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[Senate Hearing 113-514]
[From the U.S. Government Publishing Office]

 

                                                        S. Hrg. 113-514

                          HONORABLE NOMINATION

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                                   ON

NOMINATION OF COLETTE D. HONORABLE TO BE A MEMBER OF THE FEDERAL ENERGY 
                         REGULATORY COMMISSION

                               __________

                            DECEMBER 4, 2014
                            
                            
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                   MARY L. LANDRIEU, Louisiana, Chair

RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
DEBBIE STABENOW, Michigan            DEAN HELLER, Nevada
MARK UDALL, Colorado                 JEFF FLAKE, Arizona
AL FRANKEN, Minnesota                TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia      LAMAR ALEXANDER, Tennessee
BRIAN SCHATZ, Hawaii                 ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico          JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin

                Elizabeth Leoty Craddock, Staff Director
                      Sam E. Fowler, Chief Counsel
              Karen K. Billups, Republican Staff Director
           Patrick J. McCormick III, Republican Chief Counsel
           
           
             
           
                     
                    
                     
           
           
                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Baldwin, Hon. Tammy, U.S. Senator from Wisconsin.................     3
Boozman, Hon. John, U.S. Senator from Arkansas...................     5
Honorable, Colette, Nominee to the Federal Energy Regulatory 
  Commission.....................................................     7
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2
Pryor, Hon. Mark, U.S. Senator From Arkansas.....................     4
Stabenow, Hon. Debbie, U.S. Senator From Michigan................     3
Wyden, Hon. Ron, U.S. Senator From Oregon........................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    23

                              Appendix II

Additional material submitted for the record.....................    49

 
                          HONORABLE NOMINATION

                              ----------                              

                       THURSDAY, DECEMBER 4, 2014

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 11:38 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden, 
presiding.

       OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR 
                          FROM OREGON

    Senator Wyden [presiding]. The committee will come to 
order. We meet this morning to consider the nomination of Ms. 
Colette Honorable to be a member of the Federal Energy 
Regulatory Commission.
    Senator Landrieu very much regrets that's she's not able to 
be here this morning to chair the hearing. She has asked me to 
chair in her absence. She has submitted a written statement in 
support for the nominee. Without objection, it will be included 
and printed in the record.
    Senator Wyden. Like Senator Landrieu I'm pleased to support 
Ms. Honorable's nomination. Ms. Honorable clearly has the 
background, training and experience necessary to serve on the 
Federal Energy Regulatory Commission.
    She's demonstrated her ability in the Arkansas Public 
Service Commission for the past 7 years.
    Was Chairman of the Commission for the past 4.
    Was President and Chair of the Board of the National 
Association of Regulatory Utility Commissioners for the past 
year.
    Moreover, she has demonstrated her fairness, her commitment 
to safe, reliable and affordable utility service.
    In the words of FERC's organic statute, her ability, and I 
quote here, ``to access fairly the needs and concerns of all 
interests affected by Federal energy policy.''
    Ms. Honorable, as Chairman of Arkansas' Public Service 
Commission, kept her State's electric rates among the lowest in 
the Nation, promoted diversity of energy sources and investment 
in new energy infrastructure and ensured the safe operation of 
her State's natural gas pipelines.
    I believe we will benefit by having her experience and 
ability on the Federal Energy Regulatory Commission. I hope 
that it will be possible to confirm her nomination before the 
session is over.
    We'll have Senator Murkowski make her opening remarks and 
we'll recognize our colleagues.
    Senator Murkowski.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman.
    I appreciate the fact that we are able to have this hearing 
today considering the nomination of Colette Honorable, to serve 
as Commissioner on the FERC. I think we recognize that it is an 
increasingly important, independent agency.
    To Ms. Honorable, I would like to welcome you back to the 
committee. In your capacity as President of NARUC you've been a 
national figure in energy regulation. Our committee has had the 
benefit of your testimony and your expertise at our electric 
reliability hearing last spring. Through your role at NARUC and 
as the Chair of the Arkansas Public Service Commission, I think 
it's clear that you have seasoned experience that, I believe, 
will be an asset at FERC. I do appreciate the willingness to 
serve.
    At its core FERC's purpose is to ensure reliable energy at 
just and reasonable rates. By one rough measure the energy 
transmitted over FERC regulated pipes and wires is worth over 
$400 billion per year. Considering that energy is a fundamental 
input across the economy, the Commission's impact can be 
multiplied significantly.
    Most Americans feel the effect of FERC's decision in 
hundreds of individual cases and controversies. Ultimately, 
though, what we're talking about is money from their pockets 
and the quality of their energy service. More and more, though, 
we're hearing concerns about encroachment on FERC's fundamental 
mission.
    It appears that the Administration is intent on 
transforming the very nature of energy production and use 
regardless of costs or sometimes even feasibility. Considering 
electricity alone, just one of the energy sectors that are 
regulated by FERC, I've noted for years now that the EPA is 
releasing an unrelenting onslaught of new and unduly burdensome 
Federal regulations, particularly in combination with one 
another. These rules could seriously challenge the reliability 
of our Nation's grid system and push more Americans into energy 
insecurity.
    As I discussed last week with Ms. Honorable, if you are 
confirmed, I'm counting on you to champion FERC's role as the 
Federal agency with responsibility for electric reliability. We 
need the FERC to stand up in interagency dialogs and guard 
against Federal regulations that will make our electricity less 
secure and more expensive. I would hope that you'll agree with 
me and your future colleagues, Commissioners Moeller and Clark, 
that FERC must be a stronger voice for balance.
    I would think that one immediate step would be for the FERC 
to accept a request that I made last week with Chairman Upton 
and Whitfield to convene a technical conference on this subject 
as soon as possible.
    Again, I'm glad that we have this hearing this morning. 
Given the controversy surrounding the Commission and its work 
since 2009, I think we need to make sure that as a committee we 
give Ms. Honorable sufficient time to provide thorough and 
complete answers to the questions that Senators may submit for 
the record.
    I would also like to remind my colleagues that we've got 6 
nominations pending on the Senate calendar that have been 
approved by the Energy Committee. We did process a couple 
today. But most of the nominees are for the Department of 
Energy. They've been pending since January, if not longer.
    I have told Secretary Moniz and I think we would all agree 
that he deserves to have his team in place. So I would hope 
that we can clear those nominees before the end of this 
Congress, including that of Ms. Honorable.
    Senator Wyden. Thank you.
    We have 2 colleagues with a very tight time schedule.
    Senator Stabenow is going to have to leave.
    Senator Baldwin has to preside on the Floor.
    So if both of you could make short statements that would be 
great.

        STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR 
                         FROM MICHIGAN

    Senator Stabenow. Thank you, Mr. Chairman.
    I will be very brief. I will not be able to stay for the 
hearing, but I did want to indicate for the record 2 things.
    One, I did have the opportunity, I appreciate, to meet in 
my office with Ms. Honorable and will be supporting her.
    I also did want to indicate that we did discuss in my 
office a very serious situation affecting the families and 
businesses in the Upper Peninsula in Michigan in the issue 
before FERC. It does involve both some legislation that we've 
introduced, House/Senate bipartisan legislation, but also 
actions before FERC. I'm going to be working very closely and 
urging FERC to make the right decision as it relates to 
distribution of costs regarding a very critical project in the 
UP.
    So, thank you.
    Senator Wyden. Very good.
    Senator Baldwin.

         STATEMENT OF HON. TAMMY BALDWIN, U.S. SENATOR 
                         FROM WISCONSIN

    Senator Baldwin. Thank you, Mr. Chairman.
    I am grateful for an opportunity to, rather than ask 
questions, at least make a brief opening statement and put the 
issues that I have into the record.
    Mrs. Honorable, I was very happy to have a chance to speak 
with you earlier and also support your nomination to the FERC.
    We had a chance to cover 3 issues of great consequence to 
the State of Wisconsin and the region.
    One of them relates to the reliability of rail, freight 
rail transport of coal, to our regional power companies. We are 
hearing alarming reports that there are low stocks as we face 
the onset of winter, unreliable service, unpredictable service 
and obviously, this has an impact on reliability. So I want to 
underscore what Ranking Member Murkowski just said about the 
importance of interagency dialog. I will want a commitment that 
FERC will engage with the Surface Transportation Board to 
ensure that these reliability issues are addressed.
    Also, I understand the value of the idea of technical 
conferences where FERC and the STB and industry convene to find 
solutions to supply issues that threaten grid reliability.
    Two other quick issues that were raised during our 
conversation that I'm very concerned about.
    This committee heard me talk many, many times last winter 
about the propane crisis that hit the Upper Midwest as well as 
other regions of the United States when stocks were alarmingly 
low. There were multiple agencies that were involved in a 
response. We've drafted legislation that came out of a hearing 
that was held by this committee. But I want to identify, again, 
that FERC played a very specific role in using an emergency 
authority that it had never used before to mandate that one of 
the batch pipelines be set aside for propane only to alleviate 
this crisis.
    Since it was the first time FERC had ever used it, we want 
to make sure that that emergency power would be available in 
the future and that they've worked out any issues relating to 
that authority.
    The last thing I want to just address really briefly. I 
know this affects many States, as it does ours. But as we see 
manufacturers and utilities plan on pivoting from coal to 
increasing use of natural gas in the coming years, you know, 
they're certainly contemplating this and doing this to take 
advantage of low prices, update their processes, reducing 
pollution.
    It's not unique to my State. It's a transition that's being 
experienced across the country. But we know that it's going to 
result in a cumulative increase in domestic demand that's going 
to require careful monitoring and review. FERC plays an 
important role in ensuring this transition will be smooth and 
successful.
    So I want to know how Ms. Honorable and FERC will work to 
ensure that cumulative increases in demand for natural gas are 
modeled and considered in our infrastructure planning.
    So with that, again, thank you for letting me get in a few 
words before I dash to the Floor.
    Senator Wyden. Thank you, Senator Baldwin.
    We're fortunate this morning to be joined by our 2 
thoughtful colleagues from Arkansas, Senator Pryor and Senator 
Boozman. They'll introduce the nominee. I think it's fair to 
say we often have Senators introduce their constituents to the 
committee but it is not a frequent occurrence that a Senator, 
who hired the nominee that they're introducing and that is the 
case with Senator Pryor and Ms. Honorable is here with the 
committee.
    So, Senator Pryor, I know you feel strongly about this 
nominee. That's important to us. Please proceed.

          STATEMENT OF HON. MARK PRYOR, U.S. SENATOR 
                         FROM ARKANSAS

    Senator Pryor. Thank you very much. Thank you to all the 
members of the committee for having me here today. I'll just be 
very brief.
    But I do feel very strongly about this nomination because I 
know Colette. I know her well. I've known her for years. She 
will be an outstanding member of the Federal Energy Regulatory 
Commission.
    I've known her since my time in the Attorney General's 
office. She was one of the first people I hired when I came 
into the office. I've just seen her grow and blossom and seen 
her career just take off. It's been a great thing to see.
    Currently or she has just been the Chairman of the Board 
and President of the National Association of Regulatory Utility 
Commissioners, NARUC. In that capacity she's had the 
opportunity to talk to her colleagues. She's on the State 
Public Service Commission. But she's had the opportunity to 
talk to her colleagues all over, from all over the country, and 
to hear their concerns and hear how they do it. I think it's a 
great training ground for her to be on the FERC.
    I don't want to take much more of the committee's time. 
But, you know, when you think about Colette Honorable, once you 
get to know her, she's honest. She's fair. She listens. She 
works harder than anyone I've ever seen. I just think she'll be 
a great commissioner.
    Just by virtue of Senator Boozman sitting here with me you 
see that she has across the board support in Arkansas and 
that's not just partisan support from business, consumer 
groups, etcetera, etcetera. I think you'll find that around the 
country as well. Anyone who has any exposure to her will 
wholeheartedly endorse her effort to become part of the FERC.
    So again, thank you very much for having me here.
    Senator Wyden. Senator Pryor, thank you. Thank you for your 
support.
    I told Ms. Honorable given your connection when you look at 
her relationship with you, she is running with the right crowd. 
We very much appreciate your being here.
    Senator Boozman, I've always admired your input. Please, go 
ahead and make the comments that you seek.

         STATEMENT OF HON. JOHN BOOZMAN, U.S. SENATOR 
                         FROM ARKANSAS

    Senator Boozman. Thank you, Chairman Wyden and Ranking 
Member Murkowski, very much for allowing me the privilege to 
introduce Colette Honorable, the current Chair of the Arkansas 
Public Service Commission and the President's nominee to an 
important seat on the Federal Energy Regulatory Commission.
    I didn't hire Ms. Honorable and yet certainly after getting 
to know her, I certainly would hire her. I guess that's really 
what this is all about.
    I also want to welcome her family, her sisters, Pam Smith 
and Coleen Jeter and her daughter, Sydney. I'm sure that 
Colette is very proud of them in being here. I'm also glad that 
they took the time to travel here to show their love and 
support.
    Chairman Honorable served on the Arkansas Public Service 
Commission for over 7 years. During that time she's earned the 
deep respect of Arkansas. Her experience includes served as 
President of the National Association of Regulatory Utility 
Commissioners and prior service as Executive Director of the 
Arkansas Workforce Investment Board.
    Colette has practiced law for over 18 years from her time 
as a public defender through her service in the Attorney 
General's office. She has built an excellent reputation as a 
person of high integrity.
    In Arkansas our electricity rates are the fourth lowest in 
the country. Colette understands that affordable energy is very 
important to the creation of jobs and opportunity. She can also 
be proud of her work to encourage energy efficiency and 
conservation. Most importantly and the reason why I'm very 
comfortable endorsing her is that I believe that Colette is 
dedicated to the principles of fairness and the role of law, 
principles that will continue to guide her.
    She has a reputation as a straight shooter and an 
independent regulator. As you know FERC has the important 
responsibility of regulating the interstate transmission of 
oil, electricity and natural gas, as well as reviewing and 
licensing other major energy projects. I believe that Chairman 
Honorable's experience, knowledge and fairness have prepared 
her for these important responsibilities. I'm proud to 
introduce her today and express my strong support for her 
nomination.
    Thank you very much.
    Senator Wyden. Thank you, Senator Boozman.
    In my view, she's lucky to have you in her corner. I 
appreciate it.
    Both of you are welcome to stay, but I know you've got busy 
schedules with the week being hectic. We'll excuse you at this 
time.
    OK.
    The rules of the committee which apply to all nominees 
require that they be sworn in connection with their testimony.
    So, Ms. Honorable, if you could stand and raise your right 
hand.
    Do you solemnly swear the testimony you're about to give to 
the Senate Committee on Energy and Natural Resources shall be 
the truth, the whole truth and nothing but the truth, so help 
you God?
    Ms. Honorable. I do.
    Senator Wyden. Thank you.
    You can be seated.
    Before you begin your statement, Ms. Honorable, I need to 
ask 3 questions addressed to each nominee before the committee.
    The first is will you be available to appear before the 
committee and other Congressional Committees to represent 
departmental positions and respond to issues of concern to the 
Congress?
    Ms. Honorable. I will.
    Senator Wyden. Are you aware of any personal holdings, 
investments or interests that should--could constitute a 
conflict of interest or create the appearance of such a 
conflict should you be confirmed and assume the office to which 
you've been nominated by the President?
    Ms. Honorable. My investments, personal holdings and other 
interests have been reviewed both by myself and the appropriate 
ethics counselors within the Federal Government. I've taken the 
appropriate action to avoid any conflicts of interest. There 
are no conflicts of interest or appearances thereof, to my 
knowledge.
    Senator Wyden. Are you involved or do you have any assets 
that are held in a blind trust?
    Ms. Honorable. No, I do not.
    Senator Wyden. Alright.
    Ms. Honorable, we have had a long tradition in this 
committee, one that I like very much, of having our nominees 
introduce any members of the family that are with them today. 
Is there anyone you would like to introduce?
    Ms. Honorable. Thank you, Mr. Chairman.
    I'm honored to be joined here today by my sweet daughter, 
Sydney Marie, who is 13 and also my twin sister, Coleen Jeter. 
She resides in Atlanta, Georgia and my sister Pamela Smith, who 
lives in Little Rock.
    Senator Wyden. I bet they're all sweet, not just the first 
one.
    Ms. Honorable. That's right. They all are.
    Senator Wyden. Alright.
    Ms. Honorable, you're now recognized to make your 
statement. Your written statement will be included in the 
record in its entirety so you may summarize your prepared 
remarks and just go ahead.

   TESTIMONY OF COLETTE D. HONORABLE, NOMINEE TO THE FEDERAL 
                  ENERGY REGULATORY COMMISSION

    Ms. Honorable. Thank you.
    Mr. Chairman--Chairman Wyden, Ranking Member Murkowski, 
members of the committee, good morning. My name is Colette 
Honorable and I'm honored to sit before you today as a nominee 
to serve as Commissioner on the Federal Energy Regulatory 
Commission.
    I'm grateful to President Barack Obama for this opportunity 
to serve. If confirmed, I'm certain it will be the highest 
honor in my lifetime.
    I would also like to thank Chairman Landrieu for scheduling 
this hearing.
    I'm appreciative to both of my home State Senators, 
Senators Mark Pryor and John Boozman, who have shown such a 
wonderful, bipartisan leadership. Certainly you've heard that 
I've had the honor of working for Senator Mark Pryor. Therefore 
I learned up close what it means to truly serve others and to 
put Arkansas first.
    I'm also grateful to Arkansas Governor, Mike Beebe, who has 
supported my career in public service and has been a wonderful 
mentor and friend.
    I'm thankful to my incredible family. I've introduced those 
here today. I also want to acknowledge my mother, Joyce Dodson, 
who has been such an inspiration to me, my in-laws, William and 
Maggie Honorable and also want to thank my brothers and the 
rest of my family. I have a wonderful support team.
    My husband, Rickey, is here with me in spirit today. He 
strongly encouraged me to pursue this incredible opportunity.
    The Federal Energy Regulatory Commission is an independent 
agency charged with ensuring just and reasonable rates, 
wholesale rates, by public utilities and to ensure that such 
service is not unduly discriminatory or preferential. Among 
other duties FERC is charged with overseeing the reliability of 
the bulk power system and regulates construction of new 
pipeline, LNG and hydropower projects nationwide.
    I believe that I'm well suited to serve on the Federal 
Energy Regulatory Commission at this time. I do believe that 
public service is my calling.
    I began my legal career at legal services. I've also worked 
as a consumer protection attorney in civil litigation and as a 
Department of Medicaid Fraud Special Prosecutor before serving 
as then Attorney General Mike Beebe's Chief of Staff.
    As you've heard I've served in a cabinet level work force 
position which taught me the importance of energy in the 
economic work force development arena.
    I was appointed to the Arkansas Public Service Commission 
in October 2007. Since that time I've worked in a number of 
capacities there as Commissioner, Interim Chairman and now as 
chairman, a position I've held since January 2011.
    As chairman of the PSC I've overseen an agency charged with 
ensuring safe, reliable and affordable retail electric service. 
Our Commission has jurisdiction over approximately 450 
utilities with annual jurisdictional revenues of approximately 
$5 billion. Therefore, I've participated in rate case 
proceedings, plant acquisitions, transmission build out 
applications, regional transmission efforts and other 
transactions to ensure that Arkansas has a reliable grid and 
diverse generation mix.
    We're also proud that we use all sources and resources to 
ensure affordability and reliability for Arkansas consumers. 
Therefore, we truly employ an all of the above approach.
    Arkansas leads the south and southeast in comprehensive 
energy efficiency programs. Our electric rates are consistently 
among the lowest in the Nation. Arkansas also has one of the 
most prolific shale plays in the Fayetteville Shale of which 
we're proud too.
    My Commission also ranks first in pipeline safety 
transparency nationwide.
    As you've heard I've served as President of NARUC. I was 
elected by my peers to lead our association on many issues 
including pipeline safety, reliability and resilience efforts 
and fuel and work force diversity. I've worked with government 
and industry on behalf of our 200 plus member commissioners and 
the consumers that they serve. I've testified before Congress 
including this committee on multiple occasions and have 
advocated for infrastructure development to ensure safety and 
efficiency, increased reliability and resilience efforts, 
diversity of energy and of our energy work force.
    My peers have described me as fair, pragmatic, moderate and 
a hard working leader, who is able to build consensus across 
party lines for common goals.
    If confirmed to serve at FERC I would continue to build 
upon the work which began so many years ago in my beloved 
Arkansas, a place that's taught me so much, to do good, to 
listen to the opinions of others, even when we don't agree, to 
respect others and to serve, the least of these.
    This is an exciting time to work in the energy sector but 
it's also a challenging time. I believe that I'm up for the 
challenge. If confirmed I would be committed to carrying out 
the duties and obligations of the position of Commissioner of 
the Federal Energy Regulatory Commission.
    This concludes my testimony. Thank you for the opportunity 
to appear here today. I'm happy to answer any questions that 
you may have.
    [The prepared statement of Ms. Honorable follows:]

  Prepared Statement of Colette D. Honorable, Nominee to the Federal 
                      Energy Regulatory Commission
    Chairman Wyden, Ranking Member Murkowski, Members of the Committee, 
good morning. My name is Colette Honorable and I am honored to sit 
before you as a nominee to serve as a Commissioner on the Federal 
Energy Regulatory Commission.
    I am grateful to President Barack Obama for this opportunity to 
serve and, if confirmed, it will be the highest honor in my lifetime. I 
would also like to thank Chairman Landrieu for scheduling this hearing.
    I am appreciative to both of my home state senators: Senator Mark 
Pryor and Senator John Boozman and the bipartisan leadership they have 
displayed. I had 1 the honor of working for and with Senator Pryor and 
saw up close what it means to truly serve others, and to put Arkansas 
first.
    I am also grateful to Arkansas Governor Mike Beebe who has 
supported my career in public service and has been a wonderful mentor 
and friend.
    I am thankful to my incredible family. I am joined today by my 
daughter, Sydney Marie, my twin sister Coleen and my sister Pam. I want 
to also acknowledge my mother, Joyce Dodson, who has been such an 
inspiration for me, and my in laws, William and Maggie Honorable. I 
also thank my brothers who are such a support to me. My husband Rickey 
is here with me in spirit today, and he strongly encouraged me to 
pursue this wonderful opportunity.
    The Federal Energy Regulatory Commission is an independent agency 
charged with ensuring just and reasonable wholesale rates by public 
utilities, and to ensure that such service is not unduly discriminatory 
or preferential. Among other duties, FERC oversees reliability of the 
bulk power system and regulates construction of new pipeline, LNG and 
hydropower projects nationwide.
    I believe I am well suited to serve on the Federal Energy 
Regulatory Commission. Public service is my calling.
    I began my legal career at Legal Services, and worked as a consumer 
protection attorney, in civil litigation, and as a Department of 
Medicaid Fraud special prosecutor before serving as then-Attorney 
General Mike Beebe's Chief of Staff. served in a cabinet-level 
workforce position, which taught me the importance of energy in 
economic workforce development. I was appointed to the Arkansas Public 
Service Commission in October 2007 and I have served at all levels at 
the PSC-commissioner, interim chairman, and now as Chairman of the 
agency, a position I've held since January 2011.
    As Chairman of the PSC, I have overseen an agency charged with 
ensuring safe, reliable and affordable retail electric service. The 
Commission has jurisdiction over approximately 450 utilities which have 
annual Arkansas jurisdictional revenues of approximately $5 Billion 
dollars. I have participated in rate case proceedings, plant 
acquisitions, transmission buildout applications, regional transmission 
efforts and other transactions to ensure Arkansas has a reliable grid 
and diverse generation mix. We are proud that we use all sources and 
resources to ensure affordability and reliability for Arkansas 
consumers. We truly employ an all of the above approach. Arkansas leads 
the South and Southeast in comprehensive energy efficiency programs and 
our electric rates are consistently among the lowest in the nation. 
Arkansas also has one of the most prolific shale plays, the 
Fayetteville Shale, and we're proud of that too. My Commission also 
ranks first in pipeline safety transparency nationwide.
    I have served as President of the National Association of 
Regulatory Utility Commissioners. I was elected by my peers to lead our 
Association on many issues, including pipeline safety, reliability and 
resilience efforts, and fuel and workforce diversity. I worked with 
officials and executives at the highest levels of government and 
industry on behalf of our 200-plus member commissioners and the 
consumers they serve. I testified before Congress, including this 
Committee, on multiple occasions, and have advocated for infrastructure 
development to ensure safety and efficiency, increased reliability and 
resilience efforts, diversity of energy and of our energy workforce.
    My peers have described me as a fair, pragmatic, moderate, 
hardworking leader who is able to build consensus across party lines 
for common goals.
    If confirmed to serve at FERC, I would continue to build upon the 
work which I began several years ago in my beloved Arkansas, a place 
that has taught me so much: To do good; to listen to the opinions of 
others even when you don't agree; and, to respect others and to serve 
the least of these. This is an exciting time to work in the energy 
sector, but it is also a challenging time. I am up for this challenge. 
If confirmed I would be committed to carrying out the duties and 
obligations of the position of Commissioner at the Federal Energy 
Regulatory Commission.
    This concludes my testimony. Thank you for the opportunity to 
appear today and I am happy to answer any questions you may have. 5

    Senator Wyden. Thank you very much, Ms. Honorable.
    I noted your comment of this being a very challenging time 
because I and Senator Cantwell and other members of the Finance 
Committee have been very much involved in this debate with 
respect to renewable energies that is part of the tax extender 
debate. We've seen a real evolution in renewable technologies, 
you know, recently with making considerable headway toward 
price, you know, competitiveness. I want to do everything I 
possibly can to advance those kinds of policies.
    I also want to note that at FERC you are not in the 
business of laying fossil verses renewables. That is not part 
of the agency's statutory mandate. I've expressed my personal 
views. Why I'm going to have to leave here shortly because I'm 
continuing that kind of effort to ensure that as part, 
particularly of the tax debate, we start moving toward 
technological neutrality and something resembling parity 
between the various kinds of energy sources.
    Now, in the Pacific Northwest we do feel very strongly 
about our region being able to maintain its historic 
independence. You and I have talked about that in the office. 
We discussed order No. 1 thousand where the agency, in effect, 
required Bonneville Power and other utilities in the Northwest 
to seed significant transmission cost allocation authority to 
FERC. Our region, sort of, every particular political 
philosophy and sector feels that this was a substantial over 
reach. I'd like you and I appreciate your answer in the office, 
but I think we need to get this on the record.
    I want to make sure that you will support policies that 
keep the locus, keep the place, of Northwest electricity 
decisions in the Northwest as opposed to shifting authority to 
FERC headquarters in Washington.
    Ms. Honorable. Thank you, Senator and Mr. Chairman, for the 
question.
    Indeed as a State regulator I'm very experienced with 
working with regional transmission organizations, independent 
system operators, interacting with FERC and other energy 
stakeholders surrounding these specific issues. The greatest 
thing I've appreciated is the diversity of the States, the 
diversity of the regions and the ability of each region and 
State to plan very thoughtfully and deliberately with experts 
what works best for them.
    I'm certainly committed to upholding the important tenant 
that participation in any regional transmission organization or 
ISO is voluntary. That we should allow the States and regions 
to continue to make decisions that work best for them.
    I would hesitate to speak directly about anything that 
might touch on a pending matter. I'm certainly aware of the 
order one thousand issues and more importantly the fact that 
there are varied issues among the regions.
    Senator Wyden. You'll always do well up here when you talk 
about the diversity of the States in the energy field.
    Ms. Honorable. Thank you, Senator.
    Senator Wyden. For what it's worth, unsolicited counsel.
    [Laughter.]
    Senator Wyden. Second, in my part of the country we 
obviously have base load power as hydro, in particular. We have 
some unique challenges there as well. Last month, FERC issued 
an order upholding Bonneville's ability to set rates that 
address this concern and balance the need of hydro with other 
energy sources, particularly renewables.
    If confirmed, can we count on you to continue this 
precedent?
    Ms. Honorable. Yes.
    Senator Wyden. OK.
    We also want to work with you as we discussed in the office 
to explore additional measures such as a regional energy in 
balance market so we could compensate for changes in energy 
generation, again, from what has been our focus which is 
renewables. There have been some unexpected challenges, as you 
know, in rolling out California's in balance market. So, I 
think, it's fair to say in our part of the country we would 
like a slower, essentially more voluntary, approach.
    We don't want any more Enron scams in the Pacific 
Northwest. If you need any background on Enron, certainly talk 
to my colleague, Senator Cantwell, who, I think, knows more 
about Enron than anybody around.
    So, can you ensure us that if confirmed FERC will not try 
to impose new market mechanisms on the Northwest?
    Ms. Honorable. I can confirm that. I will also confirm 
that, if confirmed for this post, I will uphold the tenant that 
it's voluntary participation in the markets.
    Senator Wyden. We've also been interested in your 
involvement in reliability and grid security kinds of issues 
which are increasingly important for a variety of reasons 
whether about terrorist threats, a whole host of concerns. What 
steps have you taken in your role at NARUC and in Arkansas on 
the issue to promote reliability and grid security?
    I'd be interested. Make it a 2 part question.
    What have you done in the past?
    What do you think need to be done in the future?
    Ms. Honorable. OK. Thank you.
    With regard to what I've done in the past certainly in 
Arkansas we've been very focused on reliability. I participate 
in leadership roles in both the MISO, the organization of MISO 
States which is comprised of commissioners throughout the 
Midwest, focus very heavily on reliability.
    Also at the national level with reliability was one of my 
top themes of work in this past year. In conjunction with that 
work and I will couple it to with resilience efforts. 
Reliability certainly speaks to ensuring that when consumers 
flip the switch, the lights come on and that things are moving 
along smoothly, as they should.
    Resilience, however, refers to our ability to prepare for 
disruptions to the grid and to be able to respond quickly from 
severe weather events, cyber security, physical security, 
geomagnetic disturbances and the like. So, in my year as NARUC 
President we partnered with the National Academy of Sciences to 
literally roll out this work throughout the country, even in 
the Pacific Northwest, to focus and aid communities in 
preparing practically to respond in these situations. I think 
that that response would address both reliability and grid 
security issues.
    I must also add, with regard to grid security, I've 
participated in the Electric Sector Coordinating Committee 
which is chaired by the Department of Energy and the White 
House, but it is comprised of a number of stakeholders 
throughout the country, industry, various Federal entities, 
security entities, NERC, FERC, other bodies. NARUC has 
certainly had a seat at the table where we are focused on 
ensuring that we're contemplating what those challenges are 
that could soon come and how we respond to them. Certainly the 
past few years, as this committee is well aware, we've 
encountered, certainly, both cyber security attacks and 
physical security attacks.
    Going forward, if confirmed, I will certainly commit to 
staying abreast of the current issues, the current challenges. 
As my experience has demonstrated, I'm certainly willing to 
participate in any way necessary to ensure that we meet these 
tenants.
    Senator Wyden. Thank you very much.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Ms. Honorable, thank you for your comments here this 
morning. I am following on the chairman's remarks here about 
the issue of reliability. As you and I discussed, this is a key 
area of concern for me. Thus I was pleased for your personal 
commitment to me that you were going to be very mindful of the 
reliability piece and to also formally recognize FERC's 
responsibility to safeguard that role, particularly as we see 
rules that seem to keep coming.
    So it wasn't a surprise to see your comments, as Chairman 
of the Arkansas Public Services Commission, when you commented 
on EPA's proposed clean power plan. The statement that you 
made, as it referenced the Arkansas goal, the terminology that 
you used was you stated it's technically flawed and is 
unattainable under the contemplated timeframe. You then went on 
to say that the proposed rule should be clarified and changed 
in various ways to better enable compliance.
    I would certainly acknowledge the concerns that you have 
raised there. The question then going forward, should you be 
confirmed as a FERC Commissioner, which I'm assuming you will 
be, is how you will fulfill FERC's mission of ensuring this 
grid reliability as well as ensuring that the rates are just 
and reasonable in face of this proposed 111(d) rule?
    Ms. Honorable. Thank you, Senator.
    As I've demonstrated, hopefully from my experience, both 
reliability and affordability are key, key to providing 
reliable electric service to homes, to businesses, to industry.
    I've demonstrated certainly also leadership in this regard 
at home. I have, in conjunction with the Arkansas Department of 
Environmental Quality, convened a 111(d) workshop. We have 
brought together more than 20 stakeholders of diverse 
perspectives, including our regional organizations, to walk 
through what this proposed rule would mean for us.
    Can we reach the goals?
    What is the economic impact on Arkansas?
    Ultimately, how it might impact reliability?
    As we've seen throughout the country, there are a number of 
regional transmission organizations and independent system 
operators that have provided some preliminary information of 
their perspectives. Certainly some have raised some concern 
that there could be reliability impacts.
    So therefore, I've demonstrated that I'm up to the task, 
that I've been involved in, certainly as President of NARUC, of 
overseeing the collaborative effort among the State economic 
regulators and the commissioners at FERC to ensure that we are 
working together through workshops on reliability, on gas/
electric coordination, thinking about what the future might 
hold.
    If confirmed to serve as a Commissioner at FERC, I will 
commit to you, Senator, that I will continue to participate, 
continue to be a productive part of our mission to ensure 
reliability.
    Senator Murkowski. Let me ask then, because I mentioned in 
my opening that I have recently sent a letter over to the 
Chairman at FERC to request that the Commission convene this 
technical conference to hear formally from DOE, other 
stakeholders, about the concerns that have been raised in the 
NERC report relating to the clean power plan. I have requested 
that, I think, that it is important to not only examine that 
proposal, but other pending regulations that might be coming 
forward that will impact grid reliability.
    Do you support having FERC convene a technical conference 
such as I've requested?
    Ms. Honorable. Senator, I would certainly support any 
effort to get the stakeholders together and also for FERC to 
provide that necessary guidance to the EPA.
    Senator Murkowski. I do think that it is something that 
should be encouraged. I think we recognize and you certainly do 
that when you have these issues coming at you that to have that 
expertise at a technical conference to drill down is greatly 
important.
    I, again, with the conversation that we had, I just want to 
hear your commitment on the record here that as a FERC 
Commissioner you will act in a meaningful, specific and a 
measureable way to ensure that FERC's expertise and the 
expertise of the electric reliability professionals is brought 
to bear in this interagency dialog that we've been talking 
about as it relates to the rulemakings that may have a negative 
impact on reliability. I would just like your affirmation that 
that is your intention.
    Ms. Honorable. That is absolutely my intention, if 
confirmed.
    Senator Murkowski. I appreciate that. I will ask again just 
to put on the record whether or not you will support a formal, 
documented process for FERC's interaction with EPA and DOE on 
rules and other initiatives that bear on electric reliability.
    Ms. Honorable. Senator, certainly the chairman of FERC 
would set the course. I'm certainly aware, based upon the 
response that Chairman LaFleur has provided that they are 
already contemplating ways to participate. Certainly wouldn't 
want to get ahead of her on that.
    If the chairman chose to move forward with the technical 
conference I would wholeheartedly support that.
    Senator Murkowski. Great.
    I appreciate your focus on reliability. Thank you for the 
responses.
    Ms. Honorable. Thank you, Senator.
    Senator Wyden. Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman.
    Thank you, Ms. Colette Honorable, sorry, Honorable, 
Honorable, thank you for your interest in this post. I think 
your unique background in work force provides an interesting 
viewpoint too, something that may not be directly in charge of 
FERC, but I think the committee is always interested in how we 
build a more sustainable work force in our energy policy since 
there's such a growth there.
    I want to get back to this basic question though that my 
colleague, the chairman asked, as it relates to the Northwest. 
I think you understand, you know, being a 70 percent reliant 
hydro State in cheap hydro.
    Ms. Honorable. Yes.
    Senator Cantwell. It has rebuilt our economy over and over 
and over and over and over again from storing apples to storing 
bits. So we do not want anything that jeopardizes that. So when 
you say you will support a voluntary market, first of all we 
don't like regional transmission organizations that would 
artificially increase the cost of hydro. The answer to that is 
no.
    Ms. Honorable. Yes.
    Senator Cantwell. No.
    We certainly don't support any efforts that manipulate the 
price of electricity which we saw in spades as it related to 
the ISOs and RTOs that were established in California.
    What I have a concern about your comments as it relates to 
a voluntary organization is, what I want to know from you is, 
if FERC, in your authority of just and reasonable rate setting, 
saw that even a voluntary market was distorting just and 
reasonable rates that FERC would take action to ensure that 
there were just and reasonable rates in an area like the 
Pacific Northwest?
    Ms. Honorable. Indeed, Senator. Let me say the hydro that 
the Pacific Northwest possesses is something to be proud of. 
It's something, the diversity and the ability of States and 
regions to harness their own potential to ensure reliable, 
affordable energy is something that should absolutely be 
protected. I want to be very clear that, if confirmed, I would 
be committed to ensuring that not only the markets are 
operating fairly, that we ensure that participation is 
voluntary.
    But more importantly that the markets are operating fairly, 
that there is no manipulation in the markets, that fuels are 
able to compete fairly and also that when there is such an 
occurrence that we are vigilant and responsive. I will commit 
to that.
    Senator Cantwell. OK. But I just want to clarify because 
again, you used the word voluntary.
    What I want to understand is if a voluntary RTO distorted 
the price of hydro and made it more expensive would you support 
FERC making sure that those rates were just and reasonable and 
not artificially increased?
    Ms. Honorable. Yes, I would.
    Senator Cantwell. Thank you.
    Ms. Honorable. Certainly it would be based upon an 
application filed and but absolutely I would commit to that.
    Senator Cantwell. I don't know about, you know, I don't 
think anybody filed an application in the California ISO case, 
maybe they did.
    Ms. Honorable. There is one. I'm trying to be----
    Senator Cantwell. Previously, I'm saying now we're talking 
2001. I mean, you know, we were all talking about other 
policies and the next thing you know the California market 
deregulated and we all paid a price for a long, long history 
here.
    So, you know, I'm--the use of just saying FERC isn't going 
to condone it, but hey, voluntarily you can go and do this, I 
think is problematic. Got to have just and reasonable rates. 
Hydro is not looking to be artificially increased.
    We all want to figure out how to, as you've done in 
Arkansas, keep rates, as you say, some of the lowest in the 
country, and focus on efficiency to drive down those costs even 
more.
    So, I thank you for that answer.
    OK, back to my, you know, colleagues also talked about grid 
reliability which your leadership at NARUC probably provided 
you a great deal of expertise in that particular area. How much 
do you think that the smart grid applications, you know, from 
synchophasers to other types of things are part of what can 
help make us more secure? How much is making us secure also 
making implementation of the smart grid strategy?
    Ms. Honorable. Senator, I believe that smart grid 
technologies and quite frankly, a number of technologies are 
able to ensure and support grid reliability, grid diversity. 
I've been enlightened by that, about that, through my 
participation in a White House Smart Grid Working Group where 
regulators from NARUC were brought together with the technical 
world.
    We normally live very separate lives. But understanding how 
we can use the power of technology to provide and ensure 2 way 
communication to benefit both consumers of energy and providers 
of energy. Also through my participation with the Electric 
Power Research Institute where they are presently studying the 
value of the integrated grid which includes a number of very 
diverse participants in supporting grid security, reliability 
and technology is key among them.
    Senator Cantwell. Thank you. My time is expired.
    Thank you, Mr. Chairman.
    Senator Wyden. Thank you, Senator Cantwell.
    Let's see, Senator Hoeven is next.
    Senator Hoeven. Thank you, Mr. Chairman.
    It's good to see you again here today and thank you so much 
for stopping by my office. I appreciate it very much.
    Ms. Honorable. Thank you.
    Senator Hoeven. I'd like to start out with in order to 
build an energy plan for this country where we're truly energy 
secure we've got to have the infrastructure to do it.
    Talk to me for a few minutes, if you would, about what you 
see FERC's role is in ensuring that we build the necessary 
infrastructure to have energy security for our country?
    Ms. Honorable. Thank you, Senator.
    A few ways in particular that FERC can support the 
infrastructure development.
    One is by ensuring that the markets are sending proper 
signals to investors and to others who want to support 
infrastructure, upgrades, build outs, to ensure that we're 
getting the power in all of the resources where they need to 
be.
    Certainly I've spoken about FERC's role to ensure just and 
reasonable rates. That's a key way.
    Another way that maybe you don't read specifically in what 
FERC's roles would include would be providing regulatory 
certainty.
    Hearing, being consistent with the--with honoring what the 
law says, the rule of law and ensuring that we're issuing 
orders in a timely fashion.
    Those are a few ways.
    Senator Hoeven. How do you make sure that applicants can 
get through the process where we certainly make sure that 
they're doing things right and well but that they can get 
through the process in an expeditious manner so they're 
encouraged to make the investment in new transmission and other 
infrastructure that we need?
    Ms. Honorable. Indeed.
    As a State regulator I'm very cognizant of this specific 
issue where investor owned utilities or others come to us with 
a request, with a request to construct a transmission line or 
to offer a particular rate to a newcomer in economic 
development. It's important that, as I mentioned, that we 
follow the law. But that, for instance, with regard to a 
pipeline application there's a pre-filing period which allows 
the parties to work with FERC and others to ensure that they 
work out the bumps in the road and the kinks to ensure that 
when the formal application process gets underway that it will 
be done as seamlessly and quickly as possible.
    I understand that, in particular with those applications, 
FERC does by and large respond to them within the year. 
However, the law requires FERC to, for instance with regard to 
a project to make a determination regarding safety and 
environmental impacts, in the locale where the project would 
take place. This also requires FERC to get input from other 
Federal agencies, to comply with NEPA and other Federal laws. 
So much of that timeline is constrained by what the law says.
    If confirmed, I would be, certainly, I would be more than 
willing to uphold the law but more importantly, I would be open 
to any suggestions that you may have or others for ways to 
streamline those processes so that we're not only providing 
regulatory certainty, that we're responding in a timely 
fashion, but that also sends a signal of confidence to the 
market and to the investors and also provides some degree of 
certainty about the process.
    Senator Hoeven. What's your view on LNG export?
    Ms. Honorable. I have certainly, generally supported the 
notion. I think, and I've also noted that DOE conducted a study 
some time back that determined that within certain ranges that 
there would not be a significant impact on domestic prices. 
That's very important.It would be prudent for DOE to undertake 
that exercise. We certainly don't want to harm domestic prices 
in our ability to harness this resource and participate in the 
global gas market.
    Senator Hoeven. Do you think LNG will adversely impact the 
domestic market?
    Ms. Honorable. No, not at this time.
    Senator Hoeven. How do you--how do we expedite the citing 
of transmission lines, electric transmission lines? How do we 
expedite that citing process?
    Ms. Honorable. Certainly I can speak to this from a State 
regulatory perspective.
    It's important for industry to, much in the way that I 
described about this informal process that takes place ahead, 
for the relevant entities to ensure that they've worked out 
some of those conflicts. So that when they present the various 
options to be considered by the regulatory authority the 
process can move seamlessly.
    I would be committed to dotting the ``I''s, crossing the 
``T''s and by that I mean following the law, ensuring that due 
process is observed, but moreover, ensuring that we provide the 
applicant with a timely and certain response.
    Senator Hoeven. I think that's very important.
    We need more electric transmission.
    Ms. Honorable. I agree.
    Senator Hoeven. You know, we need to build out the grid. We 
need safety, security, but certainly more transmission. This 
will be an important role for you.
    Ms. Honorable, thank you. I think you bring an outstanding 
track record.
    Ms. Honorable. Thank you.
    Senator Hoeven. Resume to this job. Great to have you here 
today. Thank you.
    Ms. Honorable. Thank you, Senator.
    Senator Wyden. Thank you, Senator Hoeven.
    Senator Manchin is next.
    Senator Manchin. Thank you, Mr. Chairman.
    Thank you for being here and putting your name up so that 
we could have someone of your caliber to serve this great 
country of ours.
    I was so amused when I was first introduced to you and they 
said there is a Colette Honorable. I said you mean, Honorable 
Colette, don't you? Before I knew your last name was Honorable.
    They said, no. This is not a title. This has real meaning 
to it.
    [Laughter.]
    Ms. Honorable. Thank you, Senator.
    Senator Manchin. So I appreciate so much.
    Let me just say that everybody has basically touched on and 
we're all concerned about what we have in every area of the 
country to be represented properly. I've been so impressed 
because you're looking at an all in energy policy for our 
country, to use all the resources in the most balanced, 
environmental and economic way possible, taking both of those 
in consideration. As, I think, Senator Cantwell said one size 
doesn't fit all.
    Ms. Honorable. Yes.
    Senator Manchin. In West Virginia we don't have the luxury 
of hydro, but we have energized this country for many, many 
years and given it the coal and now we have the natural gas. So 
we want to continue to be able to provide whatever energy that 
we can for this Nation. We just want a balanced, level playing 
field that we can work within. We don't really get that right 
now.
    I think if you can comment on the polar vortex and what 
you've been able to study about that. How close we came to a 
shutdown which would have been horrific for a lot of people's 
lives. People that are harmed the most are those in the low end 
of the socioeconomic totem pole and the elderly and frail.
    How close are we to being in that position again with 
another polar vortex based on our base load of power which is a 
coal and nuke and most of the coal coming, old plants coming 
offline and nothing new to retake its place as far as in base 
load. I'm concerned about that. That gets back to reliability.
    My final question would be and you can answer in any order 
you want to. What's the greatest challenge you think that when 
you are, not if you are, but when you are confirmed, will be 
taking on as a new member of FERC trying to look at the 
challenges you think is the most pressing this country is 
facing?
    Ms. Honorable. Thank you.
    Senator, if you don't mind, I'll take the last one first.
    Senator Manchin. OK.
    Ms. Honorable. The greatest challenge that I perceive from 
my experience as an economic regulator and also interacting 
with the FERC Commissioners is reliability. It's reliability in 
a number of respects. I spoke about it earlier.
    In many ways we need to think about, not only reliability, 
but resilience efforts. There are so many potential 
interferences with the ability to provide reliable and 
resilient service to, as you mentioned, businesses, 
communities, nursing homes, schools, to the, as one of our 
State legislators said, the little old lady at the end of the 
road, what that truly means. Reliability is certainly a top 
priority for me in my daily work. If confirmed, it would 
continue to be.
    As I think about the polar vortex and reflect upon what 
occurred and the lessons learned. Certainly I read somewhere a 
saying that the grid bent but didn't break. We were certainly 
challenged.
    It was challenging in a number of respects, not only with 
regard to the ability to get the capacity where it needed to 
be. Certainly the base load capacity was key in that. But also 
the lives that were at risk.
    I think the lessons learned from my perspective are these.
    Coordination and collaboration is key.
    The ability to move trucks and people from across the 
country to where they needed to be is an effort we hadn't 
undertaken before. But we were experiencing more and more 
severe weather events. We've had some this year. It will 
continue to be an issue we'll need to resolve together.
    Who's on first?
    Also the interplay and interconnection between electric and 
telecommunications and the telecommunications sector needed 
electricity to get up and running. The electric sector needed 
telecommunications. So we need to coordinate. I think that even 
industry and other stakeholders that are nontraditional have 
learned that lesson as well.
    FERC, I also observed with regard to propane, for instance, 
used a very limited authority for the first time ever to ensure 
that they got together the relevant stakeholders who agreed to 
allow the redirection of a propane pipeline for a limited time 
and in a way that didn't impact industry and other suppliers, 
but to shore up reliability in an instance.
    If confirmed, I would certainly be open to, I wouldn't want 
to prejudge this issue, but I would be open to entertaining the 
prospect of using that authority in order to ensure reliability 
in the future.
    Senator Manchin. Let me just say my time is up, but I would 
like to say this, that it's just such a breath of fresh air 
because from this standpoint you're the first person that's 
been nominated to the FERC that's had, truly, the experience to 
do the job that we're asking you to do. That's have regulatory 
experience, being recognized by your peers, having that 
expertise to bring, immediately, to something, I think, is very 
vulnerable, our grid system and how we produce reliable, 
affordable and clean power in a balanced way.
    So I really appreciate that and look forward to your taking 
the rein.
    Ms. Honorable. Thank you.
    Senator Manchin. Uh huh.
    Senator Wyden. Thank you, Senator Manchin.
    Senator Franken.
    Senator Franken. Thank you, Mr. Chairman of another 
committee.
    [Laughter.]
    Senator Franken. I want to ask you like a very big, sort 
of, overarching future of the grid, kind of question.
    We're seeing a transformation in the way electricity is 
generated and delivered in the United States which is 
challenging the, kind of, the centralized hub and spoke model 
of our grid. Because of energy efficiency electricity demand is 
down and this is saving households and businesses money. The 
plummeting prices of wind turbines and solar panels have driven 
more renewables and distributed power generation to the 
marketplace. We are developing more efficient and effective 
energy storage systems which will allow us to balance and 
manage increasing amounts of these intermittent clean energy 
sources.
    My State of Minnesota is on track to be 25 percent 
renewable by 2025. It's working so well the State is actually 
looking at ways of increasing the target to 40 or even 50 
percent by 2030. So the future of our grid will be 
fundamentally different than it is today.
    David Crane, who is the CEO of NRG described this 
eloquently in his letter to stakeholders. He said that we were 
moving toward and I quote. ``A post grid future, a future that 
is driven by renewables incorporating both energy storage and a 
sophisticated localized automation to balance production and 
load.''
    So, Ms. Honorable, I would like to hear from you your 
vision for the future of the grid. In your view what needs to 
be done to prepare for electricity delivery in this post grid 
future, as David Crane calls it?
    Ms. Honorable. Thank you, Senator.
    I must tell you that we look to Minnesota. You all provide 
such a great example in many ways in the energy sector. So I 
applaud you on all of the work that you've done.
    The future of the grid, in my mind, and in my opening 
statement when I talked about this being an exciting time, it 
truly is when you think about the future and what the grid will 
and should look like in the future. I agree with Senator 
Hoeven, that we do need more transmission. But in doing so we 
allow a greater optionality that allows consumers to 
participate more greatly in their energy futures.
    You've talked about energy efficiency. I'm proud of the 
work in Arkansas. We have--we lead the South and Southeast in 
our comprehensive energy efficiency programs. Certainly we 
don't hold a candle to you yet. But we're on our way.
    Senator Franken. It's because you've been using candles.
    Ms. Honorable. Maybe so.
    [Laughter.]
    Ms. Honorable. Maybe so.
    Senator Franken. I don't even know why I said that, but go 
ahead. I'm sorry.
    Ms. Honorable. You couldn't resist.
    Senator Franken. Yes, not that I can.
    Ms. Honorable. But certainly the ability to integrate 
cleaner, more efficient resources is a must. Wind and solar, 
absolutely will be part of that future. They should be.
    Storage is a key. Microgrids. When I talked about the value 
of the integrated grid effort that EPRI is undertaking, they're 
looking at all of these ways in which technology, innovation, 
cleaner energy sources and by the way, energy efficiency is at 
the top of that list, will come together in a way that ensure 
diversity, reliability and also a more nimble grid.
    So I'm looking forward to seeing the grid of the future. If 
confirmed, I look forward to working to help make that happen.
    Senator Franken. I want to see a lot more energy production 
in working in island mode too, in terms of resilience.
    Let me ask you about coal stockpiles that utilities over 
the past year in Minnesota we've seen them repeatedly drop to 
dangerously low levels due to the inadequate rail delivery of 
coal. At least 4 coal powered plants in Minnesota were shut 
down so that their stockpiles could be built back up before the 
cold winter months. In the end the cost of the unreliable rail 
service is passed on to the public who will have to pay for the 
more expensive replacement power that was purchased to make up 
for the lost generation.
    Last month I sent a letter to FERC highlighting my concerns 
about Minnesota's utility's low coal stockpiles and asking FERC 
to work with all other stakeholders to find a solution to this 
ongoing issue.
    Ms. Honorable, what do you think FERC should do to mitigate 
the problems that we're seeing with rail delivery issues which 
are shrinking coal stockpiles and unnecessarily driving up 
electricity prices in Minnesota?
    Ms. Honorable. Certainly, Senator.
    I sympathize with Minnesota's concerns. In Arkansas we've 
experienced a similar situation that occurred years ago. The 
industry is captive to when their shipments will arrive. The 
greatest concern for me is the very thing that you've said. It 
ultimately impacts everyday people and their ability to pay for 
this electricity.
    Certainly from a State regulator's viewpoint it impacts 
reliability.
    If confirmed at FERC and certainly I recognize that this 
issue is not purely within FERC's jurisdiction. I guess the 
Surface Transportation Board would have the primary oversight 
there. But I would commit to you that having had personal 
experience with understanding and working through a similar 
issue, I will be committed to working with the FERC 
Commissioners and working collaboratively and in ways maybe we 
haven't before to ensure that FERC is doing its part to send 
proper signals, to in any way possible, alleviate this concern.
    I certainly would look forward to your thoughts and because 
you are up close and personal with this issue right now. I 
understand that you had, even over the summer possibly, some 
issues as well. So I'd be happy to visit with you.
    Senator Franken. Thank you very much.
    Ms. Honorable. Thank you.
    Senator Wyden. Thank you very much, Senator Franken.
    Ms. Honorable, there aren't any more questions. We're going 
to allow members until 5 tomorrow to submit additional 
questions for the record.
    Senator Wyden. I just want you to know we're going to do 
everything we possibly can to see if we can get you confirmed 
before the Congress wraps up. As you know this is not 
completely within our power and there are many, many 
nominations that are in the queue.
    But I'm struck in terms of particularly how you've 
addressed some of these important issues, the question of 
diversity and recognizing the differences between the various 
parts of the country, the questions of grid security is 
obviously, and reliability is very important to members.
    In effect, the FERC challenge is almost like a teeter 
totter, you know, everybody wants to keep prices as low as 
possible. This is something that I feel very strongly about. I 
essentially got my start in public service as Co-Director of 
the Oregon Gray Panthers. We were always concerned about the 
prices that seniors pay.
    So, over here you've got to keep the prices down. Over here 
you've got to figure out how to ensure that people get adequate 
service. It's, kind of, a teeter totter here.
    I will tell you based on what you have said today, based on 
your history and the significant bipartisan support that you've 
had today, I think you're going to do a good job of striking 
that balance on the teeter totter. It's not an exercise for the 
faint hearted, but I think you'll do it very well.
    With that we wish you well and the committee is adjourned.
    [Whereupon, at 12:40 p.m. the hearing was adjourned.]
                               APPENDIXES

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                               Appendix I

                   Responses to Additional Questions

                              ----------                              

   Responses of Colette Honorable to Questions From Senator Landrieu
    Question 1. Midla Pipeline--Over the past year there has been a 
great deal of controversy in Louisiana regarding an attempt by the 
American Midstream company, the owner of the Midla natural gas 
pipeline, to obtain authorization from the Federal Energy Regulatory 
Commission (FERC) to ``abandon'' most of the Midla pipeline and take it 
out of service. If this proposal had been adopted by FERC the result 
would have been a termination of affordable natural gas service to tens 
of thousands of customers in 9 parishes in Louisiana: Franklin, 
Catahoula, Ouachita, Richard, Tensas, Concordia, West Feliciana, East 
Feliciana and East Baton Rouge. This would have been devastating to the 
well-being and economy of these parishes.
    I have written and contacted FERC on numerous occasions to suggest 
that it reject the Midla abandonment proposal in its entirety. In 
response, FERC initiated a settlement process between the various 
parties, including both the Midla pipeline and affected Louisiana gas 
consumers. I was pleased to learn on October 9, 2014, that an agreement 
in principle regarding the future of the Midla pipeline had been 
reached between the key parties. Under this agreement virtually all 
current gas customers will be assured access to affordable continued 
service on a modernized Midla pipeline or other means.

   Assuming that a final settlement is reached by the key 
        parties and submitted to the Commission for its approval do you 
        agree that FERC should, to the maximum extent possible, approve 
        such settlement without modification?
   Alternatively, if no final Midla settlement is reached do 
        you agree to carefully and thoroughly review any Midla 
        abandonment proposal to assure that existing gas customers 
        continue to receive gas pipeline service at a rate that is just 
        and reasonable and not unduly discriminatory?

    Answer. Because the Midla proceeding is currently pending before 
the Commission, I cannot comment on any issues that may specifically be 
raised in any settlement or abandonment proposal. However, as a state 
regulator, I understand that reliable and affordable service are key 
issues to consumers. Section 7(b) of the Natural Gas Act provides that 
an interstate pipeline company may only abandon jurisdictional 
facilities or services if the abandonment is permitted by the ``present 
or future public convenience or necessity.'' Central to the 
Commission's consideration of any request for abandonment authorization 
are the principles that: (1) a pipeline which has obtained a 
certificate of public convenience and necessity to serve a particular 
market has an obligation to continue to serve; and (2) the burden of 
proof is on the applicant to show that the public convenience or 
necessity permits abandonment, that is, that the public interest will 
in no way be disserved by abandonment. If confirmed, I commit to 
carefully considering any settlement proposal or abandonment 
application filed by Midla and to carefully consider the public 
interest.
    Question 2. Toledo Bend Project--Over the last few years, I have 
focused a significant amount of my time on the Toledo Bend Project, a 
FERC-licensed project on the Sabine River that is half owned by my 
state of Louisiana and half owned by Texas. This project, which was 
first licensed in 1963, received a new 50 year license from the 
Commission on August 29th of this year. I conducted a field hearing at 
this Project in Sabine Parish, Louisiana on May 17th of this year. My 
experience with this Project acquainted me with the extreme cost of the 
relicensing process. The manager of this project for Louisiana 
testified at my field hearing that the re-licensing process of the 
Commission, plus changes in the operation of the Project that are 
required by the new license, will increase the annual operating cost of 
the Project by 44 percent. This calculation is based on amortizing 
these costs over the 50 year term of the new license rather than the 30 
year term of hydro licenses that has become increasingly common.
    Do I have your commitment that you will review the licensing and 
relicensing process of the Commission for hydroelectric projects and 
lead the Commission's efforts to improve the process that will reduce 
the current extreme cost of the hydro licensing process?
    Answer. According to the Supreme Court, the Commission must examine 
all public interest considerations to meet the Federal Power Act's 
mandate to ensure that hydropower licenses are best adapted to a 
comprehensive plan for developing affected waterways. The costs of 
providing the Commission information regarding affected resources in 
order for the Commission to understand the environmental impacts of 
relicensing a project will vary depending on the complexity of the 
issues involved in the licensing proceeding and the availability of 
existing information. Also, Congress has given certain federal and 
state agencies the authority to impose mandatory conditions which the 
Commission must include in a license, regardless of their cost impacts. 
While I understand that the Commission makes every effort to ensure 
that hydropower relicensing proceedings are as efficient and cost-
effective as possible, if confirmed, I commit to considering ways to 
improve the process.
    Finally, I would ask you to review carefully a pending appeal of 
the terms of the new license that was issued in August for the Toledo 
Bend Project. The states of Louisiana and Texas believe that Section 
406 of the new license has the potential to prevent the operation of 
the Project for its primary purpose: water supply. The Project contains 
the major unallocated amount of fresh water available in the state of 
Texas and the water in the Project is equally important to Louisiana 
for residential, commercial and industrial water use. Section 406 seems 
to have no basis in the record of the relicensing process and seems to 
be impossible to implement. Section 406 seems to require the Project to 
maintain a minimum water level that the Project has not been able to 
maintain for a significant portion of the time it has been in operation 
due to drought and other natural conditions. This Project is very 
important to the states of Louisiana and Texas and its primary water 
supply purpose should not be thwarted by an ill-considered provision in 
the new license for the Project.
    Do I have your commitment on this matter?
    Answer. Because the Toledo Bend project is currently pending before 
the Commission on rehearing, I cannot comment on the issue you raise. 
However, if confirmed, I commit to fully consider all issues raised in 
the proceedings before the Commission.
   Responses of Colette Honorable to Questions From Senator Murkowski
    When a question calls for a ``yes'' or ``no'' answer, please answer 
``yes'' or ``no'' before elaborating.
    Question 1. On November 5, NERC released its initial reliability 
review of EPA's proposed Clean Power Plan, which raised concerns about 
a number of the assumptions that serve as the proposal's foundation and 
that require additional consideration for reliability purposes. Do you 
support NERC's independent initiative to understand and comment upon 
the reliability impacts of this major EPA regulation?
    Answer. As I noted at the hearing, I have, in conjunction with the 
Arkansas Department of Environmental Quality, convened a workshop to 
discuss EPA's proposed Clean Power Plan with more than 20 stakeholders 
of diverse perspectives, including our regional organizations. I think 
it is imperative that FERC and the industry examine the important 
issues raised by the proposed rule, particularly how it might affect 
reliability. I support NERC's efforts to look at the proposed rule and, 
if confirmed, I look forward to discussing the NERC report more in 
depth with NERC and my colleagues.
    Question 2. In comments submitted to the EPA on the Clean Power 
Plan proposal, the ISO/RTO Council--the national council of electric 
grid operators--asked EPA to include a ``safety valve'' in the final 
rule for electric reliability purposes. The Council outlined what it 
sees as three scenarios for such a reliability ``safety valve'' or 
``backstop'': (1) if a state determines that the interim goals between 
2020 and 2029 cannot be met; (2) if a state determines later in the 
compliance period that it cannot meet the final target by 2030 without 
risking reliability; and (3) providing for grid operators to request 
EPA to review state plans that might jeopardize reliability in other 
states.
    2a. Do you agree with the ISO/RTO Council that a reliability 
``safety valve'' is needed?
    2b. If so, should FERC assert itself to ensure that there is a true 
reliability backstop? If so, how?
    Answer (a-b). I have not studied the ISO/RTO Council's specific 
proposal in depth. It is important to note that, with regard to the 
most recent proposed EPA regulation, there has been an unprecedented 
and significant level of outreach employed by EPA at local, state, 
regional and national levels. On October 28, 2014, after engaging in 
significant outreach to a broad range of stakeholders, the EPA issued a 
notice of data availability (NODA) to, in part, seek comment on the 
potential technical challenges described by some stakeholders 
associated with achieving all of the reductions that states would be 
required to make as early as 2020. In the NODA, EPA requests comment on 
two approaches that stakeholders have offered to address these issues 
and explains how EPA's June 2014 proposal requests comment on the 
option of early reductions. As a state regulator, I have had numerous 
opportunities to offer feedback and comments about the proposed rule 
informally, through the formal comment period, and additionally with 
regard to the ``glidepath'' after the EPA-issued NODA. At FERC, my 
understanding is that staff from FERC discusses issues concerning the 
proposed rule with the EPA. I believe it is important for FERC to 
continue this relationship and discuss reliability issues with the EPA 
and other interested stakeholders. If confirmed, I will continue to 
participate in the discussions on this rule and be a productive part of 
FERC's mission to ensure reliability.

    2c. Should FERC or the ERO have stronger legal authority or 
obligation to conduct an analysis of any major federal regulations that 
could negatively impact the reliability of the electric grid? Should 
the implementing agency be required to address any concerns raised 
before the rule could be finalized?
    Answer. Section 215 of the FPA authorizes NERC to conduct periodic 
assessments of the reliability and adequacy of the bulk-power system in 
North America. In fact, NERC has performed assessments of EPA's rules 
in 2011 and 2014 and includes issues involved in the EPA rules in its 
regular assessments. Thus, I do not believe NERC needs additional 
authority to conduct reliability analyses. As stated in response to 
Question 2.b, I believe it is important to continue to discuss 
reliability issues with the EPA. In my view, FERC's role in the 
reliability of the electric grid includes communicating with other 
agencies on significant reliability issues that may be raised by their 
regulatory efforts. I do not have an opinion yet on whether the type of 
legislation you describe would be appropriate, and would like to 
discuss this with a variety of stakeholders first. If I am confirmed 
and Congress chooses to grant the Commission additional authority, I 
will work to ensure that the Commission faithfully executes that 
additional authority.
    Question 3. Increasing supplies of natural gas from shale, together 
with proposed new environmental regulations, are accelerating a major 
switch from coal to natural gas as the fuel for power generation. 
However, FERC has expressed concern that the lack of coordination 
between the gas and electric sectors could lead to future natural gas 
supply problems for electric generation and potential reliability 
concerns for both gas and electricity consumers.
    3a. Are we at risk of an overreliance on a single fuel for U.S. 
power generation? How will the electricity industry continue to achieve 
fuel diversity, which can help moderate electric power costs?
    Answer. Maintaining diversity in our nation's energy sources and 
generation fuel supply is important to ensuring reliability and just 
and reasonable rates for consumers. In Arkansas, I worked to promote 
diversity in our state's energy resources, helping us achieve some of 
the lowest rates in the country, and, as President of NARUC, I 
proactively engaged with my peers across the country and with industry 
on the security and diversity of our energy supplies. To continue to 
achieve fuel diversity, appropriate planning by industry and continued 
proactive engagement among regulators and industry will be needed. The 
electricity industry is already including fuel diversity in its future 
planning, and FERC has appropriately focused attention on the need for 
increased coordination between the natural gas and electricity 
industries, and, in a recent order, generator fuel assurance concerns 
in organized wholesale markets. In addition, traditional state 
integrated resource planning and the resource adequacy constructs 
adopted in many regions can provide additional tools to address fuel 
and resource diversity. If confirmed, I would work with my fellow 
Commissioners to continue these efforts and explore new ways to 
collaborate with other regulators and industry on these issues.
    3b. In your view, what are the reliability implications of 
increasing natural gas use for electricity generation, especially in 
New England and the northeast? Are existing federal policies and 
initiative adequate to ensure gas-electric interdependence does not 
become a reliability problem? If not, what should FERC do to improve 
the situation?
    Answer. Abundant and low cost supplies of domestic natural gas can 
provide positive benefits for consumers and the environment and will 
become increasingly important for compliance with proposed 
environmental regulations. Increased reliance on natural gas for 
electricity generation, however, can create infrastructure and 
coordination challenges that industry, state regulators and FERC must 
continue to address to maintain reliability.
    For example, pipelines and other natural gas infrastructure must be 
expanded to keep pace with the needs of both local distribution 
companies and gas-fired generators. The events of last winter showed 
that infrastructure constraints in the Northeast and in other areas of 
the country can result in volatile and often higher electricity and 
natural gas prices for consumers, and can negatively impact the 
delivery of fuel to gas-fired power plants. Using its authority under 
the Natural Gas Act to approve the siting and construction of 
interstate natural gas pipeline infrastructure, FERC has an excellent 
track record of quickly and efficiently processing applications to 
build needed new facilities. In addition, as FERC staff has noted in 
quarterly reports to the Commission (posted on the Commission's 
website), there are ongoing efforts at the regional level by 
reliability planning authorities, RTOs/ISOs, and state regulators to 
collaboratively asses their unique infrastructure needs. All of these 
efforts should continue.
    Increased use of natural gas for electricity generation also 
requires increased coordination of communications and scheduling 
practices between the two industries. Since 2012, FERC has proactively 
engaged with the electric and natural gas industries, NARUC, NERC and 
other stakeholders to identify and address these coordination 
challenges. FERC has also taken affirmative steps to improve the 
coordination of communications and scheduling between the two 
industries and address reliability risks that can result from a lack of 
effective coordination. For example, in 2013 the Commission issued a 
Final Rule to affirmatively allow interstate natural gas pipelines and 
electric transmission operators to share non-public operational 
information to promote the reliability and integrity of their systems. 
Electric transmission operators reported that the enhanced 
communications facilitated by this rule were vital in maintaining 
reliability during the events of last winter. In addition, in March of 
2014, the Commission proposed changes to the natural gas operating day 
and scheduling practices used by interstate pipelines to schedule 
natural gas transportation service. The Commission also initiated 
investigations under section 206 of the FPA to determine whether the 
day-ahead scheduling practices of the RTOs and ISOs align with any 
revisions to the natural gas scheduling practices that may be adopted 
by the Commission in a Final Rule stemming from the proposal. 
Commission is currently considering responses to the proposal. If 
confirmed, I will carefully review the record developed in these 
proceedings to identify potential reforms that could improve gas-
electric coordination and address potential reliability risks.
    Question 4. FERC's Order 745 requiring full locational marginal 
pricing (LMP) for demand response resources was recently vacated in its 
entirety by the D.C. Circuit which ruled that FERC was attempting to 
regulate retail electricity markets in violation of the Federal Power 
Act.
    4a. In your opinion, where is the federal/state jurisdictional 
divide?
    Answer. As noted in your question, the D.C. Circuit on May 23, 2014 
issued a decision vacating Order No. 745 and addressing the 
Commission's jurisdiction over demand response in organized wholesale 
markets. On July 7, 2014, FERC filed with the D.C. Circuit a petition 
for rehearing en banc of that May 23, 2014 decision, which was denied. 
On December 5, 2014, the Solicitor General at the U.S. Department of 
Justice indicated that he has authorized the filing of a petition for a 
writ of certiorari seeking review at the U.S. Supreme Court of that May 
23, 2014 decision. FERC's legal authority to regulate demand response 
in organized wholesale energy markets will be determined in this 
ongoing litigation.
    4b. Given the Appellate Court's decision, should RTOs continue 
allowing demand-side resources to bid in forward capacity auctions?
    Answer. Market participants in the PJM and ISO New England regions 
have filed complaints at the Commission presenting the same issue noted 
in your question. Because this issue would be likely to come before me 
if I am confirmed as a member of the Commission, it would be 
inappropriate for me to prejudge how the Commission should address this 
issue.
    Question 5. As Senator Barrasso and I and other Senators pointed 
out earlier this year, there is controversy surrounding some of the 
methods and practices of the FERC enforcement program. Would you 
support convening a series of FERC technical conferences to develop the 
public record on these matters and consider reforms that the record of 
the technical conference may justify?
    Answer. I believe it is important for an enforcement program to be 
fair and transparent. If confirmed, I look forward to discussing the 
issues raised concerning the Commission's enforcement program and 
considering what, if any, reforms are necessary. If confirmed, I commit 
to gain a better understanding of the issues associated with the 
enforcement program, and to consider any number of ways to address 
these concerns, including technical conferences, if necessary.
    Question 6. In July 2013, the National Association of State 
Regulatory Utility Commissioners (NARUC) issued a resolution specifying 
a number of concerns about FERC's implementation of its sweeping Order 
1000 on transmission cost allocation and planning. The Resolution 
concluded that Order 1000 ``inappropriately infringes on State 
authority reserved by Congress over such matters and threatens to 
relegate States to the status of a mere `stakeholder' on these crucial 
issues.''
    6a. Please explain NARUC's concerns with Order 1000 and whether or 
not you agree with them.
    Answer. From my perspective, NARUC's ``Resolution Regarding State 
Authority over Public Utility Resource Planning'' served as a reminder 
of the states' collective and substantial jurisdiction, efforts and 
role in the oversight of utility integrated resource planning and 
resource adequacy processes, and transmission planning and expansion. 
The resolution also urged FERC to recognize the crucial role of the 
states in developing regional transmission planning and cost allocation 
policies, and to provide flexibility to the states to continue this 
work through cooperation and collaborative efforts. I do agree with the 
concerns expressed in the resolution.
    6b. Please explain your idea of what the phrase ``beneficiary 
pays'' should mean in the context of transmission cost allocation.
    Answer. The phrase ``beneficiary pays'' refers to a concept applied 
during transmission planning and cost allocation to ensure that those 
customers who benefit from a particular transmission project 
participate in paying for the cost of the transmission line or facility 
construction.
    6c. Do you believe ``benefits'' should be measured and specifically 
defined?
    Answer. To the extent possible, ``benefits'' should be measured and 
specifically defined in a collaborative process. In the context of 
transmission planning and cost allocation, where the benefits flow 
would necessarily depend upon the size of the line and the customers to 
be served by the improved transmission capability. Clearly, the value 
of approving and constructing a transmission line over a larger 
footprint in the regional context would allow the sharing of costs 
among a greater customer base, thereby allowing lower costs for 
individual consumers. I also recognize that it is difficult to 
prospectively define who benefits from a particular project in certain 
circumstances. The customer composition of an area in which a 
transmission line was constructed twenty years ago could change over 
time, for instance, based upon factors such as economic development, 
population shifts or load growth. I believe that regions can define 
``benefits'' for themselves, through a flexible, robust collaborative 
process. If confirmed, I would follow the law and current precedent.
    Question 7a. Regulatory Philosophy--What is your over-arching 
regulatory philosophy?
    Answer. My overarching regulatory philosophy is to ensure the 
provision of safe, reliable and affordable electricity that is in the 
public interest through processes that are open, transparent and fair. 
I also strive to uphold the law, observe due process, respect 
precedent, and conduct this work in a way that encourages stakeholder 
participation, investment and innovation, and provides regulatory 
certainty, confidence in the process and preserves the integrity of the 
institution.
    7b. How far should FERC seek to evolve its role beyond the 
authorities specifically given it by Congress? For example, how, if at 
all, would you use FERC's authorities with respect to RTO formation in 
the Western Interconnection?
    Answer. FERC cannot seek to evolve its role beyond the authorities 
specifically given it by Congress. Based upon my legal training, it is 
the role of Congress to say what the law is, and FERC's role would be 
to apply the law to the facts to arrive at a particular result. I 
believe that RTO participation is voluntary, as noted from my work in 
Arkansas in which I presided over requests for utilities to participate 
in an RTO. Likewise, I would not seek to use FERC's authority to 
require RTO formation or participation in the Western Interconnection 
or any other portion of the country.
    Question 8. Some regional transmission organizations have dispatch 
rules which allow intermittent generators such as wind power to 
participate in day-ahead markets rather than just real-time markets. It 
is my understanding that the current federal Production Tax Credit 
(PTC) allows wind generators to submit a zero dollar bid, or even a 
negative bid price, in these competitive markets. What are your 
thoughts on this ability to submit a zero dollar bid or even a negative 
bid price into competitive markets?
    Answer. RTO market dispatch rules find the lowest cost of 
dispatching resources, based on their bids, to serve load while 
respecting transmission system limitations. A resource's bids reflect 
the resource's incremental cost of energy production. A zero dollar bid 
by an intermittent resource is consistent with the incremental cost of 
energy from the resource and usually reflects a resource's contractual 
obligation to produce its full output regardless of what the market 
clearing price is. A negative bid usually indicates that a resource is 
willing to continue to produce as long as it must pay less than its 
opportunity cost to do so. This is consistent with competitive bidding. 
In addition, when variable energy resources do not bid into the energy 
market, the market operator is forced to manually curtail the generator 
if too much energy is produced. This manual curtailment is economically 
inefficient and can create risks to system reliability.
    Question 9. What is your view of the importance of new transmission 
assets and electricity storage technologies for power grid efficiency 
and reliability? Are FERC's existing rate and market policies 
sufficient to encourage the development and appropriate deployment of 
this infrastructure in the grid?
    Answer. I foresee a greater role for energy storage in the bulk 
power system. As our energy supply becomes more diverse, and as more 
renewables are integrated, the ability to develop widely deployed 
storage capability will allow for greater fuel diversity and grid 
reliability. FERC has continuously assessed whether existing wholesale 
market rules and operational practices erect barriers to the 
participation of storage and other new and emerging technologies, and 
has required changes in those market rules to remove such barriers and 
ensure that all resources can compete on a level playing field. For 
example, the Commission has encouraged or required RTOs and ISOs to 
revise certain minimum megawatt size and run-time requirements in their 
tariffs that it found created unreasonable barriers to the 
participation of storage and other small resources, and also required 
the RTOs and ISOs to reform compensation practices that failed to 
appropriately compensate fast-responding resources like energy storage 
based on their performance. If confirmed, I would support continuing 
efforts to assess whether existing wholesale market rules and practices 
result in unreasonable barriers to new and emerging technologies like 
energy storage.
    Question 10. What are your views on financial incentives for 
transmission system development? Have existing transmission rate 
structures provided proper incentives to promote transmission system 
construction?
    Answer. I believe that FERC has used financial incentives to 
encourage necessary investment in transmission infrastructure for 
reliability. Existing transmission rate structures have provided 
incentives to promote transmission buildout, but FERC should remain 
vigilant in overseeing the provision of these incentives to ensure that 
they are provided judiciously, and in a way that does not inhibit 
investment in other areas.
    Question 11. With regards to transmission, how does a greater 
reliance on a risk-based approach to resiliency investments differ from 
traditional methods?
    Answer. Traditionally, states and regions have taken approaches and 
methodologies that determine necessary investments to ensure 
reliability of the electric grid. However, due to the increase in 
disruptions to the grid that are potentially catastrophic, it is 
imperative that the current transmission planning and cost allocation 
process plan for, invest in, and construct a grid which also employs a 
risk-based approach to resiliency investments. In this way, states and 
regions are not only undertaking investment that fortifies the grid for 
disruptions, but also ensures our collective ability to quickly respond 
to disruptions to the grid such as cyber security events, physical 
security attacks, severe weather events, geomagnetic disturbances and 
the like.
    Question 12. What are the implications of ``smart grid'' 
technologies for the wholesale electric grid in terms of efficiency, 
reliability, and security? Do FERC policies appropriately take into 
account these implications and/or concerns?
    Answer. In its March 19, 2009, Proposed Policy Statement and Action 
Plan, the Commission stated that ``Smart Grid advancements . . .  will 
bring new efficiencies to the electric system through improved 
communication and coordination between utilities and with the grid, 
which will translate into savings in the provision of electric 
service.'' The Policy Statement also indicated that ``[t]hese 
technologies will also enhance the ability to ensure the reliability of 
the bulk-power system.'' The Commission in its July 16, 2009, Smart 
Grid Policy statement addressed cyber security issues, observing that 
``cybersecurity is essential to the operation of the smart grid and 
that the development of cybersecurity standards is a key priority. 
Cybersecurity and physical security are ongoing concerns for both the 
Commission and the electricity industry . . . '' If I am confirmed, I 
will join my fellow Commissioners in continuing to consider the 
implications of smart grid technology on Commission jurisdictional 
activities.
    Question 13a. EPA's Clean Power Plan contemplates natural gas 
combined cycle operating at higher capacity factors. What can FERC do 
to advance and expedite gas delivery infrastructure investment?
    Answer. Under the Natural Gas Act, FERC plays an important role in 
gas infrastructure development. First, FERC issues certificates for the 
construction of new facilities. Since 2003, FERC has certified 93.1 
Bcfd of capacity in new pipelines and expansions. The Commission also 
encourages natural gas pipeline development through its regulation of 
the wholesale markets, which can attract investment in needed 
infrastructure. For example, last year FERC held a technical conference 
that discussed, among other things, pricing of fuel security into the 
wholesale power markets. The Commission recently directed the regional 
transmission organizations and independent system operators to file 
reports on their efforts to address the need for generator access to 
sufficient fuel supplies and the firmness of generator fuel 
arrangements. The Commission has also acted in several individual 
proceedings to put in place a number of market rule and tariff changes 
that can help address fuel assurance concerns, including clarifying the 
obligations of capacity resources with respect to fuel procurement, and 
providing greater fuel cost recovery certainty. If confirmed, I look 
forward to reviewing the fuel assurance reports and to discussing any 
additional ways to advance needed natural gas infrastructure.
    13b. Have you considered what challenges FERC might face in 
changing market rules to accommodate an increased reliance on gas?
    Answer. Yes. As president of NARUC, I oversaw the collaborative 
effort among the state economic regulators and the Commissioners at 
FERC to ensure that we are working together to discuss the important 
issues raised by the changing infrastructure mix in this country 
through workshops on reliability and gas-electric coordination. If 
confirmed, I look forward to continuing those conversations.
    In addition, The Commission recently directed the regional 
transmission organizations and independent system operators to file 
reports on their efforts to address the need for generator access to 
sufficient fuel supplies and the firmness of generator fuel 
arrangements. The Commission has also acted in several individual 
proceedings to put in place a number of market rule and tariff changes 
that can help address fuel assurance concerns, including clarifying the 
obligations of capacity resources with respect to fuel procurement, and 
providing greater fuel cost recovery certainty. If confirmed, I look 
forward to reviewing the fuel assurance reports and to discussing any 
additional ways to advance needed natural gas infrastructure.
    Question 14. What can FERC do to help improve gas delivery 
scheduling practices to allow both natural gas consumers and gas-fired 
electric generators to access gas supplies efficiently?
    Answer. As noted in my answer to Question 12.b, earlier this year 
the Commission proposed changes to the natural gas operating day and 
scheduling practices used by interstate pipelines to schedule natural 
gas transportation services, to more closely align their processes and 
improve coordination. In response to the proposal, the North American 
Energy Standards Board (NAESB) filed a set of alternative proposed 
changes to natural gas scheduling practices in September that it 
developed through an industry stakeholder consensus process. In 
November, the Commission received comments from the public on its 
proposals and the alternative proposals submitted by NAESB. If 
confirmed, I look forward to carefully reviewing this record and 
collaborating with my fellow Commissioners to consider what next steps 
on gas delivery scheduling practices may be appropriate.
    Question 15. In general, widespread and persistent outages to the 
Bulk Power System are rare. However, as assets begin to retire, the 
risk of a ``localized'' reliability effect is growing.
    15a. If true, would you find this impact acceptable if caused by 
federal policy?
    Answer. No, I would not find such an impact acceptable. While such 
an occurrence may or may not be within the jurisdiction of the 
Commission, if confirmed I will commit to analyze such instances, and 
to engage with other FERC Commissioners or other relevant federal 
entities to alleviate any such occurrences.
    15b. How do you define a ``localized'' reliability threat?
    Answer. I would define a ``localized'' reliability threat as one 
that impacts a smaller customer territory or area, and would not 
necessarily spread to a region or cause a ``domino effect'' of outages 
beyond the local area.
    Question 16a. Reliability--Should FERC continue to support 
``reliability-must-run'' (RMR) agreements for coal plants in 
competitive markets even though these plants may not be able to 
generate electric power at competitive prices?
    Answer. ISOs and RTOs issue RMR agreements only after determining 
that there is no alternative available to maintain reliability. These 
agreements are intended to be of short duration until a long-term 
solution can be placed into service. I support these agreements under 
these circumstances.
    16b. Should FERC and the North American Electric Reliability 
Corporation (NERC) consider potential cost increases to consumers under 
the ``just and reasonable'' requirements of the Federal Power Act in 
reviewing RMR or similar actions?
    Answer. If an RMR agreement is filed with the Commission under 
section 205 of the Federal Power Act, the Commission must determine 
whether the costs included in that agreement are just and reasonable. 
NERC, as the Commission-approved Electric Reliability Organization 
(ERO) under section 215 of the Federal Power Act, is responsible for 
developing reliability standards for the bulk power system and 
enforcing compliance with those standards. To my knowledge, NERC does 
not have an affirmative role in reviewing RMR agreements or the costs 
included in those agreements.
    16c. Are you concerned about the prospects for continued operations 
of baseload coal and nuclear generation in organized markets? If so, 
what do you think should be done to address the situation?
    Answer. Baseload generation is an important part of the nation's 
resource mix and will continue to operate in the future. The organized 
capacity markets have been attracting and retaining baseload resources. 
For example, PJM's base residual action for 2017/2018 procured about 
4,800 MW of new combined cycle generation. The Commission is resource- 
and fuel-neutral. My concern is that all resources are fairly 
compensated for the value they provide the system. These resources 
depend critically on revenues earned in the energy markets. The 
Commission's ongoing price formation effort is exploring whether energy 
and ancillary service prices appropriately reflect the costs to serve 
load. If confirmed, I look forward to discussing the issues explored in 
the price formation proceeding.
    Questi on 17a. Capacity Markets--Do you think that there is a 
sufficient level of transparency in pricing and other relevant data 
from the electricity markets?
    Answer. A significant amount of electricity pricing and other 
market data is made available to regulators and the public. For 
example, FERC's regulations require wholesale power sellers to report 
the details of their transactions (including pricing, quantity, etc.) 
on a quarterly basis. The Commission makes this information available 
to the public. In addition, RTOs and ISOs publicly post pricing data 
that are granular in time and location. Further, RTOs and ISOs post 
resource offer data, subject to an appropriate lag period and masking 
procedures to ensure the protection of competitively-sensitive 
information. Further, FERC's open access policies also require public 
utility transmission providers to publicly post information on 
available electric transmission capacity. While these and other 
requirements provide a significant amount of transparency in pricing 
and other relevant data, if confirmed, I would continually evaluate 
ideas to provide additional transparency.
    17b. As you see it, how, do capacity markets affect local and state 
resource decisions?
    Answer. The impact of capacity market design elements on state and 
local resource decisions, including state generation resource portfolio 
policies, was a key topic of discussion at FERC's September 2013 
technical conference on centralized capacity markets, in post-technical 
conference comments, and in a recent technical conference focused on 
the NYISO markets. The Commission continues to evaluate these issues. 
In addition, these issues are pending before the Commission in a number 
of contested proceedings. As a result, I am hesitant to comment 
directly on how capacity markets may impact state and local resource 
choices. If confirmed, I look forward to carefully evaluating these 
issues.
    17c. Do you believe a three-year capacity market commitment period 
used by RTOs is the appropriate time period to capture the value of 
capacity?
    Answer. The Commission has given each RTO/ISO the flexibility to 
choose the forward procurement period and commitment period that best 
meets its regional needs and best fits its capacity market or other 
resource adequacy construct. Some RTOs/ISOs use a three-year forward 
procurement period and one-year commitment period, while others procure 
capacity on a shorter timeframe, such as a month ahead or day ahead. 
FERC staff noted in a paper released last year that ``[t]he length and 
duration of the forward and commitment periods have implications for 
encouraging competitive entry of new resources and efficient market 
exit of existing resources, balancing risk between suppliers and 
customers, and the stability of prices''. For example, a longer forward 
procurement period provides more lead time for the construction or 
activation of capacity resources, but can increase risks to customers 
given that load forecasts are generally more accurate closer to the 
period when capacity resources are needed. As I noted at the hearing, I 
am cognizant of the diversity of the regions and the ability of each 
region to develop market design features that work best for them, and 
if confirmed as a Commissioner, I would consider this and other 
capacity market design issues with that in mind.
    17d. Do you believe the RTO capacity markets are attracting and/or 
retaining baseload power resources?
    Answer. Baseload generation is an important part of the nation's 
resource mix and will continue to operate in the future. The organized 
capacity markets have been attracting and retaining baseload resources. 
For example, PJM's base residual action for 2017/2018 procured about 
4,800 MW of new combined cycle generation. The centralized capacity 
markets in place in some RTOs/ISOs are designed to procure sufficient 
capacity to meet the region's reliability needs and provide necessary 
price signals to facilitate the entry of new capacity resources when 
needed, the retention of existing capacity resources when economic, and 
the retirement of older and less efficient capacity resources. To date, 
the capacity markets have met these goals, procuring sufficient 
capacity to meet reliability needs and attracting and retaining 
baseload, mid-merit and peaking resources. However, FERC has continued 
to evaluate the performance and design of capacity markets, 
particularly as the resource mix evolves in response to low natural gas 
prices, state and federal policies encouraging the entry of renewable 
resources and other specific technologies, and the retirement of aging 
generation resources. If confirmed, I would support Commission efforts 
to continue this evaluation.
    Question 18a. Presidential Permit Authority--What do you think of 
proposals to transfer Presidential Permit authority for cross-border 
oil pipelines from the State Department to FERC?
    18b. If FERC were given Presidential Permit authority for oil 
pipelines, what kind of rules and resources would the commission have 
to put in place in order to effectively exercise such authority? How 
long would it take to put these in place?
    Answer (a-b). If I am confirmed and Congress chooses to grant the 
Commission additional authority over such pipelines, I will work to 
ensure that the Commission faithfully executes that additional 
authority.
   Responses of Colette Honorable to Questions From Senator Heinrich
Electric Energy Storage
    Question 1. The cost of electric energy storage is dropping 
precipitously. Do you foresee a greater role for energy storage in the 
bulk power system?
    Answer. I do foresee a greater role for energy storage in the bulk 
power system. As our energy supply becomes more diverse, and as more 
renewables are integrated, the ability to develop widely deployed 
storage capability will allow for greater fuel diversity and grid 
reliability.
    Question 2. How can FERC promote deployment of energy storage in 
competitive wholesale markets where it is cost effective compared to 
alternative power sources?
    Answer. FERC is resource- and fuel-neutral, and thus does not 
promote the deployment of any particular resource in the competitive 
wholesale markets it regulates. FERC does, however, have a role in 
ensuring that there are not unreasonable barriers to the participation 
of resources in competitive wholesale markets. FERC has continuously 
assessed whether existing wholesale market rules and operational 
practices erect barriers to the participation of storage and other new 
and emerging technologies, and has required changes in those market 
rules to remove such barriers and ensure that all resources can compete 
on a level playing field. For example, the Commission has encouraged or 
required RTOs and ISOs to revise certain minimum megawatt size and run-
time requirements in their tariffs that it found created unreasonable 
barriers to the participation of storage and other small resources, and 
also required the RTOs and ISOs to reform compensation practices that 
failed to appropriately compensate fast-responding resources like 
energy storage based on their performance. If confirmed, I would 
support continuing efforts to assess whether existing wholesale market 
rules and practices result in unreasonable barriers to new and emerging 
technologies like energy storage.
    Question 3. How can FERC encourage electric energy storage to 
participate in competitive auctions for ancillary services in organized 
wholesale markets?
    Answer. As noted in my answer to Question 2, FERC's primary role is 
to ensure that market rules and tariffs do not create unreasonable 
barriers to the participation of energy storage and other new emerging 
technologies and allow all resources to compete on a level playing 
field in wholesale markets. With respect to the participation of 
electric energy storage in ancillary services markets, the Commission 
can remove regulatory barriers to energy storage by ensuring that the 
requirements ISOs and RTOs use to determine whether a resource can 
supply ancillary services are appropriate. Further, the Commission can 
ensure that resources receive compensation for providing ancillary 
services that reflects the value of the service provided. For instance, 
some resources, including energy storage, can provide higher quality 
frequency regulation service. In Order No. 755, the Commission required 
ISOs and RTOs to pay resources that provide frequency regulation 
service based on the resource's performance.
Wholesale Demand Response
    Question 4. Do you agree that demand response at times of high 
power demand in organized regional markets can help lower costs to 
consumers and reduce emissions?
    Answer. As a general matter, I agree that demand response can 
benefit consumers and help to address the issues noted in your 
question. With respect to the Commission's role in regulating demand 
response, I note that the U.S. Court of Appeals for the District of 
Columbia Circuit (D.C. Circuit) on May 23, 2014, issued a decision 
vacating Order No. 745, the Commission's final rule on compensation for 
demand response resources participating in organized wholesale energy 
markets. In that decision, the D.C. Circuit addressed the Commission's 
jurisdiction over demand response in those markets. On July 7, 2014, 
FERC filed with the D.C. Circuit a petition for rehearing en banc of 
that May 23, 2014 decision, which was denied. On December 5, 2014, the 
Solicitor General at the U.S. Department of Justice indicated that he 
has authorized the filing of a petition for a writ of certiorari 
seeking review at the U.S. Supreme Court of that May 23, 2014 decision. 
The extent of FERC's legal authority to regulate demand response in 
organized wholesale energy markets will be determined in this ongoing 
litigation.
    Question 5. In competitive wholesale power markets, does generating 
and transmitting additional power have any advantages over reducing 
demand, or are consumers best served when the two compete on equal 
footing?
    Answer. The issue of demand response resources' participation in 
organized wholesale electric markets, including both energy markets and 
capacity markets, is likely to come before me if I am confirmed as a 
member of the Commission. For that reason, it would be inappropriate 
for me to prejudge how the Commission should address that issue.
    Question 6. Do you consider market-based rates for power to be just 
and reasonable in an organized multi-state wholesale energy or capacity 
market if demand response is excluded and generation is the only option 
allowed to compete?
    Answer. The issue of demand response resources' participation in 
organized wholesale electric markets, including both energy markets and 
capacity markets, is likely to come before me if I am confirmed as a 
member of the Commission. For that reason, it would be inappropriate 
for me to prejudge how the Commission should address that issue. 
Similarly, I am hesitant to prejudge issues that may arise if demand 
response resources are excluded from those markets.
Transmission Planning and Siting
    Question 7. The country is shifting generating resources toward 
more natural gas and renewables. How do you think the FERC can best 
promote the investment in new interstate transmission capacity that 
will be required to assure continued reliability of the bulk power 
system?
    Answer. The Commission has taken a number of actions to enhance the 
efficient development of transmission infrastructure for all resources. 
This includes providing for regional transmission planning and cost 
allocation through Order No. 1000 and, providing additional flexibility 
totransmission developers to allocate new transmission capacity, and 
proposing to establish a more efficient process for generators to 
obtain priority rights to use transmission capacity on their 
interconnection facilities. Finally, last year, the Commission 
streamlined the interconnection process for small generating facilities 
and adopted reforms to its small generator interconnection procedures 
in response to changed circumstances in the industry.
    In addition, I believe that FERC has used financial incentives to 
encourage necessary investment in transmission infrastructure for 
reliability. Existing transmission rate structures have provided 
incentives to promote transmission buildout, but FERC should remain 
vigilant in overseeing the provision of these incentives to ensure that 
they are provided judiciously, and in a way that does not inhibit 
investment in other areas.
    Question 8. Arkansas is split between two of the nation's 
transmission planning regions, MISO and SPP. As chairman of the PSC in 
Arkansas, how do you see your role versus FERC's in supporting regional 
planning and cost allocation for siting new interstate transmission 
capacity?
    Answer. From my experience as a state regulator for more than seven 
years, I have participated strongly in both the MISO and SPP 
transmission planning regions. State regulators have traditionally 
participated in transmission planning processes to ensure that their 
respective state's consumers pay only those costs that are just and 
reasonable, and in the public interest. This is carried out through a 
robust collaborative process, with cooperation among the states. If 
confirmed, I would see my role at FERC as supporting the regional and 
interregional processes through collaboration and cooperation, and 
providing the necessary guidance and certainty while properly observing 
the diversity of the states and regions.
Cyber Security
    Question 9. The security of the grid system is another major 
concern. Do you think the FERC has sufficient authority to protect the 
bulk-power system and critical electric infrastructure against cyber 
security threats and vulnerabilities?
    Answer. NERC's rules allow it to develop a standard quickly to 
address an emerging issue. However, in the case of a national security 
emergency requiring immediate action, the Commission's authority does 
not allow it to author standards or to require quick action to protect 
the United States from a national security threat to the reliability of 
the electric grid. Any new legislation should address several key 
concerns, including allowing the federal government to take action 
before a cyber or physical national security incident has occurred, 
ensuring appropriate confidentiality of sensitive information 
submitted, developed or issued under new authority, and allowing cost 
recovery for costs entities incur to mitigate vulnerabilities and 
threats. This authority need not necessarily be given to FERC.
    Question 10. Many cybersecurity threats could require a quick 
response. Do you think Congress should designate one federal agency 
with the clear and direct authority to respond in the event of an 
emergency involving a physical or cyber threat to the bulk-power 
system?
    Answer. See my response to Question 9.
     Responses of Colette Honorable to Questions From Senator Flake
    Question 1. What role do you believe FERC should play in helping to 
modernize and harden the infrastructure and systems of the electric 
grid and increase system resiliency?
    Answer. First, FERC plays an important role in overseeing the 
reliability of the grid through approving and enforcing mandatory 
reliability standards for the bulk-power system. These standards cover 
cybersecurity, geomagnetic disturbances, and, most recently, physical 
security. I also believe that FERC should work cooperatively with 
regulated entities, other governmental agencies, and the states to 
increase system resiliency by sharing information and best practices to 
allow industry to identify potential physical and cyber threats to the 
grid and develop solutions to those potential threats.
    Question 2. Last month, the director of the National Security 
Agency and the Commander of the U.S. Cyber Command, Admiral Michael 
Rogers, told the House Intelligence Committee that critical 
infrastructure systems in the United States, such as those that are 
used to run the electric grid, are vulnerable to cyber threats from 
countries like China. He further acknowledged that the United States is 
not prepared to manage that threat. What role do you believe FERC 
should play in addressing the aforementioned cyber threats to the 
electric grid?
    Answer. See my response to question 1.
    Question 3. In your opinion, how effective is FERC's process for 
permitting of natural gas infrastructure in terms of timing, addressing 
all the issues, adequacy of FERC resources, and relationship to other 
agencies involved?
    Answer. As a state regulator with experience in transmission 
siting, I am very aware of the impact of the permitting process on 
applicants and economic development. FERC's process results in over 90 
percent of applications being acted on within a year of the filing of a 
complete application. In addition, I would note that these applications 
are rarely unopposed and FERC staff, in their review, must address all 
comments and interventions. This results in a complete environmental 
document which, in turn, results in an order that is defensible in 
court, if appealed. This provides a great deal of regulatory certainty 
to project applicants. Nevertheless, if confirmed, I look forward to 
discussing ways to streamline FERC's processes so that they provide 
timely review.
    Question 4. As Chairman of the Arkansas Public Service Commission, 
you joined the Interim Director of the Arkansas Department of 
Environmental Quality in submitting comments to the EPA on their 
proposed Clean Power Plan. In that submittal, you state that, ``The 
2030 Arkansas goal, which is the sixth most stringent in the United 
States, is technically flawed and is unattainable under the 
contemplated timeframe. The Agencies urge changes in the Proposed Rule 
to avoid unreasonable and inequitable results that may include 
disruptions to electric service and significant cost impacts in 
Arkansas and in neighboring states.'' You further note that the 
``proposed rule should be clarified and changed in various ways to 
better enable compliance.'' Please comment on the difficulties you see 
with the CPP as it applies to Arkansas--particularly with regard to the 
``unreasonable and inequitable results that may include disruptions to 
electric service and significant cost impacts.''
    Answer. During my tenure as Chairman of the Arkansas Public Service 
Commission, I have expressed support for the Administration's efforts 
to reduce greenhouse gas emissions and to improve the environment. In 
fact, with regard to the Clean Power Plan, there has been an 
unprecedented and significant amount of outreach employed by EPA at 
local, state, regional and national levels. On October 28, 2014, after 
engaging in significant outreach to a broad range of stakeholders, the 
EPA issued a notice of data availability (NODA) to, in part, seek 
comment on the potential technical challenges described by some 
stakeholders associated with achieving all of the reductions that 
states would be required to make as early as 2020. In the NODA, EPA 
requests comment on two approaches that stakeholders have offered to 
address these issues and explains how EPA's June 2014 proposal requests 
comment on the option of early reductions. As a state regulator, I have 
had numerous opportunities to offer feedback and comments about the 
proposed rule informally, through the formal comment period, and 
additionally with regard to the ``glidepath'' after the EPA issued a 
Notice of Data Availability. After the issuance of the EPA proposed 
Clean Power Plan, the EPA sought comments on the Proposed Plan and its 
impact on the states. As Chairman of the APSC, I co-convened a 
statewide workshop with the director of the Arkansas Department of 
Environmental Quality to study the impact of the Proposed Rule on 
Arkansas. The workshop was comprised of a diverse array of 
participants, which included representatives from both regional 
transmission organizations that operate in Arkansas: MISO and SPP. The 
APSC's comments included the results of that collaborative effort in 
Arkansas, and it included comments that our goal, as included in the 
Proposed Rule, is too stringent for Arkansas to attain by the interim 
goal timeline of 2020 or 2030. Both regions conducted studies and 
modeling of the potential impact of the Proposed Rule on their 
respective footprints, and both issued comments raising the potential 
for reliability to be negatively impacted based upon decisions that 
utilities or generators could make regarding coal-fired generation 
plants in their respective fleets. In addition, the utilities and plant 
operators in Arkansas expressed concern about cost impacts if required 
to displace coal-fired units and replace that generation with more 
expensive baseload capacity. This is the rationale underlying the 
statement regarding the results that may impact reliability and cause 
significant cost impacts in Arkansas. Having said that, I do believe it 
is prudent for our country to reduce greenhouse gas emissions and other 
pollutants that negatively impact our environment, and that now is the 
time to undertake this effort. I also believe that the proposed rule 
allows states to design state plans to take into account resource 
adequacy and reliability.
   Responses of Colette Honorable to Questions From Senator Barrasso
    Question 1. EPA and opponents of natural gas have asked FERC to 
radically expand the environmental review process for interstate 
natural gas pipelines, natural gas compressor stations, and liquefied 
natural gas (LNG) export terminals. They want FERC to assess the so-
called ``upstream'' and ``downstream'' effects of these facilities.
    EPA and opponents of natural gas want FERC to try to assess whether 
a single pipeline or LNG export terminal will contribute to climate 
change. They also want FERC to try to assess whether a single gas 
pipeline or LNG export terminal would increase gas demand, and if so, 
gas production. They even want FERC to determine where gas production 
may or may not increase.
    To its credit, FERC has rejected EPA's requests. In August, Cheryl 
LaFleur, the Chairman of FERC, said that: ``[W]e do not do a cradle-to-
grave, molecule-by-molecule analysis of where . . . a fuel is coming 
from, what's going to happen . . . when [a ship] goes off to the other 
side of the earth and what other fuel it displaces.
    We don't believe that's in our authority or in our role under [the 
National Environmental Policy Act]. NEPA is a permitting statute.''
    I applaud FERC for rejecting EPA's request for what is effectively 
a climate change litmus test on American exports. Such a test would 
devastate American exports and the good-paying jobs they create.
    Last year, Ross Eisenberg of the National Association of 
Manufacturers testified before this committee. He explained that: 
``using NEPA to require a cradle-to-grave . . . analysis that assesses 
the impact of cargo . . . would create a very dangerous precedent that 
could be used to block exports of all types,'' including automobiles, 
civilian aircraft, and heavy equipment (e.g., construction vehicles, 
etc.).
    Do you agree with Chairman LaFleur that NEPA does not authorize 
FERC to try to assess the so-called ``upstream'' and ``downstream'' 
effects of natural gas pipelines, compressor stations, and LNG export 
terminals? If not, why not?
    Answer. While I do not believe NEPA is a permitting statute, I 
agree with Chairman LaFleur regarding the Commission's implementation 
of NEPA in this regard.
    Question 2. A. What would you say are the greatest challenges 
facing the bulk power system? B. What do you see as the top priorities 
for FERC in regulating this system?
    Answer. The most pressing threats to continued reliable operation 
of the nation's power grid are resilience threats. They are the most 
challenging, in my opinion, because of the risk to the grid, and 
potential for great or widespread disruption or harm to the grid. In 
order to properly mitigate these risks, state and federal regulators 
and other stakeholders must be vigilant constantly to ensure that our 
collective planning supports risk-based resilience investments, which 
support the traditional reliability work that has been underway for 
decades. Resource adequacy is an important issue at this time. 
Commission-approved rates can have an effect on this issue, and the 
Commission has been considering or making changes to jurisdictional 
rates to address this issue. Another issue is the growing use of 
natural gas as a fuel for electric generation. The Commission has made 
significant efforts to address this issue, most recently by directing 
RTOs and ISOs to report on their efforts to address fuel assurance. On 
both of these issues, the States also have significant roles and are 
working to address the issues. Finally, the increased use of renewable 
resources means the grid may operate somewhat differently than it has 
in the past, and the industry is working hard to ensure that its 
operating practices and procedures adapt accordingly. In each of these 
areas, work is ongoing and will continue as appropriate to meet the 
challenges.
    Reliability is of vital importance to both FERC and state 
regulators, and has been a top priority for me in my daily work as 
Chairman of the Arkansas PSC and as President of NARUC. If confirmed as 
a Commissioner at FERC, it will continue to be a top priority. Equally 
important is to ensure that FERC-jurisdictional rates are just and 
reasonable and that markets send the proper signals to encourage 
investment and innovation while providing regulatory certainty.
    Question 3. If confirmed, would you push for FERC to have a role in 
reviewing and approving state plans submitted to EPA under the carbon 
standards for existing power plants in order to ensure that those plans 
do not undermine electric reliability? If not, why not?
    Answer. While I have not studied any specific proposal, I do 
support the creation of a means by which reliability concerns can be 
taken into account should they arise.
    Question 4. Do you think that EPA is positioned to analyze the 
reliability impacts of its own power sector regulations without active 
assistance from FERC?
    Answer. The EPA's proposed rule contained a reliability analysis 
and offered flexibilities that will allow states to design state plans 
to take into account resource adequacy and reliability. However, as EPA 
considers the comments it has received, I think it is important that 
EPA consult with experts in reliability, such as the Commission, NERC, 
and regional transmission organizations and independent system 
operators.
    Question 5. Everyone agrees that enforcement is a critical 
component of FERC's mission. We can also agree that those who violate 
the law should be prosecuted. However, it is equally important that 
FERC respects the due process rights of the targets of FERC 
investigations. William Scherman, a former General Counsel at FERC, and 
others argue that FERC has failed to do this in recent years.
    In September of this year, Senator Collins and I sent a letter to 
the Department of Energy's Inspector General (IG), asking that he 
examine FERC's enforcement program. Senator Casey-a Democrat-has also 
asked the IG to review FERC's enforcement program. You can see that 
these are bipartisan concerns. In October, the IG notified me that he 
will review FERC's enforcement program.
    In the meantime, FERC should take steps of its own to address our 
concerns. FERC should hold what are known as technical conferences on 
its enforcement program.
    Technical conferences would allow the public and regulated entities 
to discuss their concerns directly with the Commissioners. Technical 
conferences would help the Commissioners craft any needed reforms to 
the enforcement program.
    If confirmed, would you push for convening technical conferences on 
FERC's enforcement program? If not, why not?
    Answer. I believe it is important for an enforcement program to be 
fair and transparent. If confirmed, I look forward to discussing the 
issues raised concerning the Commission's enforcement program and 
considering what, if any, reforms are necessary. If confirmed, I commit 
to gain a better understanding of the issues associated with the 
enforcement program, and to consider any number of ways to address 
these concerns, including technical conferences, if necessary.
      Responses of Colette Honorable to Questions From Senator Lee
    Question 1. What are your views on the relative threat EPA's Clean 
Power Plan for curbing carbon emissions at existing power plants may 
pose to maintaining grid reliability as the regulation goes into effect 
and coal plants are inevitably retired? What should FERC do in 
response, if anything?
    Answer. During my tenure as Chairman of the Arkansas Public Service 
Commission, I have expressed support for the Administration's efforts 
to reduce greenhouse gas emissions and to improve the environment.--I 
believe the impact on reliability as the Clean Power Plan is executed 
varies by state and region. Clearly, the work occurring regionally will 
be important to ensure reliability as the regulation goes into effect 
and coal plant retirements take place. I believe that the proposed rule 
allows states to design state plans to take into account resource 
adequacy and reliability, in conjunction with the work occurring 
regionally. As I noted at the hearing, I have, in conjunction with the 
Arkansas Department of Environmental Quality, convened a workshop to 
discuss EPA's proposed Clean Power Plan with more than 20 stakeholders 
of diverse perspectives, including our regional organizations. I think 
it is important to explore the important issues raised by the proposed 
rule, particularly how it might affect reliability. If confirmed, I 
look forward to discussing these issues more in depth with NERC and my 
colleagues.
    Question 2. What do you believe is the proper role for FERC with 
respect to EPA rulemakings generally and EPA's Clean Power Plan in 
particular? For instance, during EPA's rule-setting process, should 
FERC defer to EPA's judgment on the reliability impacts associated with 
its proposal and get engaged to ensure reliability is protected only 
after the rule is finalized and being implemented? If so, how do you 
believe such an approach is consistent with FERC's statutory 
responsibility to ensure grid reliability?
    Answer. My understanding is that FERC staff has had discussions 
with the EPA and provided input to the EPA on its proposal before its 
issuance through the Office of Management and Budget (OMB) interagency 
review process from a reliability perspective. I believe it is 
appropriate for FERC to provide input to EPA on the reliability impacts 
both through the OMB review process and through discussions directly 
between FERC and EPA.
    Question 3. In your view, has the level of consultation and 
coordination between FERC and EPA been sufficient? Or do you believe a 
formal, documented federal interagency process should be established to 
ensure that EPA's forthcoming 111(d) final rule does not adversely 
impact grid reliability?
    Answer. In both my roles as the Chairman of the Arkansas Public 
Service Commission and the National Association of Regulatory Utility 
Commissioners, I have convened meetings to discuss these rules. I 
understand the importance of coordination on matters that can affect 
the electric industry. GAO recently issued a report recognizing that 
FERC, EPA and the Department of Energy jointly conduct regular meetings 
with key industry stakeholders concerning EPA regulations. I fully 
support any effort by FERC and EPA to coordinate on issues concerning 
the reliability of the grid. If confirmed, I would discuss this issue 
with my colleagues, including whether FERC should use formal processes 
such as public conferences to explore these issues in detail and 
provide for discussion of reliability concerns.
    Question 4. Should FERC insist that EPA include a ``reliability 
safety value'' mechanism in the final rule in case utilities and states 
need more time to meet the rule's requirements without hurting system 
reliability?
    Answer. While I have not studied any specific reliability safety 
valve proposal, my understanding is that staff from FERC discusses 
issues concerning the proposed rule with the EPA. I believe it is 
important for FERC to continue this relationship and discuss 
reliability issues with the EPA and other interested stakeholders. If 
confirmed, I will continue to participate in the discussions on this 
rule and be a productive part of FERC's mission to ensure reliability. 
While a state regulator, I have also benefitted from an unprecedented 
and significant level of outreach employed by EPA at local, state, 
regional and national levels. I have had numerous opportunities to 
offer feedback and comments about the proposed rule informally, through 
the formal comment period, and additionally with regard to the 
``glidepath'' after the EPA issued a Notice of Data Availability.
    Question 5. Should FERC be given the role of monitoring the 
reliability impacts from the various state implementation plans, and 
advising on mitigation measures if a reliability problem is assessed? 
Should FERC be required to certify that the simultaneous implementation 
of the state compliance plans will not harm reliability before those 
plans can be executed?
    Answer. FERC should monitor the reliability impacts from the 
various state implementation plans. After the EPA issued its MATs rule, 
FERC, EPA and the Department of Energy have monitored industry progress 
responding to EPA regulations, including jointly conducting regular 
meetings with key industry stakeholders. I believe that this is a good 
model to look to in determining how to monitor any impacts from state 
plans stemming from the Clean Power Plan.
    Question 6. As a FERC Commissioner, how would you weigh costs to 
customers in your evaluation of whether a particular proposed 
reliability standard provides an adequate level of reliability 
protection?
    Answer. Federal Power Act section 215 does not explicitly identify 
costs as a consideration, but does require the Commission to consider 
whether a proposed reliability standard is ``just, reasonable, not 
unduly discriminatory or preferential, and in the public interest.'' I 
cannot at this time offer a legal opinion on how this language applies 
to the question you ask but, subject to legal interpretation of this 
language, I believe the consideration of proposed standards could 
include a wide range of factors, including well-supported information 
on costs. I would note, also, that the NERC process is based on voting 
by stakeholders and they are likely to informally consider a proposed 
standard's foreseeable costs to them as part of their decision-making, 
regardless of subsequent processes.
    Question 7. As you know, states view themselves as the front line 
for service quality issues, including cost recovery. What vision do you 
have for the boundaries between FERC and the states for reliability 
issues?
    Answer. Reliability is of vital importance to both FERC and state 
regulators, and has been a top priority for me in my daily work as 
Chairman of the Arkansas PSC and as President of NARUC. As NARUC 
President, I oversaw the collaborative effort among the state economic 
regulators and the commissioners at FERC to ensure that we are working 
together through workshops on reliability. If confirmed, I hope to 
continue these collaborative efforts on reliability.
    With respect to the boundaries, FERC has jurisdiction over the 
bulk-power system and recently approved a definition of this term that 
establishes uniform criteria to determine what elements of the electric 
grid are subject to the FERC-approved mandatory reliability standards. 
In doing so, it approved a process to add elements to, or remove 
elements from, the scope of coverage on a case-by-case basis. An entity 
can also seek a FERC ruling on whether a facility is a local 
distribution or transmission facility. This process of identifying bulk 
electric system elements should help create a clearer boundary between 
FERC and the states for reliability jurisdiction.
    Question 8. What do you believe are the most pressing threats to 
continued reliable operation of the nation's power grid and are those 
risk being appropriately mitigated? If not, what needs to happen in 
your opinion?
    Answer. The most pressing threats to continued reliable operation 
of the nation's power grid are resilience threats. They are the most 
challenging, in my opinion, because of the risk to the grid, and 
potential for great or widespread disruption or harm to the grid. In 
order to properly mitigate these risks, state and federal regulators 
and other stakeholders must be vigilant constantly to ensure that our 
collective planning supports risk-based resilience investments, which 
support the traditional reliability work that has been underway for 
decades.
    Question 9. Does FERC have the authority under the Federal Power 
Act to regulate demand response?
    Answer. The U.S. Court of Appeals for the District of Columbia 
Circuit (D.C. Circuit) on May 23, 2014, issued a decision vacating 
Order No. 745, the Commission's final rule on compensation for demand 
response resources participating in organized wholesale energy markets. 
In that decision, the D.C. Circuit addressed the Commission's 
jurisdiction over demand response in those markets. On July 7, 2014, 
FERC filed with the D.C. Circuit a petition for rehearing en banc of 
that May 23, 2014 decision, which was denied. On December 5, 2014, the 
Solicitor General at the U.S. Department of Justice indicated that he 
has authorized the filing of a petition for a writ of certiorari 
seeking review at the U.S. Supreme Court of that May 23, 2014 decision. 
The extent of FERC's legal authority to regulate demand response in 
organized wholesale energy markets will be determined in this ongoing 
litigation.
    Question 10. If the D.C. Circuit's decision in Electric Power 
Supply Association v. FERC (EPSA) is upheld (whether through a denial 
of petition for certiorari or on the merits), how should FERC implement 
the decision?
    Answer. If confirmed as a member of the Commission, this issue may 
come before me. Therefore, it would be inappropriate for me to prejudge 
how the Commission should implement the D.C. Circuit's EPSA decision, 
if that decision is upheld.
    Question 11. Do you believe that the decision in EPSA also calls 
into question FERC's jurisdiction over demand response participation 
and compensation in capacity and ancillary services markets?
    Answer. Market participants in the PJM and ISO New England regions 
have filed complaints at the Commission challenging participation by 
demand response resources in those regions' capacity markets. 
Similarly, it is my understanding that comments filed in at least that 
PJM-related proceeding raise the issue of whether and how demand 
response resources may participate in ancillary services markets. 
Because these issues would be likely to come before me if I am 
confirmed as a member of the Commission, it would be inappropriate for 
me to prejudge how the Commission should address these issues.
    Question 12. In your view, has FERC's demand response compensation 
policy adversely impacted baseload generation units or impaired grid 
reliability? How so?
    Answer. The issue of demand response resources' participation in 
organized wholesale electric markets is likely to come before me if I 
am confirmed as a member of the Commission. For that reason, it would 
be inappropriate for me to prejudge how the Commission should address 
that issue.
    Question 13. As a policy matter, do you believe Order No. 745 
justifiably treated demand response resource providers preferably to 
other capacity resources, such as generation?
    Answer. The issue of demand response resources' participation in 
organized wholesale electric markets, including both energy markets and 
capacity markets, is likely to come before me if I am confirmed as a 
member of the Commission. For that reason, it would be inappropriate 
for me to prejudge how the Commission should address that issue.
    Question 14 . What are your views on treating behind-the-meter 
generation differently than traditional generation in terms of how it 
is compensated and held accountable to deliver as promised? For 
instance, do you believe behind-the-meter generation is analogous to 
demand response resources and should receive comparable compensation 
pursuant to Order No. 745?
    Answer. It is difficult to generalize about appropriate 
compensation for behind-the-meter generation because the owners of such 
equipment use it in many different ways. The manner in which behind-
the-meter generation is used and related circumstances may be relevant 
to determining what compensation is appropriate.
    Question 15. FERC took unprecedented action and sued the Idaho 
Public Utilities Commission under Section 210(h) of the Public Utility 
Regulatory Policies Act (PURPA) in federal court. Under what 
circumstances, if any, should FERC take similar action in the future? 
How much deference should FERC give state regulators on legally 
enforceable obligation determinations under PURPA?
    Answer. I would hope that such action would be rare. FERC and the 
Idaho Public Utilities Commission (Idaho PUC) signed a Memorandum of 
Agreement to resolve this matter which reflects that PURPA establishes 
a program of cooperative federalism, with FERC establishing regulations 
and states implementing them in a manner that accommodates local 
conditions. I hope that in the future, FERC and the states can work 
cooperatively on these issues and, if confirmed, I look forward to 
discussing them with my state colleagues.
    Question 16. In light of the due process allegations questioning 
the fairness and transparency of FERC's enforcement program, do you 
believe any procedural or substantive reforms are in order?
    Answer. I believe it is important for an enforcement program to be 
fair and transparent. If confirmed, I commit to gain a better 
understanding of the issues associated with the enforcement program, 
and to consider any number of ways to address these concerns.
    Question 17. Many have argued that the definition of market 
manipulation in electric and gas wholesale markets is too vague, 
causing uncertainty and confusion for participants. This ambiguity, 
when combined with powerful enforcement tools and the potential for 
significant penalties, appears to have the potential to chill 
investment and reduce liquidity in these markets. Do you agree that 
this a logical outcome of such policies? Could the combination of 
ambiguity and exposure to significant penalties have a negative impact 
on consumers? Please provide a full explanation.
    Answer. The Commission's regulations defining market manipulation 
were patterned on the Securities and Exchange Commission's core anti-
fraud and anti-manipulation rule because EPAct 2005's prohibition 
against fraud and manipulation was patterned on and specifically 
references the Securities and Exchange Act of 1934. The Commission has 
issued settlement agreements and orders that have explained the scope 
and application of the rule. However, because the Commission's 
authority to prohibit market manipulation is relatively new, it is 
important to consider whether further guidance is needed. If confirmed, 
I look forward to discussing the issues raised concerning the 
Commission's enforcement program and considering what, if any, reforms 
are necessary.
    Question 18. In general, how does the inclusion of banks or large 
financial institutions in commercial energy enterprises affect utility 
ratepayers? How might the exit of large banks from these commercial 
businesses impact the functioning of electricity markets?
    Answer. The participation of entities of all kinds, including 
energy companies and financial institutions, can benefit markets in 
numerous ways. However, I would expect all market participants in 
electricity markets, including banks or large financial institutions, 
not to engage in market manipulation and to follow market rules and 
work cooperatively with FERC and grid operators.
    Question 19. Do you believe that market manipulation can occur 
where there has been no independent violation of a FERC regulation, 
rule, order, tariff, or ISO/RTO market rule? If so, please provide an 
explanation, including some examples. Also, if so, please reconcile 
your answer with traditional notions of due process.
    Answer. The Commission's Order No. 670 states that ``[i]f a market 
participant undertakes an action or transaction that is explicitly 
contemplated in Commission-approved rules and regulations, we will 
presume that the market participant is not in violation of the Final 
Rule.'' However, the Commission has made clear an entity need not 
violate a specific tariff provision to violate the market manipulation 
rule because ``[N]o list of prohibited activities could be all-
inclusive.'' One example is the activities discussed in the 
Commission's JP Morgan settlement.
    Question 20. Are there steps the Commission can take to clarify the 
definition of market manipulation so as to provide sufficient notice to 
market participants?
    Answer. As I said in response to Question 17, because the 
Commission's authority to prohibit market manipulation is relatively 
new, it is important to consider whether further guidance is needed. If 
confirmed, look forward to discussing the issues raised concerning the 
Commission's enforcement program and considering what, if any, reforms 
are necessary.
    Question 21. Should the target of an investigation have access to 
transcripts of FERC depositions? If not, why?
    Answer. The Commission regulations require that subjects of 
investigations be given access to their deposition transcripts. I 
understand that the timing of such access has been a matter of 
discussion, and, if confirmed, I look forward to discussing the issue 
with my colleagues.
    Question 22. Do you believe that FERC should adopt any limits on 
the scope of its discovery requests; i.e., data requests, document 
requests, depositions?
    Answer. My years of experience working in litigation have given me 
substantial experience with all phases of discovery. Ensuring that the 
markets are free from fraud and market manipulation is an important 
aspect of the Commission's work. Such fraud and market manipulation 
poses a significant threat to the markets the Commission oversees. 
Therefore, I believe the Commission should be able to thoroughly 
investigate allegations of misconduct to ensure just and reasonable 
rates. However, I believe that the enforcement program should be fair 
and transparent. If confirmed, I look forward to discussing these 
issues with my colleagues and determining if further action is needed.
    Question 23. Should FERC be required to provide the target of an 
investigation (or subsequent administrative adjudication in a show 
cause proceeding) be given access to third-party materials obtained in 
the course of the investigation?
    Answer. It is my understanding that in a FERC investigation, there 
is no right to discovery by the subject of an investigation at the 
investigative stage. However, the subject of an investigation will have 
discovery rights during adjudication of the matter at issue. My 
understanding is that it is the practice of the Commission's 
enforcement staff to provide any relevant third party materials to the 
subject of an investigation prior to the issuance of an Order to Show 
Cause.
    I believe that the enforcement program should be fair and 
transparent and I am open to ways to address these concerns.
    Question 24. Are FERC's existing procedural rules regarding ex 
parte communications and separation of functions sufficient to ensure 
that the target of an investigation receives a full and fair hearing 
before an impartial decision-maker?
    Answer. The Commission provides that the subject of an 
investigation may communicate in writing with the Commission at any 
time throughout the course of an investigation. However, if confirmed, 
I look forward to discussing the issues raised concerning the 
Commission's enforcement program and considering what, if any, reforms 
are necessary.
    Question 25. Should FERC adopt an intent requirement for its rules 
prohibiting false or misleading statements to FERC, an ISO/RTO, or 
other FERC-jurisdictional entities?
    Answer. It is my understanding that false or misleading statements 
can be relevant to different kinds of violations, so the answer may 
depend on the context of a specific case. If confirmed I look forward 
to reviewing this issue and discussing it with my colleagues.
    Question 26. Please describe your views on interstate cost 
allocation. In what circumstances should ratepayers in one state be 
allocated the costs for transmission projects that will benefit 
ratepayers in other states?
    Answer. I believe that, in the context of the work of regional 
transmission organizations or independent system operators, interstate 
cost allocation allows for the planning and development of necessary 
interstate transmission lines. An interstate cost allocation to those 
areas that benefit from a line allows customers in those areas to 
collectively share in the cost of the construction, thereby bringing 
costs down for the entire region. When deciding issues of cost 
allocation, the Commission applies the principles of ``cost causation'' 
and ``beneficiary pays'' that developed over several years of 
Commission and judicial decisions. In Order No. 1000, for example, the 
Commission established a set of guiding principles for developing ex 
ante cost allocation mechanisms that apply to projects selected in a 
regional plan for purposes of cost allocation. Two of the central 
tenants of those principles are: (1) the costs of new transmission 
facilities must be allocated in a manner at least roughly commensurate 
with benefits received, and (2) those who do not benefit from 
transmission facilities, either at present or in a likely future 
scenario, must not be involuntarily allocated the costs of such 
facilities. These principles draw in part from a recent decision of the 
U.S. Court of Appeals for the Seventh Circuit (Seventh Circuit), which 
stated that ``[t]o the extent that a utility benefits from the costs of 
new facilities, it may be said to have `caused' a part of those costs 
to be incurred'', and required that the Commission ``compar[e] the 
costs assessed against a party to the burdens imposed or benefits drawn 
by that party'' and articulate why ``the benefits are at least roughly 
commensurate'' with the costs. Under these principles, whether 
ratepayers in one state can be allocated the costs for transmission 
projects that will benefit ratepayers in other states depends on the 
extent to which ratepayers in the first state also derive benefits from 
those projects.
    Question 27. Can a transmission line utilizing local renewable 
electricity resources produced in one state under a renewable/clean 
energy standard be shown to have regional benefits in another state 
without such a mandate?
    Answer. As explained in my response to question 26, whether the 
costs of a transmission facility can be assessed to a party depends on 
a determination of whether that party derives benefits from the 
facility. In addition, such cost allocation decisions will depend on 
how the region in question has defined the regional benefits that will 
be considered. The principles-based approach to cost allocation adopted 
by the Commission in Order No. 1000 provided each region with 
significant flexibility to develop ex ante cost allocation mechanisms 
that fit the region's needs, including flexibility to define the 
benefits that will be considered in those mechanisms, so long as they 
satisfy the broad cost allocation principles.
    Question 28. In the recent Entergy-ITC merger proceeding, the 
Arkansas PSC and other state commissions expressed concerns that the 
merger would result in higher rates for Arkansas ratepayers. Please 
describe your concerns regarding the rate increases and the increased 
rate of return on equity requested by ITC.
    Answer. In the federal proceeding, although the Arkansas PSC took 
no position on the merger application itself, it did raise concerns 
regarding the return on equity. The filing referenced the fact that in 
the past five years, capital costs in the US have slightly deceased. In 
addition, because the ITC Midsouth Companies' capital structure is 
comprised of less common equity that the proposed rate construct of 60 
percent common equity/40 percent debt, ITC's effective allowed return 
on equity would be greater than 12.38 percent. In fact, with the 
imputed common equity ratio of 60 percent, their rate of return would 
be in excess of 14.7 percent, according to computations by agency 
experts.
    Question 29. Are rates pursuant to an ISO/RTO auction mechanism 
protected under the Mobile-Sierra doctrine? In answering this question, 
please describe your views on the application of the Mobile-Sierra 
doctrine.
    Answer. I recognize the importance of regulatory certainty in the 
electric and natural gas industries. The Mobile-Sierra doctrine, with 
its history developed over decades of court precedent and cases before 
FERC, contributes to regulatory certainty by establishing a presumption 
that agreements with certain characteristics that are reached by 
electric or natural gas companies satisfy the just and reasonable 
standard of the Federal Power Act or the Natural Gas Act, respectively.
    The markets operated by RTOs or ISOs (and component auction 
mechanisms) are run pursuant to detailed market rules approved by FERC. 
My understanding is that those market rules differ in a number of 
respects, including whether the above-noted Mobile-Sierra presumption 
would attach to the results of a particular type of RTO or ISO auction. 
If confirmed, I commit to consider carefully proposals on this issue 
that may come before the Commission.
    Question 30. In your experience as a state regulator, has FERC ever 
overstepped its jurisdiction and intruded into areas of appropriate 
state regulation? If so, please provide examples.
    Answer. From my perspective, there will always be areas of tension 
among regulators who share concurrent jurisdiction in certain areas. 
Where Congress has not given comprehensive and exclusive jurisdiction 
to either federal or state regulatory bodies to act exclusively, there 
will be areas, e.g., the use of demand response in the context of a 
regional capacity market, where it will be imperative for both 
regulators to work constructively and cooperatively with one another. 
If confirmed, I will commit to do so, and to follow the law.
     Responses of Colette Honorable to Questions From Senator Risch
    Question 1. Last year, FERC took the unprecedented action and sued 
the Idaho Public Utility Commission under Section 210(h) of the Public 
Utility Regulatory Policies Act (PURPA). The FERC Commissioners 
realized that this suit was not in their best interest and they were 
able to reach an agreement out of federal court with the Idaho PUC. How 
do you believe FERC should work with the states to avoid another 
situation like Idaho was involved in?
    Answer. I believe that FERC should work collaboratively and 
constructively with the states, and that litigation should be a last 
resort. It is imperative that state and federal regulators respect one 
another's authority in an effort to achieve mutually beneficial 
results. A failure to do so erodes the confidence that all participants 
have in the respective processes and weakens the credibility of the 
overall regulatory process. As NARUC President, I have supported such 
cooperative efforts as the FERC-NARUC Collaborative, technical 
conferences and workshops included within the NARUC Conferences that 
allow for open dialogues regarding pressing energy issues.
    Question 2. As a state regulator, what do you believe the 
relationship between FERC and state regulators should be?
    Answer. The relationship between FERC and state regulators should 
be a positive, progressive and evolving one. In all candor, this 
relationship is not one free from tension. But if both regulators work 
cooperatively and collaboratively, I am confident that together we can 
achieve positive results to overcome challenges that are in the public 
interest and serve our constituencies well.
    Question 3. What do you believe is FERC's role in relation to the 
Bonneville Power Administration?
    Answer. I understand that the Commission's relationship with 
Bonneville Power Administration (Bonneville) is different from that it 
has with public utilities under the Federal Power Act. Standard Federal 
Power Act ratemaking authorities do not apply to Bonneville. While the 
Commission does have jurisdiction over Bonneville pursuant to section 
211A of the Federal Power Act to require an unregulated transmitting 
utility to provide transmission services, I agree with the Commission's 
statements that FERC should not take the exercise of its section 211A 
authority lightly, and that that authority should be used rarely. 
Finally, section 215 of the Federal Power Act gives the Commission 
authority over Bonneville with respect to mandatory reliability 
standards.
    Responses of Colette Honorable to Questions From Senator Heller
    Question 1. There is a general consensus that our nation must 
increase investment in the U.S. transmission system, in an effort to 
promote grid reliability and resiliency as well as access remote areas, 
like those in rural Nevada, that are particularly suitable for 
renewable energy development like solar and geothermal generation.
    In your view, what type(s) of transmission projects should FERC 
encourage and why? What ideas to you have on policies FERC could pursue 
to achieve this goal?
    Answer. The Commission has taken a number of actions to enhance the 
efficient development of transmission infrastructure for all resources. 
This includes providing for regional transmission planning and cost 
allocation through Order No. 1000, providing additional flexibility to 
transmission developers to allocate new transmission capacity, and 
proposing to establish a more efficient process for generators to 
obtain priority rights to use transmission capacity on their 
interconnection facilities. Finally, last year, the Commission 
streamlined the interconnection process for small generating facilities 
and adopted reforms to its small generator interconnection procedures 
in response to changed circumstances in the industry. The Commission 
can also provide appropriate transmission incentives to those projects 
that deserve them.
    In addition, I believe that FERC has used financial incentives to 
encourage necessary investment in transmission infrastructure for 
reliability. Existing transmission rate structures have provided 
incentives to promote transmission buildout, but FERC should remain 
vigilant in overseeing the provision of these incentives to ensure that 
they are provided judiciously, and in a way that does not inhibit 
investment in other areas.
    Question 2. Some players within the industry have expressed 
concerns raised that FERC's ROE policies may lead to diminished 
transmission investment, for instance by making it harder for 
prospective transmission developers to secure financing at reasonable 
rates. What is your perspective on this criticism? Do you share such 
concerns?
    Answer. I appreciate that, in setting rates, the Commission must 
strike a balance between the need for just and reasonable rates for 
consumers and the need for utilities to earn a just and reasonable 
return to maintain existing facilities and attract new investment. I 
believe the Commission has struck that balance. However, each rate 
determination must be based on the facts and circumstances of each case 
and, if confirmed, I will work with my colleagues to ensure we strike 
the right balance in each case. The Commission must strike this balance 
whether it is setting base ROE or addressing transmission incentives.
    Question 3. In its recent ROE determinations, do you believe FERC 
has struck the proper balance between ensuring just and reasonable 
rates for customers and providing a return for transmission investors 
that is adequately compensatory to assure capital attraction? If not, 
what reforms do you believe are in order? What is your perspective on 
FERC's current transmission incentive policies?
    Answer. Issues related to FERC's recent ROE determinations remain 
pending, including on rehearing. For this reason, it would be 
inappropriate for me to prejudge how the Commission should act on those 
issues. In general, however, FERC's recent ROE determinations appear to 
me to strike a balance between the traditional ratemaking methodologies 
and also respond to current economic conditions. I applaud FERC's 
efforts to creatively address challenges in the ratemaking process and 
allow utilities the opportunity to earn a fair rate of return on their 
investments.
    I believe that FERC has used financial incentives to encourage 
necessary investment in transmission infrastructure for reliability. 
Existing transmission rate structures have provided incentives to 
promote transmission buildout, but FERC should remain vigilant in 
overseeing the provision of these incentives to ensure that they are 
provided judiciously, and in a way that does not inhibit investment in 
other areas.
    Question 4. As the West's energy supply mix further diversifies, 
what actions should FERC take, if any, to promote greater regional 
coordination and more efficient dispatch services that will be 
essential to ensuring that variable energy resources like wind and 
solar power generation are cost-effectively integrated into the western 
electric grid? What role can geothermal resources in states like Nevada 
play in those efforts?
    Answer. More efficient dispatch services and regional coordination 
can help cost-effectively integrate all resources into the electric 
grid. The Commission's regulations remove barriers to the integration 
of variable energy resources by requiring each public utility 
transmission provider to: (1) offer intra-hourly transmission 
scheduling; and, (2) incorporate provisions into the pro forma Large 
Generator Interconnection Agreement requiring interconnection customers 
whose generating facilities are variable energy resources to provide 
meteorological and forced outage data to the public utility 
transmission provider for the purpose of power production forecasting. 
Further, the Commission reformed its market-based rate authority rules 
such that transmission providers should have greater access to the 
reserve services needed to maintain reliability, including integration 
of variable energy resources. If confirmed, I look forward to exploring 
other opportunities to facilitate more efficient bilateral trading.
    In 2013, Geothermal resources generated 0.4 percent of electricity, 
with Nevada producing approximately 17 percent of the U.S. geothermal 
power. In its recent Annual Energy Outlook 2014, EIA projects electric 
production capacity from geothermal resources will continue to grow, 
almost doubling over the next decade and quadrupling by 2040. According 
to EIA, Nevada has the country's largest amount of potential geothermal 
resources.
    Question 5. As a state regulator, how much control do you think 
state regulators should have over the design of ISO/RTO capacity 
markets in hybrid regulated regions where utilities remain vertically 
integrated but participate in ISO/RTOs?
    Answer. From my perspective, state regulators should participate in 
regional processes to ensure just and reasonable rates, and to serve a 
consumer protection function for the benefit of each state's consumers. 
Each region has the proper knowledge base, through the work of seasoned 
expert engineers and planners, to design and run capacity markets. I 
also recognize that there are different market constructs based upon 
the diverse composition of market participants, and that each region 
should be allowed to design and operate a market that works best for 
them.
    Question 6. What measures can FERC take to help maximize renewable 
energy production in resource-rich Western states like Nevada?
    Answer. In addition to removing barriers to the participation of 
renewable resources in the Commission-jurisdictional markets, as 
discussed in response to Question 4, the Commission has also taken 
action taken a number of actions to enhance the efficient development 
of transmission infrastructure for all resources. This includes 
providing for regional transmission planning and cost allocation 
through Order No. 1000, providing additional flexibility to 
transmission developers to allocate new transmission capacity, and 
proposing to establish a more efficient process for generators to 
obtain priority rights to use transmission capacity on their 
interconnection facilities. Finally, last year, the Commission 
streamlined the interconnection process for small generating facilities 
and adopted reforms to its small generator interconnection procedures 
in response to changed circumstances in the industry.
    Question 7. What actions do you believe FERC should be taking to 
address electric reliability and fuel supply availability concerns that 
are the result of the increasing role natural gas is playing in meeting 
our nation's electric generation needs?
    Answer. FERC has taken affirmative steps to improve the 
coordination of communications and scheduling between the two 
industries and address reliability risks that can result from a lack of 
effective coordination. For example, in 2013 the Commission issued a 
Final Rule to affirmatively allow interstate natural gas pipelines and 
electric transmission operators to share non-public operational 
information to promote the reliability and integrity of their systems. 
Electric transmission operators reported that the enhanced 
communications facilitated by this rule were vital in maintaining 
reliability during last the Polar Vortex events of last winter. In 
addition, in March of 2014, the Commission proposed changes to the 
natural gas operating day and scheduling practices used by interstate 
pipelines to schedule natural gas transportation service. The 
Commission also initiated investigations under section 206 of the FPA 
to determine whether the day-ahead scheduling practices of the RTOs and 
ISOs align with any revisions to the natural gas scheduling practices 
that may be adopted by the Commission in a Final Rule stemming from the 
proposal. The Commission is currently considering responses to the 
proposal. If confirmed, I will carefully review the record developed in 
these proceedings to identify potential reforms that would improve gas-
electric coordination and address potential reliability risks.
    In addition, last year, FERC held a technical conference that 
discussed, among other things, pricing of fuel security into the 
wholesale power markets. The Commission recently directed the regional 
transmission organizations and independent system operators to file 
reports on their efforts to address the need for generator access to 
sufficient fuel supplies and the firmness of generator fuel 
arrangements. The Commission has also acted in several individual 
proceedings to put in place a number of market rule and tariff changes 
that can help address fuel assurance concerns, including clarifying the 
obligations of capacity resources with respect to fuel procurement, and 
providing greater fuel cost recovery certainty. If confirmed, I look 
forward to reviewing the fuel assurance reports and to discussing any 
additional ways to advance needed natural gas infrastructure.
    Question 8. What actions, if any, should FERC take to incentivize 
the procurement of firm pipeline services needed to support 
construction of new pipeline capacity?
    Answer. See response to Question 7.
    Question 9. Do you believe regional infrastructure concerns 
regarding gas-fired generator fuel availability are better addressed by 
market-driven solutions and/or tailored wholesale electric regional 
market reforms or by FERC prescribing broad regulatory solutions?
    Answer. As I noted in response to Question 7, the Commission 
recently directed the regional transmission organizations and 
independent system operators to file reports on their efforts to 
address the need for generator access to sufficient fuel supplies and 
the firmness of generator fuel arrangements. If confirmed, I look 
forward to reviewing the fuel assurance reports and to discussing any 
additional ways to advance needed natural gas infrastructure.
    Question 10. Do you believe the Notice of Proposed Rulemaking 
(NOPR) issued in RM14-2-000 is likely to accomplish FERC's stated 
policy goal of improving coordination of gas and electric scheduling? 
If so, how? Couldn't FERC pursue more cost-effective solutions that 
alleviate FERC's concerns if they were readily available?
    Answer. In response to the NOPR you reference in your question, the 
NAESB filed in September a set of alternative proposed changes to 
natural gas scheduling practices that it developed through an industry 
stakeholder consensus process. In late November, the Commission 
received comments from the public on its NOPR proposals and the 
alternative proposals submitted by NAESB. I am reluctant to prejudge 
the issues raised in response to the NOPR. If confirmed, I will 
carefully review the record in considering what next steps on 
coordinating gas and electric scheduling practices may be appropriate.
    Question 11. In light of the broad concerns that have been raised 
about the widespread impacts and substantial costs associated with 
FERC's proposal, would you support FERC doing a cost-benefit analysis 
prior to finalizing the NOPR in RM14-2-000?
    Answer. As I noted in response to question 10, in response to the 
NOPR the Commission has received a set of alternative proposals from 
NAESB as well as a number of comments from the public on the NOPR and 
the NAESB alternative. While I am reluctant to prejudge any of the 
issues before the Commission in this rulemaking, if confirmed, I will 
carefully review the record in considering appropriate next steps.
    Responses of Colette Honorable to Questions From Senator Baldwin
Rail-related grid reliability issues
    Question 1. Many of our coal plants have struggled to get the 
shipments of coal necessary to ensure stable, affordable, and 
predictable electricity. This fall, coal stocks were critically low at 
several coal plants in the region. I have pressed the Surface 
Transportation Board to resolve this rail service issue, as have our 
utilities. However, as the situation continues, it threatens the health 
and safety of Wisconsin residents. We know that FERC can play a role in 
helping solve these problems and I'm hopeful that as a Commissioner, 
you would be willing to help address these issues.
    1a) How does inadequate rail service impact our energy supply and 
energy consumers?
    Answer. Inadequate rail service, and in particular diminishing coal 
supplies can impact the operation of the grid in many ways, including 
local and potentially regional reliability issues, resource adequacy 
and wholesale rates.
    1b) What commitments will you make to assure that FERC engages with 
the Surface Transportation Board to ensure these reliability issues are 
addressed?
    Answer. If confirmed, I would support efforts by all affected 
parties to resolve this issue. This includes collaboration between the 
Surface Transportation Board and FERC to monitor this issue and share 
any relevant information.
    1c) How do you view the value of technical conferences, where FERC, 
the STB and industry convene to find solutions to supply issues that 
threaten grid reliability?
    Answer. If confirmed, I would support a discussion between the 
relevant stakeholders, including FERC, the STB and industry, given its 
potential impact to the reliable operation of the electrical grid. 
Information on this topic would help the Commission understand the 
duration of the issue, likelihood of any reliability issues and whether 
this issue is likely to reoccur.
Commitment to emergency propane actions
    Question 2. Last winter, at the height of the propane supply 
shortage in the Midwest, FERC took action to ensure that propane 
shipments were prioritized on batched pipelines. This action eased the 
supply crisis. It is critical that FERC be prepared to use its 
emergency authority as a tool for the federal government to respond to 
future crises.
    2a) How do you think the emergency authority and process for 
invoking this authority currently functions?
    Answer. Last year FERC used its authority under the Interstate 
Commerce Act for the first time ever to determine that an emergency 
existed requiring immediate action and issued an order directing 
Enterprise to provide seven days of priority treatment for propane 
shipments to help alleviate the propane shortage. In conjunction with 
the emergency order, FERC Staff conducted alternative dispute 
resolution discussions with the National Propane Gas Association, 
Enterprise, and other interested parties to determine if a longer-term, 
voluntary solution to the propane shortages could be achieved, which 
led to an agreement to extend the emergency order. In this way, the 
Commission was able to use its authority and work with industry to help 
to address the supply shortage in a way that did not impact industry 
and other suppliers.
    2b) Does FERC have all of the tools it needs to respond to quickly 
to similar crises in the future?
    Answer. Because the Commission has only used its authority one 
time, I think it is too soon to say whether the Commission would need 
additional authority. I think it will be important to monitor the 
propane markets and evaluate whether the Commission's current authority 
is sufficient before determining if additional tools are needed. If 
confirmed, I commit to continue to monitor the propane issue in the 
Midwest and to entertain the prospect of using the Commission's 
authority under the Interstate Commerce Act in order to ensure 
reliability in the future.
Natural Gas Infrastructure Issues
    Question 3. Many Wisconsin manufacturers and utilities are planning 
to increase their use of natural gas in the coming years. They are 
doing this to take advantage of low prices, to update their 
manufacturing processes, and to reduce pollution. This shift to natural 
gas is not unique to Wisconsin-it is a transition felt in many places 
across the country. As this transition happens, the cumulative 
increases in domestic demand will require a careful review.
    FERC plays an important role in ensuring that this transition will 
be smooth and successful. As Commissioner, how will you work to ensure 
that the cumulative increases in demand for natural gas are modeled and 
considered in infrastructure planning and build out?
    Answer. Natural gas pipeline companies file applications with FERC 
seeking authority to construct facilities and provide transportation 
service to their customers, including manufacturers and utilities. 
Pipeline companies typically conduct open seasons and then design 
projects to meet that need. In reviewing a pipeline project 
application, FERC considers, among other things, the demonstrated need 
for the project. FERC has an excellent track record of processing 
applications to build needed new facilities; since 2003, FERC has 
certified 93.1 Bcfd of capacity in new pipelines and expansions. If 
confirmed, I will work with my fellow Commissioners and FERC staff to 
continue to process applications for natural gas pipeline projects in a 
timely manner.
                                 ______
                                 
    Responses of Colette Honorable to Questions from Senator Portman
    Question 1. Do you agree that baseload power plants, the ``always 
on'' energy resources vital to reliable operation of the grid, deserve 
additional consideration for the irreplaceable reliability benefits 
they provide?
    Answer. Baseload generation is an important part of the nation's 
resource mix and will continue to operate in the future. The organized 
capacity markets have been attracting and retaining baseload resources. 
For example, PJM's base residual action for 2017/2018 procured about 
4,800 MW of new combined cycle generation. The Commission is resource- 
and fuel-neutral. My concern is that all resources are fairly 
compensated for the value they provide the system. These resources 
depend critically on revenues earned in the energy markets. The 
Commission's ongoing price formation effort is exploring whether energy 
and ancillary service prices appropriately reflect the costs to serve 
load. If confirmed, I look forward to discussing the issues explored in 
the price formation proceeding.
    Question 2. Would you commit, if confirmed, to supporting a FERC 
effort to model the cumulative effect of EPA regulations on the 
reliability and affordability of our nation's electric grid?
    Answer. My understanding is that staff from FERC discussed issues 
concerning the proposed rule with the EPA. I believe it is important 
for FERC to continue this relationship and discuss reliability issues 
with the EPA and other interested stakeholders. Yesterday, the 
Commission announced that it plans to hold a series of technical 
conferences to discuss implications of compliance approaches to the 
Clean Power Plan proposed rule, which will focus on issues related to 
electric reliability, wholesale electric markets and operations, and 
energy infrastructure. I believe this is an important step in 
discussing issues that may arise as a result of the proposed EPA 
regulations. If confirmed, I will continue to participate in the 
discussions on this rule and be a productive part of FERC's mission to 
ensure reliability.
    Question 3. Some of my constituents are voicing concerns as to the 
forecasted ``mismatch'' between the number of coal-fired and nuclear 
units that are likely to be retired VS the magnitude and timing of new 
capacity that EPA is anticipating will come on line to meet capacity 
needs.
    To illustrate, it's my understanding that in PJM (a 13-state 
regional transmission organization (RTO) that includes Ohio), approx. 
25,000 MW--40,000 MW (megawatts) of coal-fired and nuclear generation 
are at risk of retirement. In Ohio, more than 6,000 MW are due to be 
retired in 2015 alone-with only 1,200 MW of new capacity slated to come 
on line in that same timeframe.
    Given that we narrowly averted rolling brownouts and blackouts last 
winter---but which nevertheless resulted in significant price 
volatility for retail consumers, as well as disruptions in 
manufacturing operations across the country,--what responsibility do 
you believe FERC has, and/or what role should FERC play, in addressing 
this imbalance / misalignment?
    Answer. The Commission is resource- and fuel-neutral. However, 
maintaining diversity in our nation's energy sources and generation 
fuel supply is important to ensuring reliability and just and 
reasonable rates for consumers. In Arkansas, I worked to promote 
diversity in our state's energy resources, helping us achieve some of 
the lowest electricity rates in the country, and, as President of 
NARUC, I proactively engaged with my peers across the country and with 
industry on the security and diversity of our energy supplies. To 
continue to achieve fuel diversity, appropriate planning by industry 
and continued proactive engagement among regulators and industry will 
be needed. The electricity industry is already including fuel diversity 
in its future planning, and FERC has appropriately focused attention on 
the need for increased coordination between the natural gas and 
electricity industries, and, in a recent order, generator fuel 
assurance concerns in organized wholesale markets. In addition, 
traditional state integrated resource planning and the resource 
adequacy constructs adopted in many regions can provide additional 
tools to address fuel and resource diversity. If confirmed, I would 
work with my fellow Commissioners to continue these efforts and explore 
new ways to collaborate with other regulators and industry on these 
issues.
    Question 4. Should FERC have a formal role in reviewing and 
approving the state implementation plans called for by the Clean Power 
Plan to ensure affordable and reliable energy?
    Answer. While I have not studied any specific proposal, my 
understanding is that staff from FERC discusses issues concerning the 
proposed rule with the EPA. I believe it is important for FERC to 
continue this relationship and discuss reliability issues with the EPA 
and other interested stakeholders. Yesterday, the Commission announced 
that it plans to hold a series of technical conferences to discuss 
implications of compliance approaches to the Clean Power Plan proposed 
rule, which will focus on issues related to electric reliability, 
wholesale electric markets and operations, and energy infrastructure. I 
believe this is an important step in discussing issues that may arise 
as a result of the proposed EPA regulations.
    Question 5. The national council of grid operators recently called 
on the EPA to require states to identify the reliability impacts of 
their plans on neighboring states and their region. As a former state 
regulator yourself, do you think state regulators will be in a position 
to determine how their state's implementation plan will impact the 
greater reliability of the grid?
    Answer. Yes. As Chairman of the APSC, I co-convened a statewide 
workshop with the director of the Arkansas Department of Environmental 
Quality to study the impact of the Proposed Rule on Arkansas. The 
workshop was comprised of a diverse array of participants, which 
included representatives from both regional transmission organizations 
that operate in Arkansas: MISO and SPP. I think it is through efforts 
like these that state regulators can determine how their state's 
implementation plan will impact the reliability of the grid. However, 
while I have not studied any specific proposal, my understanding is 
that staff from FERC discusses issues concerning the proposed rule with 
the EPA. I believe it is important for FERC to continue this 
relationship and discuss reliability issues with the EPA and other 
interested stakeholders. Yesterday, the Commission announced that it 
plans to hold a series of technical conferences to discuss implications 
of compliance approaches to the Clean Power Plan proposed rule, which 
will focus on issues related to electric reliability, wholesale 
electric markets and operations, and energy infrastructure. I believe 
this is an important step in discussing issues that may arise as a 
result of the proposed EPA regulations.
    Question 6. As the EPA determines in the final rule what is 
required of states to comply with the Clean Power Plan, should the EPA 
reduce the compliance challenges and potential electric grid 
reliability concerns by recognizing and giving credit to states for 
reductions in greenhouse gas emissions that have already occurred in 
those state over the last several years?
    Answer. In November 2013, the National Association of Regulatory 
Utility Commissioners passed a resolution titled, ``Resolution on 
Increased Flexibility with Regard to the EPA's Regulation of Greenhouse 
Gas Emissions from Existing Power Plants,'' in which NARUC urged EPA to 
credit ``early movers,'' comprised of those states and/or regions which 
have already taken steps to reduce greenhouse gas emissions. I agree 
that, if possible, such efforts should be recognized.
    Question 7. Commissioner Moeller has requested a formal role for 
FERC in the development of the Clean Power Plan, especially with 
regards to reliability implications. If confirmed, would you support 
greater FERC involvement in examining reliability implications of EPA 
regulations?
    Answer. At FERC, my understanding is that staff from FERC discusses 
issues concerning the proposed rule with the EPA. I believe it is 
important for FERC to continue this relationship and discuss 
reliability issues with the EPA and other interested stakeholders. 
Yesterday, the Commission announced that it plans to hold a series of 
technical conferences to discuss implications of compliance approaches 
to the Clean Power Plan proposed rule, which will focus on issues 
related to electric reliability, wholesale electric markets and 
operations, and energy infrastructure. I believe this is an important 
step in discussing issues that may arise as a result of the proposed 
EPA regulations. If confirmed, I will continue to participate in the 
discussions on this rule and be a productive part of FERC's mission to 
ensure reliability.
    Question 8. What are your views on how RTO-administered capacity 
markets are working? Specifically, are these markets supporting the 
development of a diverse array of electric generating facilities in 
light of the pending coal plant retirements, while minimizing adverse 
impacts on consumers?
    Answer. The centralized capacity markets in place in some RTOs/ISOs 
are designed to procure sufficient capacity to meet the region's 
reliability needs and provide necessary price signals to facilitate the 
entry of new capacity resources when needed, the retention of existing 
capacity resources when economic, and the retirement of older and less 
efficient capacity resources. To date, the capacity markets have met 
these goals, procuring sufficient capacity to meet reliability needs 
and attracting and retaining baseload, mid-merit and peaking resources. 
For example, PJM reports that its base residual action for 2017/2018 
procured approximately 5,900 MW of new generation resources, the 
highest quantity of new generation procured in a single auction since 
the market began. However, FERC has continued to evaluate the 
performance and design of capacity markets, particularly as the 
resource mix evolves in response to low natural gas prices, state and 
federal policies encouraging the entry of renewable resources and other 
specific technologies, and the retirement of aging generation 
resources. If confirmed, I would support Commission efforts to continue 
this evaluation.
    Question 9. If not, what steps would you take to improve or modify 
them?
    Answer. As noted in my response to Question 8, to date the 
centralized capacity markets in place in some RTOs/ISOs have met the 
goals they are designed to achieve. However, in response to the 
significant changes taking place in the resource mix, FERC continues to 
evaluate the performance and design of these markets and the RTOs/ISOs 
continue to propose improvements or modifications to the markets to 
ensure that they will continue to achieve their objectives. If 
confirmed, I would support Commission efforts to continue its 
evaluation of capacity market performance and design, and would 
carefully consider RTO/ISO proposals to reform those markets.
    Question 10. Do you agree with Commissioners LaFleur and Moller 
that FERC should be a source of reliability expertise to the EPA?
    Answer. Yes.
    Question 11. Do you agree that we will need to continue to rely on 
coal to generate electricity for the foreseeable future?
    Answer. I believe that baseload generation, including coal-fired 
generation, is an important part of the nation's resource mix and will 
continue to operate in the future.
    Question 12. What are your thoughts on the fuel transition 
currently taking place in the utility sector? Do you share Chair 
LaFleur's concerns about increasing price volatility?
    Answer. Abundant and low cost supplies of domestic natural gas can 
provide positive benefits for consumers and the environment and will 
become increasingly important for compliance with proposed 
environmental regulations. Increased reliance on natural gas for 
electricity generation, however, can create infrastructure and 
coordination challenges that industry, state regulators and FERC must 
continue to address to maintain reliability. For example, pipelines and 
other natural gas infrastructure must be expanded to keep pace with the 
needs of both local distribution companies and gas-fired generators. 
The events of last winter showed that infrastructure constraints in the 
Northeast and in other areas of the country can result in volatile and 
often higher electricity and natural gas prices for consumers, and can 
negatively impact the delivery of fuel to gas-fired power plants. Using 
its authority under the Natural Gas Act to approve the siting and 
construction of interstate natural gas pipeline infrastructure, FERC 
has an excellent track record of quickly and efficiently processing 
applications to build needed new facilities. In addition, as FERC staff 
has noted in quarterly reports to the Commission (posted on the 
Commission's website), there are ongoing efforts at the regional level 
by reliability planning authorities, RTOs/ISOs, and state regulators to 
collaboratively asses their unique infrastructure needs. All of these 
efforts should continue.
    Increased use of natural gas for electricity generation also 
requires increased coordination of communications and scheduling 
practices between the two industries. Since 2012, FERC has proactively 
engaged with the electric and natural gas industries, NARUC, NERC and 
other stakeholders to identify and address these coordination 
challenges. FERC has also taken affirmative steps to improve the 
coordination of communications and scheduling between the two 
industries and address reliability risks that can result from a lack of 
effective coordination. For example, in 2013 the Commission issued a 
Final Rule to affirmatively allow interstate natural gas pipelines and 
electric transmission operators to share non-public operational 
information to promote the reliability and integrity of their systems. 
Electric transmission operators reported that the enhanced 
communications facilitated by this rule were vital in maintaining 
reliability during the events of last winter. In addition, in March of 
2014, the Commission proposed changes to the natural gas operating day 
and scheduling practices used by interstate pipelines to schedule 
natural gas transportation service. The Commission also initiated 
investigations under section 206 of the FPA to determine whether the 
day-ahead scheduling practices of the RTOs and ISOs align with any 
revisions to the natural gas scheduling practices that may be adopted 
by the Commission in a Final Rule stemming from the proposal. The 
Commission is currently considering responses to the proposal. If 
confirmed, I will carefully review the record developed in these 
proceedings to identify potential reforms that could improve gas-
electric coordination and address potential reliability risks.
    Question 13. Commissioner Tony Clark recently expressed concern 
with the timeline EPA has proposed for the Clean Power Plan, arguing 
that the timeline was ``front-loaded.'' He was quoted as saying: 
``There doesn't seem to be anybody who thinks that you can do it either 
in a cost-effective manner or even maybe that it's physically feasible 
because you're talking about a lot of transmission and a lot of gas 
pipelines being built, and doing it [in] the next couple of years just 
can't physically happen.''
    Do you agree with his concerns regarding the interim targets for 
the Clean Power Plan?
    Answer. I am unable to agree with Commissioner's Clark quote as I 
have not undertaken an assessment of the collective positions of the 
various states and regions nationwide. As President of NARUC, I have 
had the opportunity to interact with state regulators from all over the 
country who have diverse perspectives regarding the Clean Power Plan 
and its impact on reliability and costs. I have expressed support for 
the Administration's efforts to reduce greenhouse gas emissions and to 
improve the environment. As a result, Arkansas has filed comments 
indicating that its proposed goal may be difficult to reach by 2020. 
However, I note that on October 28, 2014, after engaging in significant 
outreach to a broad range of stakeholders, the EPA issued a NODA to, in 
part, seek comment on the potential technical challenges described by 
some stakeholders associated with achieving all of the reductions that 
states would be required to make as early as 2020. In the NODA, EPA 
discusses approaches that stakeholders have offered to address these 
issues and requests comment both on the concept of phasing in 
reductions over time and possible approaches to effectuating such a 
phase-in.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

           National Rural Electric Cooperative Association,
                                   Arlington, VA, December 2, 2014.
Hon. Mary L. Landrieu,
Chair, Energy and Natural Resources Committee, U.S. Senate, Washington, 
        DC.
    Dear Chair Landrieu:
    On behalf of the National Rural Electric Cooperative Association 
(``NRECA''), I express our support for the President's nomination of 
Colette Honorable to serve as a Commissioner on the Federal Energy 
Regulatory Commission.
    NRECA is the national service organization for more than 900 not-
for-profit rural electric cooperatives and public power districts that 
provide electric energy to over 42 million people in 47 states. NRECA 
members serve 19 million businesses, homes, schools, churches, farms, 
irrigation systems, and other establishments in 2,500 of 3,141 counties 
in the United States. NRECA's members include consumer-owned local 
distribution systems and 65 generation and transmission cooperatives 
that supply wholesale power to their distribution cooperative owner-
members. Our members exist to serve and provide reliable electric 
service to their ownermembers at the lowest reasonable cost.
    Colette D. Honorable's experience as a state regulator gives her a 
unique perspective on those areas where federal and state interests 
converge such as reliability and resilience. As the current chair of 
the Arkansas Public Service Commission, Chair Honorable has overseen 
regulations advancing energy efficiency and consumer protection. She 
has also built on her experience with notable leadership at the 
National Association of Regulatory Utility Commissioners and National 
Petroleum Council. As a FERC CCommissioner, these qualities will serve 
our nation well as demand for reliable and affordable energy services 
continues to rise.
    It is our sincere hope that Chair Honorable's nomination will move 
quickly and successfully through the Committee and that members on both 
sides of the aisle will support her by helping to ensure a successful 
confirmation by the full Senate.
            Sincerely,
                                             JoAnn Emerson,
                                                        CEO, NRECA.
                                 ______
                                 
                 Arkansas Electric Cooperative Corporation,
                                 Little Rock, AK., December 2, 2014
Hon. Mary L. Landrieu,
Chair, Energy and National Resources Committee, 304 Dirksen Senate 
        Building, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Energy and National Resources Committee, 304 Dirksen 
        Senate Building, Washington, DC.
    Dear Senator Landrieu and Senator Murkowski:
    On behalf of the Electric Cooperatives of Arkansas, I would urge 
the United States Senate Energy and Natural Resources Committee to 
recommend confirmation of President Obama's nomination of Colette 
Honorable, current Chairman of the Arkansas Public Service Commission 
(APSC), to serve on the Federal Energy Regulatory Commission (FERC). 
Chairman Honorable has proven herself to be a highly skilled, fair and 
reasonable lutility regulator; very professional in her dealings with 
all parties and stakeholders; and very foresightful in her 
understanding of the many complex issues facing both the electric and 
natural gas industries.
    As the President and CEO of Arkansas Electric Cooperative 
Corporation and Arkansas Electric Cooperatives, Inc., I represent over 
500,000 electric cooperative members in 74 of Arkansas' 75 counties. 
Collectively, our membership represents approximately 30 percent of the 
state's population and 60 percent of its land mass. We serve many of 
the state's low income households and struggling businesses, and are 
focused on ensuring that our electric service is both reliable and 
affordable. Currently, our wholesale electric rate to our members is 
the second lowest of any electric cooperative generation and 
transmission provider in the country. We advocate regulatory policy and 
approaches that will ensure our ability to continue to provide reliable 
and affordable electricity for generations to come. Under the Federal 
Power Act, FERC has the responsibility to ensure both reliable electric 
transmission service and just and reasonable wholesale electric rates. 
Chairman Honorable's record as both the Chair of the APSC and President 
of the National Association of Regulatory Utility Commissioners (NARUC) 
demonstrates her substantial relevant experience and ability to fulfill 
the critically important responsibilities of the FERF.
    Nationwide, there are over 42 million electgric cooperative members 
being served in 47 states. These cooperative members represent 
approximately 12 percent of the nation's population. With Colette's 
significant legal and regulatory background in both the electric and 
natural gas industries, along with her commitment to the principles of 
affordability and reliability, we believe that she is uniquely suited 
to serve our entire nation as the next member of the Federal Energy 
Regulatory Commission. Therefore, we respectfully urge your committee 
to approve her nomination and submit it to the full Senate for 
confirmation.
    If you have any questions that I can answer or need any further 
examples of Chairman Honorable's experience and qualifications to serve 
on the FERC, please feel free to contact me.
            Most Sincerely,
                                             Duane Highley,
      President and CEO, Arkansas Electric Cooperative Corporation.
                                 ______
                                 
  New England Conference of Public Utilities Commissioners,
                                                  December 3, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington, 
        DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building, 
        Washington, DC.
    Dear Majority Leader Reid and Minority Leader McConnell:
    We are writing in support of the nomination of Chairman Colette 
Honorable to serve as Commissioner on the Federal Energy Regulatory 
Commission. As Chair of the Arkansas Public Service Commission and 
President of the National Association of Regulatory Utility 
Commissioners, Chairman Honorable has a deep understanding of the 
importance of maintaining reliable, resilient and affordable energy in 
service to our nation's citizens. Chairman Honorable has the reputation 
of being a pragmatic regulator and has earned strong bi-partisan 
support among her colleagues.
    We respectfully request that you and your colleagues on the Senate 
Energy and Natural Resources Committee favorably report the nomination 
of Chairman Colette Honorable with a recommendation to confirm.
            Sincerely,
                                        Margaret E. Curran,
                                                         President.
                                             Sarah Hofmann,
                                                Executive Director.
                                 ______
                                 
           MID-ATLANTIC CONFERENCE OF REGULATORY UTILITIES 
                                     COMMISSIONERS, MACRUC,
                                                  December 4, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington, 
        DC.
Hon.  Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building, 
        Washington, DC.
    Dear Majority Leader Reid and Minority Leader McConnell:
    We are writing in support of the nomination of Chairman Colette 
Honorable to serve as Commissioner on the Federal Energy Regulatory 
Commission. As Chair of the Arkansas Public Service Commission and 
President of the National Association of Regulatory Utility 
Commissioners, Chairman Honorable has a deep understanding of the 
importance of maintaining reliable, resilient and affordable energy in 
service to our nation's citizens. Chairman Honorable has the reputation 
of being a pragmatic regulator and has earned strong bi-partisan 
support among her colleagues.
    We respectfully request that you favorably support the nomination 
of Chairman Colette Honorable.
            Sincerely,
                                        Robert F. Powelson,
                                                         President.
                                          Mary Anna Holden,
                                             Second Vice President.
                                 ______
                                 
            SOUTHEASTERN ASSOCIATION OF REGULATORY UTILITY 
                                             COMMISSIONERS,
                                     Austin, TX., December 2, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washing, DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building, 
        Washington, DC.
    Dear Majority Leader Reid and Minority Leader McConnell:
    In addition to our letter of support for Chairman Collette 
Honorable to serve on the Federal Energy Regulatory Commission, the 
Southeastern Association of Regulatory Utility Commissioners (SEARUC) 
would like also to share with you the action taken by SEARUC on 
November 17, 2014. At the business meeting of SEARUC held that date, 
the *commissioners attending unanimously voted to support the 
nomination and confirmation of Chairman Honorable to serve as a FERC 
Commissioner.
---------------------------------------------------------------------------
    * All other commissioners signatures have been retained in 
committee file.
---------------------------------------------------------------------------
            Sincerely,
                     Commissioner Kenneth W. Anderson, Jr.,
                                                 President, SEARUC.
                                 ______
                                 
        Western Conference of Public Service Commissioners,
                                                  December 4, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington, 
        DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building, 
        Washington, DC.
    Dear Majority Leader Reid and Minority Leader McConnell:
    We are writing in support of the nomination of Chairman Colette 
Honorable to serve as Commissioner on the Federal Energy Regulatory 
Commission. As Chair of the Arkansas Public Service Commission and 
President of the National Association of Regulatory Utility 
Commissioners, Chairman Honorable has a deep understanding of the 
importance of maintaining reliable, resilient and affordable energy in 
service to our nation's citizens. Chairman Honorable has the reputation 
of being a pragmatic regulator and has earned strong bi-partisan 
support among her colleagues.
    We respectfully request that you favorably support the nomination 
of Chairman Colette Honorable.
            Sincerely,
                                 ______
                                 
                         Mid-America Regulatory Conference,
                                  Milwaukee, WI., December 4, 2014.
Hon. Harry Reid,
Senate Majority Leader, 522 Hart Senate Office Building, Washington, 
        DC.
Hon. Mitch McConnell,
Senate Republican Leader, 317 Russell Senate Office Building, 
        Washington, DC.
    Dear Majority Leader Reid and Minority Leader McConnell:
    The nomination of Chairman Colette Honorable to serve as 
Commissioner on the Federal Energy Regulatory Commission will be before 
you. As Chair of the Arkansas Public Service Commission. President of 
Mid-America Regulatory Conference and President of the National 
Association of Regulatory Utility Commissioners. Chairman Honorable has 
a deep understanding of the importance of maintaining reliable, 
resilient and affordable energy in service to our nation's citizens. 
Chairman Honorable has the reputation of being pragmatic regulator and 
has earned strong bi-partisan support among her colleagues.
    We respectfully request that you favorably support the nomination 
of Chairman Colette Honorable. The enclosed *list of state regulatory 
leaders fully endorse this recommendation.
---------------------------------------------------------------------------
    * The list of state regulatory leaders have been retained in 
committee file.
---------------------------------------------------------------------------
            Sincerely,
                                           Phil Montgomery,
                                                         President.
```