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38–201 PDF 2007

FULL COMMITTEE HEARING ON THE COST

AND AVAILABILITY OF ENERGY AND

THE EFFECT ON SMALL BUSINESSES

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

AUGUST 31, 2007

Serial Number 110-43

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

DEAN HELLER, Nevada, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Urban and Rural Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

LOUIE GOHMERT, Texas, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Shuler, Hon. Heath .................................................................................................. 1

Davis, Hon. David .................................................................................................... 3

WITNESSES

Eggers, Dr. Dolores, University of North Carolina-Asheville .............................. 5

Snowden, Stanley, Seven Wheels Trucking, Inc. .................................................. 7

Hutchinson, John, Powell Construction ................................................................. 9

Lamberts, Dr. Frances, Co-Chair, Natural Resources, League of Women Voters of Tennessee ................................................................................................... 11

Tiller, Dr. Kelly, Agricultural Policy Analysis Center, The University of Tennessee .................................................................................................................... 14

Keiffer, Jim, Tennessee Valley Authority .............................................................. 22

White, Robert, Johnson City Power Board ............................................................ 24

Elkins, Larry, Holston Electric Cooperative .......................................................... 26

APPENDIX 

Prepared Statements: 

Shuler, Hon. Heath .................................................................................................. 33

Davis, Hon. David .................................................................................................... 36

Eggers, Dr. Dolores, University of North Carolina-Asheville .............................. 38

Snowden, Stanley, Seven Wheels Trucking, Inc. .................................................. 42

Hutchinson, John, Powell Construction ................................................................. 44

Lamberts, Dr. Frances, Co-Chair, Natural Resources, League of Women Voters of Tennessee ................................................................................................... 67

Tiller, Dr. Kelly, Agricultural Policy Analysis Center, The University of Tennessee .................................................................................................................... 71

Keiffer, Jim, Tennessee Valley Authority .............................................................. 75

White, Robert, Johnson City Power Board ............................................................ 79

Elkins, Larry, Holston Electric Cooperative .......................................................... 81

(V) 

(1)

FULL COMMITTEE HEARING ON 

THE COST AVAILABILITY OF 

ENERGY AND THE EFFECT ON 

SMALL BUSINESSES 

Friday, August 31, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:04 a.m., in the Auditorium, the Johnson City Power Board, 2600 Boones Creek Rd., 

Johnson City, Tennessee, Hon. Heath Shuler [Chairman Pro-tempore of the Subcommittee], presiding. 

Present: Representatives Shuler and Davis. 

OPENING STATEMENT OF MR. SHULER 

ChairmanSHULER. I now call this hearing to order. 

I would like to first thank the Johnson City Power Board for 

their hospitality in allowing us to hold a Congressional hearing 

here. And I want to extend an absolute special thanks to my good 

friend Congressman David Davis here in the First District of Tennessee. 

We are both freshman members, we are back to be freshmen all 

over again. And he has done an outstanding job and we have been 

able to work together on a lot of issues. And really as you can tell 

to truly start making—to cross the party lines to do what is right 

for America. And I think that is the most important thing. 

We are here today to hear from a panel of witnesses that can 

educate the two of us to go back to Washington and send that message what happens in western North Carolina and east Tennessee, 

we can send that message to Washington that the people there can 

listen to the testimony that will be today and they can educate us 

on being able to serve you better in our district and serve America. 

So we want to—I want a special thanks to Congressman Davis 

and what he has been able to accomplish in a very short time, he 

has certainly made a very good name for himself in Washington. 

Today’s hearing will focus on the cost and availability of energy 

and the effects on small businesses. 

Here in Tennessee we will examine the matter of energy prices 

and how it impacts small businesses. It is an issue that affects 

nearly every industry, whether it is a retailer coping with the higher energy rates or small trucking companies that are dealing with 

the spiking gasoline prices. It is one of the most critical economic 

challenges facing our country today. 

2

The increasing cost of energy is making it difficult for small business owners to manage and survive. According to a recent survey 

published by the PNC, financial service groups, the rise in energy 

price is the leading concern among small and medium sized business owners. While gasoline prices have dipped recently, the cost 

of energy remains high for oil and natural gas as well as electricity. 

While gas prices have—unlike the large competitors, small businesses often lack the cash reserves to cope with a spike in prices. 

Here in Tennessee and in my home state North Carolina the 

manufacturing sector has taken a tremendous hit. Manufacturing 

jobs have gone oversees for a variety of factors and the cost of energy is adding to these problems. That is one of the reasons that 

Congress needs to act sooner than later as the energy must become 

another factor in this—must not become another factor in deciding 

to move good paying jobs oversees. 

I am proud to say that the Committee has worked to highlight 

the urgent and the significant impacts facing small business when 

it comes to energy. In our Committee, we have worked for both immediate and long term solutions for these challenges. 

The Committee has considered measures for helping and dealing 

with some of these issues. Earlier this spring, I introduced a Small 

Energy Effective Business Act, which was included in the comprehensive energy legislation we recently passed in the House. 

My bill helped small businesses acquire energy efficient technologies by providing more flexible loans through the SBA’s 7A and 

the 504 lending program. The legislation also requires the SBA to 

develop a national strategic for education educating small firms 

about energy efficiency. 

The bill will create renewable fuel capital investment programs 

that invest in research and the production of renewable energy 

sources for small businesses. This includes the development of biodiesel, ethanol, and related research considering other than more 

biomass fuels. While this is a start, I believe that we can do more 

to address this issue of energy prices. That includes making sure 

that we are encouraging the creation of energy supplies here in 

America while helping small businesses deal with the current situation. 

In the short term, small businesses must deal with the reality 

that they are going to pay higher prices for electricity, gas, and oil. 

To help them cope, I believe that we need to ensure that companies here in America are able to compete in light of these costs. 

Small businesses often lack the resources to identify equipment 

and techniques that would save their businesses money down the 

line through reducing energy consumption. I believe that there is 

a need for a greater tax incentive for small business to invest in 

energy efficient equipment. These policies would assist them in decreasing the overall energy consumption without harming their 

business growth. 

We also need to do more to promote more domestic supplies of 

energy production from organic material and that would otherwise 

be discarded. The State of Tennessee has obviously been a leader 

in this forefront. I am please that my alma mater, the University 

of Tennessee, is working to develop new techniques for these clean 

energies. This investment will pay off in a number of ways. It will 

3

not only help rural economics, but it will help the potential for 

long-term energy solutions. Quick action is needed to help small 

businesses contain their costs, remain competitive, and play the 

necessary role in reducing carbon emissions in the U.S. This Committee looks forward to working with you to continue solving energy issues important to our nation and small businesses. 

And at this time I would like to recognize Congressman Davis, 

the distinguished gentleman from the State of Tennessee who 

serves as a ranking member on the Subcommittee on Contracting 

and Technology, for his opening remarks. 

OPENING STATEMENT OF MR. DAVIS 

Mr.DAVIS. Good morning. Thank you all for being here to examine the availability and cost of energy and how it has an effect on 

small business. I am very appreciative of each of our witnesses who 

have taken time out of their undoubtedly busy schedules to be with 

us today. Thank you for being here. 

Before we begin, I would like to sincerely thank my good friend 

Congressman Heath Shuler for making the short trip across the 

Blue Ridge mountains. Heath and I were actually together yesterday on the other side of the mountain, to talk about healthcare. 

And I cannot think of two more important things facing small business right now than the availability and access to good quality 

healthcare and the availability and access of energy costs and energy products. Heath and I may come different states, be members 

of different parties, only one of us can still throw a 12 yard out pattern on the road, and you can probably guess who that is. 

[Laughter.] 

Mr.DAVIS. But we both care passionately about the survival and 

prosperity of our small businesses. 

Being back here in Tennessee is probably a little bit like a homecoming for you, Heath. I certainly hope that it is. For those of you 

who may not know, and there are probably not many of you who 

do not, before he was Congressman Heath Shuler he was Heath 

Shuler, the 1993 SEC player of the year and NCAA male athlete 

of the year while playing quarterback at the University of Tennessee-welcome back. 

ChairmanSHULER. Thank you. 

Mr.DAVIS. What many of you may not know is that following his 

playing days in the NFL he became a successful entrepreneur and 

small business owner. He began a real estate brokerage firm and 

several other successful real estate companies. I consider Heath to 

be a strong asset to the small business community as he brings 

real world experience to the Committee as he, like myself, have 

owned small businesses. He knows the pressures of meeting a payroll, finding affordable health insurance for his employees and complying with government regulations. 

Across the United States, small businesses make up more than 

99 percent of all non-governmental employees. They also lead our 

economic growth by creating anywhere between 60 and 80 percent 

of our new jobs created in the economy. Small businesses are dynamic and continually changing to meet consumer demands and 

market needs. Almost 700,000 small firms with employees start up 

every year in America. 

4

Today we are addressing on of the most significant problems 

faced by small business, the rising cost of energy. In recent years, 

it has become painfully clear that America is too far dependent on 

foreign oil. We import nearly two-thirds of the oil that we consume. 

With gas prices in east Tennessee and throughout the country hovering around $3 a gallon at times, it is important for Congress to 

continue to explore ways that we can produce more energy domestically rather than relying on oil from the volatile Middle East. 

It is quite apparent that the United States must work toward a 

balanced and diversified energy policy, including locating and developing our own domestic sources of fossil fuels, such as those located in the Arctic National Wildlife Refuge and in the ocean off 

of our shores. Exacerbating our dependence on foreign oil is the 

fact that new refineries have not been built in the United States 

for over 30 years. I believe we must take a long hard look at refining capacity as part of the solution. 

Due to the astounding technological advances in recent years, we 

can now look to the immense potential of renewable energy as alternatives to fossil fuels. Bio-diesel and ethanol are fast becoming 

household names and their prevalence in the marketplace has increased dramatically in a very short time. There can be little doubt 

that the increased demand for renewable fuels has had a positive 

impact on our nation’s economy, including small businesses. 

When one considers the contributions of wind, solar, and nuclear 

power, we can begin to see that we have taken great strides in reducing our foreign oil dependence. Diversifying and improving our 

nations energy production and consumption increases competition, 

which we all know drives prices down, spurs innovation, and creates opportunities for niche industries to crop up and begin to 

thrive. In fact, more than 70 percent of renewable fuel producers 

are small businesses. 

With that said, there is still more that needs to be done, including examining more immediate fixes to help businesses and homeowners alike to cope with rising fuel prices. We have asked our distinguished panel to discuss both long and short term solutions to 

this pressing problem and I am very eager to hear their testimony 

this morning. 

Again, thank you all for being here today and now I would like 

to yield to the gentleman from North Carolina to introduce his 

guess Dr. Eggers. 

ChairmanSHULER. Thank you, Congressman Davis. 

Again, we are faced with lots of adversity for small businesses 

and at this time, I would like to introduce our first panel. But before I do that, I ask unanimous consent that the record be held 

open for five days for all members to submit their statement. Hearing no objection so ordered. 

At this time I would like to introduce Dr. Dee Eggers as an assistant professor of environmental studies at the University of 

North Carolina at Asheville. 

Dr. Eggers previously worked for the Environmental Protection 

Agency as well as the North Carolina Department of Environment 

and Natural Resources. 

Dr. Eggers, you are recognized for five minutes. 

5

STATEMENT OF DR. DOLORES EGGERS, UNIVERSITY OF 

NORTH CAROLINA, ASHEVILLE 

Ms.EGGERS. Thank you, very much. Congressman Shuler and 

Congressman Davis, thank you both for your service and, Congressman Shuler, especially for inviting me here today to speak on 

energy issues and opportunities as they relate to small businesses. 

I am an associate professor now, I got a promotion, but I am an 

associate professor in the environmental studies department at 

UNC Asheville and I also serve on the North Carolina legislative 

commission on climate change and I teach classes in policies, resource management, basic environmental science and strategies for 

sustainability. 

We are all feeling the effects of rising energy costs as global demand for energy increases. Unfortunately, those costs will continue 

to rise for the foreseeable future. So how can we address that growing impact on our local economy and small businesses? I think the 

best help you can give small businesses is to make energy efficiency and renewables more affordable and available. 

So why efficiency? The most affordable energy is the energy we 

do not use. According to research done for the North Carolina Utilities Commission, the cost of generating a new kilowatt hour from 

the least expensive source which is coal, is about seven cents. 

Whereas, the cost to save a kilowatt hour through an efficiency 

program is about three cents per kilowatt hour. And in the handout, there is a bar chart that shows the various cost of different 

sources of energy. 

One of the best things about investments in efficiencies is that 

the savings are usually permanent. A building with extra insulation will save money for that user year after year after year. And 

with the payback period on many of these investments being pretty 

short, like one to five years, six months even, those saving soon become additions to the bottom line. 

Now most of us—this is the part that you should really pay attention to. Most of us are steeped in the old design mentality of increasing marginal cost, that is for every additional kilowatt hour 

we conserve, it costs us more than the last kilowatt hour we conserve. 

But what we are finding is this effect that Amory Levens calls 

tunneling through the cost barrier—and there a graph representing 

that in the handout as well. With this effect, what happens is when 

we combine many approaches at once, like more efficient HVAC 

systems, better HVAC controls, efficient windows, better insulation, 

shading, et cetera, all of a sudden something transformational happens and we see new opportunities emerge for cost savings, because we can downsize certain systems and omit systems all together. So we can put in a more efficient smaller HVAC system 

and have fewer east and west facing windows while still having 

great natural light on the inside. 

Because of the cost savings from the smaller systems, the total 

investment decreases. In the example I included in supporting material, total investment in a new building for energy efficiency went 

from 26,200 down to $4330 and the payback period for some of 

those things, which may have been like for shading on the order 

6

of 17 years—the payback period for the entire package went to less 

than one year for a highly efficient building. 

Now this is a familiar concept, we call it the whole is greater 

than the sum of the parts. Everybody who has played on team 

knows how that works. But people do not expect to see it in efficiency. So this is an opportunity that we need to take advantage 

of. In some cases it actually costs less to build a highly efficient 

structure than it does cost to build a conventional structure. And 

these are some synergies we get to take advantage of and our small 

businesses get to benefit from these opportunities. 

It is a foreign idea for most places or most people in the United 

States, but it is not a foreign idea in other places. We are seeing 

this rapid emergence of these technologies applied in Japan, Germany, Holland, Denmark, and even China is coming on board with 

this. But in the U.S. right now only a handful of architecture and 

engineering schools are teaching their students those design techniques. For folks in existing structures or who want to build traditionally, we have known for a long time that various investments 

and individual efficiency projects can provide significant savings. I 

invested in retrofitting insulation in a house that I have as a rental, that paid back in less than two years. 

Most people do not know what the opportunities are for them 

though and they do not know what projects would be most cost effective for them and we need to bridge those gaps. So what can you 

do to help small businesses? 

I recommend that you support the following types of legislation, 

I have seven recommendations: 

The first one is to establish national goals for renewables and efficiencies to drive the development of this technology, the accessibility of information, et cetera. 

Number two, make sure that small businesses have access to tax 

credits for renewables and efficiencies. The tax credits need to be 

extended existing tax credits for at least a decade; because of financial planning, we have got to push it a lot farther out. They need 

to be available for much small projects so that small business owners can really take advantage. They also probably need to be 

transferrable or available to renters so that businesses that rent 

space and pay their own utility bills, but do not own the building 

can actually use the tax credit themselves or be able to transfer 

them back to the building owners, sell them to the building owner 

in some way. 

Number three, improve the availability of technical support programs. We have some good existing programs at HUD, DOE, and 

EPA, but they are separated and not coordinated, a lot of duplication of effort and because of that we do not have one that is really 

good enough at providing technical assistance at the level that we 

need to support small businesses. 

Number four—this is a big one, I recommend that you require all 

states to decouple utility profits from energy sales. In many places 

utilities can only make profit by selling electricity, they need to be 

able to make profit by having energy efficiency programs as well. 

We need a national carbon cap to simulate markets, address climate change, and meet our 1992 Real Earth Summit commitment. 

We need to require or encourage better training programs—this is 

7

the key—better training programs for architects, engineers, plumbers, electricians, builders, contractors, et cetera, so they know how 

to put these systems in place. 

And finally I would say we could use some moral authority of 

Congress to call for a change at the state and local level and perhaps even create a national challenge program, because Americans 

love a challenge. We really rise to a challenge. 

I want to thank you for listening and thank you very much for 

coming to the people and please let us know how we can help you. 

[The prepared statement of Dr. Eggers may be found in the Appendix on page 35.]

ChairmanSHULER. Thank you, so much. Now I yield to the ranking member, for the introduction of the remaining witnesses. 

Mr.DAVIS. Thank you, Mr. Shuler. The next witness will be Stanley Snowden. Stanley Snowden is the president of Walker Supply 

Company, which has locations in Alcoa, Morristown and Danridge, 

Tennessee. The company employs approximately 100 people and 

distributes plumbing, lighting, and cabinets to contractors primarily in new construction. 

He graduated from the University of Tennessee in 1970 and is 

past president of the Morristown Area Chamber of Commerce. Mr. 

Snowden, welcome. 

STATEMENT OF STANLEY SNOWDEN, PRESIDENT, SEVEN 

WHEELS TRUCKING, INC. 

Mr.SNOWDEN. Thank you very much and thank you Congressman Davis and Congressman Shuler. After listening to Dr. Eggers 

I feel totally inadequate to be here. I do not make a living speaking, but I do appreciate the opportunity to be asked and to participate. 

As Congressman Davis said, I am president of Walker Supply 

Company, I am also president of Wallace Hardware Company in 

Morristown, Tennessee, which is a wholesale hardware distributor 

that employs approximately 250 people and I am representing 

today Seven Wheels Trucking, Incorporated, which is a Subchapter 

S corporation of Wallace Hardware Company. Our primary business at Seven Wheels is we provide transportation for both Wallace 

Hardware and Walker Supply Company. We have approximately 

35 tractor trailers and 150 trailers on the road every day and obviously fuel is a huge concern to us. 

The biggest challenge that we have to face is the same challenge 

that the average consumer has to face and that is the spikes on the 

cost. When fuel goes from $1.97 a gallon to $3.25 a gallon within 

the same 12-month period of time, very few people can adjust to 

that without making some substantial changes in their life styles. 

And those changes in their life style result in economic depression 

upon our business. There are only so many discretionary dollars to 

be spent and when gas goes up as much as it has or diesel fuel, 

those dollars gets squeezed. 

From our standpoint, it really affects our customers, which our 

customers are primarily small independent retail hardware stores 

and building supply places. Now fortunately some of those are located in Congressman Shuler’s area and they do not know that 

8

there is a depression going on or any economic slowdown or anything. But there is a lot of places when you go into in eastern Kentucky and southwest Virginia and West Virginia that are feeling 

the effects of it quick heavily. 

Our fuel cost at Seven Wheels in one year, from 2004 to 2005, 

increased 40 percent, while the miles driven increased three percent. In real dollars that was a difference of almost $300,000 just 

in fuel cost from one year to the next. And we do not make the 

kind of profits to be able to absorb those kinds of additional cost. 

We try to pass on as much as we can to our customers, but then 

that creates problems for them, because that adds to their cost of 

goods sold or adds to their expense. And then they try to pass it 

on to their customers in the form of higher prices or they get 

squeezed, and usually it is a combination of both. And that is the 

battle we have all been facing for the last three years is how much 

do we try to pass, how much can we pass, how much do we have 

to absorb and then trying to find other measures to maintain profitability because of those things. 

One of the things that I would hope could come out of this is two 

things, anything that can help us to promote energy savings, to 

identify those savings that are out there and that are available to 

us, and as Congressman Shuler alluded to, the technology that is 

available that might help us in conserving energy, many times it 

is hard to know what is out there. If you know what is there then 

you can do something with it, but the lack of knowledge and the 

lack of a common place to go to get that information is very difficult. 

And one example I will give, we are in the process of building 

a new building and we were looking at the lighting and we found 

out that there is lighting available now that will probably save us 

about $50,000 a year just in energy used, just in lighting in our 

warehouse. Well, obviously that got our attention and then we find 

out that there is a an Energy Act of 2005 that provides a tax benefit on that also. But getting the information on the how to do that 

is virtually impossible. Very few people know the mechanics of how 

that works or at least the people that we have tried to contact to 

find out how this truly works, it is very difficult to do. 

So one of the things that I would strongly urge is the availability 

of information, whether it would be a common source or one source 

or whatever, be made easier to the average person, because most 

people—we are much busier every day in fighting the battles of 

keeping people happy and taking care of customers. And if we can 

find ways to get that information easier and know specifically how 

to apply that information to where it is beneficial to us, then it also 

benefits all of us, because anything we do has a ripple effect, just 

as anything you all do has a ripple effect. And there is only so 

much that you can pass on and there is only so much that you can 

absorb. 

And while there is 700,000 small businesses starting up every 

day I think you alluded to, there is probably close to that many 

closing up every day too. Because the failure rate is extremely high 

in small businesses, exceptionally in the first three years. 

So again, thank you for allowing me to be here and I look forward to seeing the results of this work. Thank you. 

9

Mr.DAVIS. Thank you for presenting today and you did a great 

job. Our next witness is Mr. John Hutchinson. John is a graduate 

of West Virginia University and spent the first 50 years of his life 

in the hard West Virginia coal fields. He has over 38 years of experience in the coal industry working with construction of underground slopes and ventilation shafts, above ground in the construction of coal preparation plants and material handling and laying 

systems. Currently Mr. Hutchinson serves as Vice President of finance for Powell Company right here in Johnson City, Tennessee. 

He also serves on the board of director for the Johnson City, 

Jonesborough, Washington County Chamber of Commerce. John, 

welcome to the hearing. 

[The prepared statement of Mr. Snowden may be found in the 

Appendix on page 90.]

STATEMENT OF JOHN HUTCHINSON, VICE PRESIDENT - FINANCE, POWELL CONSTRUCTION, JOHNSON CITY, TENNESSEE 

Mr.HUTCHINSON. Thank you very much, Congressman. It is an 

honor to be here today. Like Mr. Snowden said, I am new to this. 

I was asked to make a presentation today on coal and the coal 

industry of which I have spent my life in. From West Virginia I 

grew up with it, I lived it, I felt it, I learned it every day. I guess 

I could start out with a comment about our Powell companies and 

Mr. Snowden has touched on that. We offer a huge fleets of cranes, 

boom trucks, lot of Low-Boy equipment, a lot of pick-up trucks, in 

the hundreds and obviously we feel the impact every minute of the 

energy crisis; particularly gasoline, diesel fuel, oils and so forth. 

And as he said, many of those we are unable to pass on in our pricing to our customers. We absorb the upswings and do the best that 

we can, but that is obviously a major part of our cost. 

But that is not really why I was here today, I wanted to speak 

with you regarding coal. I feel that it is our most important and 

most abundant source of energy in this country for the past, the 

current days, and the future. 

In my handout—and I would encourage everybody to pick one up, 

if they have not already. I put in a lot of data there and I am not 

going to bore you with that at this time. But I would encourage you 

to go through and read some of the statistics, I provided some 

charts and graphs. But basically just to give you some information 

today, currently coal is providing about 23 percent of our energy 

sources in the U.S. today with oil at 39, natural gas at 24, and nuclear, hydropower and the other making up the balance. 

Worldwide, coal is at about 23 percent also, we are right in line 

with the world market. Oil is 35 internationally and natural gas 

is 21 percent internationally. So we are some where in line with 

the world, but the U.S. has the largest supplies, reserves of coal 

in the world. And there is a pyramid in the handout I would like 

for you to take a look at. Basically we are looking today at active 

mines, so this is the ones that are being worked, about 19 billion 

tons of coal with active mines. Keep in mind we use about one billion tons of coal per year in the U.S. So there is 19 billion tons 

there, but there is a total of 275 billion tons that are mineable and 

10

identified in this country. If you want to look totally at the reserves 

you can see somewhere near four billion tons, the balance are tons 

of coal that are probably not economically feasible to get out. So if 

we use a billion tons a year and we have a 275 billion tons reserve, 

we have about 275 or 280 tons at the current consumption available for use in this country. 

And most of you may not know this, our federal government is 

the largest owner of coal reserves in this country, most of that is 

out west, they lease those properties to coal companies for money. 

One of the of the points I would like for you to go away with 

today, is coal gasification. This is not a new concept, it has been 

around a lot of years, but I think it is pretty much new to the 

mainstream today. Basically what that means and I learned a lot 

with this study, is they take the coal, they react it at high temperatures with oxygen and out of that process comes a new fuel, a synfuel. It is available for use in internal combustion engines and it 

is used for methane gas and it can be used as others syn-fuel uses. 

So that is a new word and a new concept and a new use for coal 

that we all should consider strongly going forward. 

Also in my handout you will see more detail on the coal reserves; 

obviously, the eastern coal fields, the Appalachia coal fields 

produce bituminous coal, that is a very high quality coal. The coal 

fields in the west produce a lesser quality but greater tonnages and 

easier to mine and more economically mined. But certainly here in 

Appalachia we are more familiar with what we call bituminous coal 

reserves. 

In the U.S. coal-fired power plants account for over 50 percent 

of the electricity generated in this country. Coal provides 90 percent of that coal; and again, it is a billion tons per year that we 

are currently mining and using. 

Regionally, we have the TVA, it operates 11 coal-fired power 

plants producing 60 percent of TVA’s total power outgo. And that 

is roughly 15,000 megawatts of electricity sold to 158 locally owned 

distributors, Johnson City Power Board I believe is one. 

I have given you some information in the handout on types of 

mining and you can review that on your own time. Just a comment, 

a couple of things, in a 30-year period, coal productivity has increased from two tons per man hour to today about seven tons per 

man hour. The workforce has gone from about 152,000 in 1973 to 

roughly half of that, 71,000 today. But the total production has 

gone from about 600 million tons to over a billion tons, less man 

power, more tons per hour. 

Again the world coal reserves, the United States is at 275 billion, 

Russia is next at 173 billion and China, India, and Australia are 

also big coal reserve areas. 

Coal is also used in the production of chemicals and fertilizers, 

not many people understand that. Another point I am going to 

make about Appalachia coal mines is that during World War II 

their coal supplies was used in the production of steel to make 

guns and planes and tanks, et cetera. And without that coal I 

would fear where we would be today. 

Coal use has grown in recent years, because of the secure abundant domestic reserves and relatively low prices. They have maintained the demand in both for the domestic and the international 

11

markets through increased productivity, larger mines and mega 

mines is the terms, new technology and all the while the fewer 

mine personnel. 

The coal mining industry as a whole provides many jobs in east 

Tennessee, southwest Virginia and eastern Kentucky. These jobs 

are in the form of not only coal mine jobs, but also construction, 

such as the Powell Companies, manufacturing, engineering, sales, 

marketing, and consulting. 

I am going to brag about the Powell Companies right now. We 

have over 500 jobs regionally to this coal industry and according 

to some statistics, I think there are about 4600 coal miners office 

worker type jobs in this area creating an estimated 11,500 additional jobs. 

History indicates that each significant action of government was 

accomplished with immediate and negative effect on production. 

However, the reverse is also true. That is, positive governmental 

encouragement will likely resulted in the capital investment necessary to sustain future production at or above current levels. This 

is what we should all strive for. 

In closing, it is essential that we as elected officials, business 

men and women, state and local officials, and everybody in this 

room today, should do all we can to sustain this eastern U.S. coal 

production. 

I want to thank you for inviting me to be here today. Again, I 

would encourage everybody to pick up a handout. I have included 

also some pictures in there of some coal preparation plants that the 

Powell Companies have been involved in and I think they are impressive. I hope everybody does too. I will try to answer any questions anybody has. 

Thank you, very much. 

Mr.DAVIS. Thank you for being here today. 

Our next witness is Dr. Frances Lamberts. She co-chairs the National Resource Committee for the League of Women Voters in 

northeast Tennessee and the State League of Women Voters. Previously Dr. Lamberts taught at East Tennessee State University 

and is a licensed psychologist and director of psychological services 

at the Green Valley Developmental Center. She has organized several regional educational forums on ground water protection ambient air health standards, endangered species for East Tennessee 

State University Lung Association League of Women Voters Education Fund. Dr. Lamberts, welcome. 

[The prepared statement of Mr. Hutchinson may be found in the 

Appendix on page 39.]

STATEMENT OF DR. FRANCES LAMBERTS, COMMUNITY 

ACTIVIST, JONESBOROUGH, TENNESSEE 

Ms.LAMBERTS. Thank you. Thank you, Congressman Davis for inviting me to speak for the League of Women Voters on energy matters. Those have been a concern to the League of Women Voters 

for a very long time. In order to protect our natural resources, in 

order to make ourselves strategically more independent with regard to energy availability and in order to keep costs down, the 

League has for a long time promoted energy efficiency and thriftVerDate 0ct 09 2002 09:27 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\38201.TXT LEANN
12

iness and conservation in energy use and expansion of renewable 

resources as our wisest course in energy policy. 

In my written testimony, I had highlighted a personal example 

to show how little we think the energy resource of efficiency investment has been capped in our area; namely, support for energy efficiency investments are not very available here. They are in other 

areas and for other utilities. Our major utility, the TVA, for quite 

some time has not had a serious program in energy efficiency. 

I have highlighted a small business, very close by here, a very 

modern recently opened meat packing facility that provides an 

enormously important service to hundreds of families in our area 

who when they modernized that plant took great pain to invest in 

insulation to reduce energy cost, but are still finding because they 

must meet high standards, health-related standards for processing 

and cooling, et cetera, and they conscientiously do meet these 

standards, their electric bill, their electric burden is very, very 

high, potentially putting them their viability at risk as a small 

business. 

I am very happy to hear therefore these efforts in the Congress 

to provide more incentives to small business and homeowners with 

regard to investments in efficiency and in renewable technology, 

which some generation in renewables this particular company is 

now looking to see if they can provide that. 

We think this is a very opportune time for us to work on efficiency investments, because the State of Tennessee, our legislature, 

just passed a bill asking the state to develop a comprehensive energy plan. We would hope that the TVA and state government 

would work together to put some very high energy efficiency goals 

and performance standards into that plan. I outlined a number of 

realizable concrete examples of how this can be done. One of which, 

relates to what Mr. Snowden was talking about namely, we recommend creation of energy consultant teams that go to homeowners and businesses and do baselines on energy use and then 

make technical recommendations like he was talking about and 

then do monitoring. We would recommend obviously for businesses 

and homeowners that should be a voluntary thing. But we think 

for public buildings that should be an obligatory measure, you 

know, for us to improve ourselves and also please be aware that 

Tennesseans, shame on us, at this time our per capita energy consumption is among the two or three highest in the whole country. 

So we have a long way to go. Energy efficiency and energy reduction can be accomplished very quickly and concretely. 

We would urge—we hope for an initiative between state, government and the TVA and hopefully our Congressional leaders so that 

energy growth demand in electricity be met at least for the foreseeable future in energy efficiency improvements. 

We do note with some concern the apparent steps or plans by 

TVA for a significant expansion in traditional energy, you know, in 

capacity through traditional sources; we would point out these 

sources, critical and must reduce dependence on our waters, to the 

extent that 83 percent according to the statistical abstract of our 

daily withdraws of fresh water from our rivers and lakes; namely, 

more than eight billion gallons a day, go to electricity production 

from the traditional coal-fired and nuclear power plants. And the 

13

latter particularly are especially vulnerable we think when we 

know and have already seen both in TVA recently and in other 

countries that in a climate changed world, water itself is becoming 

a threatened resource. And so we think that this is not a wise way 

to go when we have alternatives that are totally independent of 

water and we would like for us very seriously to think about this. 

We would urge a predominant redirection by the TVA of the plan 

for electricity expansion into the renewable resource program that 

they now have under the good green power switch program, which 

is however, very, very, small. 

At the federal level, the League of Women Voters supports adoption of a renewable portfolio standards for the very many benefits 

that it has with regard to protection of our environment, with regard to job creation and many other aspects with regard to that diversification of the fuel mix and some more competition in the industry, et cetera, et cetera. There are many, many advantages to 

this. 

Finally we would like to bring to your attention what we see as 

lack of public oversight in the TVA and we would like to see some 

accounting from the agency on how it can work on increased energy 

efficiency and expansion of its renewables. We know in Congressman Shuler’s state, there is a Public Utility Commission, we do not 

have this for TVA. Perhaps some accounting in the form of quarterly reports to the Congressional TVA Caucus could accomplish 

something like this and we would like to have that accessible to the 

public. 

Thank you very much for your concern and for your interest and 

for your efforts in these regards. 

Mr. DAVIS. Thank you, Dr. Lamberts. You did a wonderful job. 

You mentioned the state legislature passing some legislation. I see 

at least two of my colleagues from the state legislature. I see Dale 

Ford, Dale, thank you, for being here. Eddie Oakley, thank you for 

both being here. Are there any other members of the State Legislature. I see some county commissioners, good friends out in the audience. Thanks to everyone at all levels of government for your 

willingness to participate in this Congressional hearing. 

Now it is indeed a pleasure for me to introduce Dr. Kelly Tiller. 

And thank you for bringing that mic to yourself there. Dr. Kelly 

Tiller, this will actually be the second time I have had her testify 

before a Congressional hearing and I know you have done that 

even before I took office. Dr. Tiller is the director of internal operations for the University of Tennessee Office of Bio-energy Programs. 

In this role she is coordinating a state and university commit- ment to more than $70 million to develop a cellulosic bio-fuels industry in Tennessee. 

Dr. Tiller also holds a faculty appointment in the Agricultural 

Policy Analysis Center at the University of Tennessee where she 

has been a faculty member of the Department of Agricultural Economics since 1999. She received her Ph,D from the University of 

Tennessee in Agriculture Economics. Dr. Tiller, thank you again for 

being with us today. 

[The prepared statement of Ms. Lamberts may be found in the 

Appendix on page 63.]

14

STATEMENT OF DR. KELLY TILLER, ASSISTANT PROFESSOR, 

AGRICULTURAL POLICY ANALYSIS CENTER, THE UNIVERSITY OF TENNESSEE, KNOXVILLE, TENNESSEE 

Ms.TILLER. Thank you very much, Representative Davis, Representative Shuler, for the opportunity to be here today and talk 

to you about our countries energy needs. And the new domestic renewable energy opportunities and the effects on small businesses. 

The U.S. is the world’s largest consumer of energy. The entire 

economy of the U.S. is designed to revolve around the availability 

of safe, reliable, abundant and affordable energy. In our energy 

supply picture, a reliance on petroleum as a base source of liquid 

transportation fuels is particularly problematic. 

Petroleum products account for 97 percent of our transportation 

fuel market. The U.S. holds less than three percent of the world’s 

proven oil reserves, but account for 25 percent of the world’s oil 

consumption. In fact, petroleum consumption in the U.S. is greater 

than in the next five leading countries combined. 

Today 60 percent of that petroleum is from imported sources, 

much of it from unstable and even hostile nations. America’s dependence on petroleum, not only jeopardizes its national security, 

but drains billions of dollars from the U.S. economy and creates environmental concerns. The economic benefits of breaking this addiction to oil would be immense and widespread. Fortunately there is 

a commercially viable and sustainable way for the U.S. to transition to a low oil and high growth bio-based economy. 

The University of Tennessee and the State of Tennessee have 

made a significant commitment to developing a cellulosic biofuels 

industry. In July, Tennessee’s Governor and legislature committed 

more than $70 million in funding for renewable biofuels research 

and programs including an investment of $49 million in the Tennessee biofuels initiative. Led by UT’s Institute of Agriculture, the 

initiative is a synergistic partnership among the University of Tennessee, the Oak Ridge National Laboratory and our private industrial partners to construct and operate a five million gallon per 

year, cellulosic bio refinery in east Tennessee. 

Importantly, the initiative also includes a farm component to develop 8000 acres of switchgrass as a dedicated energy crop. The initiative focuses on research necessary to refine the conversion process, optimize the use of local farm and forest resources and generally improve the economics of the systems to allow commercial 

scale up and expansion throughout the state and regions. 

Businesses and farmers across the state and nation are watching 

with enthusiastic, yet cautious optimism, as Tennessee actively invests in this new paradigm for fuel production in the new bio-economy. There are several benefits of the cellulosic bio-economy approach that resonate with small businesses. 

First the potential for the U.S. farm and forest sectors to supply 

more than a billion tons annually of biomass feed stock for a mature cellulosic industry bears significant economic opportunities for 

the farm businesses, equipment dealers, service providers, and 

input suppliers that would form the backbone of the biomass feed 

stock supply chain. 

Second, on the second anniversary of Hurricane Katrina we are 

again reminded of the fragility of the system that has evolved to 

15

meet our seemingly endless energy demands. The economics of cellulosic biofuel suggests a highly dispersed system that is more secure and resilient with new opportunities for small businesses to 

participate in the energy sector. 

Third, small businesses are often particularly sensitive as we 

have heard today to wide and rapid price swings in energy cost and 

overall higher energy costs. Our research suggests that within 

three to four years we could be commercially producing cellulosic 

ethanol at a cost that is very competitive with gasoline and in line 

with corn based ethanol. Within five years, we could feasibly 

produce cellulosic ethanol at a wholesale price of a $1.50 per gallon 

or less. This is certainly good news for small businesses. 

In closing I believe that we are on the verge of a dramatic transformation from a hydrocarbon economy to a carbohydrate economy. 

As an economist, I know that the business economics of cellulosic 

biofuels industries will ultimately drive this development and expansion. But as a policy economist, I also know, that there are innovative system wide policy measures that can accelerate the 

growth of the cellulosic ethanol industry while protecting farm income, ensuring market discipline and supporting the sustainability 

of small businesses. 

Thank you, again, for the opportunity to be here today. 

[The prepared statement of Dr. Tiller may be found in the Appendix on page 67.]

Mr.DAVIS. Thank you, Dr. Tiller, for your wonderful testimony. 

You did a great job today as always. Thank you for what you do. 

I would like to start with some questions if I may. 

Dr. Eggers, you brought up the point that we need to have a better system at the federal level to communicate what is available to 

bring down energy costs. Could you expand on that somewhat, who 

do you think would be the best department of government to do 

that? The SBA, the Department of Energy, Department of Commerce, do you think it would be better if there were a web site? 

What is your vision for that? 

Ms.EGGERS. It is kind of a question where I will alienate most 

of government no matter what I say I guess, if I identify one 

branch. I think there are a lot of ways to get it right and there are 

also ways to get it wrong and there definitely needs to be significant resources on the Internet. And there needs to be live people 

with good technical backgrounds on the phone. 

Instead of giving a kind of magic bullet answer, my answer is 

that there are many ways to get it right and I would leave it up 

to thoughtful people who put a lot of time into thinking about 

where that should be housed. It should be in cooperation with some 

of the leading institutions, like the Rocky Mountain Institute who 

can help us provide what is now in this country cutting edge technical support, but is really just the very basic technical support 

that people at this table are asking for. 

Mr.DAVIS. Thank you for that. I heard most of what you had to 

say and I am sure my staff got the rest of it. 

Mr. Snowden, you mentioned that you had just put in some energy efficient lighting into your warehouse. Paul Chapman, my district director, and I have just had the opportunity to visit a wareVerDate 0ct 09 2002 09:27 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\38201.TXT LEANN
16

house last week and it was interesting. In this large warehouse, 

most of the building was dark until we walked down an aisle and 

as we would walk down the aisle the lights will come on. And as 

we passed through that area, lights would turn off automatically. 

Is that the type of system that you put in and if so, how did you 

find out about it? 

Mr.SNOWDEN. Well, yes, it is a combination though. We have put 

it in one of our facilities and we are in the process of putting it in 

a new facility that we are building also and we are looking very 

strongly at retrofitting all of our existing facilities. 

We heard about it through a lighting supplier and it is basically 

T5 high bay lighting that replaces the current T12s and T8s that 

typically have been used. And basically what it does, it drives a 

tremendous amount of light from a high distance, which our ceilings are like 35 feet, down to the floor level where people are picking orders and things like that and they need a large amount of 

light. It gives a lot more light and it uses much less electricity in 

doing so. I do not really understand all the mechanics of how it 

does it. But it is very, very efficient. And that is one of the reason 

that the tax credit of 2005 is allowing, you know, that to be utilized 

as part of the lighting—there are three components of that package 

as we understand it. One of it has to deal with wall structures and 

roof structures and one of them has to deal with HVAC and the 

third component has to deal with the lighting. And all three of 

them enable you to qualify for certain tax credits if you meet the 

criteria. But again, getting the particulars on how that works is not 

easily done. 

But basically it is that type of lighting that you spoke of and also 

with electronic sensors so that the electronic sensors sense when 

somebody goes in and activates the lights. And then if somebody 

has been—if there has been no activity within that region within 

say five minutes, then the lights go off. So the electronic sensors 

allow the lights to be on when there is someone in the area and 

allow them to go off when they are not in the area. And both of 

those components are part of what I was referring to, yes. 

Ms.EGGERS. How did you find out about it? 

Mr.SNOWDEN. I found out about it through a lighting manufacturer, Lithonia Lighting manufacturer, is how we found out about 

it. And to be honest with you, one of their representatives out of 

Atlanta is the only person that we found that knows very much 

about it. And we had a meeting with him and our accountant and 

our CPA and our contractor to make sure that everybody was on 

the same page before we, you know, made the expenditure to do 

it. 

Mr.DAVIS. I think you make a very good point. And it goes sort 

of back to my question to Dr. Eggers. The government is always 

not the answer to every problem. Sometimes, as Ronald Reagan 

once said, they are the problem, they just shuffle problems around. 

It is good to know that there are other businesses that are helping 

your business to learn about new products and that is usually what 

makes America great, is we have a system of capitalism in America 

and people are willing to share great ideas and everybody does better. 

17

Have you had that system in place long enough to actually see 

how much savings you will receive? 

Mr.SNOWDEN. No we have not. We have done the analysis on it 

based upon the usage of energy of the new fixtures versus what we 

are presently experiencing and that is where we arrived at our 

computed savings, we estimate a $50,000 in our existing facilities. 

We just put the first section of lighting in about two months ago 

in an addition that we did on our existing facility. It has been in 

effect about two months. 

Mr.DAVIS. Thank you for sharing that with me. 

Mr. Hutchinson, thank you again, for being here today. Coal, as 

you testified, is one of the products that we have domestically more 

of than anybody else in the world. Can you tell me how long you 

perceive the coal reserves actually holding out in number of years 

into the future? 

Mr.HUTCHINSON. Well, I think as I stated there earlier and this 

is, you know, based on estimation certainly, with the known and 

recoverable reserves today, we see about 285 years worth of reserves. There are other reserves out there that are maybe not attainable and maybe in the future with new technology would be, 

but at least 285 years worth. 

Mr.DAVIS. I have been told—and I do not know if it is true, 

maybe someone on the panel would know—I have been told that 

if we continue to rely on foreign oil for our energy policy, there is 

only about 30 years supply of oil. And can you imagine what that 

would do to our economy and our economic development here in 

northeast Tennessee, across the mountains in western North Carolina and across America, if we have to worry about energy. And we 

worry about it now, can you imagine where we would be 30 years 

from now. I do not know if that is a true figure or not. 

Mr.HUTCHINSON. Well, you know, here is my estimation and I 

am just going to off-the-cuff here. But, you know, I was around in 

the early 1970s when we had the gasoline situation and some of 

these younger ladies were not. But we were in lines and we were, 

you know, we were on alternate days and we were on license numbers and we were on all kinds of crazy things, that was 1972, 1973, 

1974, in that area. And here we are in 2007 and unfortunately we, 

all of us, are in the same situation that we were back then. The 

only situation that is different is that we do now have the money 

to pay the higher prices and bring the product in. But we have not 

replaced that situation. That is just a situation that still exists. 

Now whether it be coal or natural gas or some of this new technology that we are hearing about today, we have got to do something. We have got to make a move, we have got to commit ourselves to doing something to replace this oil situation. Because as 

we all know, whether it is 30 years or three years or a war in Iran, 

we have got a serious issue on our hands in this country today; one 

that I feel that we have not approached properly in my life time, 

so I guess that is a concern I have. We talk and we meet and we 

hear and so forth, but when it comes to driving our automobiles 

and operating our trucks and our cranes, you know, I think there 

is a real issue out there for fuel. I would hope that this would spur 

some changes that helped us deal with this in the very, very near 

future. 

18

Mr.DAVIS. You mentioned that coal is producing about 500 jobs 

in east Tennessee and the surrounding area right now. Let me take 

that a little further, I am going to ask you what would happen to 

that number of jobs. Back in World War II Germany was taking 

coal, turning it into a liquid and running basically its war machine, 

over 50 years ago. So the technology was available then to turn 

coal into liquid and gas, do we still have that technology? Do we 

have it in America and do we have the opportunity to take coal 

that is abundant in these mountains and then turn it into gas and 

then what would that do to our economy in northeast Tennessee, 

southwestern Virginia, even over in the mountains of western 

North Carolina? 

Mr.HUTCHINSON. Certainly the technology for coal gasification is 

there. And let me back up, you know, I said 500 jobs, that is our 

company, that is the Powell Companies. I think that number for 

the region is about 4600 jobs. 

But, yes, the technology is there and it is a matter of having the 

capital to put into the plants to build the facilities. There is some 

underway in southern West Virginia right now and that is what we 

would like to see more of obviously that means another source for 

Appalachian coal and, you know, that is what is near and dear to 

us. 

Mr.DAVIS. One last question for you. There are some members of 

Congress that seem to be moving away from coal, want to discourage the use of coal, would in some instances not allow the use of 

coal, what would happen to our economy if coal was taken out of 

the energy equation? 

Mr.HUTCHINSON. Well, you know, if you go back to my handout, 

you look, we are right now providing 23 percent. I do not think that 

can do anything but go up. So if you remove that, then there is 

more dependence on foreign oil and natural gas which I guess, you 

know, the reserves there are kind of an unknown. Basically what 

they say about natural gas is they are not sure about the reserves 

until they mine them or pump them. So, you know, I think if we 

took coal out of the equation, you know, we have got major problems. We have got more dependence on the foreign oil right off the 

bat. 

Mr.DAVIS. Very scary to me. 

Mr.HUTCHINSON. Absolutely. 

Mr.DAVIS. Dr. Lamberts, thank you again, for being here. And 

you and I have talked several times about the green power switch. 

You have convinced me that was good for me to do. I am a member 

of that. Could you allude a little bit more to the green power switch 

and what it does for our environment? 

Ms.LAMBERTS. The green power switch program was initiated by 

TVA and I think on Earth Day 2000, and in 2001 our local utility 

was able to join it. It is a program under which the TVA through 

methane capture at sewage treatment at the sewage treatment 

plant that supplies the Allen Plant near Memphis and through 

wind turbines and through some solar installations provide electricity from these three, at this time, renewable resources. It is a 

voluntary program that subscribers need to pay additionally for, in 

order to obtain it. It has grown far too slowly, it is very small and 

19

we would hope that this would be a strong impetus to expanding 

that relative to additional generations. 

Mr.DAVIS. Thank you. Dr. Tiller, you and I have discussed this 

often. In my opening testimony, I talked about that we really have 

not had a new petroleum refinery in over 30 years in America. As 

we start this move over to biofuels and switchgrass and those type 

of things, I understand that there is going to be new refineries, but 

they are not going to be in the Gulf. They have the potential of 

being all across Tennessee. What do you think will be the economic 

impact in northeast Tennessee and across the state as we go to 

those and how will that work from the farmer up through the refinery and out to the consumer? 

Ms.LAMBERTS. I think we are looking at a totally different system than the one that we have become accustomed to. So rather 

than a very highly centralized and very large system, this is a very 

diverse and dispersed system. I think it brings tremendous opportunities for especially rural economic development, for ag development and for general economic development and even keeping that. 

Right now, we are sending not only money outside our state to 

those regions, but even outside our country to regions that are not 

particularly friendly to us. So it is an opportunity to not only generate those products in -- within our borders and within our region, 

but to keep that money and income and economic development opportunities inside our borders as well. 

As far as kind of how the chain works, there would be a very 

large number of farmers within about a 30 to 50 mile radius of a 

bio-refinery that would be producing dedicated energy crops and 

other biomass resources that would be creating job to transport and 

the logistics associated with getting that material to the bio-refinery, jobs inside the bio-refinery. They are not huge employers but 

at a large scale several hundred employees to a couple of thousands 

per those facilities. 

There also would be jobs with the transportation and local use 

and distribution. You cannot transport this very far since it does 

not go in pipelines today and so it would be more jobs in that distribution process. Also a lot of development of co-products that 

would lead to satellite industries that would be either collocated or 

located near those bio-refineries that would take some of those high 

values but low volume chemicals, the chemical building blocks, the 

lignin and other sources, and use those to make value added bioproducts that today are largely petroleum based. 

Mr.DAVIS. Thank you so much. I would like to yield to my good 

friend, Mr. Shuler. 

ChairmanSHULER. I guess I am probably one of the folks that 

probably disagree on the coal issue, as my colleague has probably 

alluded to. If you look at coal, you are talking about liquid coal, obviously has been a topic. Dr. Lamberts has obviously talked extensively about fresh water. Do you know how many gallons of water 

it takes in order to produce one gallon—fresh water does it take to 

produce one gallon of liquid coal? 

Mr.HUTCHINSON. I do not. 

ChairmanSHULER. Six to seven gallons. So what are we going to 

with the storage of this water after, because we cannot put it back 

in our streams? 

20

Mr.HUTCHINSON. For one thing, it is recycled in the process and 

filtered and put back into the system. And hopefully it is not discharged into the streams. 

ChairmanSHULER. Hopefully. 

Mr.HUTCHINSON. But it is a closed system. 

ChairmanSHULER. Sure. 

Mr.HUTCHINSON. Intended to be a closed system, yes, sir. 

ChairmanSHULER. Dr. Tiller, if you were looking at, and we have 

obviously talked about that we have so many—you know, if we do 

not increase our production of coal that we may lose some jobs or 

if we lessen our dependence upon coal that we may lose jobs. You 

know, you obviously alluded to it. I mean if you look at our whole 

entire region. If you look at the state of Tennessee alone and we 

went into more biodiesel and biofuels, biomasses, you know, what 

kind of jobs—are we putting our farmers back into the economic 

structure again? 

Ms.TILLER. Absolutely, we estimate that within 20 years, we 

could have about 20,000 farmers in the state of Tennessee growing 

a million acres of switchgrass or other dedicated energy crops producing hundreds of millions of dollars in new farm revenue that is 

not there today. This is also not a zero sum game where it is either 

corn or soybeans, but since this fits very well on some marginal 

land, these are new opportunities. That is in addition to the economic opportunities within the facilities and jobs those would support as well. 

ChairmanSHULER. And then from the environment standpoint 

which has a better impact on the environment, coal versus the biomass? 

Ms.TILLER. Well, that is a pretty complex question, but the simple answer is that the process that we are talking about which is 

an enzymatic hydrolysis technology for conversion of cellulose to 

ethanol or other biofuels is a very green process, very low impact, 

very environmentally friendly. 

Chairman SHULER. Dr. Eggers, one of the most important things 

that we talk about, you know, how does it benefit, what benefits 

are we going to have, small business benefits on a healthy environment, you know, if we have a healthier environment how will that 

impact our small businesses? 

Ms.EGGERS. And that is another very complex question, but a 

good one, because there is definitely a relationship. I think the relationship that most people can easily see and find most tangible 

is that small businesses will be helped by cleaner air because of reduced healthcare costs and healthcare are—you know, we could all 

be sitting here talking about healthcare costs pretty easily and 

their effect on small businesses and everybody else. 

But just as an example, our local power utility, Progress Energy, 

had wanted to put in a peaking plant, about 120 megawatt plant, 

not very big. It would run 10 percent of the time outside of Asheville and just in Buncombe County alone, the federal government 

models estimated the county at the county health department 

would spend another $1.9 million a year on respiratory illness 

caused by the emissions from that plant. And so respiratory illness 

whether we are talking about asthma or heart attacks which can 

be stimulated by small, fine particulate matter, strokes which also 

21

can be caused by air pollution events, they cost us mightily through 

insurance, so a clean environment really helps us all out and fattens up our wallet, you know, a greener world, a greener wallet. 

And that is very tangible. But also there is a lot of aesthetic benefits and things like that. 

I did want to respond also that there is a tremendous opportunity to gain thousands and thousands jobs nationwide for increases in efficiency and if we have federal programs that are stimulating energy efficiency, we are going to be creating a lot more 

jobs so Mr. Snowden does not have to call Atlanta. Ideally everywhere in the U.S. people would be able to open up the Yellow 

Pages and find all kinds of local service providers to do energy audits and to provide renewable energy services. And while I agree 

the federal government usually is very much an inefficient service 

provider, the opportunity right now to help stimulate that market 

development and stimulate that job creation is one that I think is 

morally in the hands of the federal government. 

ChairmanSHULER. And to refer back to Mr. Snowden’s information, the Small Energy Efficient Business Act, which was my bill 

that we put through the House, which was passed, we will be able 

to gain that knowledge of these type of energy efficient tax credits 

if you will through our local chamber and our small business development areas throughout our region. So once it passes and it is 

signed off on by the President, hopefully it will be more—our local 

chambers will be more actively involved and talk about the tax 

credits that are available. 

I certainly would like to thank this first panel for your testimony 

and I think it has been very encouraging. We can take so much information back to us and I will yield to the gentleman from Tennessee, Mr. Davis for his closing remarks and actually also an introduction of our second panel. 

Mr.DAVIS. Thank you, first panel, you have been very informative, well prepared. Thank you for being here today. 

And now the Committee staff will actually switch panels and 

while we are doing that, I would like to thank Gary Mayberry with 

the Johnson City, Washington County Chamber of Commerce for 

helping putting this together. 

I would like to thank Homer G’Fellers and his staff at the Johnson City Power Board for your hard work in making this possible. 

Thank you for what you do. I know that we have been joined by 

Major Dick Grayson, thank you for being here from Johnson County, we have Mayor Lynch from Unicoi County. Thank you, Mayor 

Lynch for being here and we have Mayor Crockett Lee from Hawkins County. Thank you each and every one of you for being here 

today. And if we could we will go ahead and switch panels. 

[Brief pause.] 

Mr.DAVIS. If we could get the second panel and have everyone 

take their seats. 

Well I hope everyone found the first panel to be as informative 

as Mr. Shuler and I did. And I would like to welcome the second 

panel. And we are going to start out the second panel with Mr. Jim 

Keiffer. Jim is the senior vice president of marketing for the Tennessee Valley Authority, TVA, has over 30 years of experience in 

both natural gas and electric utility industries. He is responsible 

22

for partnering with the distributors of TVA power, to develop strategies to promote energy efficiency as well as efficient consumption 

electricity in homes and businesses. 

Jim holds a bachelor of science degree in civil engineering from 

West Virginia Institute of Technology and an MBA from West Virginia University. 

Jim thank you for your willingness to testify today. Welcome to 

East Tennessee. 

STATEMENT OF JIM KEIFFER, SENIOR VICE PRESIDENT OF 

MARKETING, TENNESSEE VALLEY AUTHORITY, KNOXVILLE, 

TENNESSEE 

Mr.KEIFFER. Good morning and thank you both. Thank you Congressman Davis and Congressman Shuler for the chance to be here. 

I am Jim Keiffer. My title is Senior Vice President of Marketing 

with our company TVA. I am responsible for TVA’S energy efficiency and conservation efforts in our renewable energy program 

that is known under the trademark of Green Power Switch. 

On behalf of TVA I would like to thank you for the opportunity 

to discuss the role that energy efficiency is paying in our strategy 

and how it can affect homes and businesses. 

TVA is the nation’s largest public power company, about 33,000 

megawatts of capacity to supply electricity wholesale to those 158 

power distributors that have been discussed this morning. They 

serve the 8.7 million people in our service region. It is also our responsibility that we generate and give our electricity at the lowest 

feasible cost and that we support and encourage our customers to 

use that energy wisely. 

The customers know and as the first panel mentioned that the 

cheapest kilowatt is the one that you do not use and that conserving energy can help TVA reduce the investments that are needed to build new generating plants. Ultimately energy efficiency and 

conservation is in everyone’s best interest, especially the small 

business sector where it is essential that we keep those costs low. 

Earlier this year the new TVA board adopted a plan that makes 

energy efficiency and conservation a key part of our business plan 

for keeping TVA power rates competitive. We have set a goal to 

help make our service region a national leader in energy efficiency 

over the next five years. It is a goal that will produce economic and 

environmental benefits for everyone. But we cannot do it alone. It 

requires a cooperative effort with TVA, certainly with our 158 

power distributors, with those 62 directly served customers and 

federal installations and by everyone who uses TVA electricity. 

To achieve our goal, we developed a three part approach. The 

three elements are first, conservation which we define as using less 

energy. And then there is energy efficiency which simply means 

using energy smarter and reducing the daily peak demand, which 

is the brief period each day when electricity is demanded at its 

highest. For us for TVA in the winter, that peak occurs in the early 

morning hours and in the summer it is in the mid to late afternoon. The process we are undergoing began this summer with a 

pilot program launched in cooperation with distributor customers 

in Chattanooga, Nashville, and Huntsville, Alabama. Through arVerDate 0ct 09 2002 09:27 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\38201.TXT LEANN
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rangements largely with small commercial users, we are employing 

what is known as demand response. 

In this program participants cut their energy use during critical 

peak periods in return for incentives. The results of the pilots will 

be used to determine if we can and should develop a broader program as part of our overall efforts to reduce peak demand growth 

by at least 700 megawatts during the next five years and make the 

region a leader in energy efficiency. 

TVA has always worked in the past with our distributor customers to provide energy efficiency programs and services for 

homeowners and for small business customers. We have an existing 

program called Energy Right where they can access energy management tools to help them reduce those overall energy costs. We 

also provide small businesses access to affordable financing to enable them to install high efficiency heat pumps as one of the programs. Today, we continue to work with our customers to identify, 

evaluate, and implement new cost effective initiatives to help consumers to use energy smarter and reduce the amount they use. 

These initiatives will give energy efficiency, conservation, and reducing peak demand as well as on site generation a greater role 

in the mix of resources that we use to meet the demand. 

Renewable energy is also important. Our efforts to responsibly 

control the need for new generation include the renewable program 

known as Green Power Switch, which was also mentioned by the 

prior panel. Green Power Switch was one of the first renewable energy programs offered by a utility in the southeast. It gives everyone—business, industry, and the homeowners—an opportunity to 

support the development and growth of green power and our energy portfolio. All of the money generated by this program is used 

to develop more renewable energy and to fund research aimed at 

making it even more cost effective. 

Currently about 12,000 residential users and almost 500 businesses are participating in Green Power Switch. It is marketed 

through 100 of the local utilities served by TVA including both the 

Johnson City Power Board and Holston Electric. 

Our numbers show that nearly three-fourths of the businesses 

enrolled in Green Power Switch came from the small business sector. They know it pays to display the Green Power Switch logo on 

their business fronts and to show their support for renewable energy. And I will also add the mix between business and residential 

in the Green Power Switch program is much stronger in the business area than it is many other green power programs. 

Currently we have 16 solar sites across the valley, one methane 

facility near Memphis and a wind farm on Buffalo Mountain near 

Oak Ridge, which made TVA the first utility in the southeast to 

use wind power on a commercial scale. Last month, these sites generated more than two million kilowatt hours of electricity. 

One of our solar sites is located here in the first Congressional 

District at Cocke County High School. It offers a good example of 

creative ways that solar technology is being used. Solar panels are 

arrayed to form a shelter for spectators at the high school soccer 

field. The panels themselves generate enough electricity to serve an 

average home. This types of innovation is helping to expand the 

use of solar energy here in the southeast and elsewhere. 

24

Homes and businesses account for about 70 percent of the total 

electricity consumption in our region. To encourage the broader use 

of renewable generation TVA has established a pilot program 

called Generation Partners. It pays homes and businesses for the 

electricity generated by their own wind and solar units. Currently 

we have about 30 generation partners participating in the pilot. 

Plans are underway to make this program part of a permanent net 

metering program to support the increased use of onsite winds and 

solar power. 

Finally as our plan makes clear, there is no single answer to 

meeting the growing demands of the Tennessee Valley. We must 

use a balanced combination of strengthening our current system, 

investing in new generations such as the restart of Unit 1 at the 

Browns Ferry Nuclear Plant, purchasing power from the marketplace, and using cost effective energy conservation, and energy efficiency initiatives to meet that growing demand. 

The Valley has enjoyed some of the lowest cost electricity available in the United States for the past seven decades. However, the 

cost of fuels to produce electricity such as coal and natural gas are 

rising due to the increased demand here in the U.S. and worldwide. 

By focusing on energy efficiency and conservation, we can all help 

keep the price of electricity as a competitive advantage for the region’s economy and for the people in for the people and businesses 

who live and work here. 

Thank you, very much. 

Mr.DAVIS. Thank you, Mr. Keiffer. We appreciate what you do for 

the region. Thank you for being here in Johnson City today. 

Mr.KEIFFER. Thank you for having me. 

Mr.DAVIS. Our next witness is Mr. Robert White. Robert, thank 

you for being here, thank you for your friendship. Robert is in his 

23rd year in the Johnson City Power Board, I am making you older 

than you really are, Robert, a public electric utility company serving all of Washington County and parts of Sullivan, Carter, and 

Greene Counties. He has served in several roles during his tenure 

with the power board. His roles included, meter reader, assistant 

stock keeper, supervisor of stores, purchasing, transportation and 

manager of maintenance, purchasing transportation. 

Robert currently serves as the chief public relations officer, 

where he manages and oversees the public community relations 

and customer support departments. 

Robert, thank you for opening up your beautiful facility to us 

today. Thank you for your hospitality and thank you for your testimony. 

[The prepared statement of Mr. Keiffer may be found in the Appendix on page 81.]

STATEMENT OF ROBERT WHITE, CHIEF PUBLIC RELATIONS 

OFFICER, JOHNSON CITY POWER BOARD, JOHNSON CITY, 

TENNESSEE 

Mr.WHITE. Thank you. It is a pleasure to be here this morning. 

Congressman Davis and Congressman Shuler, thank you for the 

opportunity to appear before this Committee to address the subject 

25

of today’s hearing, the Cost of Availability of Energy and the Effect 

on Small Business. 

I am responsible for managing and overseeing our public and 

community relations and customer support departments. So we 

hear a lot from our small business customers. 

With national energy costs on the rise, it is a pleasure to address 

you from within the Tennessee Valley Authority service territory. 

The Johnson City Power Board serves an area of approximately 

357 square miles serving all of Washington County and parts of 

Carter, Greene, and Sullivan Counties. 

Johnson City Power Board is fortunate to have access to TVA 

generated electricity. It is some of the lowest priced and most reliable electricity available in the United States. We at Johnson City 

Power Board realize however contentedness is akin to stagnation. 

This is precisely why we continue to reevaluate our programs, practices, procedures, in our unrelenting pursuit of excellence. It is our 

mission as a power distributor to be recognized by our customers, 

non-customers, and competitors as the leading energy and energy 

services provider in the region and to promote and support economic development programs for the benefit of all. 

The Johnson City Power Board customer base has increased by 

an average of two percent the last eight to ten years. This growth 

rate has been a result of a mirror increase in both residential and 

our commercial and industrial customers. 

We currently serve 73,227 customers, residential customers represent 86 percent of our customer base and commercial and industrial customers represent 14 percent of our customer base. While 

commercial and industrial customers represent only 14 percent of 

our customer base, they generate 49 percent of our revenues. This 

fact is what drives us to promote programs designed to address our 

small business customers’ needs. 

An asset that we offer to our customers, including our small business customer, is our ability to serve as a conduit to the many programs and services offered by TVA. Johnson City Power Board energy services and marketing department offer a key accounts program through which various TVA programs are administered. Although, the key accounts program serves mostly large commercial 

and industrial customers’ special needs, the program also serves as 

a liaison for the small business customer as well. Our key accounts 

program partners with TVA to offer programs and services such as 

have already been mentioned, Energy Right, a program offering energy management tools help reduce overall energy cost; heat pump 

loans to provide access to affordable financing for installing high efficiency heat pumps; and comprehensive services, which provides 

technical expertise to increase efficiency or to explore the use of 

new energy technology. 

The Johnson City Power Board also participates in TVA’s Green 

Power Switch and Generation Partners. Green Power Switch is a 

renewable energy program offering customers the opportunity to 

support the development and growth of more renewable energy. In 

2006 our customers purchased over 1.3 million kilowatt hours of 

Green Power. Generation Partners is a pilot program that pays 

homes and businesses for the electricity generated by their own 

wind and solar units. We are proud to say that Johnson City Power 

26

Board currently has two customers of the 30 participating in Generation Partners. 

As the Johnson City Power Board plans for the future, we are 

committed to identifying and addressing the needs of all of our customers including our small business customers and to provide resources available to make them successful. In the words of our general manager Homer G’Fellers, for any challenge, we will either 

find a way or we will make one. 

Thank you. 

Mr.DAVIS. Thank you, Mr. White. 

Our next witness is my good friend, Larry Elkins. Larry has been 

employed by the Holston Electric Cooperative for 28 years and been 

general manager since 1984. During his tenure as general manager 

he actively participated in programs and served on numerous committees within the Tennessee Valley Public Power Association, 

Tennessee Electric Cooperative Association, Appalachian District 

Power Distributors Association, and the National Rural Electric 

Cooperative Association where he currently serves on the board of 

directors representing Tennessee. 

It was actually Larry and I that discussed about two months ago 

the need for this Congressional hearing. Larry, thank you for your 

foresight and thank you for being willing to testify today. 

[The prepared statement of Mr. White may be found in the Appendix on page 85.]

STATEMENT OF LARRY ELKINS, GENERAL MANAGER, 

HOLSTON ELECTRIC COOPERATIVE, ROGERSVILLE, TENNESSEE 

Mr.ELKINS. Congressman, thank you for allowing me to testify 

today and Congressman Shuler, we are glad to have you on this 

side of the mountain. We were just over on your side of the mountain a couple of weeks ago, at Mount Mitchell playing golf, so we 

really enjoyed your area. 

As Congressman Davis said, I am Larry Elkins, General Manager of Holston Electric. We serve 30,000 members in Hawkins and 

Hamblen Counties and then a spattering of customers all over 

Greene, Cocke, Grainger, even a few in the edge of Virginia. 

I have been in the business—I actually started in the business 

in 1974. And if you recall at that time that is when we started an 

energy crisis. As one of the gentleman spoke to earlier, this same 

subject matter that we are discussing today was in the headlines 

and on the evening news about 34 years ago in 1973. We had long 

car lines, I know there in Rogersville and the energy crisis that we 

are experiencing today is nothing new. It started back then. The 

1973 oil embargo began a painful realization of the vulnerability of 

energy supplies. However, the crisis of today is much more than 

just a shortage of gasoline that led to long lines forming at the gas 

pumps. More than any time in the past, we are an industrialized 

nation that is dependent upon electric energy as a basis of our 

economy. And our appetite for electricity continues to increase. 

According to the Energy Information Administration, worldwide 

electricity consumption is expected to double during the period of 

2002 through 2025. But while the demand for electric power conVerDate 0ct 09 2002 09:27 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\38201.TXT LEANN
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tinues to increase, no new base generating plants have been built 

in years. The plants that have been constructed are peaking units 

and we have talked a little bit about that earlier that have been 

built generally just to provide power during peaking times. So no 

baseload plants have been built. 

Some in Congress say to let the natural laws of economics, supply and demand control the price of electricity, let rates go up so 

the demand for electricity will go down. We found that out in the 

1970s and that approach does work. When I came to work at 

Holston Electric, we were selling a kilowatt hour for a cent and a 

half and almost overnight it went to three cents. The demand for 

electricity was cut severely, but that is on the backs of people that 

can least afford to pay it. The consequences of such an action would 

prove to be devastating to our business and industry. Adding an increased power cost to the bottom line of major industries in this region who are already struggling with high labor and operating cost 

will only add to the elimination of local manufacturing jobs and 

their subsequent relocation to neighboring countries. And statistics 

show that every manufacturing job in our economy leads to six 

other jobs in related sectors. This higher rates, lower demand way 

of thinking also hurts, as I mentioned, the low income and those 

on fixed income to a greater extent that it does to middle and higher incomes. 

Drastic rate increases for electric power is not the solution. Efforts to conserve electricity and to develop alternative sources of 

energy such as has been discussed here today, such as solar wind, 

hydrogen fuel cells are all to be applauded and must continue. 

Nuclear plants produce power at minimal cost but are extremely 

expensive and they require an extensive amount of time to construct. But while these efforts inch forward, the United States is 

at the mercy of the Middle East for its energy. We are at a point 

that we are going to have to build a base generated plants to provide for the consistent demand for electric power for industrial, 

commercial, and residential customers or we are going to have to 

be ready to live with the consequences of an inadequate supply of 

electric power for this country. 

Electricity can be generated by many different sources. According 

to the latest Department of Energy statistics American electricity 

is currently being generated 50 percent by coal, 19 percent by nuclear reactors, 19 percent natural gas, 6.5 percent by hydroelectric, 

3 percent by oil, and only 2.8 percent is produced by all other 

sources that we have talked about, solar and green power, and all 

the many ways that we have. 

By a wide margin, coal is the lead in energy source for generating electricity in the United States and the world, it is also the 

least expensive way to generate electricity, when you take everything into account. And a few other critical statistics to keep in 

mind, the United States has 26 percent of the world’s supply of coal 

but only two percent of the world’s supply of oil and three percent 

of the world’s supply of natural gas. 

The protests in this country against pollution from coal-fired 

plants continue and have led to stricter emission standards and the 

development of new cleaner technology, such as coal gasification. 

Everyone wants clean air to breathe and to be environmentally reVerDate 0ct 09 2002 09:27 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\38201.TXT LEANN
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sponsible. But the United States does not control the emissions of 

the world. 

Asia, but primarily China, accounts for 50 percent of the global 

coal consumption. China uses coal for 82 percent of electricity generation, India 70 percent, South Africa 92 percent. Another staggering fact is that China is bringing in one new coal-fired generation plant on line every week. My point is, even if we restricted our 

use of coal in power generation to save the planet, we have no way 

to control the amount of emissions being put into the atmosphere 

by the rest of the world. 

We need baseload generation coming on line and we need it now. 

We have the coal reserves to fuel the power plants that are required for our future, but without additional generated plants, 

quite simply, there will not be adequate power for this region. 

The electric utility industry is in a standoff with the coalition of 

environmental and political activists who are coordinating the tax 

on new baseload plants projects all over our nation. In short, they 

do not nuclear plants, they do not want coal-fired plants, even with 

the promise of technology improvements. Rather they tout the folly 

that renewable generation and energy conservation measures alone 

will provide enough electricity capacity for our nation well into the 

future. 

Business and industries rely on us to supply their energy needs. 

Our customers expect to flip a switch and to have power, and not 

excuses. We implore the use of common sense in the legislative 

process. Let American ingenuity work out the details of clean coal 

and safe nuclear technologies and let the construction of new power 

plants provide for the future of our citizens business and industry. 

Thank you, gentlemen. 

[The prepared statement of Mr. Elkins may be found in the Appendix on page 87.]

Mr.DAVIS. Thank you Mr. Elkins for your testimony. 

Mr. White, the first panel today talked about the need to market 

the availability of how you can keep your costs low and use less 

electricity and other energy sources. Could you tell us how you do 

that here at the Johnson City Power Board? 

Mr.WHITE. Sure, I will be glad to. 

As I mentioned in my statement we have a key accounts program 

that is responsible for mostly large commercial and industrial customers, but they also work a lot with small business. And as I 

mentioned, they provide a way to administer programs that TVA 

does offer. I will give you an idea of some of the duties that they 

do handle. They handle billing issues, energy audits, HVAC recommendations, lighting recommendations—Mr. Snowden would not 

have to go to Atlanta—you could have it right here via our relationship with TVA. Metering questions, power factor questions are becoming much more important to small business with their electronic machinery that they are using nowadays. Outage information, which is very important, technical assistance. We are very 

hands on with our small business customers through our key accounts program. We have several people who are available any 

time, they just need to call and make an appointment. We work 

with TVA real closely with their expertise, with their engineers, 

29

with their experts to provide small businesses that opportunity for 

these services. 

Mr.DAVIS. I have one last question and I am going to sort of 

spread it across all three of you if I could. 

Larry, I remember very well the gas lines back in 1973. I remember our dependence on foreign oil back then. I remember the 

change in our economy when we went from 30 cents a gallon up 

to 90 cents a gallon. And now we have gone up to 2.50-$3.00 a gallon for gasoline. So I remember that very well. 

As we continue to move forward, we have heard a lot today about 

renewable energy and that is something I think we have to do. I 

serve on Homeland Security Committee and I can tell you, I am 

very concerned about our dependence on foreign oil and our dependence on people that quite frankly do not like us. That is worrisome for me in the homeland security aspect, it is very worrisome 

for me for our economy as well. And I think that we need to do everything we can to use the domestic resources so we become less 

dependent on foreign oil. And I think we need to look at solar and 

we need to look at wind power, we need to use hydro power. I think 

all of those need to come into play. I think there are some people 

in Congress that would like to limit it to those three. 

Now the question, after I made my statement, the question 

across all three of you, what happens to our economy and our access to energy if we prohibit the use of coal and nuclear availability 

in the whole mix? And Mr. Keiffer, we will just start with you and 

work our way down the line if we could. 

Mr.KEIFFER. I will say that the question I want to make sure is, 

if we limit the access to no more nuclear and no more coal what 

would happen. Let me say this, we are growing, TVA just said last, 

this past couple of weeks, we had the 13 highest peak days that 

we have had in the history. So our market area is growing. We believe we have to have a mixture of nuclear, of baseload generation 

of some sort, peaking and energy efficiency. If you were to take 

away the fact that you could not add any more nuclear or you could 

not add any more coal, and you try to serve the growing needs of 

the Valley, I simply do not think you can keep up with the demand. 

We believe you need to do all of the above. 

Mr.DAVIS. Thank you. 

Mr.WHITE. I will reiterate that point. I do believe it is a balance 

approach. I feel that especially from our perspective as a distributor we are so, I guess we are at the mercy of what the purchase power cost and the additional cost may affect TVA, which is 

going to ultimately affect our wholesale power cost, which is going 

to affect our end use customer. I think that conservation, efficiency, 

cutting the peak demand, but at the same time realizing that if 

there is a demand for that electricity they expect us to have it. 

They expect when they flip that switch that the energy is going to 

be provided. 

And there is another thing we have to consider as well. We feel 

it is our responsibility to provide the infrastructure to make sure 

that as the power is generated and transmitted to us that we have 

our infrastructure in place to provide it. We are affected by so 

many different costs, whether it be fuel cost, the lead times for 

transformers are now up to 12 months. It is affecting our cash flow 

30

with our increased inventory, the cost of having to purchase so 

much in advance. When you combine all that with the fact that if 

we are under distress because customers do not want to have nuclear or coal generation, then I think it is going to affect our end 

use customer a whole lot worst than they would ever anticipate. 

Mr.ELKINS. Congressmen, I would answer that question from not 

being from a power distributor point of view, but being chairman 

of the industrial development board of Hawkins County and serving in that capacity for the last 20 some years. 

We are primarily about creating jobs and economic development 

for our young people that are growing up here and that are going 

to East Tennessee State, Northeast State and University of Tennessee, we have got to supply jobs. And we are seeing more and 

more of our jobs leaving. And I know over in Congressman Shuler’s 

neck of the woods, all of the industries that have left North Carolina. We have got to maintain an industrial base. We cannot live 

as a service society for long. And as I mentioned statistics show 

that one manufacturing job creates about six related jobs in the 

service industry and various things. And we are seeing so many 

jobs leave because of labor costs and things of that nature. You add 

on the back of that, electricity and energy costs going sky high and 

you are going to see industry leaving our country. And that is my 

main concern. I will be retiring here in a couple or three years out 

of the power business, but I see so many young people that need 

jobs and we are going to—if we are not careful in Congress by raising the price up just as I said in my speech to limit the use of demand of electricity, it is kind of like my mother used to say, cutting 

your nose off to spite your face, and we are going to end up losing 

a lot of industrial jobs which trickles down to all the other jobs in 

our economy and it really bothers me from that point of view. 

Mr.DAVIS. Thank you, Mr. Elkins. Thank you, panel, you have 

done a wonderful job. I also see Mike Browder out in the audience 

from Bristol Electric; Mike, thank you for being here. 

Thank every one of you for taking part in this hearing today and 

with that I yield back the remainder of my time. 

ChairmanSHULER. Thank you so much, Congressman Davis. I 

want to commend all three of you because it is not until your power 

goes out that you realize what an impact you have on all of our 

lives. Whether it be a storm or snow or ice, and the people, the 

men and women work for your different organizations, the time 

and commitment that they put forth in those wet rainy cold nights. 

Please extend my special thanks to them, because they are true heroes when the lights come back on. 

You know I am very encouraged in a lot of things I hear today, 

obviously, Mr. Keiffer, what the TVA’s approach has been, I commend the TVA for continuing to put scrubbers on those smoke 

stacks. And truly making a difference on energy efficient waste. 

There is so much that we possibly can do. You are exactly right, 

it is going to take a lot of pieces of a puzzle and we talk about 

homeland security, part of it is going to be diversifying our energy 

sources as Dr. Tiller had mentioned earlier. You know, putting 

back—biomass cellulosic fuels, putting that back into the economy 

for our farmers. That is going to create—Mr. Elkins, as you say, 

that is going to create jobs in our district. It is going to take a lot. 

31

I think we are very blessed both in western North Carolina and in 

east Tennessee. People like where we live. And so part of it, the 

people that has moved in here has caused some of the reasons for 

it. 

And I think one of the most important things is people are staying here, you know, when they go to East Tennessee State University or they go to UNCA they want to remain and live in the community. We have to do a very good job economically and industrial 

to be able to protect it. And we have done some things over many 

administrations that has created a problem and an issue and we 

talk about losing our jobs and not having adequate enough jobs 

here to really retain the people we would like to. As we say kind 

of retain our mountain values, retaining those mountain values is 

retaining our students. 

Whether it be NAFTA or CAFTA, however you look at some of 

the trade issues, I know the other night at 1:00 in the morning I 

was still up looking, going through the toys that had the recall on 

them from China, because of lead base paint, you know. It started 

out kind of being funny, but by 1:00 in the morning I was still looking through those toys and realizing every single toy that my two 

children, who are two and six, every one of them were made in 

China. And so you know, they kind of look Santa Claus brings 

them all, but momma and daddy took them all away in one day. 

So I mean, we have to, I guess that kind of gets back to my 

point, Mr. Elkins, you know, does China’s wrong make it right for 

us to continue down that path of destroying our environment? That 

is a question. 

[Laughter.] 

Mr.ELKINS. No, it does not. And I am concerned and I think it 

is going to some national treaties between countries the size of 

China and Russia and the United States on a global basis. And certainly we need to set the standard. I do not want to sound like I 

am just totally oblivious to everything going on, because as you 

said, I have spent my 59 years here in the mountains of east Tennessee and I love it and I love the lakes and everything and we 

want to guard against it. I just do not want to take a reckless approach that some of I have heard. As was mentioned, I serve on 

a national board and meet in Washington on several times during 

the year and I hear and read all of the comments from the Congressmen and Senators throughout the United States and there 

seems to be a movement toward what I would consider to be a 

reckless abandonment of common sense when it comes to energy. 

ChairmanSHULER. I can assure you that Congressman Davis and 

I are not going to let it go reckless and abandon and some times, 

do not always pay attention to just the folks that talk on C-span 

because I do not think they always voice the opinion of the Congress. And, you know, some of them get up on both sides, I would 

say Congressman Davis, they get up there and I think it is for 

their—they want to become famous. So we do have to have those 

approaches, and I think we have to take every aspect. And even 

personally, I am very fortunate that I can—I am getting ready to 

put an anemometer up on the seventh, at my home to be able to 

track the wind right in my district at my home. I am hoping that 

is going to work. And we have been able to work with the power 

32

company and they are very excited about it. And it is going to take 

small steps and it ultimately takes each and every one of us as individuals and as a community to truly make that difference and I 

commend all of you for the work that you are doing, because I 

know that, you know, is building a plant what you really would 

like to do, you would probably like to maintain the stuff that you 

have presently because I know from the TVA and Mr. White, I 

know from you all of us would like to maintain what we have. If 

we could find a way to utilize other resources and create the jobs 

that we have. I think that would make it a better community for 

all of us. And if we can find technologies and ways to utilize some 

of the resources that we do have, then I think that is where we 

have to work together and truly be a big part of the solution and 

as government, we are a lot of problems sometimes and we have 

to be a better part of the solution. And hearing your testimony 

today, it seems like I looked at every single question that the staff 

had put together and you guys have done an outstanding job of 

truly answering all the questions and just a wonderful job. And in 

my closing, I would like to say thank you so much for having us 

here, Mr. White, in your facility. 

Mr.WHITE. It is a pleasure. 

ChairmanSHULER. And Tennessee always means a whole lot to 

me in so many different ways. And I feel privileged to come back 

and Congressman Davis, a ranking member, having me in his district. And I yield back. 

Mr.DAVIS. Heath—and we know you as Heath—thank you for 

being with us. And I would like to thank Bridget Baird with Senator Corker’s office; Bridget, thank you for what you and the Senator do. I was with Lamar Alexander earlier in the week talking 

about important issues. 

I would like to thank my own staff. You can imagine, it takes a 

lot of work to put one of these together and, Heath, you know that 

first hand with your staff as well. It is a team approach. And I 

thank each and every one of you for being here today. And this is 

something that happens, very unusually, we actually end on time. 

Thank you. 

ChairmanSHULER. Also the staff of the committee has done and 

understanding, terrific job and my staff as well. 

This hearing is adjourned. 

[Whereupon, at 12:00 p.m., the Subcommittee was adjourned.]

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