U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

56–051 PDF 2010

S. HRG. 111–376 

PERSILY AND HOFFMAN NOMINATIONS 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

TO

THE NOMINATIONS OF LARRY PERSILY TO BE FEDERAL COORDINATOR 

FOR ALSAKA NATURAL GAS AND TRANSPORTATION PROJECTS, AND 

PATRICIA A. HOFFMAN TO BE ASSITANT SECRETARY OF ENERGY. 

FEBRUARY 2, 2010 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Begich, Hon. Mark, U.S. Senator From Alaska .................................................... 7 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Hoffman, Patricia A., Nominee to be an Assistant Secretary of Energy for 

Electricity Delivery and Energy Reliability, Department of Energy ............... 5 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 2 

Persily, Larry, Nominee to be Federal Coordinator for Alaska Natural Gas 

Transportation Projects ....................................................................................... 8 

APPENDIX 

Responses to additional questions .......................................................................... 19 

(1) 

PERSILY AND HOFFMAN NOMINATIONS 

TUESDAY, FEBRUARY 2, 2010 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The committee met, pursuant to notice, at 2:40 p.m. in room SD– 

366, Dirksen Senate Office Building, Hon. Jeff Bingaman, chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. OK. Why don’t we get started? 

The committee meets this afternoon to consider 2 nominations of 

importance to the Nation’s energy security, that of Larry Persily, 

who is to be the Federal coordinator for Alaska natural gas transportation projects, and that of Patricia Hoffman to be the Assistant 

Secretary of Energy for Electricity Delivery and Energy Reliability. 

The Office of Federal Coordinator was established in 2004 to expedite the licensing and construction of a pipeline to transport natural gas from the North Slope of Alaska to markets in the lower 

48 States. Construction of the pipeline is a considerable engineering challenge, may cost $30 billion or more, which may explain 

why, after 40 years of discussion, work has yet to begin. But it will 

employ thousands and unlock enormous sources of domestic energy. 

This is the reason that Congress created this Office of Federal 

Coordinator, to help expedite the project. In Mr. Persily, the President has nominated someone who has worked on this issue in the 

Alaska State government for much of the past 12 years. 

The Office of Electricity Delivery and Energy Reliability was established in 2005 to help modernize the Nation’s electric grid, to 

enhance the security and reliability of our energy infrastructure, 

and to help recover from energy supply disruptions. The position of 

Assistant Secretary of Energy for Electricity Delivery and Energy 

Reliability was established in 2007 to give the job stature commensurate with its importance. Ms. Hoffman has served as the Principal Deputy Assistant Secretary since November 2007 and has 

held senior positions in the office before that. 

We are fortunate to have 2 highly qualified nominees for these 

important positions, and I strongly support both nominees. I am 

pleased to welcome them to the committee today. 

Let me recognize Senator Murkowski for her statement. 
2 

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

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I would like to also welcome both of the nominees that are before 

us today, Ms. Hoffman and Mr. Persily, neither of whom are 

strangers. The committee has had the pleasure of hearing from Ms. 

Hoffman on smart grid policy in the past, and I look forward to 

continuing to work with her, should she be confirmed. 

While the other committee members may not be as familiar with 

Mr. Persily, I do know him very well. I know that my colleague 

Senator Begich had intended to come and introduce him. I just saw 

him on the floor, and he is presiding until, I understand, 3 p.m. So 

he is going to try to come in later. 

But I would agree with your comments, Mr. Chairman. I believe 

that Larry Persily is an excellent choice to take over the agency 

that we created in 2004 to coordinate the permitting and the environmental review to help get this pipeline built to move Alaska’s 

natural gas to the markets in the lower 48. 

I have known of Larry since the 1970s, when he and his late 

wife, Lesley, were the publishers of a small newspaper in Wrangell. 

This is a little community that I grew up in as a child. Then, when 

I was in the legislature, I had the privilege of working with him. 

He was with the Department of Revenue, and we had an opportunity to work on some fiscal policy issues. At that time, he specialized in oil and gas policy development. 

He is exceptionally, exceptionally knowledgeable about the problems that we have confronted in past efforts to get a gas line built 

in Alaska, and he knows how important it is to make this project 

work for Alaska’s future and for the Nation. Larry will work tirelessly to overcome the hurdles and get companies on the same page 

to commit to building a line and then get it permitted and inspected in both this country and through Canada so that it can be 

built on time, on budget. 

I certainly know from his work in Juneau, for both Republican 

and Democratic administrations, that he is not one to let partisan 

pressures stand in the way of building the project. Larry, I think 

it is fair to say, will bring some refreshing candor. 

[Laughter.] 

Senator MURKOWSKI. We laugh at it, a little politically correct 

there. But I think candor is necessary when you have something 

of the significance and import as we are looking at with this gas 

line. 

Just last Friday, 1 of the 2 companies working to build the line, 

the TransCanada-Exxon partnership, announced in its open season 

application filing that the line was going to cost somewhere between $32 billion and $41 billion to build. Mr. Chairman, that is 

a lot of money. Even around here, that is a lot of money. It is going 

to be the largest infrastructure project that most of us have ever 

seen. 

Mr. Persily knows that it is vital that this line get built. Northern Alaska, both on shore and off shore, potentially contains 368 

trillion cubic feet of conventional natural gas. That means that 

nearly 18 percent of the Nation’s total prospective natural gas market is dependent on getting this resource to market. 
3 

That gas is worth a lot to America more than just its likely $2.5 

trillion value. It is forecast to actually save American consumers 

about $50 billion on their gas bills in the first 4 years after the line 

would go into operation because of the downward pressure that it 

would cause on the gas prices initially. 

For the private sector, the line will produce about 15,000 jobs 

during construction, and produce between 400,000 to more than a 

million jobs nationwide when you consider the steel, the compressor plants, and all the equipment that this project will entail. 

The project also is forecast to provide the Federal Treasury more 

than $100 billion in taxes in the first 20 years alone. 

Now, being a long-time Alaskan, Larry knows how important it 

will be to get the economics of this project right, and that permitting and construction proceed without a hitch. Construction delays 

caused by the 15 Federal agencies that will be involved in overseeing the line’s construction we know can add literally hundreds, 

if not billions, of dollars of cost to a project of this size and cost 

the Federal Treasury billions eventually in lost tax revenues. 

I think we have all been a bit disappointed that in the nearly 6 

years since we in Congress approved a loan guarantee and expedited permitting for this pipeline, that it has not advanced farther 

than it has toward construction. But we now have 2 projects that 

are under design, the TransCanada project and the Denali project 

of ConocoPhillips and BP, both of which have spent more than 

$100 million in preparation for their open seasons. 

I and all Alaskans hope that somehow all the parties will come 

together, concentrate on financing and building a single project, 

and that Alaska’s vast reserves of clean-burning, carbon-reducing 

natural gas can get to market and get to market soon. I am confident that Mr. Persily has the knowledge and the persistence to 

help that come to pass. 

I welcome him before the committee and commend him for agreeing to step up to take on this Herculean task of overseeing construction of the largest private construction project in world history. Certainly wish him the best of luck and welcome his insights 

on the project. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Let me just see if Senator Menendez wishes to make any statement here before we call the witnesses forward? 

Senator MENENDEZ. No, Mr. Chairman. I have huge interest in 

the Alaska issue, but—not seriously. 

[Laughter.] 

Senator MURKOWSKI. We welcome it. 

Senator MENENDEZ. I know. But I do have interest with Ms. 

Hoffman. So I will wait for questions. 

The CHAIRMAN. All right. 

Could I just ask the 2 nominees to please come to the witness 

table here? The rules of the committee, which apply to all nominees, require that nominees be sworn in connection with their testimony. 

If each of you would raise your right hand? Do you solemnly 

swear that the testimony you are about to give to the Senate Com-
4 

mittee on Energy and Natural Resources shall be the truth, the 

whole truth, and nothing but the truth? 

Mr. PERSILY. I do. 

Ms. HOFFMAN. I do. 

The CHAIRMAN. Please be seated. 

Before you begin your statements, I will ask 3 questions that we 

address to each nominee who comes before this committee. First 

question, will you be available to appear before this committee and 

other congressional committees to represent departmental positions 

and respond to issues of concern to the Congress? 

Ms. HOFFMAN. I will. 

The CHAIRMAN. Mr. Persily. 

Mr. PERSILY. I will. 

The CHAIRMAN. Second question, are you aware of any personal 

holdings, investments, or interests that could constitute a conflict 

of interest or create the appearance of such a conflict should you 

be confirmed and assume the office to which you have been nominated by the President? 

Ms. Hoffman. 

Ms. HOFFMAN. My investments, personal holdings, and other interests have been reviewed by both myself and the appropriate ethics counselors within the Federal Government. I have taken appropriate action to avoid any conflicts of interest. There are no conflicts of interest or appearances thereof to my knowledge. 

The CHAIRMAN. Mr. Persily. 

Mr. PERSILY. My investments, personal holdings, and other interests have been reviewed both by myself and the appropriate ethics 

counselors within the Federal Government. I have taken appropriate action to avoid any conflicts of interest. There are no conflicts of interest or appearances thereof to my knowledge. 

The CHAIRMAN. All right. The third question is, are you involved 

with or do you have any assets held in a blind trust? 

Ms. Hoffman. 

Ms. HOFFMAN. No, sir. 

The CHAIRMAN. Mr. Persily. 

Mr. PERSILY. No, sir. 

The CHAIRMAN. All right. Our practice here in the committee is 

at this point to allow nominees to introduce any family members 

that they might have present, if they would like to do that. 

Ms. Hoffman, did you have anybody you want to introduce? 

Ms. HOFFMAN. I certainly do. I would like to introduce my husband, James Hoffman, and my 2 sons, Michael and John. 

The CHAIRMAN. Very good. We welcome them. 

Mr. Persily. 

Mr. PERSILY. Thank you, Mr. Chairman. 

I would like to introduce my parents, Bernard and Claire Persily, 

who just moved to Fairfax, Virginia, recently from Chicago. My 

brother Andy Persily and his wife Lesley are here. 

I also have friends from college who have decided to come and 

watch—Tom Walsh from Detroit, Toni Apgar from Vermont, and 

Craig Schumacher from Indiana. Long-time friends from Alaska, 

Kim Elton and Mary Lou Elton. Kim is now with the Department 

of the Interior. Friends Alison Reardon and Pat Pourchot and Kate 

Tesar are also here. 
5 

Thank you. 

The CHAIRMAN. I think you have named more people than we 

have present. 

[Laughter.] 

The CHAIRMAN. We welcome them all. 

Mr. PERSILY. I wasn’t sure if I needed the votes. 

[Laughter.] 

The CHAIRMAN. You might. You never know. 

Ms. Hoffman, why don’t you go ahead and make your opening 

statement? Then we will have Mr. Persily make his, and then we 

will have some questions. 

STATEMENT OF PATRICIA A. HOFFMAN, NOMINEE TO BE AN 

ASSISTANT SECRETARY OF ENERGY FOR ELECTRICITY DELIVERY AND ENERGY RELIABILITY DEPARTMENT OF ENERGY 

Ms. HOFFMAN. Thank you. 

Good afternoon, Chairman Bingaman, Ranking Member Murkowski, and distinguished members of this committee. It is a great 

honor and privilege to appear before you today as President 

Obama’s nominee to be Assistant Secretary for the Office of Electricity Delivery and Energy Reliability. 

I would like to thank Secretary Chu and the department’s senior 

leadership for their support. 

I come before you today with great appreciation and respect for 

the magnitude and complexity of work that is required to advance 

the electric sector, as well as meet the commitment to respond to 

emergency events by providing critical assessment and recovery 

support. 

During my time at the department, I have been proud to work 

on and be a part of investments and innovations that enhance our 

energy security and reliability through public- private partnerships. Such efforts include demonstration of an advanced industrial 

gas turbine, advancing micro turbines and reciprocating engine research, the expansion of phasor measurement units, and composite 

conductors. 

I am excited to be part of this innovation at the Department of 

Energy and the opportunity to provide leadership, especially in the 

areas of renewable integration, smart grid, energy storage, and 

emergency response. If confirmed, I will work for results, drawing 

on my experience in managing public-private partnerships. 

I pledge to work closely with this committee and work with Congress to address the myriad of State, regional, and national electric 

issues that we face in a reasonable and equitable way. 

Thank you once again for this opportunity to testify this afternoon and, if confirmed, serve as Assistant Secretary for the Office 

of Electricity Delivery and Energy Reliability. I look forward to answering any questions that you may have. 

[The prepared statement of Ms. Hoffman follows:] 
6 

1 Report to Congress: Comprehensive Program Plan for Advanced Turbine Systems, July 1993. 

page 11. 

PREPARED STATEMENT OF PATRICIA A. HOFFMAN, NOMINEE FOR ASSISTANT SECRETARY FOR ELECTRICITY DELIVERY AND ENERGY RELIABILITY DEPARTMENT OF ENERGY

Good morning, Chairman Bingaman, Ranking Member Murkowski and distinguished members of this committee. It is a great honor and privilege to appear before you today as President Obama’s nominee to be Assistant Secretary for the Office of Electricity Delivery and Energy Reliability at the United States Department 

of Energy. I would like to thank Secretary Chu and the Department’s senior leadership for their support. I would also like to take a brief moment to introduce and 

thank my husband of 20 years, James Hoffman, and our two sons, Michael and 

John, for their support. 

I come before you today with great appreciation and respect for the magnitude 

and complexity of work that is required to advance the electric sector as well as to 

meet the commitment to respond to emergency events (all hazards) by providing 

critical assessment and recovery support. 

I have worked at the Energy Department for fifteen years on a variety of technologies and programs in support of the electric sector, utilizing my Masters Degree 

in Ceramic Science and Engineering from Penn State University. During my time 

at the Department, I have been proud to work on investments and innovations that 

enhance our energy security and reliability, including through public-private partnerships, such as our efforts demonstrating an advanced industrial gas turbine. We 

successfully demonstrated a forty percent efficient turbine achieving the original design goals for the program1. Solar Turbines Incorporated went on to commercialize 

this technology as the MercuryTM 50 product for distributed generation applications. 

This kind of work not only shows the potential of DOE investments in innovation, 

but it also shows the tangible results of our work on delivering electricity reliably 

to American consumers. 

When Thomas Edison opened the Pearl Street Station in 1882 with a hundred kilowatt ‘‘Jumbo dynamo’’ distributed generator, he could hardly have foreseen the pivotal role electricity would play in the development of American society. Although the 

demand for electricity initially drove the station’s construction, electricity ultimately 

stimulated and enabled technological innovations that reshaped America. Today, the 

availability of and access to electricity is something that Americans simply take for 

granted. While most people cannot describe what electricity is or where it comes 

from, we all recognize it as a vital and constant part of our daily lives, powering 

our personal electronics and heating our homes, supporting our transportation, financial, food and water systems, and helping maintain our national security. 

Meeting our future electricity needs will require time, hard work, and multiple 

solutions. We will need to pursue a combination of options, including advanced generation and transmission technologies, demand response programs, and improved efficiency. That said, perhaps the greatest challenge will be in developing the appropriate network of wires, storage, and intelligent solutions to deliver electricity reliably, responsibly and efficiently. As this committee knows, transmission will be critical to bring the electricity from wind generation from the areas with strong wind 

resources to the densely populated demand centers of this country and if confirmed, 

I look forward to working with Congress on this challenge. 

If confirmed, I will work for results, drawing on my experience at the Department 

in managing public-private partnerships. I pledge also to work closely with this 

Committee and with the Congress to address the myriad of state, regional and national electricity issues we face in a reasonable and equitable way. My goal will be 

to make measurable progress in integrating clean energy resources into the grid, 

while maintaining a reliable and secure electric system. 

Thank you once again for the opportunity to testify this morning and if confirmed, 

to serve as Assistant Secretary for the Office of Electricity Delivery and Energy Reliability. 

I look forward to answering any questions that you may have. 

The CHAIRMAN. Thank you very much. 

I see Senator Begich has arrived, and you might want to go 

ahead and make any introductory comments you would like to before Mr. Persily gives his statement. 
7 

STATEMENT OF HON. MARK BEGICH, U.S. SENATOR 

FROM ALASKA 

Senator BEGICH. Thank you, Mr. Chairman. I appreciate it. 

Senator Murkowski saw me presiding and was trying to figure 

out how I was going to be here and there at the same time. Magic 

occurred, and someone relieved me without me asking. So I am 

able to be here. 

Thank you again, Chairman Bingaman and Ranking Member 

Murkowski and my colleagues on the committee. I appreciate this 

opportunity to address the committee today on an appointment 

that is the highest importance to Alaska. 

I also want to thank President Obama and his administration for 

their support of this project and for their wisdom in appointing 

Larry Persily to oversee the Office of Federal Coordinator for the 

Alaska gas pipeline project. 

Simply put, I can think of no other Alaskan or American who is 

better qualified or more capable of handling this task. I have 

known Larry for many years throughout his career, including work 

as a journalist, to Deputy Commissioner of the Alaska Department 

of Revenue. 

It goes without saying that the largest private sector construction 

project in North America, the Alaska gas pipeline, is important to 

the economic future of the State of Alaska and for our energy security for our country. But it is also a key source of clean-burning energy for the lower 48 States by supplying up to 4 million cubic feet 

a day of natural gas. Construction on this project alone offers the 

equivalent of some 6,000 full-time jobs, high-paying jobs, over a 

=year period. 

The key, of course, is can conventional gas from Alaska be competitive in the North America market, potentially flooded in newfound shale gas reserves? I believe the answer is simply yes. It is 

not only important for our jobs in this country but, again, for our 

national security. 

The position to which Larry is nominated plays a fundamental 

role in hopefully proving me right. Both industry and our citizens 

will benefit from a robust, swift, and certain environmental and 

permitting process for the pipeline project. All parties need reliable 

information to make good decisions, and reducing the bureaucratic 

delays reduces tariff costs that will make or break the project financially and ultimately save consumers money. 

This position is charged with coordinating the work by 22 Federal agencies and up to 2,000 miles of 4-inch high-pressure steel 

pipeline. It crosses the permafrost tundra, major rivers, avalanche 

zones, and the international borders. Actually, we should all thank 

Larry for being brave enough to take on this challenge in tackling 

a daunting task and approving him before he really truly becomes 

aware of the task we set him on because we don’t want him to back 

out. 

Larry’s strengths are particularly suited to the task at hand. 

That is, with his knowledge of the project and the Government 

processes and critical thinking skills, he is well equipped to use the 

tools provided to the Alaska Natural Gas Pipeline Act of 2004 to 

save time and money without shortchanging the public’s interests. 
8 

It is an important job for my State and for our country, and I 

am proud to recommend Larry as an ideal person to do it. I trust 

your hearing today will see your questions answered and that you 

will forward his nomination to the full Senate for confirmation 

shortly. 

With that, I will conclude my comments. Mr. Chairman, I am 

happy to answer any questions. I do have another meeting, as we 

all do, that I have to rush off to. But I am happy to answer any 

questions. 

But again, thank you for the opportunity to speak. 

[The prepared statement of Senator Begich follows;] 

The CHAIRMAN. Thank you very much for making the time to be 

here and to introduce Mr. Persily. 

I don’t have any questions of you, Senator Begich. Let me ask if 

either of our colleagues do? They don’t appear to. So we will excuse 

you and appreciate your strong endorsement of the nominee. 

Senator BEGICH. Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Persily, why don’t you go right ahead and 

give us your statement. 

STATEMENT OF LARRY PERSILY, NOMINEE TO BE FEDERAL 

COORDINATOR FOR ALASKA NATURAL GAS TRANSPORTATION PROJECTS 

Mr. PERSILY. Thank you. 

Chairman Bingaman, Senator Murkowski, and members of the 

committee, thank you for allowing me this opportunity to present 

myself and the hopes for an Alaska natural gas pipeline. 

Senator Begich, thank you for that introduction. 

If confirmed for the position of Federal coordinator for Alaska 

natural gas transportation projects, I pledge to devote my energy, 

my knowledge, and ingenuity to the prospect of a very large and 

very long steel pipe to bring North Slope natural gas to America’s 

consumers. 

The entire project could require 2.5 million tons of steel, maybe 

more. That is 5 times as much steel as went into building the 

trans-Alaska oil pipeline 35 years ago. At an estimated construction cost now approaching $40 billion, the pipeline, its compressors, 

gas treatment plant would be the largest private sector project ever 

in North America. 

The superlatives are overwhelming, even for a State so proud of 

its geographic superlatives. The world’s largest natural gas treatment plant, an estimated 50 million worker hours just to build the 

pipeline itself, more than 5,000 bulldozers, backhoes, loaders, graders, trucks, trailers, and side boom pipe layers to dig the earth, 

move the equipment, and set the inch-thick steel pipe into place. 

Tens of thousands of more workers to build the equipment, the 

tools and pipe for the job, and even more to get everything to the 

work site. The economic benefits of a secure domestic energy supply would spread across North America, along with the environmental benefits of clean- burning natural gas. 

The President supports this project, and I appreciate his confidence in nominating me for this position. If confirmed, I will work 

to ensure that the companies that are willing to take the financial 

risk receive fair and expeditious Federal reviews for the permits, 
9 

leases, rights of way, and certificates required for the project. That 

includes continuing to work with agencies to ensure that the environment is fully protected during construction and operation. 

If confirmed, I will work closely with the State of Alaska and the 

provincial, territorial, and Federal Governments of Canada to continue the close coordination essential for a successful project. 

If confirmed, I will ensure, Mr. Chairman, that you and this committee, Congress, and the executive branch have all the information needed to understand the project, how it could fit into the national energy policy, the substantial financial risks of the project 

and the equally substantial rewards to the Nation, and the issues 

that must be resolved before anyone can order ribbon for the 

ground-breaking. 

But first, I realize I need to convince you of my qualifications for 

the job. I have not run for office since student body president at 

Purdue University almost 40 years ago. I have never been a Federal employee or welded a section of steel pipe. But I have worked 

on the Alaska gas line issue and oil and gas issues generally as a 

State official for the better part of the past dozen years. 

Through my 30-plus years in Alaska, I have studied the history, 

the stacks of reports on the North Slope gas line, which was first 

proposed when oil and gas were discovered at Prudhoe Bay in 

1968. I served as Deputy Commissioner at the Alaska Department 

of Revenue, Associate Director of the State’s Washington, DC, office, and currently as an oil and gas aide to the co-chair of the 

State House Finance Committee. 

I know the issues, the history, and the players, and have worked 

hard to earn their respect. I know what has and hasn’t worked 

through the years. If confirmed, I intend to look for what will work 

to get this project underway. 

As a kid, I remember the unused coal bin in our basement. The 

previous owner had switched to natural gas. I also remember the 

hopper cars from the steel mills near our home in south Chicago, 

pouring molten slag that lit up the sky so much we would drive 

over and park just to watch. 

I know a lot more now about natural gas and steel pipe than I 

did then, but I am still fascinated at how all the pieces fit together. 

I appreciate your consideration of my nomination and ask that you 

allow me to play a role in fitting together the pieces of an Alaska 

natural gas pipeline. 

Thank you. I would be pleased to answer any questions. 

[The prepared statement of Mr. Persily follows:] 

PREPARED STATEMENT OF LARRY PERSILY, NOMINEE TO BE FEDERAL COORDINATOR

FOR ALASKA NATURAL GAS TRANSPORTATION PROJECTS

Chairman Bingaman, Senator Murkowski and members of the committee, thank 

you for allowing me this opportunity to present myself and the hopes for an Alaska 

natural gas pipeline. 

Senator Begich, thank you for that introduction. 

If confirmed for the position of Federal Coordinator for Alaska Natural Gas Transportation Projects, I pledge to devote my energy, my knowledge and ingenuity to the 

prospect of a very large and very long steel pipe to bring North Slope natural gas 

to America’s consumers. 

The entire project could require two and one-half million tons of steel, maybe 

more. That’s five times as much as went into building the trans-Alaska oil pipeline 

35 years ago. 
10 

At an estimated construction cost approaching $30 billion, the pipeline, its compressors and gas treatment plant would be the largest private-sector project ever in 

North America. 

The superlatives are overwhelming, even for a state so proud of its geographic superlatives. 

• The world’s largest natural gas treatment plant. 

• An estimated 50 million worker hours just to build the pipeline itself. 

• More than 5,000 bulldozers, backhoes, loaders, graders, trucks, trailers and 

side-boom pipe layers to dig the earth, move the equipment and set the inchthick steel pipe in place. 

• Tens of thousands more workers to build the equipment, tools and pipe for the 

job, and even more to get everything to the work sites. 

The economic benefits of a secure, domestic energy supply would spread across 

North America, along with the environmental benefits of clean-burning natural gas. 

The president supports the project, and I appreciate his confidence in nominating 

me for this position. 

If confirmed, I will work to ensure that the companies willing to take the financial 

risk receive fair and expeditious federal reviews for the permits, leases, rights-ofway and certificates required for the project. That includes continuing to work with 

agencies to ensure that the environment is fully protected during construction and 

operation. 

If confirmed, I will work closely with the State of Alaska and the provincial, territorial and federal governments of Canada to continue the close coordination essential for a successful project. 

If confirmed, I will ensure that this committee, Congress and the executive branch 

have all the information needed to understand the project, how it could fit into a 

national energy policy, the substantial financial risks, the equally substantial rewards to the nation, and the issues that must be resolved before anyone can order 

ribbon for the groundbreaking. 

But first, I realize I need to convince you of my qualifications for the job. 

I have not run for office since student body president at Purdue University almost 

40 years ago. I have never been a federal employee or welded a section of steel pipe. 

But I have worked on the Alaska gas line issue—and oil and gas issues generally—as a state official for the better part of the past dozen years. Through my 

30-plus years in Alaska, I have studied the history, the stacks of reports on the 

North Slope gas line which was first proposed when oil and gas were discovered at 

Prudhoe Bay in 1968. 

I have served as deputy commissioner at the Alaska Department of Revenue, associate director of the state’s Washington, D.C., office and, currently, as oil and gas 

aide to the co-chair of the state House Finance Committee. I know the issues, the 

history and the players, and have worked hard to earn the respect of those involved 

in the gas line effort. 

I know what has and hasn’t worked through the years. If confirmed, I intend to 

look for what else will work to get this project under way. 

As a kid, I remember the unused coal bin in our basement—the previous owner 

had switched to natural gas. I also remember the hopper cars from the steel mills 

near our home in South Chicago, pouring molten slag that lit up the sky so much 

we would drive over and park, just to watch. 

I know a lot more now about natural gas and steel pipe than I did then, but I’m 

still fascinated at how all the pieces fit together to fuel the nation. 

I appreciate your consideration of my nomination, and ask that you allow me to 

play a role in fitting together the pieces of an Alaska natural gas pipeline. 

With your permission, I will submit my statement for the record, and I would be 

pleased to answer any questions. 

Thank you. 

The CHAIRMAN. Thank both of you for your statements. 

Let me start with a few questions, and we will just do 5-minute 

round of questions here. 

Mr. Persily, first, I have been reading all these articles, like most 

of us have perhaps, about the enormous increase in the reserves of 

shale gas, which have been discovered in the last few years here 

in the lower 48. In your view, is the pipeline still needed in light 

of these very large increases and projected reserves in the lower 

48? 
11 

Mr. PERSILY. Mr. Chairman, I believe the pipeline is still needed. 

Alaska gas could still secure a place in the market. We are talking 

about gas deliveries 2020—starting 2020, 2011. If the Alaska pipe 

can—if the developers of the Alaska pipe can secure the financial 

commitments to develop the project and serve notice on the market 

that we will be there on that date with gas at competitive rates, 

there will be a place in the market for Alaska gas. 

The CHAIRMAN. Maybe you could try to sort out for me how these 

2 projects relate to each other, the TransCanada-ExxonMobil 

project and the BP-ConocoPhillips Denali project. How do those relate to each other? Are they just sort of on parallel tracks going forward, or how is a decision finally made as to what gets built? 

Mr. PERSILY. Mr. Chairman, there are 2 partnerships both essentially developing the same project in terms of taking natural gas 

from the North Slope into Alberta, connecting with the North 

American distribution grid. You have, as you said, TransCanadaExxon are developing a project where they are partners. BP and 

Conoco are trying to develop their own project. But eventually, it 

is going to become one project. No one expects there is 2 pipes. 

There is going to have to be some day a commercial deal between 

the 3 major North Slope producers. TransCanada, the State of 

Alaska certainly will be involved—hopefully, the Federal Government, too. But it is going to be a commercial deal that involves all 

four of those companies. 

The CHAIRMAN. All right. 

Ms. Hoffman, let me ask you about this whole issue of cyber security. I think when you testified to this committee last May, you 

said, ‘‘Smart grid is both a means to enhance grid security, as well 

as a potential vulnerability.’’ 

In your view, has the department been able to ensure that the 

Recovery Act funds for the smart grid are being used to enhance 

grid security rather than to increase cyber security vulnerabilities? 

Ms. HOFFMAN. Thank you, Mr. Chairman. 

With respect to my statement, enhancing energy security, what 

smart grid does is bring information sensors to the industry so that 

we can real time evaluate and analyze what is happening on the 

electric system. It can be a vulnerability because we are accessing 

information. We are connecting different parts of the network together, providing more information that is flowing throughout the 

system. 

With the investment grants, smart grid investment grant 

projects, we are requiring that the awardees, the selectees, do a 

cyber security plan, which will define the cyber security strengths 

and weaknesses of their proposals. We will engage the national laboratories, as well as other Federal agencies, to make sure that we 

have done a proper and thorough analysis of the cyber security 

strength and weaknesses for each of the grantees. 

The CHAIRMAN. One of the issues that arose when we were marking up our legislation this last summer, the bill that is currently 

on the Senate calendar for consideration, the department had not 

taken any position on the cyber security legislation that we were 

considering. Do you know if that is still the case, or has the department taken a position on the cyber security legislation that we included in that bill we reported in June? 
12 

Ms. HOFFMAN. I am not familiar with all of the details of that 

legislation. I remember looking at that legislation, and the department was looking at technical comments for that legislation. 

Some of the comments focused around vulnerabilities versus immediate threats. The department will—I will be glad, if confirmed, 

to work with the committee and provide comments for the record. 

The CHAIRMAN. Thank you very much. 

Senator Murkowski. 

Senator MURKOWSKI. Mr. Chairman, I know that the Senator 

from New Jersey is not interested in pursuing the questions to Mr. 

Persily on the gas line, although maybe he has changed his mind 

because it was very interesting testimony, Larry. But I would be 

happy to let Senator Menendez go first, and then I will ask a series 

of questions to Mr. Persily. 

Senator MENENDEZ. Thank you. Thank my colleague for her 

courtesy. I appreciate it. 

I know that the Alaska line is very important. I just don’t have 

any questions about it. 

But, Ms. Hoffman, thank you very much for your willingness to 

serve. I want to pursue something that is very important to the 

people of New Jersey, and that is the Energy Policy Act of 2005 

that authorized the DOE to conduct a National Electric Transmission Congestion Study and, based on that study, to designate 

national transmission corridors. 

In 2007, the department conducted such a study and designated 

all or part of Ohio, West Virginia, Pennsylvania, New York, Maryland, Virginia, Delaware, the District of Columbia, and New Jersey 

a transmission corridor. That is an enormous area that really 

doesn’t strike me as a corridor. I don’t think that all those States 

would consider themselves in the context of the country, all of that 

as a corridor. 

Or does it seem necessary given the fact that DOE’s congestion 

study stated, in the eastern interconnection, ‘‘a relatively small 

portion of constrained transmission capacity causes the bulk of the 

congestion cost that is passed through to consumers. This means 

that a relatively small number of selective additions to transmission capacity could lead to major economic benefits for many 

consumers.’’ 

So I know that the department is in the process of updating its 

congestion study for the eastern interconnect. As a matter of fact, 

as I understand it, it is past due. So my first question is what is 

the status? 

Ms. HOFFMAN. Thank you, Senator. 

The status is that the department is now reviewing the 2009 congestion study. We hope to have it released later on this year. We 

are in the process of just internal review and approval. 

Senator MENENDEZ. Later on this year? 

Ms. HOFFMAN. Yes. 

Senator MENENDEZ. How late are we talking about? 

Ms. HOFFMAN. My assessment of the review process, probably 

will be late spring, early summer. 

Senator MENENDEZ. Late spring. Will it attempt to narrow the 

enormous transmission corridor that has been designated for the 

eastern United States? 
13 

Ms. HOFFMAN. Senator, the congestion study is a study of congestion in the United States. So the 2009 study that we are working 

on is looking at where there are congested areas as part of our 

transmission and distribution network. 

The identification of congestion in the United States is really the 

identification of where there are problems in the United States. So 

with the congestion study, what we would like to do is make sure 

that we are identifying the problems that are in the United States 

with the ability to bring generation to demand. 

As we identify the congestion in the United States, there are 

multiple solutions that we would like to look at in relieving 

congestions. Congestion can be eliminated by demand response and 

energy efficiency. It also can be alleviated by onsite generation, as 

well as transmission. 

So the congestion study that will be released for the 2009 congestion study will look at where there are problems in the United 

States for potential solutions. Once that congestion study is released, we hope to have—we will have, not we hope. We will have 

a comment period, and I look forward to working with members of 

this committee, as well as the States, to address any issues that 

arise from the release of the congestion study. 

Senator MENENDEZ. I appreciate your answer. I know you are obviously prepared for it since you are reading from a statement. But 

let me explore it a little further. 

You know, there are 2 ways to solve a problem. I can solve it 

with a blunderbuss, or I can solve it, when it is possible, with a 

surgeon’s scalpel. There is a difference. So, I can say this whole— 

the easy way is this whole area that has previously been talked 

about is our solution, or I can seek to narrow the scope of it to 

make it more tenable for all of those States that are involved. 

So my concern is do you—you will be in this role, and as I understand it, this will be immediately underneath your authority. Will 

the congestion study be detailed enough to show the projected congestion on every transmission line within the corridor? Again, will 

the corridor be redrawn to only be as large as is necessary to relieve congestion? 

That is a fundamental overarching question. We will see what 

that means. But the question is if we are just going to take it and 

say, well, it is easier to have this big swath, that, to me, is not a 

responsive answer. I want to know that we are going to be able to 

look at this and say what is necessary for the transmission, but let 

us not just make it the easiest way, which means cutting through 

all of these States. I mean, it is just pretty amazing to me. 

Ms. HOFFMAN. I understand your perspective. In looking at congestion, we will define areas of the United States that exhibit congestion. It will be based on information that includes congested 

transmission lines, the price signals, as well as all that will contribute to the definition or defining of congested regions in the 

country. 

The corridor designation does not occur until after—may or may 

not occur until after the congestion study is released and there is 

comments on the congestion study. 

Senator MENENDEZ. If I may, one last, final question, Mr. Chairman? I think I would like to have a conversation with you outside 
14 

of the hearing to get a better sense of this before I make a judgment here. 

But will the study reflect the recent decrease in electricity demand due to the economic downturn and the energy conservation 

gains from the Recovery Act? Or is that outside the scope of the 

study? 

Ms. HOFFMAN. The data baseline for the study may have just 

started the analysis of when the economic downturn has occurred. 

We will go back and take a look at that and make sure that that 

is reviewed. 

Senator MENENDEZ. OK. I appreciate your answers. I am still 

somewhat unsettled, to be honest with you, and I look forward to 

an opportunity to have a conversation. 

Ms. HOFFMAN. I look forward to the conversation. Thank you, 

Senator. 

The CHAIRMAN. Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Mr. Persily, you will recall that it was here in this committee 

back in 2004 that we worked through, and ultimately passed, the 

Natural Gas Pipeline Act of 2004, and there was a great deal of 

excitement back home that, ta-da, we are on our way. The gas line 

is coming. 

We are now in 2010, and Alaskans are, appropriately, asking 

questions. As you mentioned, there is good news on the horizon. 

You have mentioned the open season with TransCanada and 

Exxon, and then Denali will be advancing theirs in these next several months. 

But you have been focused on this professionally, and just from 

your own personal interest, for decades now. Why haven’t we been 

able to move things more quickly? What are the roadblocks that we 

face? What can be done to help accelerate this project that I think 

we all agree is in the Nation’s best interest and, clearly, in our 

State’s best interest? 

Mr. PERSILY. Thank you, Senator. 

It is just the complexity of the project. The size is what you need 

to make it economical. It has got to be big enough so the unit cost 

of moving molecules to market is low enough, but that size is such 

a hurdle to overcome. 

We are looking now at $40 billion in construction. Shippers on 

the line are going to have to sign firm transportation commitments, 

pledges, to either ship their gas or pay for the empty space, firm 

transportation commitments on that line for 20, 25 years. Those 

are going to be worth $130 billion, give or take. 

That is a tremendous risk. No company is going to commit to 

those kind of numbers unless they have done all their homework 

in advance, excruciatingly slow homework perhaps to the public, 

from the public’s view of it. But there is a lot of money at stake, 

a lot of complexity. 

It has taken longer than everyone has wanted. I guess we could 

sit here and talk about how good things take time. Hopefully, I 

think—I believe we are closer now than we were then. But right 

now, we are looking for the commercial deal between project sponsors, the shippers who are going to pledge basically the money to 

cover the mortgage on that project. The State is involved in talks 
15 

with them, and hopefully working—the Office of Federal Coordinator, working with this committee and Congress, can see if there 

is anything more the Federal Government can do to help the 

project or things we shouldn’t do that would make it worse. 

Senator MURKOWSKI. I think that is an important thing to keep 

in mind. We always think about those things that we might want 

to do proactively. But we also need to recognize that oftentimes unintentionally at the Federal level or at other levels we are putting 

up roadblocks or not removing barriers that would allow us to 

move closer. 

You have been focused certainly in these past years working in 

the legislature and with the Governor’s office, looking at this line 

from the State’s perspective. In your role, should you be confirmed, 

which we certainly hope that you will be, to the role of Federal coordinator, looking at it from a different lens. How do you think that 

you can contribute a different perspective from your background, 

working with the State on these issues, now viewing things 

through the Federal lens? 

Mr. PERSILY. Senator, I guess what I would bring to it is I just 

deal in reality. I have got to admit I am not much on process. I 

don’t do vision statements very well. But, to me, the reality—— 

Senator MURKOWSKI. We know what the vision is on this. 

Mr. PERSILY. Right. Getting to the end of the line. But we have 

to look at the reality of the numbers, the risk, the problems involved in this. Just because we want it isn’t going to make it happen. 

So, hopefully, working with the parties, the State, the Canadian 

government, certainly the producers, and TransCanada, the ones 

who are going to be putting their companies’ value on the line, and 

seeing what can be done, where we can identify roadblocks, what 

can be done to remove them, see which parties are willing to take 

risk. Then with risk comes reward. 

Senator MURKOWSKI. Mr. Chairman, my time is just about over. 

I have got a couple more for Mr. Persily and then one for Ms. Hoffman. But I defer to Senator Risch if—— 

The CHAIRMAN. Senator Risch, did you have some questions? All 

right. Go right ahead. 

Senator MURKOWSKI. OK. I will keep going with you. 

In terms of the cost estimates that have been released just last 

week, the TransCanada-Exxon group came back and indicates that 

we are looking at a project somewhere between $30 billion and $40 

billion. When we were talking about what might be necessary for 

loan guarantees back in 2004, I think we were looking about an 

$18 billion project. 

There are some who would suggest that it just costs too much. 

In view of what is happening in the lower 48 with our abilities to 

produce shale gas, some speculate that, somehow or other, the 

Alaska line is just not worth it. Can you speak to those comments? 

Mr. PERSILY. Senator, it is worth it in that the Nation certainly 

is looking to natural gas to a much larger extent in the future, in 

the decades ahead, as a preferable, cleaner-burning fuel of choice. 

Alaska, as you stated so eloquently in your statements, has a lot 

of natural gas. We just need to get it to the buyers. 
16 

Certainly, the transportation costs will be higher to move Alaska 

natural gas from the North Slope to North American markets, but 

our production costs will be lower than shale gas. We have got a 

producing field at Prudhoe Bay. We produce billions of cubic feet 

a day right now. We reinject it into the ground to enhance oil recovery, but it won’t cost that much more to produce it and put it 

into a pipe and move it to market. 

So I think as the developers of the Alaska project work out the 

numbers, they know that they have to be competitive on price 

when they get to market. That is one of the hurdles they are working on. They know that a consumer wants natural gas at the burner to—unlike wild salmon, where we know people will pay more for 

wild Alaska salmon, gas is a commodity. We just have to be competitive in the market on price. 

Senator MURKOWSKI. I think it is important that folks recognize 

that the process, when you are dealing with shale gas, is entirely 

different than what we have up north. 

We get focused about what we need to do within Alaska to advance this project, and sometimes you actually forget that in order 

to deliver Alaska’s gas to the American market, we have to go 

through a foreign country. We are going through Canada. 

Your predecessor in this job, Drue Pearce, pioneered this office. 

She set things up and had been very aggressive working with our 

Canadian counterparts to make sure that all aspects along the way 

are going to be working. Can you just speak to the issues that confront this project as we deal with our neighbors to the north? 

Mr. PERSILY. Sure, Senator. Obviously, Canada has its own regulatory process to go through. It has land issues with First Nations, 

which the Canadian Federal Government is going to have to deal 

with. Canada faces many of the same socioeconomic issues that 

Alaska faces when you build a mega project through an area. 

But I have worked through the years with several Canadian officials. As you said, Drue Pearce, who started this office, set up an 

excellent working relationship with the Canadians, and I don’t 

think that is going to be an insurmountable problem for this 

project. Canada would see many benefits from this just like the 

United States would. 

Senator MURKOWSKI. Which, again, is very important to point 

out. 

I have just got one more question for you, Larry, and this is regarding the authority that the coordinator has under the Alaska 

Natural Gas Pipeline Act. You have some authority to get the 

project built without governmental permitting delays, and it specifically grants you the authority to preclude Federal agencies from 

insisting on permitting conditions that aren’t required by law that 

you would find prevent or would impair the construction or operation of the pipeline. How would you envision exercising that kind 

of authority? 

Mr. PERSILY. Senator, my understanding is we are going to have 

to do it at the Office of Federal Coordinator, if I am confirmed, 

work up regulations on that. There is going to have to be a public 

process so that if we identify a problem with a particular agency, 

that there is a public process where we can accept comments, gath-
17 

er information based on working off the regulations, which we are 

going to have to adopt. 

Senator MURKOWSKI. Let me ask you a question, Ms. Hoffman, 

on the transmission aspect. Under the stimulus dollars that the 

Congress authorized last year, there was $80 million that went to 

the Office of Electricity Delivery and Energy Reliability to advance 

the regional transmission plans. That language directed you, in 

consultation with the FERC, to undertake this resource assessment 

and analysis of demand and transmission requirements. 

You are also directed to provide technical assistance for transmission planning. But there was nothing in the language that inserted an alternative energy requirement for transmission planning. Yet in just about a month ago, December 18, there was a 

press release that came from the department that announced 6 

funding awards that expressly states that awards made to transmission planners would fund work for project options for alternative electricity supplies and the associated transmission requirements. 

How are you defining ‘‘alternative?’’ By defining ‘‘alternative’’ for 

these grants, are you expressly leaving out any other resources? 

Ms. HOFFMAN. Thank you, Senator. 

That is a very good question. In defining ‘‘alternatives,’’ as you 

presented the statement, I have realized that ‘‘alternatives’’ has 

been used in multiple purposes with respect to the interconnection 

planning. The interconnection planning solicitation announced 

awards for the East, West, and URCA to do a system-wide analysis. 

The alternatives was looking at multiple scenarios or alternative 

futures as the transmission planning organization assessed resources. So we are going to look at multiple options. The solicitation requested everybody look at all forms of generation, energy 

storage, demand response, and energy efficiency. So, from that perspective, it is inclusive of all generation technologies or all alternative energy technologies. 

But the solicitation also requested that the interconnection look 

at alternative scenarios. So, i.e., if WECC is looking at a goal to 

increase clean energy technologies to meet the administration’s 

clean energy future, it would look at a scenario to minimize carbon 

emissions, as well as look at the potential deployment of other 

technologies that the States would like to deploy in each of their 

areas. 

Senator MURKOWSKI. So not necessarily alternative energies, but 

alternative—— 

Ms. HOFFMAN. Futures. 

Senator MURKOWSKI [continuing]. Futures. 

Ms. HOFFMAN. Yes, Senator. Thank you. 

Senator MURKOWSKI. Thank you for that. 

Mr. Chairman, I don’t have any further questions, but I would 

hope that the committee would view Mr. Persily and Ms. Hoffman’s 

nominations with favor and, hopefully, move them expeditiously 

through the committee. 

The CHAIRMAN. All right. If you have no questions, Senator 

Risch, then we will make provision for members to file any addi-
18 

tional questions that they would have of either witness by 5 p.m. 

tomorrow. 

With that, the committee will stand in adjournment. 

Thank you both. 

[Whereupon, at 3:26 p.m., the hearing was adjourned.] 
(19) 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF PATRICIA A. HOFFMAN TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. What is the Obama Administration’s position on whether the over $4 

billion in smart grid grants authorized by last year’s stimulus bill are subject to federal tax? If the IRS decides to tax the smart grid grants, do you anticipate any recipients declining the award and returning the funding to the Treasury? 

Answer. The Department of Energy and the Administration are working diligently 

to resolve the tax issue regarding the Smart Grid Investment Grants. As you know, 

this issue arises not from anything specific to DOE’s programs or the funding announcements, but rather is a general matter of how federal grants are treated under 

tax law. For that reason, Congress made some explicit exemptions In the Recovery 

Act. For example, the Recovery Act specifies that grants under the 48c program are 

tax exempt. However, no such provision was included with respect to the Smart 

Grid grants. We are working closely with the Treasury Department and the Internal 

Revenue Service on this issue and presenting relevant information in order for the 

IRS to release a final decision. Regardless, we are working with recipients to make 

sure that these Smart Grid projects go forward. 

Question 2. What are the Intellectual Property implications with the DOE smart 

grid grants? Will the Department claim IP rights to the infrastructure developed 

with federal grant money? 

Answer. Since the Smart Grid Investment Grants (SGIG) do not involve research 

and development, there is no patent rights clause included in the SGIG awards and 

no patent waiver is necessary. Thus, the government gets no rights in any inventions associated with SGIG. 

Question 3. How is the Office of Electricity handling cyber security efforts? How 

are you coordinating with the rest of DOE and within the Administration? Has the 

Department started to establish an independent national energy sector cyber security organization to institute research, development, and deployment priorities, as 

directed by the FY10 Energy and Water Appropriations bill? 

Answer. Cyber security is a critical priority for the Department and the Office of 

Electricity in particular. The Department has been working with the energy sector 

and other stakeholders to reduce the risk of energy disruptions due to cyber attacks 

for several years. The Department uses the ‘‘Roadmap to Secure Control Systems 

in the Energy Sector’’ published in 2006 as a guide in formulating its program activities. We are also working closely with the National Institute of Science and Technology, energy sector stakeholders, and other partners within the Administration to 

address cyber security for the Smart Grid. With regards to the national energy sector cyber security organization set out in our FY 2010 appropriations bill, we have 

released a Notice of Intent seeking comments and plan to release a Funding Opportunity Announcement this spring. 

Question 4. Pursuant to the Energy Policy Act of 2005, the Department of Energy 

is required to assess transmission congestion and designate National Interest Electric Transmission Corridors. The most recent assessment was due in 2009. What is 

the status of that effort and when can the Committee expect to see the Department’s report? 

Answer. We are working diligently on the draft study and plan to release it in 

the next few months. We will share it with the committee as soon as it is ready. 

The study will be open for public comments when the study is released. Only after 

the comment period is closed and the comments have been considered, will the Secretary consider whether National Interest Electric Transmission Corridor designation is necessary. 

Question 5. Do you believe that existing planning processes at the regional level 

have been working well? Do you believe FERC should have authority to overturn 
20 

decisions made in these regional plans to construct particular transmission lines 

and/or mandate interconnection-wide planning? 

Answer. Collaboration among DOE, FERC, and regional and state partners is critical in ensuring a reliable and secure transmission system. Balancing regional and 

federal interests is a challenge with which this committee and the Department will 

both continue to wrestle as we continue our efforts to modernize the grid. Interconnection-wide planning is important to achieving results. The Western Renewable 

Energy Zones—Phase I Report has demonstrated progress. The Electric Reliability 

Council of Texas (ERCOT) study entitled Competitive Renewable Energy Zones 

(CREZ) documented the cost and transmission requirements for connecting significant amounts of wind to this system reliably. Although the Department is encouraging the development of several scenarios (called alternative futures), consensus 

will be required and regional interconnection planning requires oversight by FERC 

for transparency and reliability review. 

Question 6. Can you describe the Eastern Interconnection Planning Collaborative 

and what you see as its ultimate objectives? Will the plans coming out of this effort 

have any binding effect on the states? 

Answer. The Eastern Interconnection Planning Collaborative (EIPC) was organized as a voluntary effort involving all of the entities in the interconnection that 

have been recognized by the North American Electric Reliability Corporation 

(NERC) as Planning Authorities. These entities realize that the electricity industry 

has entered a period of transformative change that will affect the technologies the 

industry uses and how the industry is structured and organized. The EIPC’s central 

purpose is to perform the iterative long-term assessments that will be needed to 

guide and manage this transition. The Department recognized the worth of this effort and has supported the work through grants under the Recovery Act to EIPC 

and similar entities in the Western and Texas Interconnections. However, the Department also believes that if these collaborative efforts are to be successful, the 

states must be actively involved in and informed by them. For this reason, the Department has also issued separate grants to stateoriented entities in the three interconnections, and required that the industry-based grantees (such as EIPC) bring the 

states into their planning processes. Under present law, however, the plans that 

emerge will not be legally binding on any of the participants. 

Question 7. DOE is simultaneously awarding funding for transmission planning 

and new smart grid deployments. Given that many smart grid devices, such as energy storage or real time monitoring, can complement or even decrease the need for 

transmission expansion, how will these transmission planning studies incorporate 

new smart grid technologies? 

Answer. Transmission planning and smart grid technology are inextricably linked. 

Your question highlights the need for a process to evaluate alternative scenarios— 

the interconnection-wide planning process. As we modernize the grid to gain access 

to real time data and improve storage, we will be able to adjust our planning and 

responses to the needs of the system because it will be more flexible and adaptive 

to demand response and energy efficiency savings furthered enabled by the smart 

grid. 

Question 8. What role is DOE playing to ensure standards harmonization, as well 

as product testing and certification, in order to facilitate market and consumer 

adoption of new grid applications? 

Answer. DOE has been working with the private sector, other government agencies, and academia for several years to support standards harmonization and the 

development of interoperability and cyber security standards for the Smart Grid. In 

2007, the Energy Independence and Security Act (EISA) assigned the National Institute of Standards and Technology (NIST) primary responsibility to coordinate development of a framework and protocols to achieve interoperability of smart grid devices. Under the American Recovery and Reinvestment Act , DOE provided NIST 

with $10 million to carry out its responsibilities under EISA. NIST recently issued 

the ‘‘NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 1.0’’ which provides for the development of a robust framework for conformity 

testing and certification. 

Question 9. Many new technologies, such as electric vehicles, have implications 

not only for the Office of Electricity, due to the increased strain on the grid, but 

also for other areas within the Department, such as buildings and batteries. How 

will you coordinate the RD&D efforts with the other DOE offices in order to accelerate their rollout? 

Answer. The Secretary has made breaking down stovepipes a top priority at the 

Department. Under his leadership and with the close involvement of Undersecretary 

Johnson, the Office of Electricity, the Office of Energy Efficiency and Renewable Energy, and other offices are working closely to make sure that we take a systems ap-
21 

proach to our investments including smart buildings and electric vehicles. If confirmed, I will continue to make sure that our research is coordinated with work underway in other offices to promote secure and reliable energy across the country. 

RESPONSE OF PATRICIA A. HOFFMAN TO QUESTION FROM SENATOR STABENOW

The Office of Electricity (OE) is in the midst of executing financial assistance 

awards for the Smart Grid Investment Grant program, funded through the Recovery 

Act. Grantees must comply with Buy American requirements in the Recovery Act 

where applicable. The Buy American provisions require that manufactured goods 

used in a covered project must be made in the U.S. The Department of Energy has 

an obligation to ensure that the Buy American requirements are complied with. I 

understand that the Office of Energy Efficiency and Renewable Energy is issuing 

a Request for Information to survey relevant markets for Buy American-compliant 

products. 

Question 1. Please describe the Department’s approach to ensuring compliance 

with Buy American requirements for the OE programs, and provide your views on 

whether additional steps could be taken to ensure that items such as meters purchased with federal funding are compliant with the Buy American provisions. Has 

OE considered issuing a Request For Information or other proactive action to provide grantees with adequate information to ensure their use of Buy American compliant products? 

Answer. The Buy American provisions of the ARRA apply to the construction, alteration, maintenance or repair of a public building or public work. The Buy American provisions of ARRA, as codified by OMB in 2CFR 176, are a part of the Terms 

and Conditions for any ARRA funded work. OE is not currently considering a Request for Information (RFI) at this time, but the Department is communicating with 

all grantees regarding Buy American to ensure compliance with requirements from 

ARRA. Additionally, the Department takes the oversight and transparency components of ARRA very seriously, and we will continue to work with our recipients to 

ensure proper use of these funds. 

RESPONSE OF PATRICIA HOFFMAN TO QUESTION FROM SENATOR MENENDEZ

Ms. Hoffman, in 2007 the Department of Energy conducted a study of electric 

transmission congestion and as a result of that study the Department designated 

all or part of Ohio, West Virginia, Pennsylvania, New York, Maryland, Virginia, 

Delaware, the District of Columbia and New Jersey a transmission corridor. This 

enormous area really does not strike me as a corridor, nor does it seem necessary 

given the fact that DOE’s congestion study stated that in the Eastern Interconnection: 

a relatively small portion of constrained transmission capacity causes the 

bulk of the congestion cost that is passed through to consumers. This means 

that a relatively small number of selective additions to transmission capacity could lead to major economic benefits for many consumers. 

I know that the DOE is in the process of updating its congestion study for the 

Eastern Interconnect. When will it be released? Why has it not already been released? Will that study be detailed enough to show congestion on a transmission 

line by transmission line basis? Will the study reflect the decrease in electricity demand caused by the economic downturn and conservation gains from the Recovery 

Act? Based upon that study will the Department reevaluate its transmission corridor designations and attempt to make them as narrow as possible? 
22 

Answer. I appreciate the concerns that you expressed during the hearing, and I 

can assure you that I will take them into consideration as this process moves forward. That process has several additional steps before we would make any decisions 

about corridor designations . As you noted during the hearing, the Department is 

still updating the congestion study. We expect the revised study to be released in 

the next few months. At that time, the study will be published in draft form for 

public comment so that stakeholders in New Jersey and elsewhere can provide input 

for the Department. Only after considering public comments will we finalize the 

Congestion Study. As the name suggests, the study will identify congested areas. 

Any decision to designate corridors based on the study would come at a later date, 

and again, would be part of a process that is also open to comments. 

Æ