best electricity mix as well as risk in constraining 

a State’s ability to change its generation portfolio and as you know, 

at a certain timeframe within this proposed rule, States can’t 

change, even if they might want to. So EPA’s proposed efforts dicVerDate Nov 24 2008 14:36 Mar 17, 2015 Jkt 037690 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-168 CHRIS
3 

tating electricity use is quite troubling. This is an area where the 

reach of the Federal Government has been limited, and for good 

reason, since these local resource decisions are best left to States. 

So we look forward to your testimony today. I know we have a 

lot of questions for you, and certainly, as I said, you all have the 

expertise and we look forward to your opening statements. 

And with that, I would at this time recognize the gentleman from 

Chicago, Mr. Rush, for his 5-minute opening statement. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

This morning we will be conducting our second hearing on EPA’s proposed Clean 

Power Plan targeting each state’s carbon dioxide emissions from electricity generation and use. Our first hearing focused on EPA itself, and I must say that our discussion with Assistant Administrator Janet McCabe left us with more questions 

than answers. Today, we solicit the Federal Energy Regulatory Commission’s expertise and perspective, and I welcome all five Commissioners to this subcommittee. 

As I have noted before, I find much reason for concern with this proposed rule. 

For one thing, EPA’s unprecedented use of the Clean Air Act is on very questionable 

legal ground. I see nothing in the law that empowers EPA to commandeer state decision-making authority over how it produces, delivers, and uses electricity. But 

aside from the legal questions of whether EPA can do this to the states, there is 

the equally important question of whether the agency should do it. I have serious 

doubts whether this scheme is advisable or even workable. 

Ironically, EPA is embarking on this comprehensive effort to federalize energy 

planning even though the agency has absolutely no energy policy-setting authority 

or expertise. That is why it is important to hear from a federal body that actually 

does have such authority and expertise, although I might add that the top down, 

command-and-control efforts of EPA go far beyond even FERC’s jurisdiction. As a 

preliminary matter, I would like to better understand FERC’s level of participation 

in this proposed rule—is FERC an equal partner with EPA, a junior partner, or 

hardly a partner at all in promulgating this rule? And what would be FERC’s role 

in implementing it? 

I am also interested in tapping into FERC’s considerable expertise on electric reliability, as I anticipate many reliability concerns with this proposed rule that have 

not been considered by EPA. As it is, the agency has already promulgated a number 

of rules that have contributed to coal-fired power plant shutdowns. This proposed 

rule would lead to more of the same and indeed is seen by some as the nail in the 

coffin for coal. I am very interested in learning from FERC whether it believes coalusing states can abruptly move away from this base load source without raising significant reliability concerns. 

I am also worried by many of the assumptions EPA makes as to how states can 

meet electricity demand while complying with the rule. For example, the agency 

suggests that states can easily ramp up natural gas-fired generation to help meet 

their targets. But we know from the experience of last winter that several regions 

of the country have natural gas pipeline capacity constraints. I look forward to hearing the Commissioners’ thoughts on the achievability of EPA’s assumptions about 

natural gas-fired generation. 

I also have similar questions about EPA’s very optimistic assumptions regarding 

the ability of renewables to help fill the void, especially given the many challenges 

that come with integrating intermittent resources into the grid. And the limitations 

of renewables will be exacerbated if affordable and reliable base load supplies like 

coal and nuclear face a constrained future as they do under the Obama administration. 

Overall, I see great risks in allowing EPA to overrule each state’s choices as to 

the best electricity mix, as well as risks in constraining a state’s ability to change 

its generation portfolio as circumstances warrant. 

I also find EPA’s proposed efforts dictating electricity usage to be troubling. This 

is an area where the reach of the federal government has been limited, and for good 

reason since these local resource decisions are best left to states. 

Most of all, I am very concerned what this proposed rule would do to electricity 

costs for consumers and for job-creating businesses. In my view, EPA has not been 

taking these concerns into account, which is another reason why I believe this hearing is important. 

4 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman, for holding this 

important hearing on FERC perspectives, questions concerning 

EPA’s proposed Clean Power Plan and other grid reliability challenges. 

Mr. Chairman, as the title suggests, we are here today to hear 

from the FERC commissioners on the impact that we can expect 

President Obama’s Clean Power Plan to have on a variety of issues 

related to fuel diversity, the integration of variable energy resources, natural gas, electricity generation, and grid reliability, 

among many other topics. 

Mr. Chairman, last month, this subcommittee heard testimony 

from Acting Assistant Administrator of the Office of Air and Radiation, Janet McCabe, that in developing the Administration’s Clean 

Power Plan, EPA consulted on reliability-related issues with DOE, 

FERC, State, public utility commissioners, as well as the Independent System Operators Regional Transmission Organization 

Council. 

In fact, when determining the best system of emission reduction, 

or BSER, reliability was one of the key factors that EPA considered 

and the Agency made sure to allow flexibility for States to design 

and implement their own programs in order to ease pressure on 

the system reliability. 

Additionally, Mr. Chairman, the EPA proposed to give States a 

10-year period to achieve their final goals, which allows for measures to be phased in to ways that protect reliability. But why is it 

so important that we act at all? Well, Mr. Chairman, a series of 

assessment reports have come out recently, including the third national climate assessment, the fifth intergovernmental panel on climate change assessment, the EPA’s climate change indicators in 

the U.S. 2014, and the bipartisan risky business, the economic risk 

of climate change in the U.S. 

Each of these reports highlights the devastating consequences of 

climate change on both public health and the environment, and 

each urging policymakers, you and I, Mr. Chairman, to act. And 

what have we learned from all of these telling studies, Mr. Chairman? We have learned that 7 of the 10 top warmest years on 

record have occurred since 1998 and dangerous heat waves have 

become more and more frequent. 

We have learned that extreme storms threaten to flood coastal 

communities, risking lives, and that cyclone intensity has increased 

over the past 20 years, where 6 of the 10 most active years since 

the 1950s occurring during that period. We have learned that dangerous wildfires continue to intensify, reducing air quality, threatening forests, threatening property, and risking the lives of firefighters. We have learned that the area of land burned by wildfires 

annually has increased since the 1980s and that 9 of the 10 years 

with the most land burned have occurred since 2000. 

We have learned that by mid-century, farmers in the midwest 

will face crop year decline of up to 19 percent and by the end of 

the century, States like Oregon, Washington, and Idaho could experience as many hot days over 95 degrees Fahrenheit as currently 

expected in the State of Texas. We have learned that as climate 

5 

warms, labor productivity in key sections including construction, 

agriculture, and utilities would likely be reduced and that these reductions and labor productivity may be the greatest in the southeast. 

So Mr. Chairman, it is for all of these reasons that President 

Obama has decided to act and fill the void left by this very same 

Congress in hopes of mitigating some of the most devastating effects on climate change due in large part to emissions from some 

of the Nation’s oldest and dirtiest power plants. 

Mr. Chairman, I look forward to this hearing on the FERC commissioners’ responses to questions and on the FERC commissioners 

to the President’s plan, their response to the President’s plan. And 

with that, Mr. Chairman, I want to yield back all the time that I 

might have. 

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

Mr. RUSH. Right on time. 

Mr. WHITFIELD. At this time, I would like to recognize the gentleman from Michigan, Mr. Upton, chairman of the full committee 

for a 5-minute opening statement. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well thank you, Mr. Chairman. 

A couple weeks ago, EPA’s Acting Assistant Administrator Janet 

McCabe told this subcommittee that the Agency’s proposed rule for 

existing electricity generation is not an energy plan but rather it 

is a pollution control rule. Then last week, Administrator Gina 

McCarthy made the exact opposite argument during her testimony 

before the Senate that the proposal is not about pollution control 

but, in fact, it is about energy and spurring investments in the 

EPA’s preferred energy choices. 

This comparison of exchanges by the two top officials at EPA 

demonstrates the Agency’s current dilemma. After failing to push 

comprehensive cap-and-trade legislation through a Democratic Senate because of legitimate fears that it would hamstring our economy and make energy more expensive, the Administration is now 

pursuing a plan B approach by stretching the Clean Air Act to accomplish the exact same goals. 

Assistant Administrator McCabe’s answer is the one that the 

agency will likely stick to when the rule gets challenged in court, 

as EPA has no explicit energy policy setting authority under the 

law. But Administrator McCarthy had the more candid response, 

as this rule clearly is an effort by EPA to assert control in new regulatory authorities over States’ electricity decisionmaking. 

EPA’s Clean Power Plan requires States to submit for approval 

individual or regional energy plans to achieve the agency’s carbon 

dioxide emission targets. EPA is systemically Federalizing under 

the Clean Air Act what was once in the clear purview of the States 

or the markets. If the States are truly the labs of democracy, then 

why assert the Federal Government over their energy planning? 

FERC is the agency charged by Congress with regulating electricity in interstate commerce, which is why it is so important to 

gain FERC’s perspective today. Even this Agency, with explicit authority over electricity matters, does not have the expansive reach 

6 

envisioned by EPA’s Clean Power Plan. I am particularly concerned 

about the Clean Power Plan’s impact on energy diversity. Maintaining a diverse energy portfolio is a core component of this committee’s vision for America’s energy future, a vision that we call the 

architecture of abundance. 

Consumers and businesses are best served by an electricity supply that can be generated from a variety of sources: Coal, nuclear, 

natural gas, obviously, as well as renewables, and in the proportion 

that each State deems best to suit its unique circumstances. 

Maintaining diversity, both diversity in our electricity generation 

portfolio as well as the diversity of strategies for meeting a State’s 

electricity needs is critical to affordable and reliable energy, but 

EPA’s top-down Clean Power Plan will give us less of both kinds 

of diversity. 

I thank the FERC commissioners today and certainly welcome 

Mr. Bay for his first appearance before us. And I yield the balance 

of my time to Mr. Shimkus. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Several weeks ago, EPA’s Acting Assistant Administrator Janet McCabe told this 

subcommittee that the agency’s proposed rule for existing electricity generation is 

not an energy plan, but rather is a pollution control rule. Then, last week, Administrator Gina McCarthy made the exact opposite argument during testimony before 

the Senate—that this proposal is not about pollution control but is about energy and 

spurring investments in the EPA’s preferred energy choices. 

This comparison of exchanges by the two top officials at EPA demonstrates the 

agency’s current dilemma. After failing to push comprehensive cap-and-trade legislation through a Democratic Senate because of legitimate fears that it would hamstring our economy and make energy more expensive, the administration is now 

pursuing a Plan B approach by stretching the Clean Air Act to accomplish the exact 

same goals. Assistant Administrator McCabe’s answer is the one the agency will 

likely stick to when this rule gets challenged in court, as EPA has no explicit energy 

policy-setting authority under the law, but Administrator McCarthy had the more 

candid response, as this rule clearly is an effort by EPA to assert control and new 

regulatory authorities over states’ electricity decision-making. 

EPA’s Clean Power Plan requires states to submit for approval individual or regional energy plans to achieve the agency’s carbon dioxide emissions targets. EPA 

is systematically federalizing under the Clean Air Act what was once in the clear 

purview of the states or the markets. If states are truly the ‘‘laboratories of democracy,’’ then why assert the federal government over their energy planning? FERC 

is the agency charged by Congress with regulating electricity in interstate commerce, which is why it is so important to gain FERC’s perspective today. Even this 

agency, with explicit authority over electricity matters, does not have the expansive 

reach envisioned by EPA’s Clean Power Plan. 

I am particularly concerned about the Clean Power Plan’s impact on energy diversity. Maintaining a diverse energy portfolio is a core component of this committee’s 

vision for America’s energy future—a vision we call the Architecture of Abundance. 

Consumers and businesses are best served by an electricity supply that can be generated from a variety of sources—coal, nuclear, natural gas, as well as renewables— 

and in the proportion that each state deems best to suit its unique circumstances. 

Maintaining diversity—both diversity in our electricity generation portfolio as 

well as a diversity of strategies for meeting a state’s electricity needs—is critical to 

affordable and reliable energy. But EPA’s top-down Clean Power Plan will give us 

less of both kinds of diversity. 

I thank the FERC Commissioners for their testimony today, and welcome Mr. Bay 

for his first appearance before us. We look forward to a continued dialogue as we 

conduct oversight of the Clean Power Plan. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

7 

Reliable low-cost energy is a critical and key asset to this country 

and for job creation. We appreciate what you do to help maintain 

that. 

In my sole region this winter, we came very close to the demand 

meeting supply, and I think that is a thing that hopefully you will 

help focus on. Base load is a key component of that, and as these 

rules drive some generating facilities out of the market closure, 

then we are going to have these concerns, and woe be it to the 

member of Congress that has brownouts during the hottest time of 

the summer or the coldest time in the winter. 

There is also the big debate, you guys are involved with it on the 

transmission grid. As we pick and choose winners and losers and 

electricity generation, we have to move electricity larger distances 

and that stirs up the public. I think there is a credible debate 

about localizing generation and then not having these transmission 

fights. 

As you have heard me before numerous times, I am also concerned about the physical security aspects. As a former Army officer during the Cold War, we worried about the Soviets doing electromagnetic pulses that would knock out transmissions and I know 

that is not the focus of this hearing, but security aspects of that, 

and maybe it is not a terrorist attack, maybe it is just a solar flare 

that really causes great concerns, and I am going to be watching 

that and involved with that in this year and the next couple years. 

The last thing I would like to, with this time, is just, Chairman 

LaFleur, and I will follow up with my questions, when you last appeared for us, you said you would keep your fellow commissioners 

in consultation with you. I think some of the testimony kind of 

questions that, based upon meetings with the EPA, and I hope we 

get clarification on that. 

Thank you, Mr. Chairman. I yield back my time. 

Mr. WHITFIELD. The gentleman yields back. 

At this time we will recognize the gentleman from California, Mr. 

Waxman, for a 5-minute opening statement. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. I would like 

to thank each of the commissioners for being here today, and I especially want to congratulate and welcome Mr. Bay, who has just 

been confirmed to the commission. 

The Federal Energy Regulatory Commission plays a key role in 

maintaining the reliability of electric grid and protecting electricity 

consumers. That is what makes your job so important. The Republican members of this committee deny the existence of climate 

change or pretend it doesn’t exist. They see the EPA’s Clean Power 

Plan for the power sector as a threat to grid reliability, and that 

is why they have called you here this morning. They hope you will 

say something that will give them ammunition. 

But those of us who are listening to the overwhelming scientific 

consensus see carbon emissions from power plants, not EPA regulations, as the real threat to the grid. The facts are sobering. Last 

year the levels of heat-trapping carbon pollution in the atmosphere 

8 

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

docs.house.gov/meetings/IF/IF03/20140729/102558/HHRG-113-IF03-20140729-SD008.pdf 

exceeded 400 parts per million for the first time in millions of 

years. Last year was the fourth hottest year on record, 7 of the 10 

hottest years on record occurred in the last decade, and all 10 occurred since 1998. 

Wildfires in the west have gotten much worse. Droughts are setting records and devastating harvests. Sea-level rise and fierce 

storms are threatening our coast. These, and many other indicators, tell us that global warming is harming us now, and it is going 

to get much worse. The power sector will feel these impacts. Intense storms will disrupt power delivery. Droughts and rising temperatures will force plant shutdowns. Transmission systems will 

lose capacity at high temperatures. 

And that is why the Clean Power Plan is so important for the 

grid and for our future. It was issued by EPA, but I am sure it 

went through an interagency review, because it is important to get 

FERC’s perspective. A significant transition is under way in the 

power sector. Market forces and public policies are driving a shift 

to renewables, demand side efficiency and natural gas fire generation. We have doubled our capacity to generate renewable electricity from wind and solar in just 5 years. 

Wind power is already cost competitive with fossil fuel generation in parts of the country and the cost of solar power is plummeting. Natural gas costs less than coal and even coal boosters acknowledge that it is not cost effective to build new coal plants 

today because of the competition from natural gas, not because of 

any regulations by any government agency. 

These changes in the electricity sector are bringing Americans 

cleaner air, new jobs, lower bills, and more choices. The Clean 

Power Plan will advance these positive developments. FERC, too, 

should make its own contribution. The statutory standards that 

FERC administers, gives the agency many tools to help combat climate change and create the clean energy economy of the future. 

And I want to bring to the members’ attention, the University of 

California Berkeley Center for Law, Energy, and the Environment 

report that was recently issued on this subject, authored by Steven 

Weissman and Romany Webb, which I ask unanimous consent to 

insert in the record. 

Mr. WHITFIELD. Without objection. *

Mr. WAXMAN. I hope all the commissioners will give these ideas 

serious consideration. As this new report shows, we don’t have to 

choose between protecting the environment and reliable electricity. 

FERC grid operators, State public utility commissions and power 

plants, even progressive power companies are already planning for 

the changes that are under way. 

Our nation has a proven track record of adapting to new environmental requirements without adverse impacts on reliability. We 

don’t have to cling to the past, and we don’t need to be afraid of 

the future. We can protect our environment, strengthen the grid, 

and leave our world a better place for our children. 

Thank you, Mr. Chairman. I yield back my time. 

Mr. WHITFIELD. Gentleman yields back. 

9 

At this time, we look forward to the opening statements of the 

commissioners of the FERC. And we have with us this morning, 

the Honorable Cheryl LaFleur, who is the Acting Chairman; we 

have the Honorable Phillip Moeller, who is a Commissioner; we 

have the Honorable John Norris and Tony Clark; and our newest 

member, Mr. Norman Bay of New Mexico. 

So at this time, Chairman LaFleur, we will recognize you for 5 

minutes for your opening statement. Make sure your microphone 

is on, and we look forward to your testimony. 

STATEMENTS OF THE HON. CHERYL A. LAFLEUR, ACTING 

CHAIRMAN, FEDERAL ENERGY REGULATORY COMMISSION; 

THE HON. PHILIP D. MOELLER, COMMISSIONER, FEDERAL 

ENERGY REGULATORY COMMISSION; THE HON. JOHN R. 

NORRIS, COMMISSIONER, FEDERAL ENERGY REGULATORY 

COMMISSION; THE HON. TONY CLARK, COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION; AND THE HON. 

NORMAN C. BAY, COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION 

STATEMENT OF THE HON. CHERYL A. LAFLEUR 

Ms. LAFLEUR. Well, thank you very much, Chairman Whitfield, 

Ranking Member Rush, and members of the subcommittee. 

I am honored to serve as the acting chairman of the Federal Energy Regulatory Commission, and I appreciate the opportunity to 

be with you this morning. 

As this subcommittee is well aware, the Nation’s resource mix is 

changing in response to a number of factors, including the increased availability of domestic natural gas, growing use of renewable generation in response to State and Federal policies, and new 

environmental regulations. Although these drivers of power supply 

changes are themselves outside the commission’s jurisdiction, we 

must be aware of and adapt to them to carry out our responsibilities to promote reliability and ensure just and reasonable rates for 

customers. 

Our work supports reliability in three primary ways. First, 

FERC supports the timely development of needed energy infrastructure. The commission has permitting authority over natural 

gas pipelines, LNG terminals, and non-Federal hydropower. We 

also support new infrastructure through our rate authority over 

those facilities and over electric transmission. 

Second, FERC oversees wholesale power markets that support 

reliability. We work to ensure that centralized capacity, energy, 

and ancillary services markets send correct signals to support the 

procurement and retention of resources needed for reliability. 

Finally, FERC directly oversees the reliability of the grid by establishing mandatory standards for the bulk power system under 

Section 215 of the Federal Power Act. It has been almost 10 years 

since Congress enacted Section 215, and I believe the commission 

has established a solid track record not just on day-to-day reliability, but on emerging issues, like cybersecurity, physical security, and geomagnetic disturbances. 

As I mentioned, one of the key drivers of changes in our resource 

mix are new EPA regulations regarding air, water, and solid waste 

10 

pollution. EPA is, of course, responsible for promulgating environmental regulations under the statutes it implements. We, in turn, 

are responsible for helping ensure that reliability is sustained as 

new environmental regulations are carried out. Our work in this 

area is not limited to interactions with EPA but includes collaborations with states, industry, and other stakeholders. 

One recent example is our work on the mercury and air toxic 

standards where we issued a policy statement outlining how we 

would advise EPA on when additional time might be needed to 

comply with the mercury and air toxics in order to avoid a reliability violation. We also established a regularly-scheduled public 

forum with NARUC, co-led by my colleague, Commissioner Moeller 

and myself and our State colleagues, to regularly collaborate with 

EPA and other stakeholders on how the MATS rule and other rules 

were being implemented. 

I have closely followed the development of the Clean Power Plan 

because I believe it will have implications for the operation of the 

grid and require FERC engagement to ensure that reliability is 

sustained. FERC staff commented on the proposal through the 

OMB interagency review process from a reliability perspective. 

Among other recommendations, FERC staff emphasized the need 

for the development of natural gas pipeline and electric transmission infrastructure to enable compliance with State compliance 

plans. FERC staff also emphasize the importance of regional cooperation to promote efficient compliance with the Clean Power 

Plan. 

I appreciate that the plan gives considerable flexibility to the 

States to use the different building blocks it outlines, but I believe 

FERC will have at least three important roles: First, to support the 

development of pipelines and transmission that will be needed to 

attain the goals of the plan; second, to consider how market structures need to adapt to support the research choices that states 

make under the plan; and finally, to continue to be closely engaged 

with EPA and the states and others to identify any problems and 

help to make sure they are addressed. 

Reliability has been my top priority in my time at FERC, and I 

believe it is job one for anyone involved in electricity. I have seen 

many changes to the Nation’s resource mix in the past 30 years, 

but the central importance of reliability is unchanged, even as new 

technologies and new environmental challenges and aspirations 

emerge. As FERC chairman and as a commissioner, I will continue 

to champion these issues. 

I thank the subcommittee for giving me the opportunity to appear, and I welcome your questions. 

Mr. WHITFIELD. Thank you, Ms. LaFleur. 

[The prepared statement of Ms. LaFleur follows:] 

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Mr. WHITFIELD. At this time, I recognize Mr. Moeller for his 5- 

minute opening statement. 

STATEMENT OF THE HON. PHILIP D. MOELLER 

Mr. MOELLER. Thank you, Chairman Whitfield, Ranking Member 

Rush, and members of the committee. 

I am Phil Moeller. I have been on the commission since 2006. 

Thank you for holding this hearing on a very important subject, the 

EPA’s Clean Power Plan. As its name indicates, this is essentially 

power or electricity policy, so it is very relevant that we are here 

talking about it because we have the job under Section 215 of the 

Federal Power Act to assure the reliability of the Nation’s bulk 

power grid. 

And reliability should not be, and I don’t think it is, a partisan 

issue, but it has to be our job, number one, so we have to look skeptically at these kinds of proposals to make sure that we can keep 

the lights on, and more importantly the heating and the cooling on 

when consumers need it. 

The biggest challenge, I think, in this rule is that it treats states 

individually in terms of compliance, but electricity markets are fundamentally interstate in nature and that just creates some challenges that may not be insurmountable but need to be looked at 

very closely. In my written testimony, I have noted a few examples 

of states that certainly have concerns about how they will be treated. 

Idaho, for instance, consumes coal power but doesn’t generate it, 

so what does that mean for its baseline now in going forward? We 

have states like Wisconsin and New Jersey that spend significant 

amount of money, billions of dollars to clean up their fleet, but they 

don’t get credit under the Clean Power Plan. And then there are 

stranded assets, such as the one I note in Mississippi, where $1 billion of scrubbers is essentially not counted under the plan. So those 

are issues you will hear about as the comments come in on the 

rule. 

The rule is based on compliances on four building blocks. You 

have probably gone into them. I will point out one that has a little 

bit of concern to me, which is essentially getting the gas fleet up 

to 70 percent dispatch. Now, the challenge there is that we have 

traditionally gone under something called economic dispatch where 

the cheapest power plants are called in the merit order of dispatch. 

This would change it to environmental dispatch. You can do that 

with a carbon fee and mesh the two, but obviously the prices go 

up. It is a fundamental change, not only with how we regulate 

power but actually how the system is operated, and it needs to be 

examined very closely. 

The related issue that concerns me has to do with the example 

we have in New England. Almost everybody in the country, not 

universally, but almost everyone believes that we need more pipeline into New England because of the pipeline constraints. The 

challenge is financing it, because pipelines have traditionally been 

financed under long-term contracts with local distribution companies, but the new customer class for pipelines is basically power 

18 

plants that may or may not be called on a daily basis based on the 

market they are in. 

So with that, the challenge is how do you get long-term financing 

with power plants that aren’t going to sound essentially long-term 

contracts. Now, these are not insurmountable problems, but it is a 

real issue in New England. We haven’t been able to solve it and 

I am concerned that if we move to a system where there is a lot 

more gas generation to be dispatched, are we going to have the 

pipeline capacity? Can we finance the pipeline capacity to meet 

that need? It is a real conundrum, one that we need to take a look 

at more closely. 

Essentially, what I have been calling for is a more formal role 

for our commission as we deal with EPA on these issues, kind of 

an open and transparent role, so that basically we can get the engineers together to discuss the challenges involved because it really 

comes down to a very granular level with reliability. The laws of 

physics will trump regulations. There are always unintended consequences when we shut down power plants because, although they 

may not produce a lot of power, they may be producing other products, ancillary services that maintain reliability in the grid. And 

the location of those plants is key, and sometimes you can’t replicate a plant in that location. 

So the granular level of analysis is very important, and I think 

it should be open and transparent because, engineers can disagree, 

but we need kind of an open forum for them to do it. I am also not 

here to say that we shouldn’t do anything. I think we can do a lot 

of good by essentially improving and modernizing the pricing of 

electricity. Under the leadership of Acting Chair LaFleur, the 

FERC has opened up a proceeding on price formation in the wholesale markets. This is overdue, it is a good effort. I am kind of impatient. I want this to move forward, because we have some inefficient pricing right now. 

Similarly, at the retail level, I urge my colleagues at the State 

level to consider more realtime and dynamic pricing at the retail 

level because that will send more accurate pricing to consumers, 

and hence, they should use their power more efficiently. 

Again, thank you for having us, and I look forward to any questions you have. 

Mr. WHITFIELD. Thank you, Mr. Moeller. 

[The prepared statement of Mr. Moeller follows:] 

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Mr. WHITFIELD. Mr. Norris, you are recognized for 5 minutes. 

STATEMENT OF THE HON. JOHN R. NORRIS 

Mr. NORRIS. Chairman Whitfield, Ranking Member Rush, and 

members of the subcommittee, thank you for the opportunity to 

share with you my thoughts on how EPA’s proposed Clean Power 

Plan will work. The fact that we are here today having this discussion on reducing carbon emissions, to some degree, tells me it is already working. 

As you may have read in my written testimony, I believe the 

EPA’s proposed Rule 111(d) can work. The flexibility provided in 

the rule, along with the continuous communication and cooperation 

between EPA, FERC, NERC, the states, RTOs, industry and others 

to make appropriate adjustments along the way to ensure reliability lead me to the conclusion that we can reduce carbon emissions and keep the lights on. If the question is, is this the most efficient way to reduce carbon emissions in our electric sector? I would 

give you a firm no, it is not. 

I applaud the EPA for this action but recognize that this was the 

only option available to curtail harmful greenhouse gas emissions 

because Congress has failed to act. Placing a cost or a value on carbon consistent across the country would, I believe, be a far and 

away more efficient and fair way to address carbon emissions. 

While the EPA’s proposal does provide more certainty on energy investment than before an industry struggling with uncertainty, it is 

nowhere near the clarity and direction legislation establishing a 

national energy policy on carbon would provide. 

Let me share with you an excerpt from an interview from a 

former Republican colleague of yours. He tells of a conversation he 

had with an elderly gentleman about the need for a carbon policy, 

and I quote: I was talking to him about, ‘‘What about your 

grandkids?’’ And he said, ‘‘I think they can get by on their own.’’ 

I don’t think that caring fellow really meant it quite that bluntly. 

I think what he meant was somebody will figure something out. 

And, of course, my response to him is, ‘‘Well, technological innovation will sure work better if we set the economics right, because 

what we believe as conservatives and people who believe in free enterprise is if you get the economics right, somebody chasing the dollar would deliver to me a better product. They will make money 

and they will serve my needs. That is what makes our system go 

around. 

‘‘But if you can’t get to that next step of getting the price on carbon, because if you attach that price, the external hidden cost of 

the product, it changes economics and all kinds of exciting things 

happening for the enterprise system.’’ But he wants to stick at that 

point of saying it is not a cost, that CO2 is not a cost; it is not a 

negative. If it is a negative externality, it is a value of zero. If you 

attach a zero to it, there is no change in the pricing structure. So 

for him, it is very important to continue to deny the science because he wants to assign a zero to the cost of carbon. 

That was former Congressman Bob Inglis, who is providing a 

strong, conservative economic voice on this issue, a voice worth listening to. I, too, believe the best way to address climate change is 

30 

to first recognize the overwhelming evidence provided by scientists 

throughout the world that our planet faces severe consequences if 

we do not take action. The U.S. can and should help lead a worldwide effort to reduce carbon emissions, and that our innovative and 

entrepreneurial spirit will seize the opportunities to tackle this 

problem. 

If we are here today to debate whether the EPA’s proposal will 

work or not, I fear Congress is missing the point, again. A rule that 

is not yet finalized but empowers 50 states with significant flexibility to address the proposed regulations and then grid operators 

to work to incorporate those State decisions into their operations, 

it will nearly be impossible to be proved today that it will or will 

not work. 

But if the EPA and every other entity involved commits to making it work, I am confident it is achievable. But for the sake of our 

consumers, our utility businesses and America’s entrepreneurs and 

innovators, we as a Nation could take a better course of action and 

enact a national energy policy to begin the transition to a low-carbon economy. 

Reliability will always be one of my highest priorities as a commissioner. It is my responsibility, and I will not hesitate to step 

forward and take appropriate action if grid security is threatened 

by this proposed rule or any other threat or action. But this rule 

is a very gradual transition, and I believe a very necessary transition, for I believe my responsibility as a citizen and public servant 

is to also speak up for my children, the children of America and 

the world. We are talking about action that threatens their future. 

Much talk, I think, is spent on addressing the financial debt we 

are leaving our children, and I commend all of you here today who 

are addressing that issue. But I hope you will also consider the atmospheric debt we are not adequately addressing. This is a debt I 

believe even more devastating but also deadly. 

Thank you. That concludes my testimony. I look forward to your 

questions. 

Mr. WHITFIELD. Thank you, Mr. Norris. 

[The prepared statement of Mr. Norris follows:] 

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Mr. WHITFIELD. Mr. Clark, you are recognized for 5 minutes. 

STATEMENT OF THE HON. TONY CLARK 

Mr. CLARK. Thank you, Chairman Whitfield, Ranking Member 

Rush and members of the committee. 

I hope you will allow me a point of personal privilege for an introduction that I have today which is, in probably the half a dozen 

or so times that I have testified in front of Congress, I have never 

had my boys be able to join me. They have always been in school 

or back home in North Dakota, but today they are here. So Alex 

and Thomas. 

Mr. WHITFIELD. We will have some questions for Alex and Thomas. 

Mr. CLARK. I am sure they look forward to them. They can now 

look 30 years into the future being able to look back into a Congressional Record and see their names are in there. 

Out of respect for your time, I won’t repeat the testimony that 

I submitted, but instead will probably just extend a little bit upon 

it. It is quite clear from the questions that we received from all of 

you, the pre-hearing questions that preeminent in the minds of the 

committee are, can FERC answer questions related to the EPA rule 

and whether there will be a concern about either cost or reliability. 

I think, hopefully, what you gathered from my responses were 

that it is probably too early to know with specificity exactly what 

those impacts will be and the primary driver for that is that we 

simply don’t know what the potential State implementation plans, 

compliance plans might look like, and we also don’t have a sense 

for what a Federal implementation plan or a Federal compliance 

plan would look like. 

Typically, as the EPA has proposed rules, there would be a 

marker for what a Federal plan might look like; in this case, we 

don’t have that. So it is a little tougher for us, I think, as a commission, to model it. But I think we can make some general comments about the trendline that we might at least wish to keep in 

mind, especially as a commission as we work through some of these 

issues. 

And what really got me thinking about it was an article that I 

read in the Washington Post last Friday, actually, after I had submitted my written testimony, which was about the challenges that 

a community in Colorado was having with regard to changing over 

their fleet in a relatively short amount of time, and there were 

some costs concerns that were taking place in that community. It 

happened to be Pueblo. And it got me thinking about the EPA proposed rule and what might be pathways to it. 

It is quite clear, although the EPA has said that they will offer 

flexibility to states, a pathway that they have offered up as a potential one that might be compliance, relies in some part on a combination of perhaps cap and trade, like a regional gas house initiative like they have in the northeast, some sort of reliance on energy 

efficiency and demand response resources, a shuttering of coal 

plants and, at the same time, pivoting towards heavier reliance on 

natural gas, perhaps some sort of renewable portfolio standard in 

the State. 

38 

So you put all these things together, and it actually looks very 

much like what one of the regions has already been going through, 

which is the one that Commissioner Moeller mentioned, which is 

New England. I think one of the things that FERC and Congress 

will need to keep its eye on as we potentially move forward in these 

rules is, at least from my perspective, if someone were to ask me 

which area of the country do you have the most concern about both 

as a matter of cost and reliability, I would probably point to New 

England. Not solely because of some of the things that have happened already with regard to carbon regulation, but certainly some 

of those things do play into it. 

So should the EPA rule come to pass? I would think that FERC 

would need to ensure that as it moves forward, we would want to 

make sure that some of the concerns that we have seen already 

happen in New England with the pipeline constraints and the 

rapid conversion to gas and the very tight reliability system and 

sometimes very high cost for electricity aren’t exported to other regions of the country, and overcoming that could be, indeed, a challenge. 

With that, I will end my testimony, yield back the remainder of 

our time, and look forward to your questions. 

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

[The prepared statement of Mr. Clark follows:] 

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Mr. WHITFIELD. At this time, we will recognize the gentleman 

from New Mexico, Mr. Bay, for a 5-minute opening statement. 

STATEMENT OF THE HON. NORMAN C. BAY 

Mr. BAY. Chairman Whitfield, Ranking Member Rush, and members of the subcommittee, my name is Norman Bay, and I currently 

serve as the Director of the Office of Enforcement at FERC. 

On July 15, it was my honor to have been confirmed by the Senate to serve as a member of the commission. I anticipate being 

sworn in once all the necessary arrangements have been completed. 

Thank you for inviting me to testify at this hearing regarding 

EPA’s proposed Clean Power Plan and other grid reliability challenges. I look forward to working with this committee in my tenure 

on the commission. 

One of FERC’s critical responsibilities is the regulation of electric 

reliability. As the Director of the Office of Enforcement, I have 

been involved in investigations of potential reliability violations 

and inquiries into major reliability events, but I have not been involved in the EPA rulemaking. 

While the EPA has responsibilities under the Clean Air Act and 

other legislation, the commission has similar and no less important 

responsibility to promote the reliability of the bulk power system. 

One way that I believe the commission can help to ensure reliability is through open communication and a strong working relationship with the EPA; the Department of Energy; the States and 

NARUC; the North American Electric Reliability Corporation, or 

NERC; regional transmission organizations; independent system 

operators; and industry. It is my understanding that FERC staff, 

EPA, and DOE have communicated at various times regarding the 

EPA’s power sector regulations. The agencies should continue this 

effort to ensure that the EPA is aware of any potential impacts its 

regulations may have on the reliability of the bulk power system. 

To the extent necessary and appropriate, commission staff should 

continue its communications with EPA and industry participants 

subject to FERC’s regulation, including RTOs and ISOs and public 

utilities. Once I am sworn in, I look forward to meeting with my 

colleagues to discuss in greater depth these issues and to examine 

how we can work collaboratively within the commission’s authority 

to promote the reliability of the bulk power system. 

Thank you for inviting me to testify here today. I look forward 

to remaining engaged with the committee and the EPA, DOE, 

NERC, the states and industry on these important issues. 

Mr. WHITFIELD. Thank you, Mr. Bay, and thank all of you for 

your testimony. 

[The prepared statement of Mr. Bay follows:] 

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Mr. WHITFIELD. At this time, we will recognize the panel for 

questions, and I will recognize myself to start off for 5 minutes of 

questioning. 

It is quite clear that anyone who has examined the Clean Power 

Plan views it as a fundamental change and President Obama frequently talks about Congress being obstructionist, and Mr. Norris 

made the comment this is necessary because Congress has failed 

to act. And I would point out that Congress did act by deciding not 

to act. When Mr. Waxman was the chairman of this committee, the 

Cap and Trade Bill was reported out of the House of Representatives. It went to the Senate, and the Senate did not adopt it. So 

Congress did act in the sense that it did not adopt the cap and 

trade. 

One of the frustrating—and I am sure that President Obama is 

frustrated, and it is great that we have hearings like this to bring 

all of this out into the open, to have a discussion for the American 

people. Because one of the frustrating parts for the American people is when they see decisions affecting basic services like electricity and the impact that that has on our economy being made 

by the courts and by regulators, and they view that as not really 

being transparent. 

So we in Congress, we do not intend to just lay down and let the 

President do whatever he wants to on climate change or any other 

issue without having a public discussion about it. And so CO2 emissions, by the way, today are the lowest from energy sources that 

they have been in 20 years. Lisa Jackson even made the comment 

that even if we move vigorously forward as we are attempting to 

do here on CO2 emissions, it would make no difference unless other 

countries do the same. 

And we see in Europe today, they are mothballing natural gas 

plants because natural gas prices are so high coming out of Russia 

that they are building coal plants today. And we, under this plan, 

would not have the flexibility to build a new coal plant if natural 

gas prices go up because the technology is not available to be able 

to do it in an economic way that would make it possible to do it. 

We don’t have enough money to build Kemper plants all over 

America the way they are attempting to do in Mississippi, and it 

is not being done without Federal dollars. 

So this kind of discussion, I think, is invaluable. Mr. Rush had 

made the comment about the drought and the impact on farmers, 

and I would tell you, the price of corn has fallen from $8.10 a bushel down to $4 a bushel because corn is so abundant right now. So 

there are lots of different perspectives on this. 

But Ms. LaFleur, everyone is concerned about reliability, and we 

have asked the EPA about this and we ask this question of you in 

our written questions: Did the EPA request a written document 

from FERC relating to reliability? Do you have a written report 

that was given to EPA on reliability issues? 

Ms. LAFLEUR. Thank you for that question, Congressman 

Whitfield. 

No, they did not request written comments. My understanding, 

this is the first time I have been through the interagency review, 

but there were a number of staff meetings and then a kind of formal debrief where we made our comments over at the OMB with 

51 

a number of EPA people there. And we kept a memo, but we did 

not turn them in in writing because that has not been the practice. 

Mr. WHITFIELD. I personally think that is disappointing because 

reliability is such a key issue. 

Mr. Moeller, I don’t have a lot of time left, but would you just 

comment briefly on this economic dispatch versus environmental 

dispatch and how that might get to a cap and trade system? 

Mr. MOELLER. Well, that is one of the four building blocks, and 

the building block is an aspiration to get the gas fleet up to 70 percent dispatch, which has been very rarely done in this country, 

only in very limited circumstances. So there are some operational 

questions. 

But essentially, the only way, if you have to hit your target by 

increasing your gas fleet production, that is going to trump what 

is normally economic dispatch of the cheapest plant. Now, the only 

way you can reconcile that is then put a fee on the other sources, 

and it is talked about in the rule, you put a fee on the other carbon 

emitters so that they are less competitive to gas. So that is how 

it would be done. 

Mr. WHITFIELD. Well, thank you. My time is expired. 

At this time, I recognize Mr. Rush for 5 minutes of questions. 

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. Chairman, the American people are tired of the finger pointing, they are tired of the excuse after excuse, the blame that goes 

from one to another. They are really, really tired of the inaction 

and the inertia that seems to be the standard of this Congress. 

There is no question, Mr. Chairman, that we need to reduce our 

carbon pollution if we are going to avoid the worst impacts of climate change. No question about it and the power sector is the largest source of carbon pollution in the U.S. There is no question 

about this. Mr. Chairman, I believe that the EPA’s Clean Power 

Plan is a reasonable approach to reducing emissions from power 

plants in light of the unending excuses, in light of this Congress’ 

failure to act. 

Commissioner Norris, do you agree that a Clean Power Plan is 

a reasonable approach since this very Congress has failed to act? 

Mr. NORRIS. I think the EPA plan is, as I mentioned, the most 

feasible, reasonable one that they can do out of their authority, 

that it is workable. It would be more efficient if we would remove 

the uncertainty around carbon and enact a policy that would provide more certainty and more efficiency in this transition. 

Mr. RUSH. Again, commissioner, how will EPA’s proposed rule affect investment in renewable energy and energy efficiency resources? 

Mr. NORRIS. It is a much-needed signal to both renewable energy 

and other technologies that can provide demand side management 

energy efficiency and new technologies for generation, that, I think, 

there is a great hunger, an appetite for investing in new clean air 

energy technologies. This will help spur more investment which 

will create more technology opportunities for us to make this an efficient transition. 

Mr. RUSH. What about nuclear power? With the low price of natural gas, some nuclear power plants are struggling financially. 

52 

How could the proposed rule help keep those nuclear plants running? 

Mr. NORRIS. Well, again, I think it provides a much-needed signal to the value of nuclear plants because they are noncarbon emitting. It has been a real concern of mine that we maintain our nuclear fleet because it is noncarbon emitting and a solid base load 

source of generation. So I think the EPA rule will assist in providing a better market, if you will, for nuclear resources. 

Mr. RUSH. Yes. Again, commissioner, what do you think about 

whether industry and regulators can rise to the challenge and 

achieve the carbon reduction set out in the Clean Power Plan without sacrificing electric reliability? 

Mr. NORRIS. I am sorry? 

Mr. RUSH. Without sacrificing electric reliability. 

Mr. NORRIS. Without jeopardizing electric reliability? 

Mr. RUSH. Sacrificing. 

Mr. NORRIS. Yes, I think, as I said, you are not going to prove 

it is or isn’t going to work because it is still in development. The 

key thing going forward is the communication and cooperation between the EPA, FERC, NERC and all the other entities that we— 

everyone wants to keep the lights on, including the EPA. And so 

what it is going to take is just a continuous effort going foward to 

make sure reliability needs are addressed if and when they occur. 

Mr. RUSH. Chairman LaFleur, do you agree? 

Ms. LAFLEUR. I certainly agree that it is going to take a ongoing 

effort of communication to identify issues that specific states or regions might be having. As with all, I believe, and I testified on 

MATS before this committee, I said the two things you need for 

change are flexibility and coordination and that is even more true 

in this rule. We need coordination to make sure the State plans 

work and protect reliability. 

Mr. RUSH. Commissioner Bay, what are your thoughts? Do you 

agree? 

Mr. BAY. I think that there could be challenges. 

Mr. RUSH. Turn your mike on, please. 

Mr. BAY. I am sorry. 

I think that there could be challenges, but I think that the challenges are manageable. I would note, for example, that with the 

2005 baseline that the EPA used, there has already been a 15 percent reduction in carbon emissions from generators so that an additional 15 percent needs to be achieved over the next 16 years. 

And even under the EPA proposal, it estimates that in 2030, gasfired generation will constitute more than 30 percent of generation 

and coal will be more than 30 percent, as well. And with the regulatory certainty provided by the rule, I agree with Commissioner 

Norris that it will incent innovation. And industry is amazing 

when they know that there is something to be improved upon and 

that can result in better or more profits. 

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time, we recognize the gentleman from 

Texas, Mr. Barton for 5 minutes. 

Mr. BARTON. Well, thank you, Mr. Chairman. 

And I want to thank the commission for being here. We rarely 

have all the commissioners, so it is an honor to have each of you. 

53 

I was really going to rip Mr. Clark today, but since his two boys 

are in the audience, I am going to have to give him a pass on that. 

But no, not really. 

I have a general question that I would like each of the commissioners to have the opportunity to answer. You don’t all have to, 

if you don’t wish to. With this new EPA carbon rule, would seem 

to me to be at variance with the FERC’s stated responsibility to 

provide electricity at a reasonable cost. I don’t buy the argument 

that you can close all these power plants and you are going to miraculously replace them with either natural gas, nuclear power or 

this clean coal technology which really only exists in the laboratory. It hasn’t been proven in a commercial scaled-up facility yet. 

So, my general question is, can the FERC have any impact to 

guarantee that we continue to provide electricity at a reasonable 

cost to the consumer if this rule goes forward? 

Ms. LAFLEUR. Well, thank you, Mr. Congressman. 

I do not think the rule itself is inconsistent with FERC’s responsibilities. As I see it, the EPA makes environmental rules and 

those become the baseline within which the system is planned, and 

we have to make certain that within those rules the rates are done 

in a just and reasonable way and that we will be paying attention 

to that as well as paying attention to reliability. 

I think all transitions cost money and so the transition to a new 

resource mix, whether it is because of the environment or because 

of anything else, to build pipelines, to build transmission is going 

to cost money. The long run costs are really unknown. They depend 

on the relative cost of the fuel, and we also don’t know the long 

run cost of leaving climate change unattended to, which is not free. 

So, but we will be working to make sure that the transition costs 

of the pipelines, the transmission, the things we regulate are done 

in a reasonable way. 

Mr. MOELLER. Congressman Barton, I agree with Acting Chair 

LaFleur about we have to react to an environmental rule. I suppose 

there is a possibility that EPA could put some kind of a safety 

valve in from an economics perspective. That is not in the rule 

right now, but that is a potential. Even they admit that this is 

going to cost consumers money and raise rates. 

The question is how do we transition? And my concern is do we 

have the right market signals to actually allow for these types of 

investments, particularly in pipelines, if we are going to expand the 

gas fleet so much. 

Mr. NORRIS. Thank you, Congressman. First of all I agree with 

you, there are no miracles here, but we are talking about accounting for all the costs including the external costs. I do have great 

faith in America’s technology innovation. The costs for renewable 

energy are coming down dramatically in this country. Technologies 

for a demand site management and energy efficiency are going up 

dramatically in terms of their capability. 

And finally, the fuel costs for renewable energy is zero. We know 

that is a constant going forward. That gives me great hope that we 

can make this transition in a very manageable way for the economy. In fact, a very positive way for the economy because of the 

world wide market that is out there for clean energy technologies. 

54 

Mr. CLARK. Congressman, as I indicated in my testimony, FERC 

has allowed costs that are legally incurred by a business to be bid 

into the markets themselves. So to the degree that it is just bidding 

in costs that are otherwise legally incurred, that may not directly 

implicate FERC markets from a jurisdiction standpoint. 

There is potentially though one, what I referred to as a potential 

jurisdictional train wreck between EPA and FERC, and it would be 

this; if EPA through the Clean Air Act required utilities to go down 

the path of environmental dispatches, we’ve talked about, and depart from economic dispatch, that could potentially be challenging 

for FERC in this way. 

Our authority comes not through the Clean Air Act, but through 

the Federal Power Act, which requires just and reasonable rates 

and non-discriminatory rates. We have always judged that by economic dispatch. So to depart from economic dispatch and move to 

something else could potentially be challenging for the Commission, I think. 

Mr. BAY. Congressman Barton, I think you raised an important 

issue, and certainly FERC under the Federal Power Act has to do 

its best to help ensure that rates remain just and reasonable. I 

think the commission has taken some actions to examine price formation in the energy markets as well as in the capacity markets 

that could be very helpful in addressing the issue that you raise. 

Mr. BARTON. My time is expired, Mr. Chairman. 

I want to just make a statement real quickly. In 2005 the then 

chairman of the FERC, Chairman Keliher, complained to me that 

FERC didn’t have the authority to enforce some of its rules, and 

we gave the FERC some additional authority. We changed the penalty structure. 

That authority has been used in a way that many people think 

has not been normal due process, so I hope to work with the subcommittee in the next Congress to put in a reform package to provide more transparency and more of a balanced playing field on 

some of the things that, some of these investigations that FERC 

has been engaged in, in the last 4 or 5 years. 

With that I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

California, Mr. Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

The world’s leading scientists have repeatedly confirmed that climate change is already happening. It is caused by human carbon 

pollution and will get much worse if we do not act. So, this is a 

question for all the commissioners. Do any of you believe that there 

is no need to act on climate change? If any of you believe there is 

no need to act on climate changes, raise your hand, and I will call 

on you. Otherwise, I have other questions. 

So seeing no one jumping to that bait, it sounds like all of you 

believe that there is some need to deal with climate change. Just 

this morning the President’s Council of Economic Advisors released 

a new report on the cost of inaction on climate change. They estimate that just one degree celsius additional warming could cost the 

U.S. economy $150 billion per year. It is getting harder and harder 

to deny the imperative of action, and we cannot make meaningful 

progress on climate change without controlling carbon pollution 

55 

from our largest source, power plants. Several of you discuss in 

your written testimony the ongoing transition in the power sector 

as natural gas, renewables and energy efficiency are playing larger 

roles in meeting our power needs. 

Chairman LaFleur, what is driving this shift? 

Ms. LAFLEUR. Thank you for the question, Congressman Waxman. I actually think the biggest driver of change is the abundance 

of domestic natural gas. Up in New England where we have heard 

about the challenges of pipelines, there are coal plants that have 

been under attack by the environmental community for 20 years. 

Mr. WAXMAN. Natural gas is a driving force. 

Ms. LAFLEUR. And second is, as has been mentioned, the new renewable technologies and the technological improvements and policy support. 

Mr. WAXMAN. The new renewable portfolio standards, and how 

about improvements in renewable technologies? 

Ms. LAFLEUR. Yes. 

Mr. WAXMAN. And new environmental regulations? 

Ms. LAFLEUR. Yes, that is the third. 

Mr. WAXMAN. So environmental standards play a role, but we 

would be facing a shift in the power sector even without these regulations that EPA is proposing. 

Commissioner Norris, how do FERC and other involved entities 

such as regional transmission organizations and State public utilities commissions work to ensure reliability in our power system? 

Do you try to ensure that generation and transmission infrastructure remain frozen in time, or do you work to ensure that as inevitable changes occur, the impacts on reliability are addressed? 

Mr. NORRIS. The states and RTOs are empowered with that responsibility now and no reason why they would not continue to be 

empowered with that responsibility, to choose their means, set the 

reserve margin and choose their means for meeting the adequate 

resources in the way that best fits their State and their economy. 

I see no reason that it change. 

Mr. WAXMAN. Chairman LaFleur and Commissioner Bay, do you 

agree that the goal for FERC is not to stop change, but to ensure 

that the system responds appropriately as changes occur? 

Ms. LAFLEUR. Yes, I think we have to adapt the part of the system that we regulate as new environmental regulations occur. 

Mr. WAXMAN. Mr. Bay? 

Mr. BAY. I agree with that as well. 

Mr. WAXMAN. Now opponents of the Clean Power Plan claim that 

it is a complete departure from how the power sector has regulated 

and will threaten grid reliability. 

Commissioner Norris, is this proposal a sea change from everything that has come before, or does the plan build on regulatory 

structures already in place and trends that are already occurring? 

Mr. NORRIS. Referring to the proposed EPA plan as the change? 

Mr. WAXMAN. Yes, EPA plan. 

Mr. NORRIS. No. Like I said, it is a gradual transition that is already occurring. We are already not building coal plants because 

the science is not changing. We are already having, as Commissioner LaFleur said, the advent of gas coming that is impacting the 

56 

system, that is as a result of technology, the fracking technology, 

so science and technology is driving this change, not EPA. 

Mr. WAXMAN. State PUCs, RTOs, and ISOs already regulate electricity markets and, along with FERC and NERC, work to assure 

reliability. The power sector has dealt with many environmental 

regulations in the past, most recently the Mercury and Air Toxic 

Standards, and has maintained reliability. The shift to cleaner 

electricity is already underway. The Clean Power Plan will accelerate these changes and may pose greater challenges, but they are 

challenges that we already must and will address. I would assume 

you agree with that, Mr. Norris? 

Mr. NORRIS. Do I agree that we can maintain reliability through 

this transition? 

Mr. WAXMAN. Yes. 

Mr. NORRIS. Yes—— 

Mr. WAXMAN. Chairman LaFleur, and Commissioner Bay, what 

do you think? EPA’s Clean Power Plan is eminently, in my opinion, 

reasonable and quite modest proposal. It provides tremendous flexibility and ample time to the states and industry to reduce carbon 

pollution in the least burdensome way possible. 

Do you, as Commissioner Norris stated, the question is not 

whether we reduce carbon pollution, but how, and EPA has an answer embodied in the Clean Power Plan, and that is what they are 

proposing as a start. So rather than ask that as a question, I want 

to make that comment. 

And, Mr. Chairman, one last thing. The EPA is acting under the 

Clean Air Act which was adopted by the Congress. They are acting 

under decisions by the U.S. Supreme Court. There have been five 

to four decisions that I have not liked, and there have been five to 

four decisions that you haven’t liked, but Supreme Court decisions 

are the law of the land. 

I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Ohio, Mr. Latta, for 5 minutes. 

Mr. LATTA. Well, thank you, Mr. Chairman, for today’s hearing, 

and also to the commissioners for being with us today. It is great 

to have you all here before us. 

And if I could, I would like to start with Commissioner Clark if 

I may. And what are the implications of the State energy laws and 

regulations if they are included as part of an EPA-approved State 

implementation plan to comply with the Clean Power Plan? 

And I just wondered if that could tie into your testimony, where 

you had mentioned that when you are looking at some of the, when 

this relationship is occurring, that States might get into a mothermay-I relationship with the EPA that never existed before. Would 

that tie into that? 

Mr. CLARK. Congressman, it does. The concern that I raised is 

I do think there is a risk that this is a rather dramatic change jurisdictionally, and States will at least need to consider it as they 

decide whether they are going to go down the path of a State compliance plan. The reason I say that is in the past, EPA might just 

be regulating emission sources either by source or a fleet, but not 

the entire regulatory regime in an integrated resource plan standpoint that a State might have. 

57 

So to the degree that a State goes down the path of creating effectively a carbon integrated resource plan, they will be putting 

into that things that have traditionally been set by State legislatures, renewable portfolio standards, building codes, energy efficiency standards, in addition to traditional sort of power plant decisions. 

To the degree that then becomes blessed by EPA and submitted 

and approved by EPA, it is a much different jurisdictional relationship than has existed before because if a State goes back and decides maybe the RPS should be 25 percent instead of 30 percent, 

or maybe our State building codes should be adjusted because 

something isn’t working, in many ways it will have lost that opportunity because it will have become a part of a Federally-approved 

plan and would then need to seek approval from the EPA, depending on how it is structured to—— 

Mr. LATTA. Let me follow up. What would that do to costs in 

those States, especially when you are dealing with a district like 

mine that has 60,000 manufacturing jobs, and is that going to drive 

costs up? Is there going to be less flexibility that a State could do 

in the future? What would happen out there? 

Mr. CLARK. Congressman, again, I think it is a bit too early to 

tell specifically because we don’t know what the compliance plans 

would look like or what a Federal compliance plan would look like. 

I would just point to the trend lines which is in those States that 

have moved more aggressively and have been first movers on some 

of these issues, the trend line has been toward an increasing electric rate environment. 

Mr. LATTA. Thank you. 

Chairman LaFleur, if I could turn to you, recently I have been 

hearing that in a number of States in competitive markets, electricity generators and electric distribution companies are seeking 

State public utility commission approval for the purchase power 

agreements or the PPAs, as a means to guarantee a contract between the power provider and the regulated utility company. 

States are considering these because they are concerned about 

the impacts to their retail customers if those plants were to shut 

down. So the question is, if capacity markets were ensuring reliability and preserving essential base load capacity, then it seems 

that these PPAs would not be necessary. Are these actions by the 

State an indication of the market inadequacies out there? 

Ms. LAFLEUR. Well, right now the capacity markets are under a 

lot of pressure because of all the changes in resource mix, and 

something that we are looking at very hard is how we make sure 

the capacity markets properly compensate all the increments that 

are needed for reliability, and I think that will continue to be important, but there will still be a role for the States which regulate 

generation within their own authority. 

Mr. LATTA. Let me ask you, when you say that they might be 

under pressure out there, what is causing the pressure out there 

in the capacity markets? 

Ms. LAFLEUR. I think some of the factors I already said. The first 

is the gas price being very low has really driven down the marginal 

revenues, so it is hard for some of the coal and nuclear units to recover their costs in the market and other resource changes as well. 

58 

Mr. LATTA. Thank you very much. 

Mr. Moeller, if I could turn to you, in your testimony you were 

talking about what could be happening out there is we could have 

higher costs involved out there. When you look at those higher 

costs again when you look at the States out there like the State 

of Ohio that is 70 percent generated by coal right now, if you look 

in that crystal ball down the road, what would happen to States 

like Ohio for costs when you look at what is happening with the 

EPA right now? 

Mr. MOELLER. I wouldn’t want to predict how much rates would 

go up, but, again, even EPA admits that rates will be going up 

based on this rule. It would depend a lot on how they chose to come 

up with their State implementation plan. They could go the energy 

efficiency route, but that gets more and more expensive as you get 

more efficiency out of the system. 

Transition to gas would probably be expensive because a lot of 

those coal units are relatively low cost. There are other ways to 

perhaps get there, but, again, this will result in higher rates, which 

I don’t think is denied by anybody. 

Mr. LATTA. Thank you very much. 

Mr. Chairman. I see my time is expired and I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. Well I thank the chairman for holding the hearing and the commissioners for your testimony. I congratulate Mr. 

Bay on your confirmation. 

Mr. Moeller, you had an interesting discussion of the pipeline 

challenge in New England because I assume it is from return on 

investment concerns of investors, the pipelines wouldn’t be fully 

utilized. What would improve that financial barrier situation? 

Mr. MOELLER. Well, traditionally the pipelines have been paid 

for by the local distribution companies with 20 and 30 year contracts. They are the ones selling gas at retail. The new customer 

base is power plants, and in that market power plants don’t know 

on a daily basis whether they are going to be called or not. They 

bid in. Sometimes they are taken. Sometimes they are not. 

The pipes are basically full in New England. Almost everybody 

agrees that we need more pipe in New England, but how do you 

finance it under a new model? There are three proposals out there, 

one from the governors, one from the investor-owned utilities, and 

a recent one from a municipal group and we are hoping that part 

of this discussion can lead to a solution, but it is a concern we don’t 

want replicated in other markets. 

Mr. MCNERNEY. OK. Another question. You mentioned your concern about EPA not having the capability to do the granular analysis needed. I would assume the EPA does have that capability, so 

basically would you reiterate that you don’t think they have that 

capability? 

Mr. MOELLER. Well in my opinion, I don’t expect them to know 

electric markets like we do, just like we wouldn’t know the details 

of Clean Air Act either. That is not really their job, but that is why 

I think we need a more formal relationship because we have the 

expertise. NERC has the expertise. The people that run the marVerDate Nov 24 2008 14:36 Mar 17, 2015 Jkt 037690 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-168 CHRIS
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kets do and it is really drilling down into some very detailed engineering analysis, and it can be done. 

Mr. MCNERNEY. Well, you and other of the commissioners mentioned that you think one of the requirements for success of the 

rule, and I think it is cute that it is called the rule, is that you 

need open and transparent relationship between yourselves and 

the EPA and also the DOE. How can we achieve that, Chairwoman 

LaFleur? How can we achieve that transparency? 

Ms. LAFLEUR. Well, I agree that we need an open and ongoing 

relationship with the EPA. I think the model that we adopted on 

the Mercury and Air Toxics Rule where we have regular monthly 

staff calls with the EPA, as well as meetings at the Commissioner 

level, is one we should follow here. I think we will know much 

more where the challenges are and what we need to do once the 

State implementation plans are done. 

Mr. MCNERNEY. Do you need a higher authority to make that 

transparency happen? 

Ms. LAFLEUR. Well, I always love more authority, but I think we 

have the ability to be transparent within our existing jurisdiction. 

Mr. MCNERNEY. Mr. Waxman established that each of you feel 

there is a need for reduce carbon emissions. What do each of you 

feel, briefly if you would, would be the most efficient way to achieve 

that, the rule or some other method? 

Ms. LAFLEUR. Well, I agree with Commissioner Norris that from 

the standpoint of reducing a pollutant most effectively, a nationwide cap and trade or some sort of nationwide system would probably be the most efficient. Given the structure of the Clean Air Act 

that we have, I think the EPA did a good job building in flexibility 

to use the authority they have. 

Mr. MCNERNEY. Mr. Moeller? 

Mr. MOELLER. Well, because carbon is ubiquitous in its concentration throughout the world, we have got to solve this on a 

worldwide basis, and I really think we should do it through market 

forces. As I mentioned in my testimony, getting prices more accurate at the wholesale and retail level throughout the world. Energy 

is subsidized I think a trillion dollars a year. Those are the kind 

of things that if we send the right pricing signals, people will use 

their energy more efficiently. 

Mr. MCNERNEY. OK. Thank you. 

Mr. NORRIS. Thanks. I partially agree with Mr. Moeller. Sending 

the right price signal is right, but you have got to get the external 

cost in that price. I think the most efficient way to do that personally is a carbon tax. I am not opposed to a cap and trade, but it 

takes a lot more pages for you all to write, and a carbon tax would 

be a lot simpler. 

Mr. MCNERNEY. Thank you. 

Mr. Clark? 

Mr. CLARK. Congressman, from my standpoint, research and development is really the key in future energy technologies, and I am 

a supporter of government-supported research and development 

into those new technologies, the idea being that if new sources of 

energy can be developed in a way that no Nation or no developer 

would want to do anything but because it is both the cleanest and 

the most cost effective, then that solves both answers for you, and 

60 

you don’t have to worry about as much government intervention 

into the markets themselves because on its own—— 

Mr. MCNERNEY. So that would take Federal or some higher 

source of funding for that research? 

Mr. CLARK. There can be all sorts of ways of developing those research dollars, yes. 

Mr. MCNERNEY. Mr. Bay? 

Mr. BAY. At this point 14 seconds or less, I would say innovation. 

I would say research and development. And I would say markets. 

Mr. WHITFIELD. We are always willing to talk about those issues. 

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 welcome to you, Dr. Bay, as our next chairman. Welcome. 

As you all know, our grid faces many challenges. You have to coordinate gas with electric power, and sometimes that can be difficult. Wind is plentiful but not at times when we need it, at times 

we don’t need it. Subsidies distort the market and help shutter nuclear power plants, reliable nuclear power plants, And, as we have 

heard today, EPA adds to those challenges. 

My first question is for the entire panel. In the Mercury Rule, 

the EPA included a way to pause the rule if reliability is threatened. It is called, as you all know, a relief valve. As you all know, 

too, most of America’s grid is run by impartial groups called ISOs. 

Now, the ISOs are asking EPA to include a reliability relief valve 

in the carbon rule. Yes or no, do you all agree that this could be 

a valuable part of the final rule? 

Commissioner LaFleur. 

Ms. LAFLEUR. I don’t think it could be designed by the reliability 

safety valve in MATS, but I think there should be a way to consider reliability as a last resort if there is an issue. 

Mr. MOELLER. I think some kind of a safety value would be very 

helpful. 

Mr. OLSON. Commissioner Norris? 

Mr. NORRIS. I apologize. I was not very clear on capturing the 

question, but if it is a safety valve, I am for safety valves. 

Mr. OLSON. Yes. Safety valves, there is one for reliability. And 

so they want something for a reliability rule in the Carbon rule, 

some sort of safety valve. It is out there for the ISOs. ISOs want 

to make sure they have that thing. It is part of the Mercury rule. 

It has been done with mercury. They just want to make sure that, 

hey, that is a good idea. Can we have that as well, just a safety 

valve for reliability as opposed to mercury. 

Mr. NORRIS. Reliability is paramount, and we should do whatever we can to maintain reliability but not use a safety valve to 

empower people to push back what they are trying to achieve. 

Mr. OLSON. Commissioner Clark? 

Mr. CLARK. Congressman, yes, and I think it needs to be one 

that is done by an independent third party so that they can have 

greater visibility into the entire grid itself so as the State and regional plans are stitched together, someone independently is able 

to look at how they all work together and whether it will impact 

reliability. 

Mr. OLSON. Mr. Bay? 

61 

Mr. BAY. Congressman Olson, I certainly think it is an idea 

worth considering. 

Mr. OLSON. OK, thank you. 

My second question is for you, Commissioner Moeller. When 

power plants close we focus on the number of megawatts lost, but 

large power plants like coal and natural gas just don’t provide bulk 

power. They also protect the grid with what is called ancillary services. 

Unlike wind and solar, they can ramp up or ramp down immediately if needed. They can keep their power balanced at 60 hertz, 

right there 60 hertz, not 59.99 or 60.001. It is more important than 

reliability having that power, it is having the right power. And so 

my question is, are these EPA rules closing down the most important kinds of power on the grid, ones driven by coal and natural 

gas? 

Mr. MOELLER. Well, it is very location-specific, Congressman. I 

can think of a big power plant in Montana that provides voltage 

support, a lot of power. If you were to take that out of the grid, 

it would have big impacts on the rest of the northwest system, and 

I am sure that that is the case in low pockets throughout the country. 

And that is why I think drilling down into the granular nature 

of the reliability of closing plants is necessary, and we can take 

EPA’s chart. They have projected which plants are going to be shut 

down, so the reliability study shouldn’t be that difficult. 

Mr. OLSON. Yes, so one further question. As EPA’s second pillar 

of the carbon rules calls for a massive increase in power from natural gas, but they don’t seem to realize that coordinating natural 

gas and electric power is a very delicate balance, and even worse 

now, the environmental groups are attacking FERC Using Greenhouse Gas Rule to try to turn around and stop FERC from approving natural gas pipelines. You can’t have natural gas without the 

pipelines. 

And so my question is, do you think EPA understands how difficult some of these assumptions are? Are they realistic? 

That is for you, Mr. Moeller. 

Mr. MOELLER. I don’t think they fully appreciate the challenges 

we have with getting more pipeline infrastructure. At least I 

haven’t sensed that they do, because as I noted in my testimony, 

this set of new consumers of pipelines as power plants, not the traditional ones, local distribution companies that have provided the 

financing through long-term contracts, and we have got to address 

that and solve that issue or else the assumptions on pipeline expansion, I think, will be faulty. 

Mr. OLSON. My time I yield back. Thank you. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

I want to thank our commissioners, both new and old, for testifying today. 

Reliability of transmission electricity is the backbone of our economy. Our industrial, commercial, and residential customers never 

need to question whether the power they need will be delivered 

when they need it. It is FERC’s responsibility to maintain the reliVerDate Nov 24 2008 14:36 Mar 17, 2015 Jkt 037690 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-168 CHRIS
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ability of the grid and FERC has quite a few other responsibilities, 

including pipelines, LNG facilities, and oil pipeline rates, to name 

a few. 

Chair LaFleur, in your testimony you gave EPA’s Mercury and 

Air Toxic Standards, or MATS, you state that EPA sought the advice of FERC upon the issuance. You stated that FERC issued a 

policy statement on potential violations MATS may induce based 

on FERC’s reliability standard. Did the EPA respond to that, to 

FERC, and what you submitted? 

Ms. LAFLEUR. Yes, Congressman Green. The EPA, in fact, we 

based our policy statement on a policy guidance memo they put out 

that indicated that power plants could seek a fifth year to comply 

with the advice of FERC and other reliability experts. Thus far we 

are just in the fourth year, so we haven’t had any fifth year applications, but we anticipate a few. 

Mr. GREEN. Well, Congressman Olson and I actually have passed 

a bill through the House that doesn’t deal with FERC but deals 

with EPA and the Department of Energy, H.R. 271, that deals with 

the conflict that exists between EPA and the Department of Energy. That bill passed the House, and it may emerge sometime in 

a different form over in the Senate, but it also puts reliability as 

the most important. 

Because again, I am from Texas, and Houston right now where 

it was 99 degrees when I left last week, and so reliability is important for our air conditioning to run in the summer just like it is 

for heating in the north in the winter. 

Given the increasing complexity of EPA’s regulations, does FERC 

anticipate additional conflicts with reliability? 

Ms. LAFLEUR. I believe it is our responsibility to make sure that 

reliability is sustained. I think we will know much more when we 

see the different State plans, but there will undoubtedly be issues 

to work through as we work through the transformation, that is 

what we will do. 

Mr. GREEN. You also discussed EPA’s proposal and gas pipeline 

adequacy in your testimony, stating FERC emphasized capacity 

factors and existing constraints. Do you believe EPA adequately incorporated FERC’s input? 

Ms. LAFLEUR. I think EPA referenced in the rule the considerable need for new pipeline capacity to facilitate the Clean Power 

Plan, but it is going to be up to us to help get that pipeline capacity 

in the ground. 

Mr. GREEN. OK. Do you anticipate FERC’s handling increased 

permitting requests for natural gas pipelines if States choose the 

EPA’s regional policy option, which since FERC is a national agency. 

Ms. LAFLEUR. I think our pipeline work will continue to grow for 

a number of reasons, yes. 

Mr. GREEN. OK. 

Director Bay, until you are at least sworn in, as Director of Enforcement in your office and responsible for violations and inquiries 

in market manipulation, however unlike other Federal agencies, 

FERC does not have an office of compliance or any other resource 

or regulated community to address questions and concerns. Mr. 

Bay, do you believe that the office of compliance would benefit the 

63 

regulating community, someone to just call and say we are looking 

at this option before it ends up in enforcement action? 

Mr. BAY. We actually tried to do that, Congressman Green. 

There is a no action letter process whereby an entity can submit 

its question to FERC for consideration by staff on whether or not 

there would be a violation if the entity engages in a certain form 

of conduct. 

In addition, we have a help line that is staffed to answer questions from the regulated community. And certainly we are often 

speakers at conferences in which we—— 

Mr. GREEN. OK. I only have about 40 seconds left, but I am concerned that maybe we could use some more transparency on the 

enforcement and maybe an additional office of compliance. 

Let me get to my last question. Mr. Clark, EPA’s rule seems to 

assume transmission grade will not require much, if any, changes 

as a result of retirements, decreased margins, or renewable sources 

whether they be large or small. In different regions of the country, 

what entities are responsible for building and maintaining new and 

existing transmission, and what challenges are they going to face 

under this new EPA model? 

Mr. CLARK. Congressman, there can be different entities in different parts of the country, either incumbent utilities or competitive utilities that are attempting to get into the transition business. 

Who plans that and makes the calls differs substantially in different parts of the country, and in more regulated, less restructured regions of the country, like the southeast and most of the 

west, it tends to be still traditional monopoly and vertically integrated utility companies regulated by States. In more market regions of the country, it tends to be probably an ISO or an RTO. 

Mr. GREEN. OK. 

Thank you, Mr. Chairman. I know I have run out of time. 

Mr. WHITFIELD. At this time the chair recognizes the gentleman 

from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chair. 

Ms. LaFleur, if I understood your testimony earlier, and I wrote 

down part of it but I don’t want to put words in your mouth, given 

the structure of the Clean Air Act that we have, the EPA I think 

you said did a good job or something similar to that. I got it to that 

point and then I couldn’t write fast enough. Is that an accurate 

statement of your opinion? 

Ms. LAFLEUR. That is basically what I said. The question was 

what’s the most efficient way to regulate carbon, and given the authority they have—— 

Mr. GRIFFITH. Yes, ma’am. That wasn’t my question. My question 

is, is that a statement of your opinion that the structure of the 

Clean Air Act that we have, under the structure that we currently 

have, the EPA did a good job in coming up with these regulations? 

Ms. LAFLEUR. Yes. 

Mr. GRIFFITH. And so then I would ask you to reconcile for me 

when you take a look at Section 111 of the Clean Air Act where 

in Section D it says, the Administration shall prescribe regulations 

which shall establish a procedure under which each State shall 

submit to the administrator a plan which establishes standards of 

performance for the existing source for any air pollution for which 

64 

air quality criteria have not been issued or which is not included 

on a list published under Section 108 A, and the critical part, or 

emitted from a source category which is regulated under Section 

112 or 112 B. 

And how do you reconcile that with the fact that electric generation units are currently regulated under 112, and therefore the 

EPA does not appear to have authority under the Clean Air Act to 

propose the regulations which they have enacted, and what they 

are relying on is a scrivener’s error that took place in the redraft 

in, I believe, 1990, but in a case which I would cite for you all to 

go back and look at with your lawyers, in a case New Jersey v. 

EPA 517 F.3d 574, 2008, it appears that the EPA acknowledged 

that they didn’t have this authority. 

And the court ruled accordingly in view of the plain text in structure of Section 112, we grant the petitions and vacate the delisting 

rule, which was a previous lawsuit. This requires vacation of camera regulations of both new and existing EGUs, electric generation 

units. EPA promulgated the camera regulations for existing EGUs 

under Section 111(d), but under EPA’s own interpretation of the 

Section, it cannot be used to regulate sources listed under Section 

112. 

So it is not just my reading, but apparently the EPA in a court 

case made that same reading, and the EPA thus concedes that if 

EGUs remained listed under Section 112, as we hold they do, then 

camera regulations for existing sources must fail. So it would appear that the EPA is reaching way out, and under the existing law 

I would submit they don’t have the authority and that they are 

asking for litigation. 

Doesn’t that make your job harder in trying to figure out where 

you are going to go when the EPA is stretching the law so far that 

they disagree currently with the decision of the court that they conceded was the correct reading of the law as late as 2008? Yes or 

no. 

Ms. LAFLEUR. The legality will be decided by the courts, but we 

are going to do our job to try to keep the lights on in the meantime. 

Mr. GRIFFITH. And I appreciate that you all are going to try to 

keep the lights on, and that brings us to this whole pipeline issue 

and I worry about the EPA and folks filing lawsuits on trying to 

lay down new pipeline to get it to the power sources, and all of a 

sudden we have EPA regulations coming in and saying to us, wait 

a minute, wait a minute, you can’t put the pipeline there, or we 

have lawsuits that last longer. 

And, Mr. Norris, you said earlier you were confident in the 

American innovations and so forth, and I am too. The problem is 

the EPA apparently is so confident they believe that we can get it 

done in 2 years. We know from the Department of Energy, and I 

sometimes wish that all of you all would sit down and talk on a 

regular basis. The Department of Energy has told us the new clean 

coal technology will not be available for approximately 10 years 

even if what we are working on now works, and I think there are 

some really exciting things. I love chemical looping, but we are 

looking at 10 years. I think with some money we might be able to 

shorten it to 7 years. 

65 

But under these proposed regulations, assuming that they go 

into effect, the States have to come up with their plan. Even 

though they have 10 years to hit their target, their plan has to be 

completed with one year. That doesn’t seem very reasonable to me. 

Do you believe that States really can come up with a plan not 

knowing where the pipelines are going to be, not knowing what 

technology is going to be available that can hit all of these very rigorous standards, come up with the plan now for 10 years later? Yes 

or no. Thank you. 

Mr. MOELLER. I do. 

Mr. GRIFFITH. Thank you. You do. 

Well, we only have 5 minutes, so I got to hurry to get it all in. 

I got more than I can handle here. 

Somebody said earlier it is not the EPA regulations that are putting the coal power plants out of business; it is the price of natural 

gas. The problem is that coal and natural gas compete about even 

at $4 a unit, and for most of this year, it is true in the last week 

or so it has dropped back down under $4, but for most of 2014, the 

natural gas price has been over $4. 

And so if it is not the price, I would submit to you all it must 

be EPA regulations which are in fact killing jobs across this country, and we are doing it at a time when this country can’t afford 

it. The people in my district can’t afford it. The consumers are the 

families of middle class America. We are the ones being hurt. It is 

great to have all these lofty ideas, but I don’t see it working, and 

I fear that we are going to have rolling brownouts in the future, 

and I fear that you all are going to have a really tough job because 

of these EPA regulations. 

And with that, Mr. Chairman, I see my time is up, and I yield 

back. 

Mr. WHITFIELD. At this time I recognize the gentlelady from 

California, Ms. Capps, for 5 minutes. 

Mrs. CAPPS. Thank you, Mr. Chairman, and to all of the commissioners, thank you for your testimony today. 

Despite what some have argued, it is clear to me that EPA engaged in unprecedented outreach in developing its Clean Power 

Plan. EPA met with public utility commissioners, grid operators, 

and utilities of all types among many others. 

Chairwoman LaFleur, to emphasize it for the record, I would like 

to ask you about EPA’s outreach to you and to FERC staff. In your 

written response to questions posed by the majority, you indicated 

that FERC staff met with EPA staff on several occasions while the 

proposal was being developed. Is that correct? 

Ms. LAFLEUR. Yes, it is, Congresswoman Capps. 

Mrs. CAPPS. And during these conversations, did FERC have an 

opportunity to flag issues that you all believed that EPA should be 

considering while developing their proposal? 

Ms. LAFLEUR. Yes. 

Mrs. CAPPS. Thank you. 

As far as you know, did anyone at FERC tell EPA that the proposal would significantly undermine reliability? 

Ms. LAFLEUR. That was not the sum of our advice. As I said in 

my testimony, our staff really emphasized that the pipeline and 

66 

transmissions would need to be there to facilitate the plan, that 

that was a key driver as well as a need for regional cooperation. 

Mrs. CAPPS. Thank you. 

Another topic. One of the written questions from the majority 

asked whether FERC prepared the resource adequacy and reliability analysis that EPA released with the proposed rule. Would 

FERC normally prepare the supporting documents for another 

agency’s rulemaking? 

Ms. LAFLEUR. Not to my knowledge. I think that was prepared 

at EPA. 

Mrs. CAPPS. So there is nothing unusual about EPA conducting 

its own supporting technical analysis for a proposed rule? 

Ms. LAFLEUR. I honestly don’t know what their normal practice 

is, but they did not come to us for that. 

Mrs. CAPPS. Thank you. 

And again moving on, we have heard arguments that FERC 

should immediately complete an independent reliability assessment 

of EPA’s proposal. Chairwoman, in your testimony you indicated 

you don’t think it makes sense for FERC to prepare such an analysis at this time. Why is that? 

Ms. LAFLEUR. First of all, the rule is just in draft, but even if 

the rule were final, the way it is structured, there is 49 different 

States, have to come up with plans using four different building 

blocks, and some of them will do it on a State level, some regional, 

so there would be so many combinations and permutations we 

would need to go through, I think it would be more productive for 

us to focus on doing our jobs of getting the infrastructure built and 

then zero in if there are issues in a State. 

Mrs. CAPPS. Thank you. 

Again moving on, our power sector is already transitioning towards energy efficiency and renewable energy, and EPA’s Clean 

Power Plan will accelerate that transition. That is my summary of 

it. If regulators in industry do the necessary planning and maintain focus on implementing the Rules targets, is this transition 

manageable, and can you elaborate on that a bit? 

Ms. LAFLEUR. I think on balance it should be manageable. As I 

said, I think there is a lot of infrastructure we need to get built, 

and we need to have a process if there are specific issues. But from 

what I hear, many of the States are already well situated. 

Mrs. CAPPS. Thank you. 

You know, Mr. Chairman, I think it is clear that EPA sought and 

received FERC’s input on the development of the Clean Power 

Plan, and that EPA will certainly continue to seek FERC’s input 

as it finalizes the rule as it moves from the draft into the final rule 

stage. EPA’s Clean Power Plan is a critical step to reducing carbon 

emissions and combatting climate change, and I hope we can all 

work together in the various agencies and Congress to ensure that 

these rules are as strong and as effective as possible. 

And I know I have a minute left, but I am prepared to yield 

back. 

Mr. WHITFIELD. Gentlelady yields back. 

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

Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

67 

Again, welcome. We are actually glad to have you here, and I 

missed some of the impassioned questions, but the reality is there 

are people in coal countries of this nation that since this Administration was elected there has been a war on coal. 

And I always refer people to President Obama’s then meeting 

with the editorial board of the San Francisco Chronicle in 2008 

when he said, I am just going to make it so costly to use coal, that 

they will move out of the market and I think we are living in that 

world. Your job is living in that world, how do we keep the lights 

on. 

And I also would hope that your job would be trying to make 

sure there is enough base load and that we have competitive prices 

because if prices go up, then the whole economy is challenged by 

that. But the passion is sincere for those people who live in coal 

country and have the majority of their generation from coal-fired 

power plants. 

Now I am from Illinois, so we have a big nuclear portfolio, too. 

We are fortunate in that, but I would say nuclear power is challenged today also. 

So, Chairwoman LaFleur, I filed this question, and in your statement you talked about the FERC staff working on the operational 

grid, pipeline, transmission, regional cooperation, and I understand 

the work that commission staff has done, but I was intrigued by 

Commissioner Moeller’s statement when he talked about requesting a more formal role. 

Commissioner Moeller, can you explain to me what that means, 

and maybe that might address some of these questions about how 

much time, who is reviewing, who is making decisions. And what 

do you mean by a more formal role? 

Mr. MOELLER. Well Congressman, as Acting Chair LaFleur mentioned there were meeting between FERC staff and EPA, but it is 

kind of up to whoever heads the agency as to whether that information is going to be disseminated. 

Now, to her credit, she did. But I like these issues. They may not 

be very glamorous, but they are very important in terms of the reliability implications of transitioning this fleet in a very short 

amount of time. 

And so I don’t want to endorse staff meetings and paperless 

meetings. I would prefer a more formal open, transparent process, 

where frankly we can get engineering expertise which will often 

probably disagree among themselves as to the reliability implications, and I don’t think it is that hard because EPA even gave us 

the list of power plants that they project to shut down. So the information is out there, courtesy of EPA. 

Mr. SHIMKUS. So in that statement, and not trying to sow discord, but it is your opinion that there hasn’t been an open, transparent system? 

Mr. MOELLER. I was never invited by EPA to either review the 

proposal or comment on it. It was done strictly—— 

Mr. SHIMKUS. Let me ask to all the commissioners here and the 

acting Commissioner, was anybody else invited to any of these 

meetings with the EPA? Obviously the commission, the staff is 

yours, but—— 

68 

Ms. LAFLEUR. There are two different things going on. In the 

interagency review process, we were under strict confidentiality requirements about Xeroxing and releasing information, although I 

did offer the excerpts to all of my commissioner colleagues. Now 

that the rule is out, we can have all the open meetings we want. 

Mr. SHIMKUS. And I only have a minute left. So I know Commissioner Moeller, you weren’t. Commissioner Norris, were you involved in any of this prior? 

Mr. NORRIS. Well, I was involved—— 

Mr. SHIMKUS. Or Commissioner Clark? 

Mr. CLARK. No. 

Mr. SHIMKUS. Commissioner—you weren’t around yet. So welcome, I guess I should say. 

And I will just end on this, again we appreciate it. You all know 

where we stand. I talk to a lot of people in the generating sector, 

and I was involved with public policy that moved us to competitive 

generating facilities instead of a, in regulated markets. I think 

there is now a question under this new regime of is it better for 

reliability, do you go back to regulated markets? How are merchant 

facilities going to survive? 

Commissioner Clark, you are shaking your head. Do you want to 

comment real quick, and then I will end on that, Mr. Chairman. 

Thank you. 

Mr. CLARK. Congressman, you raise an intriguing point, and one 

that I have thought of from time to time, which is there is the potential in some restructured markets to have, to the degree that 

you are requiring a State-led basically integrated resource plan to 

be put on top of the market construct, that it is a form of almost 

soft re-regulation in some of those markets that had traditionally 

been trending in a much different way in a restructured environment. 

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

Pennsylvania, Mr. Doyle, for 5 minutes. 

Mr. DOYLE. I thank my friend. 

Commissioners, thank you and welcome. You have provided a 

great deal of insight and thought, and your responses to the majority’s written questions were certainly exhaustive. 

We are embarking on a fundamental shift in our energy sector, 

and I share the goal of reducing emissions of greenhouse gasses 

that are contributing to climate change, but we have to do it in a 

way that is prudent. Traditional energy sources, nuclear, coal, they 

are still going to play a critical role in ensuring reliability, and as 

we move forward toward supporting cleaner types of energy, we 

have to make sure we have the capability and the infrastructure 

to support them. The most recent proposed rule from the EPA on 

existing power plants is going to force a sectorship with a fairly expedited time frame, and the impact is real, particularly in my home 

State of Pennsylvania. So I appreciate your time today as we continue this critical conversation. 

Chairwoman LaFleur, let me ask you, as you know, the 111(d) 

proposed rule includes both binding interim goals beginning in 

2020 and final compliance goal in 2030. Now, if there is no hiccups 

or delays or extensions, many States will have their completed 

plans in place by hopefully 2017. 

69 

By 2020, my State, Pennsylvania, will have to reduce its carbon 

emissions from the 2012 baseline by 28 percent. That is just 3 

years to make a 28 percent reduction. This will require swift action 

from utility planners, rather than long-term planning that could 

ease reliability concerns. 

My question is by keeping the 2030 compliance goal in place but 

allowing States to determine the appropriate interim glide path, 

could EPA achieve the same carbon reduction goals while providing 

utility planners the necessary timeline to avoid reliability impacts 

and unnecessary stranded assets, and is this an approach that 

FERC would support? 

Ms. LAFLEUR. I would want to think more about that, Congressman, and perhaps take it as a question for the record. It is not 

something that we discussed with EPA during the process. I do 

think that your State is well served—Pennsylvania has the advantage of being well served with gas pipelines and also being close 

to a region that—being in a regional transmission organization 

where there might be regional solutions that would both afford 

more time and more options to the State; but, of course, it is not 

up to me to make their plan. 

Mr. DOYLE. Let me ask all of the commissioners. A recent Brattle 

study noted that looking at forward market prices and recent 5- 

year cost trends, about half of merchant nuclear plants are not 

profitable. This is not a future problem. This is a problem that is 

staring at us right now today. 

What happens to reliability if nuclear plants retire, especially 

when you factor in the number of coal plants shutting down because of EPA’s MATS rule and the fact that the remaining base 

load coal fleet is under the same market pressures as nuclear? It 

seems to me that this is a real problem today long before the rule 

could impact the grid. What are the RTOs doing, particularly PJM 

in my area, to address this problem today? 

Ms. LAFLEUR. Well I think it would be a problem if we lost our 

nuclear fleet. It is a very important part of our fleet. PJM, as well 

as FERC, are looking at both the capacity markets to make sure 

they properly compensate the reliability contribution of base load 

plant, as well as Commissioner Moeller referred to we are looking 

at price formation in the energy markets to make sure that those 

plants are getting fair market prices to support them. 

Mr. DOYLE. Would any other of the commissioners like to make 

a comment on that? 

Mr. MOELLER. Congressman, your specific question about what 

happens if we lose the fleet, the entire fleet would be devastating 

because it is so important to our grid. Individual plants, it really 

depends on the load pocket involved, and I know that New England 

is struggling with the closure of Vermont Yankee, and there are 

lots of ramifications of that. 

But as Acting Chair LaFleur noted, both the RTOs and as a commission, we are looking at ways to better compensate the reliability 

implications of on-site fuel and trying to get the prices right in the 

price formation effort, which will better compensate those units. 

Mr. DOYLE. I am trying to understand when EPA says that the 

rule will preserve at-risk nuclear plants, how exactly does that 

70 

work? I mean how will they preserve at-risk nuclear plants, and 

how soon does that happen? 

Mr. CLARK. Congressman, I share your concern. I think the answer is easier in certain regions of the country than others. If you 

come from a region that still happens to be a State-regulated monopoly, vertically integrated utility environment, it is probably less 

of a concern in that those public utility commissions can build in 

some of the those base costs into base rates. 

In market regions of the country though, you are exactly right. 

We are struggling with that issue where there doesn’t seem to be 

enough revenue from the market to support some of these, what I 

think most people acknowledge are very important nuclear plants. 

Mr. DOYLE. Thank you. 

I see my time is up. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Thank you. 

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

for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. Welcome to our commissioners. We are really so grateful you spent the time with us. 

Mr. Moeller, let me ask you a question because you caught my 

attention in your opening statement and of course you were talking 

about the commission has a responsibility to promote the reliability 

of the Nation’s bulk power system, and then you specifically referenced heating and cooling. We talk a lot in this committee about 

public health concerns, about things. I mean, that is a major one, 

isn’t it? We forget about, I mean, everyone understands that there 

can be cold-related deaths, but heat-related deaths actually can be 

more significant, at least in my experience. 

Mr. MOELLER. Absolutely. We talk about the lights staying on, 

which is great, but it is really heating and cooling that keeps people alive during extreme weather events, and particularly in your 

State, it gets mighty hot. 

Mr. BURGESS. Well, and even in States where it is not. I mean, 

we saw in France in 2003, when I forget the number, but I think 

it was in excess of 10,000 deaths during a heat wave that they had 

in France that they were unprepared to deal with, so it can be substantial. The effects on public health can be substantial. 

You know, I think you point out in your testimony that the Federal Power Act restricts the duties of the commission, the authority 

to regulate interstate electricity transmission, wholesale electricity 

prices, and leaves the questions of electricity generation and intrastate distribution to the States, but with the proposed Clean Power 

Plan, this separation seems to be changed and puts the EPA in 

control of intrastate electricity matters. 

Is that concerning to you as commissioner of the FERC that the 

EPA is claiming authority through really the regulatory process 

that Congress did not grant to you as a commission through statute? 

Mr. MOELLER. I think Commissioner Clark may want to elaborate more specifically to that point. But, I try to point out the fact 

that these are interstate markets, and if you impose a State-byState enforcement solution, that is very challenging, particularly 

when you have States that, for instance, Idaho, that consumes a lot 

of coal-generated power but doesn’t actually produce any within 

71 

their State. The baseline how it works now going forward, very 

challenging. 

Mr. BURGESS. Commissioner Clark? 

Mr. CLARK. Sure. I would just reiterate what appeared in my 

presubmitted testimony, which is, just that this is a big change potentially as States enter into these compliance plans wherein they 

may be putting into the compliance plans all sorts of integrated resource planning type mechanisms like renewable portfolio standards and efficiency codes, as well as decisions that their State public utility commission is making and then seeking approval of those 

from the EPA. 

To the degree that they later try to change that, depending on 

how inflexibly that is written in their particular compliance plan, 

it could cause issues where they later need to go and seek approval 

from the EPA, or if they depart from that, subject some entity in 

their State, either a generator, the State itself, to either an EPA 

complaint in enforceability, or even private citizens lawsuits 

against the plan that they have locked themselves into. So it is a 

jurisdictional issue that I think States will need to think about as 

they work through this process if the rule is upheld. 

Mr. BURGESS. They need to think about it, but it also strikes me 

that they may not have, I don’t know. Are they going to have the 

protections that they need in order to do their job. 

I just have to say as a father and a grandfather, I admire the 

forbearance of your sons to hang with you through this. I don’t 

know what you promised them, but I suspect it must be substantial. 

Mr. CLARK. Thank you. I have a 7-year-old that is at home that 

we didn’t risk this with. 

Mr. BURGESS. So noted. 

Let me just ask you a question on, the reductions in actual capacity, the EPA seems to assume a reduction based on efficiency 

measures. 

The EPA really cannot force citizens, though, on their purchase 

of electricity or power, so how can the EPA rely upon reductions 

in usage based upon efficiency without the ability to mandate how 

much power is consumed or not consumed? 

Mr. CLARK. Congressman, I think what is envisioned by the 

EPA’s plan is that that is the sort of thing that would go into a 

State compliance plan. It does raise the question about, in my 

mind, who would be the entity that EPA would then enforce that 

standard against? 

An energy efficiency measure is not like a power plant that EPA 

can go in and specifically tell to ramp down or up. If there is something that is not being met in the State energy efficiency goal, who 

would be the compliance entity that is targeted? Would it be the 

State itself, the installers of the energy efficiency? I just struggle 

a little bit to understand in the context of the Clean Air Act exactly 

how that would be enforced, but I appreciate the question. 

Mr. BURGESS. And I appreciate the very provocative answer in 

the form of a question. 

Thank you, Mr. Chairman. I will yield back. 

Mr. WHITFIELD. At this time the chair recognizes the gentleman 

from Georgia, Mr. Barrow, for 5 minutes. 

72 

Mr. BARROW. Thank you, Mr. Chairman. I want to talk about 

something we haven’t talked about much today. To fully develop 

and deploy renewable energy in some remote areas is going to require infrastructure upgrades to get that energy from where it can 

be generated to where it is going to be needed. 

And I know until 2011, the rule was pretty set. Infrastructure 

upgrades had to be paid for by those who were going to benefit 

from them. There was a direct benefit test. Back in 2011, you all 

released a regulation, it is called Order 1000, that basically proposes to broaden, to reallocate the cost of infrastructure upgrades 

to allow for the greater development of renewables in remote locations by spreading it across a broader base, including folks who 

won’t benefit from it, won’t consume the energy that is being produced. 

Now, personally I am all for them paying the cost who get benefits, myself. But I want to ask each of you all, and direct this question to each of you in turn, what do you say to folks who are skeptical about spreading the cost of infrastructure upgrades beyond 

the base of those who are going to benefit directly from it? 

Ms. LAFLEUR. Well, Order 1000 preserved the principle that 

those who benefit are the ones who should pay for transmission. 

But it suggested a new type of benefit beyond reliability, which is 

well understood and why you build transmission. Economic benefits 

of reducing congestion, getting a cheaper power by building transmission. 

And the third was enabling States to comply with State laws 

such as buying renewables, so the premise of the rule is that if a 

State passes a law requiring extra set renewables, then the transmission to facilitate compliance with that law does benefit that 

State. So it is a different type of benefit but still one that we believe the people who receive the benefit should pay. 

Mr. BARROW. Commissioner LaFleur, am I correct in understanding, then, that a State like Georgia, which does not mandate 

the purchase of renewables in a certain quantity would not in any 

way be required to subsidize or contribute to the cost of upgrades 

elsewhere in order to provide for the—— 

Ms. LAFLEUR. That is correct. Georgia would be part of a region, 

there is a southeastern regional planning and only Federal, State 

and local enacted laws and regulations would be public policy requirements around which transmission had to be built. So if Georgia had no renewable requirement, they wouldn’t have to build for 

renewable requirement. 

Mr. BARROW. How about you, Commissioner Moeller, do you 

agree? 

Ms. LAFLEUR. Excuse me? 

Mr. BARROW. How about you, Commissioner Moeller, do you 

agree? 

Mr. MOELLER. There are parts of Order 1,000 I supported, parts 

that I wasn’t supportive of—it is in the courts now. But generally 

speaking, the concept of beneficiary pays is one that we try to embrace. The challenge with these assets is that they are often 30- 

, 40- or 50-year assets and the power flows change and so who is 

paying for them now, other entities can benefit. So there is some 

73 

art and there is some science in cost allocation. It is difficult, but 

most importantly, we want to get it built. 

Mr. BARROW. Commissioner Norris, do you think those who pay 

bills—— 

Mr. NORRIS. Yes, the board supports the principle beneficiary 

pays, and I agree with both the previous commissioners. This is not 

an exact science. But you get reliability benefits, you get economic 

benefits, and you get the access to renewable energy where it 

shows and by that plan. I would just add to what Commissioner 

LaFleur said is that the public policy only requires that that be 

considered in the regional plan. It does not require that that be a 

part of the plan. It only enables public policy considerations to be 

a part of the process but does not require them to be in the plan. 

Mr. BARROW. And what does that mean for folks who are served 

by companies that don’t—— 

Mr. NORRIS. That means the regional planning process has to 

have in their planning process, a mechanism in which public policy 

laws or requirements get on the table for consideration. It doesn’t 

require that they be adopted in the plan, only that there is a process by which they get considered. 

Mr. BARROW. Commissioner Clark? 

Mr. CLARK. I would agree that the concept of beneficiary pays is 

a sound one. There have been a number of cases, Order 1,000, 

which I, too, have agreed with parts and disagreed with parts, but 

also specific cost allocation cases that have been taken to court, 

some of which I have agreed with, some of which I have not. 

I think the courts are beginning to hem in the Commission in 

terms of what is considered within bounds and what is considered 

without, outside of the lines. In a recent MISO case, it determined 

that the Commission had made a sound judgment in terms of beneficiary pays and I thought the court was right. In the case of a recent PJM case; the Commission had decided it was outside of the 

bounds and had not tied down that beneficiary pays analysis 

enough, and I agreed with the court in that case, as well. 

Mr. BARROW. Commissioner Bay, last word. 

Mr. BAY. The only thing I would add is that the 7th Circuit has 

said that the cost must be roughly commensurate with the benefits, 

and the commission has adopted that principle, as well in Order 

1,000, and also has said that if you don’t benefit, you don’t pay. 

Mr. BARROW. Thank you. 

My time is up. 

Mr. WHITFIELD. Time has expired. 

At this time, recognize the gentleman from Pennsylvania, Mr. 

Pitts, for 5 minutes. 

Mr. PITTS. Thank you, Mr. Chairman. 

The Administration’s Clean Power Plan that we are reviewing 

here today provides four emission reduction strategies, fuel switching from coal to natural gas is a potential component of two of 

these strategies. 

One advises the coal firing of coal plants with natural gas or outright conversion to natural gas firing; the other involves increasing 

the dispatch rate for natural gas combined cycle power generation 

units. Pipeline companies are expanding their infrastructure to 

meet demands for clean burning natural gas, and in Lancaster 

74 

County, which I represent, there is a proposal for a new line that 

would run through most or some of the most pristine farmland in 

the Nation. 

Chairman LaFleur, I have two questions relating to this. Since 

many other communities will see similar projects in the coming 

years, what procedures do you have in place to make sure environmental concerns and the rights of property owners are given full 

consideration when reviewing these proposed roots for pipelines? 

And secondly, do you believe the Clean Power Plan would lead to 

a proliferation of new pipelines across the country? 

Ms. LAFLEUR. Well, thank you for the question, Mr. Congressman. 

The way our pipeline approval process works, we do a complete 

review of the environmental safety and community aspects, which 

includes scoping meetings, opportunities for public comment, open 

houses in communities around the pipelines. We are often asked 

why the process takes so long, and it is because of all the opportunity for comment that are fed into the process. I do believe we 

will have more pipelines as a result of the greater utilization of 

gas, but they have to be built with sensitivity to the concerns of 

the people whose communities we are crossing. 

Mr. PITTS. Commissioner Moeller, right now, some States average a natural gas utilization rate in the single digits. Given that 

the EPA assumes that an average 70 percent utilization rate for 

natural gas is feasible, do you think that many States may fall 

short in this goal and that many consumers will simply be left with 

a larger electricity bill? 

Mr. MOELLER. Well, I think it would be extremely challenging, 

Congressman, to reach those 70 percent levels, generally. I will be 

looking forward to the comments on the rule that talk about particularly the operational aspects of that aspiration, and we will 

need to get the pipeline in place. 

And the question is, does the timing of a new pipeline sync up 

with the enforcement timeline? 

Mr. PITTS. Commissioner LaFleur, my understanding is that the 

proposed rule factors in new nuclear plants but only factors in 6 

percent of the existing nuclear plants; in other words, if an existing 

nuclear plant shuts down, the impact on a State’s ability to comply 

is limited to 6 percent of the energy that comes out of that plant, 

which doesn’t seem like much of an incentive to take actions that 

will value the carbon-free energy that nuclear plants provide all 

day, every day. 

Don’t you think customers benefit from having plants that have 

18 to 24 months of fuel on site, particularly when those plants can 

run at 97 percent of their capacity even during conditions like the 

polar vortex or the hottest day of the summer? 

Ms. LAFLEUR. I think nuclear plants bring a lot of benefit to customers, including reliability benefits, the fuel security you mention. 

I don’t believe that the EPA mandated what percentage any State 

could or could not rely on nuclear. That was a building block that 

was put out that a State could put together. If a State wanted to 

rely more on nuclear, less on something else, my understanding of 

the plan, it would be allowed. 

Mr. PITTS. Mr. Moeller, would you like to comment? 

75 

Mr. MOELLER. Well, I have talked to a few nuclear companies 

about it, and I think they are still analyzing it, but there is one 

train of thought that despite EPA’s intention, that the 6 percent 

could actually be counterproductive to nuclear. It has to do with 

the calculations and replacing it with gas to meet your baseline 

better. But it is certainly worthy of further discussion. I admire 

EPA’s attempt to try and booster the nuclear units, but there is a 

train of thought that actually could be counterproductive the way 

they proposed it. 

Mr. PITTS. I yield back. 

Mr. WHITFIELD. Gentleman yields back. 

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

Yarmuth for 5 minutes. 

Mr. YARMUTH. Thank you, Mr. Chairman. 

And thanks to all the commissioners for this discussion. I think 

it has been a very thoughtful and interesting one. 

I want to thank the chairman, my fellow Kentuckian, for returning us to the days of yesteryear with the discussion of WaxmanMarkey, which, by the way, did not become law because a Republican minority in the Senate wouldn’t let it become law, because it 

did have a majority of votes in the Senate after passing the House. 

But when I was considering whether to vote for that bill or not in 

the House, my primary concern was how it would affect the cost 

to my consumers, both business and residential. 

And I talked to a lot of the businesses, all the big users of power; 

they were all kind of either for it or neutral on the bill. And then 

I talked to our utility company and asked them how it would affect 

residential rates, and they said that they projected that over 10 

years the average residential user would experience a rate increase 

of 15 percent if they did nothing else, and so they didn’t engage in 

any conservation practices. 

And I think, understandably, this hearing is focused on the supply side of the energy equation, but the demand side of the energy 

equation is also critical to our ongoing consideration of our energy 

future. 

And Mr. Norris, you talked about innovation primarily on the 

supply side, but there is an incredible amount of innovation going 

on on the demand side, which is going to affect supply and whether 

or not we have adequate energy in the future. So when we talk 

about rates, rates don’t necessarily mean billing amounts, is that 

correct? And there are huge amounts of the things going on out in 

the world of innovation right now which could dramatically affect 

what the bills are regardless of what the rates are. Is that not true 

and would you elaborate on that? 

Mr. NORRIS. Very true. When I was the chairman of our State 

commission, we had a utility, MidAmerican, who hadn’t raised 

rates over 10 years, but I got complaints all the time about people’s 

utility bills going up, and it is very simple: You are plugging more 

stuff in and turning more stuff on. So the demand side is a very 

important part of this equation. 

As I said in my written testimony, the deployment of smart grid 

and smart meters are already taking place, and that continues to 

be a technological innovative area where we can do a lot more to 

76 

make our consumption of electricity much more efficient, and we 

should. 

Mr. YARMUTH. And, I mean, I am not aware of any decent-sized 

business that is not very much focused on reducing their energy 

costs and doing the types of things, whether it is turning their computers off at night or whether it is putting solar panels on their 

roofs or doing any number of things to reduce those costs. 

Have you seen examples of can you gauge what the opportunity 

in terms of utilization reduction on the demand side would be because of technology, just current technology right now? How much 

can an average business save by implementing—or an average 

homeowner save by implementing some of the techniques that already exist? 

Do you have an estimate on that? 

Mr. NORRIS. How much is the potential, you say, for demand side 

reduction? Well, no, I don’t have a number. I know that there is 

still a great opportunity for putting price responsiveness and demand response in both our retail and wholesale system. For consumers to get the right price signal, putting elasticity in our demand curve, I think there is a great potential, but I don’t have an 

exact number for you. 

Mr. YARMUTH. Right. And we know that, for instance, rates on 

solar panels have come down approximately 75 percent just in a 

matter of 5 years or so. So it is reasonable to expect that those 

kinds of technologies will make it much easier for consumers and 

for businesses to keep their cost in line, their energy costs in line, 

even if rates happen to rise at some significant rate. 

Is that not true, Ms. LaFleur? 

Ms. LAFLEUR. Yes, that is definitely true. And much earlier in 

my career, I used to run conservation programs for an electric company and there are a lot of things that businesses and residences 

can do, first of all, when they build in the first place to build inefficiency, but also retrofitting, lighting, motors, and so forth. 

Mr. YARMUTH. OK. And we are actually seeing that in the automobile segment of the energy industry, too. Innovation has now 

vastly increased the amount of mileage, and unfortunately, that is 

having repercussions in the Highway Trust Fund because people 

are not buying as much gas and paying as much tax. 

But anyway, I appreciate the discussion, and your work. Thank 

you very much. 

Mr. Chairman, I yield back. 

Mr. WHITFIELD. Thank you very much. The gentleman yields 

back, and that concludes today’s hearing. 

Mr. RUSH. Mr. Chairman, I have a unanimous consent request. 

Mr. WHITFIELD. OK. What is it? 

Mr. RUSH. Mr. Chairman, I would ask that the record reflect that 

Commissioner Clark’s two sons have been the most attentive and 

intense listeners we have had before this committee in years and 

years and years. 

Mr. WHITFIELD. Without objection, so ordered. 

Mr. CLARK. Mr. Chairman, and ranking member, I appreciate 

the compliment, but you realize when you make it it is going to 

cost me a lot more money somewhere down the line paying them 

back. So thank you. 

77 

Mr. WHITFIELD. Well, I am sure that their classmates are going 

to be excited for them to tell about this hearing that we had on 

FERC and the clean plan, and they will be the most popular students in school. 

And I am also going to ask unanimous consent that we enter into 

the record a statement from the American Public Power Association on this hearing. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. And that will conclude the hearing. 

I want to thank all of you for being here. We also thank you for 

your responsibility in what you do for our country. We look forward 

to working with you because we don’t really have any easy answers 

here. There are many challenges facing all of us, and I know that 

even though we have philosophical differences, we do have the 

same goal and that is to have a strong economy and reliable abundant electricity. 

So thank you all again. The record will remain open for 10 days. 

And for the Clark children, I hope you will come back and see 

us again soon. Thank you very much. 

[Whereupon, at 12:16 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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