S. HRG. 114–118 

ENERGY SUPPLY LEGISLATION 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON

ENERGY SUPPLY LEGISLATION 

TUESDAY, MAY 19, 2015 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 


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ENERGY SUPPLY LEGISLATION 


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95–278 2015

S. HRG. 114–118 

ENERGY SUPPLY LEGISLATION 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON

ENERGY SUPPLY LEGISLATION 

TUESDAY, MAY 19, 2015 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 


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(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

ELIZABETH WARREN, Massachusetts 

KAREN K. BILLUPS, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

COLIN HAYES, Deputy Staff Director 

KELLIE DONNELLY, Deputy Chief Counsel 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 


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C O N T E N T S 

OPENING STATEMENTS

Page 

Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska .................. 1 

Cantwell, Hon. Maria. Ranking Member, and a U.S. Senator from Washington .................................................................................................................... 3 

WITNESSES

Hopper, Abigail Ross, Director, Bureau of Ocean Energy Management, U.S. 

Department of the Interior .................................................................................. 6 

Kelly, Susan N., President and CEO, American Public Power Association ........ 14 

Livingston, P.E., Randal S., Vice President, Power Generation, Pacific Gas 

and Electric Company .......................................................................................... 26 

Matzner, Franz, Director of the Beyond Oil Initiative, Natural Resources 

Defense Council .................................................................................................... 35 

Milito, Erik, Group Director, Upstream and Industry Operations, American 

Petroleum Institute .............................................................................................. 52 

Sheets, Brent, Deputy Director, Alaska Center for Energy and Power, University of Alaska Fairbanks ...................................................................................... 65 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Advanced Energy Management Alliance 

Statement for the Record ................................................................................. 282 

Alaska Independent Power Producers Association 

Statement for the Record ................................................................................. 287 

American Whitewater 

Statement for the Record ................................................................................. 288 

Association of Fish and Wildlife Agencies 

Statement for the Record ................................................................................. 356 

Barrasso, Hon. John 

Letter from the General Counsel of the Department of Defense regarding 

Section 526 of S. 2827 ................................................................................... 308 

Beaverhead County Commissioners 

Statement for the Record ................................................................................. 98 

Bureau of Land Management, U.S. Department of the Interior 

Statement for the Record ................................................................................. 297 

Cantwell, Hon. Maria 

Opening Statement ........................................................................................... 3 

Clark Canyon Hydro, LLC 

Statement for the Record ................................................................................. 95 

DNV GL 

Statement for the Record ................................................................................. 310 

Edison Electric Institute 

Statement for the Record ................................................................................. 330 

Federal Energy Regulatory Commission 

Statement for the Record ................................................................................. 100 

First Energy 

Statement for the Record ................................................................................. 338 

Geothermal Energy Association 

Statement for the Record ................................................................................. 339 

Greenfields Irrigation District 

Statement for the Record ................................................................................. 92 

Heller, Hon. Dean 

Statement for the Record ................................................................................. 344 

Hopper, Abigail Ross 

Opening Statement ........................................................................................... 6 


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IV 

Hopper, Abigail Ross —Continued 

Written Testimony ............................................................................................ 9 

Responses to Questions for the Record ........................................................... 118 

Hydro Bills Group 

Statement for the Record ................................................................................. 346 

Industrial Energy Consumers of America (regarding S. 1215) 

Statement for the Record ................................................................................. 350 

Industrial Energy Consumers of America (regarding S. 1226) 

Statement for the Record ................................................................................. 351 

Industrial Energy Consumers of America (regarding S. 1236) 

Statement for the Record ................................................................................. 352 

International Brotherhood of Electrical Workers 

Statement for the Record ................................................................................. 353 

Kelly, Susan N. 

Opening Statement ........................................................................................... 14 

Written Testimony ............................................................................................ 16 

Responses to Questions for the Record ........................................................... 120 

Livingston, Randal S. 

Opening Statement ........................................................................................... 26 

Written Testimony ............................................................................................ 28 

Responses to Questions for the Record ........................................................... 133 

Maryland Department of the Environment 

Statement for the Record ................................................................................. 354 

Matzner, Franz 

Opening Statement ........................................................................................... 35 

Written Testimony ............................................................................................ 37 

Responses to Questions for the Record ........................................................... 139 

Milito, Erik 

Opening Statement ........................................................................................... 52 

Written Testimony ............................................................................................ 54 

Responses to Questions for the Record ........................................................... 145 

Murkowski, Hon. Lisa 

Opening Statement ........................................................................................... 1 

BOEM Fact Sheet ............................................................................................. 113 

National Enhanced Oil Recovery Initiative (regarding S. 1282) 

Statement for the Record ................................................................................. 364 

National Enhanced Oil Recovery Initiative (regarding S. 1285) 

Statement for the Record ................................................................................. 365 

National Hydropower Association 

Statement for the Record ................................................................................. 367 

Outdoor Alliance 

Statement for the Record ................................................................................. 376 

Scott, Hon. Tim 

Statement for the Record ................................................................................. 378 

Sheets, Brent 

Opening Statement ........................................................................................... 65 

Written Testimony ............................................................................................ 67 

Responses to Questions for the Record ........................................................... 279 

State of Washington Department of Fish and Wildlife 

Statement for the Record ................................................................................. 387 

Sun River Electric Cooperative Inc. 

Statement for the Record ................................................................................. 91 

Sun River Watershed Group 

Statement for the Record ................................................................................. 97 

Tollhouse Energy Company 

Statement for the Record ................................................................................. 94 

Trout Unlimited 

Statement for the Record ................................................................................. 390 

Warner, Hon. Mark 

Statement for the Record ................................................................................. 396 

Western Small Hydro Association 

Statement for the Record ................................................................................. 87 

Wilderness Society 

Statement for the Record ................................................................................. 397 

Wyden, Hon. Ron 

Statement for the Record ................................................................................. 400 


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The text for each of the bills which were addressed in this hearing can be found 

on the committee’s website at: http://www.energy.senate.gov/public/index.cfm/hearings-and-business-meetings?ID=71df493c-1c78-42bc-9d4b-ba9793fb065f. 


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emcdonald on DSK3SPTVN1PROD with HEARING
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ENERGY SUPPLY LEGISLATION 

TUESDAY, MAY 19, 2015 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The Committee met, pursuant to notice, at 10:05 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 

(Chairman of the Committee), presiding. 

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

SENATOR FROM ALASKA 

The CHAIRMAN. Good morning. We will call to order the meeting 

of the Senate Energy Committee. 

We are in the third of four legislative hearings related to the 

broader energy bill that we are putting together. 

I want to thank my colleague, Senator Cantwell, and members 

of the Committee for their work as we craft what will hopefully be 

a bipartisan bill. We are building a strong foundation laid by members who continue to bring some good ideas to the table. 

The 26 bills that we are looking at today will bring the total to 

70 reviewed so far. Our topic today is supply. I think my views are 

pretty clear to folks on this Committee. It can be distilled to a 

bumper sticker. That bumper sticker reads, ‘‘Energy is good.’’ 

I believe it is in our national interest to make energy abundant, 

affordable, clean, diverse and secure. 

Today’s hearing, like the bill that we are assembling, is not designed to pit energy resources against each other, but instead to 

view energy supplies holistically and to find areas where we can 

come together. 

When it comes to abundance, few states or even countries can 

compare to Alaska. With an estimated 46 billion barrels of conventional oil and more than 430 trillion cubic feet of natural gas, Alaska is a world class petroleum province by any measure. Those conventional resources are supplemented by unconventional resources 

like the estimated 590 trillion cubic feet of methane hydrates on 

the North Slope, much of which is under existing development. 

In addition, we are the leader when it comes to everything else 

that is out there as well. I would challenge whether it is in the renewable areas with geothermal opportunities, marine hydrokinetic, 

ocean energy, biomass, wind, even with solar. People do not think 

about solar, but we truly are a state that has it all. 

In terms of the conventional resources, today Alaska has produced and shipped more than 17 billion barrels of oil through the 

Trans-Alaska pipeline. We have exported 2.5 trillion cubic feet of 


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LNG to Japan. A lot of people forget that we have been engaged 

in this for decades, and 35 wells have already been drilled in the 

Beaufort and the Chukchi Seas. 

I am oftentimes quite taken aback when I hear people ask basic 

questions as to whether or not we should allow drilling in the offshore, in the Arctic as if somehow or other drilling in the Beaufort 

or the Chukchi was something new. Exploration has occurred for 

more than 30 years. This was back in the 80s. It has been done 

safely, for all these years. 

The only Federal production in Alaska comes from the North 

Star field. This is a development in the Beaufort that was discovered back in 1984. It has produced more than 150 million barrels 

of oil since 2001. 

Despite the safe and successful development, all you hear is consternation in some of the press about how we cannot possibly be 

going offshore in the Chukchi. We cannot be going offshore in the 

Arctic. This is new and unexplored territory and the end of the 

world as we know it will likely come to pass. 

In fact, 35 wells have been drilled up there. It did not make the 

news because there was no news to report other than that the exploration was successful. What happens then? Prices go down. It is 

difficult. It is expensive. That is part of Alaska’s history. Given our 

history of safe and successful development, I think that it is time 

to expand Alaska’s contribution to America’s energy security. 

My bill, S. 1278, provides for annual lease sales in the areas between three and six miles offshore, known as the 8G zone in both 

the Beaufort and the Cook Inlet. This area is adjacent to where the 

State of Alaska holds annual lease sales and is very close to existing infrastructure. It can deliver near term production from the 

Beaufort to maintain the Trans-Alaska pipeline which is critical as 

we look at the declining through-put and infrastructure that is less 

than half full. It can also deliver natural gas from the Cook Inlet 

to Alaskans around the state. 

My legislation would also provide for more frequent lease sales 

than called for in the current five year plan and extend lease terms 

to accommodate the stringent regulatory requirements and short 

operating windows in the Beaufort and the Chukchi. The incapability of long development timelines in existing lease terms was 

identified as an issue in a recent National Petroleum Council study 

that was done at the request of the Department of Energy. I 

strongly believe that more predictable lease sales with more workable lease terms will provide more value for the treasury. 

Offshore development must also benefit states and local communities, and that is why my legislation supports revenue sharing for 

Alaska. That is also why I thank Senators Cassidy, Warner and 

Scott for spearheading similar legislation for the Gulf and Mid to 

South Atlantic states. 

Each area, I think we recognize, is different with specific needs 

and interests, but it is out of simple fairness that we should provide revenue sharing to all of them. In Alaska, supporting communities, science and workforce development are all critical components of a successful and vibrant offshore industry that meets our 

national energy interests. 


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While Alaska has abundant resources, Alaskans face some of the 

highest energy costs in the entire nation. For too many Alaskans 

energy is not diverse, secure or affordable. In fact, energy insecurity and energy poverty are the defining issues in many parts of 

my home state, and that is one of the reasons that I joined with 

Senator Scott from South Carolina to focus on this issue of energy 

insecurity. 

In considering the importance of revenue sharing, I would ask all 

of my colleagues here on the Committee and in the Senate as a 

whole to consider the commitment that Alaska has made to invest 

the earnings from non-renewable resources into our renewable resources. Through just one program, for example, the state has allocated more than $250 million to more than 275 renewable projects 

to help unlock Alaska’s vast wind, biomass and hydropower resources. 

Among those renewable resources, one that is particularly important to me and to my state is hydropower. I have introduced legislation to recognize hydropower as a renewable resource throughout 

Federal programs. Recognizing hydro as a renewable resource is incredibly important as far as I am concerned. The Federal Government needs to improve the permitting process so that we can bring 

clean hydropower to more communities across Alaska and across 

the nation. 

From producing energy on the Outer Continental Shelf to generating renewable hydropower in our waterways, we have got an outstanding opportunity to come together around some core principles 

and build a bipartisan supply title. I am optimistic that we can do 

this in a way that builds upon the American energy renaissance 

that we are currently experiencing. 

We have a lot of bills on the agenda today, and I look forward 

to reviewing these to see which ones are going to meet the test as 

well as hearing our witnesses’ perspectives on each. 

With that, I will turn to my Ranking Member, Senator Cantwell. 

Good morning. 

STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM 

WASHINGTON 

Senator CANTWELL. Thank you. Thank you, Madam Chair, for 

this important meeting, and I thank our witnesses for being at the 

hearing today. 

Once again we have a bundle of various initiatives or legislative 

proposals before the Committee, generally related to the topic of 

energy supply. In setting the context for the discussion, I think it 

is helpful to once again review what we just heard recently about 

the current supply picture last month from the Energy Information 

Agency (EIA). First, growth in U.S. energy production—combined 

with modest growth in demand—will contribute to a decline in U.S. 

energy imports. 

Second, energy use by residential consumers in the transportation sector is expected to continue to decline, driven by improvements in energy efficiency technology. Meanwhile the industrial 

sector is expected to post its strongest growth. We are making 

strides. 


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Third, electricity prices are expected to rise about 18 percentdriven primarily by fuel costs for natural gas and coal which are 

expected to rise 88 percent and 25 percent respectively. 

But with renewable technology, the fuel is free. Even while EIA 

has been criticized for underestimating growth in renewable energy 

production, the agency does project a 72 percent increase in clean 

energy generation between 2013 and 2040, accounting for more 

than a third of new capacity. 

Taken together, the set of findings suggests to me that the trajectory is generally positive from an energy security perspective. It is 

also a good reason that the first Quadrennial Energy Review, on 

which Secretary Moniz testified last month, focused so heavily on 

energy infrastructure. 

To quote the Quadrennial Energy Review, ‘‘This focus was chosen 

because the dramatic changes in the U.S. energy landscape have 

significant implications for . . . infrastructure needs and choices. 

Well-informed, forward-looking decisions that lead to more robust, 

more resilient infrastructure can enable substantial new economic, 

consumer services, climate projection and system reliability benefits.’’ 

Based on the Quadrennial Energy Review, I think there is a very 

compelling case to be made that the most pressing issue for the 

Committee to address deals with modernizing our aging energy infrastructure. If there are specific priorities with respect to supply, 

they involve bending the cost curve even more sharply downward 

on carbon, given the tremendous costs our changing climate is already imposing on businesses and communities across our country. 

From a competitiveness perspective, it also seems to me that we 

should be focused on supply-related policies that advance energy 

technologies that are going to be comparatively less expensive in 

the future. 

According to the Department of Energy’s 2014 Revolution Now 

Report, ‘‘... by 2014, rooftop solar panels cost about one percent of 

what they did 35 years ago, and solar PV installations were about 

15 times less than what they were in 2008.’’ The report outlined 

similar trends on wind. 

The Department of Energy expects renewable costs to drop another 10 to 20 percent in the foreseeable future, and these projections do not even take into account the rapid technology changes 

that can further drive down the cost curve. 

Another example from my home state is the innovation in regards to turbines that power our dams. BPA, the Army Corps of 

Engineers, and regional utilities have worked together on new designs that are optimizing fish survival rates and producing more 

power at the same time. Replacement turbines at one particular 

dam are achieving greater than 97 percent fish survival. And once 

all ten new turbines are updated, it is anticipated to result in 

enough power to serve an additional 12,440 homes. So energy efficiency is all across the board. 

With these trends in mind, it is worth this Committee’s time and 

attention to focus on policies and programs that help accelerate 

U.S. leadership in energy supply technologies that are becoming a 

greater proportion of the resource mix both at home and globally. 

But given the projections about domestic oil and gas production 


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under current law, the need to legislate lease sales for Federal resources in the Outer Continental Shelf is not at all obvious to me. 

This is especially the case at a time when we are going to have a 

lot of choices to make. There will also be a lot of discussion on the 

rationale to lift the current ban on crude exports. But there are 

many lingering questions about the adequacy of our oil supply response capabilities and potential environmental impacts. 

The Chair just mentioned this issue of revenue sharing. I want 

to note that the various revenue sharing proposals before this Committee would give producing states a larger portion of money generated from the development of federal resources on the Outer Continental Shelf. These are not new concepts. 

But they are concepts that have brought this Committee to a 

standstill on multiple occasions, given a mix of concerns—fiscal policy concerns, concerns from Senators from interior states and concerns about adequate recovery of receipts on certain existing leases 

in the Gulf of Mexico. Already, the harsh budget realities at the 

Federal level are impacting the efficiency of the way we go about 

permitting energy infrastructure. 

Among the findings in the Quadrennial Energy Review that has 

not yet received much attention is the fact that, ‘‘Federal agencies 

responsible for infrastructure siting, review, and permitting have 

experienced dramatic appropriations cuts and reductions in staff.’’ 

As a result, ‘‘the overall effort to improve the federal siting and 

permitting processes have been stymied.’’ 

I do not discount the budget challenges that we face for a variety 

of reasons; but the budget challenges at the Federal level—which 

we are already impacting the way we permit energy infrastructure—additional revenue sharing is difficult to then pencil out. 

I also want to take a moment to revisit something I mentioned 

earlier, which is the rising cost of coal. While coal costs are projected to go up 25 percent, coal exports are expected to increase 70 

percent from 2015 to 2040. So I raise that again because it is worth 

noting: in the West, you can typically lease a ton of coal from the 

BLM for $1 or less. That is $1 or less. Taxpayers get $1. Then 

years later we have to deal with almost two tons of carbon dioxide 

from that one ton of carbon of coal. And the Government’s current 

best guess is that two tons of carbon pollution will cost the American public over $70 in damages. 

Our fossil fuel leasing laws were passed long before we knew all 

of this about carbon, but now we know. The fact that we are essentially subsidizing this coal that we will subsequently export fails a 

pretty simple test of common sense policies in the public interest. 

With that said, we do have a broad set of proposals before us 

today about hydro relicensing, about energy workforce, about clean 

energy technology. I want to thank the Committee and the Chair 

for holding this hearing and for the many witness testimonies we 

are going to receive today. 

Once again, I think we have a very broad hearing, and we will 

have lots to do to try to prioritize these various proposals before 

the Committee. 

I hope that we can come together on focusing on infrastructure. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you. 


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Let us begin our panel this morning. We have a lot to talk about. 

We are joined this morning by Ms. Abigail Ross Hopper, who is 

the Director of the Bureau of Ocean Energy Management at the 

U.S. Department of the Interior. 

She will be followed by Ms. Susan Kelly, who is the President 

and CEO of the American Public Power Association. 

Mr. Randal Livingston, who is Vice President of Power Generation with Pacific Gas and Electric Company, welcome. 

Mr. Franz Matzner, who is the Director of the Beyond Oil Initiative with the National Resources Defense Council. 

Followed by Mr. Erik Milito, who is the Group Director of Upstream and Industry Operations for the American Petroleum Institute. 

Our final witness is a fellow Alaskan, Mr. Brent Sheets, who is 

the Deputy Director of the Alaska Center for Energy and Power at 

the University of Alaska Fairbanks. 

Welcome to all of you. I would ask that you try to keep your comments to about five minutes. Your full testimony will be included 

as part of the record. Once you have concluded all of the presentations, we will have an opportunity to ask questions. So welcome 

to the panel. 

Ms. Hopper, please start everybody off. 

STATEMENT OF ABIGAIL ROSS HOPPER, DIRECTOR, BUREAU 

OF OCEAN ENERGY MANAGEMENT, U.S. DEPARTMENT OF 

THE INTERIOR 

Ms. HOPPER. Sure. Thank you very much. 

Chairman Murkowski, Ranking Member Cantwell and members 

of the Committee, my name is Abby Hopper, and I am the Director 

of the Bureau of Ocean Energy Management which we call BOEM. 

I am pleased to appear before you today. 

I know that this hearing involves many bills that significantly affect a wide range of the Administration’s energy programs and policies, and I am glad you share this Administration’s belief that the 

Outer Continental Shelf, the OCS, which I’m sure we’ll end up calling it, will continue to play a significant role in assuring America’s 

energy future. 

Three of the OCS bills directly affect my bureau, primarily in the 

areas of revenue sharing and expanded leasing for the Arctic, Atlantic and Gulf of Mexico offshore waters. My written statement 

provides more in depth observations on those bills. 

Additionally I would like to note that the Committee will be receiving a written statement from the Bureau of Land Management 

regarding that bureau’s position on many of the terrestrial bills 

under consideration this morning. 

Chairwoman Murkowski, I recently had the pleasure of spending 

some time in your state including on the North Slope where they 

told me it was the coldest it had been all year when I was there. 

It was the coldest I’ve ever been and I met with many key stakeholders, including Alaska’s native organizations and tribal governments as well as representatives from the state government of 

Alaska. 

My conversations there reinforced the importance that BOEM 

has placed on carefully balancing leasing and potential exploration 


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recognizing the significant environmental, social and ecological resources in the region and establishing high standards for the protection of this critical ecosystem, our Arctic communities and the 

subsistence needs and cultural traditions of Alaska natives. 

For all five-year oil and gas leasing programs public input is a 

critical part of our process and we encouraged citizens and groups 

to provide comments to help guide our decisions. For this current 

five-year program that we’re developing now we held 23 scoping 

meetings on the draft environmental impact statement around the 

country. We received over one million comments and anticipate robust dialogue with stakeholders in the coming months that will 

help us prepare a program that emphasizes protection of the marine environments and coastal economies and uses the best available science and technology to inform our decision making. 

Regarding this revenue sharing provisions found in the bill submitted by Chairwoman Murkowski, Senator Cassidy and Senator 

Warner, the Administration is mindful of the long held view that 

coastal states should share the benefits of energy development that 

takes place off their shores. At the same time the Administration 

is also committed to ensuring American taxpayers receive a fair return from the sale of public resources, excuse me, and that taxpayers throughout the country benefit from the development of offshore energy resources owned by all citizens. 

As an alternative to the multiple revenue sharing programs that 

benefit individual states, the Administration proposes to work with 

Congress on legislation to redirect existing revenue sharing payments to programs that provide broad, natural resource, watershed 

and conservation benefits to the nation, help the Federal Government fulfill its role of being a good neighbor to local communities 

and support other national priorities. 

Senate Bills 1276, 1278 and 1279 would mandate additional 

lease sales off the coast of Alaska in the Atlantic and in the eastern 

Gulf of Mexico planning area during the 2017 to 2022 five year program. 

The 2017 to 2022 draft proposed program which I’m sure we’ll 

call the DPP, developed by the BOEM and approved by the Secretary includes potential lease sales in eight planning areas that 

contain nearly 80 percent of estimated undiscovered, technically recoverable oil and gas resources on the OCS. In total the DPP proposes 14 potential lease sales eight planning areas, 10 in the Gulf 

of Mexico, one in the Atlantic and three off the coast of Alaska. 

The Outer Continental Shelf Lands Act, Section 18, does not 

allow for a sale or area to be added to the program without restarting the program preparation process at the state in which the sale 

or area was not included or deleted. So while Section 18 does not 

allow the Department to expand, obviously, Congress has the ability to mandate additional sales via the legislative process. 

However, such legislation would mandate the Department conduct lease sales on the Outer Continental Shelf without regard for 

the consideration of the factors, the eight factors, under Section 18 

which we believe, appropriately reflects the many equities involved 

in the leasing decision. 

So based on those factors the Administration has concerns about 

bypassing the Section 18 OCSLA provisions. It’s important to the 


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Department and my bureau that we explore ways to move forward 

towards energy independence by a safe and responsible domestic oil 

and gas production while ensuring that the American taxpayer receives a fair return for development of these Federal resources. 

I look forward to working with the Committee and answering 

any questions you may have. 

[The prepared statement of Ms. Hopper follows:] 


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The CHAIRMAN. Thank you, Ms. Hopper. 

Ms. HOPPER. Thank you. 

The CHAIRMAN. Ms. Kelly, welcome. 

STATEMENT OF SUSAN N. KELLY, PRESIDENT AND CEO, 

AMERICAN PUBLIC POWER ASSOCIATION 

Ms. KELLY. Thank you very much. 

Good morning, Chairwoman Murkowski, Ranking Member Cantwell and other Senators on the Committee. Thank you for inviting 

me to testify. I’m Sue Kelly, President and CEO of the American 

Public Power Association. 

We commend your hard work putting together the first comprehensive energy package since 2005. While it may be hard to find 

consensus, APPA is ready to work with you to improve Americans’ 

access to affordable, responsible, environmentally responsible and 

reliable electric power. 

I’ll discuss APPA’s views on hydropower licensing, mandatory capacity markets and a federal, renewable energy standard. 

Hydropower is a cornerstone of our nation’s generation mix. It 

supports affordable and reliable operation of the power grid. 17 

percent of the power that APPA members generate comes from hydropower. One hundred fifty public power utilities operate 159 

FERC licensed projects with over 21,000 megawatts of capacity. 

The current hydropower licensing process needs to be reformed. 

Right now public power and other utilities cannot increase their investment in emissions free hydropower without protracted resource 

agency reviews. There is significant potential for new hydropower 

at non-powered dams throughout the country. Hydropower could be 

substantially increased at existing facilities and at water distribution conduits and canals, but there are excessive regulatory barriers to doing so. 

APPA therefore supports the concepts set out in Senate Bill 1236 

which reforms the regulatory process for licensing hydropower 

projects. FERC should be the lead agency overseeing the process, 

and it should be able to establish and enforce deadlines for other 

Federal and state agencies involved in that process. 

We also support the goals of Senate Bills 1058 and 1270. Increased Federal funding for research and incentives will help develop hydropower resources. 

Second, I’d like to discuss the mandatory capacity markets in the 

eastern Regional Transmission Organizations which we call RTOs. 

Senate Bills 1222 and 1272 address these regulatory constructs, 

which are often mislabeled markets. They’re meant to make sure 

that generation and demand side resources will be there when 

needed to meet electricity demand. They have not lived up to that 

promise and they are constantly tinkered with, but they do account 

for a substantial share of electric bills that consumers and businesses pay each month. 

APPA appreciates the interest that Chairman Murkowski has 

shown in this issue which Senate Bill 1222 shows. We’re particularly pleased to see the legislation list among its objectives an enhanced opportunity for self-supply of electric capacity resources as 

well as a diverse generation portfolio and availability of transmission facilities. But we’re concerned the bill may lack the teeth 


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to achieve the needed reforms. We’re concerned it does not include 

cost to consumers in the list of objectives which could force tariff 

amendments. Finally, we fear that owners of generation in regions 

without mandatory capacity markets could use Section 1222 to advocate for these constructs in their RTO regions. 

We also appreciate Senators Markey and Warren’s introduction 

of Senate Bill 1272. This legislation requires the GAO to answer 

the fundamental question that APPA has been asking for some 

time, whether these constructs produce just and reasonable rates 

as the Federal Power Act requires. 

Both bills kick off a much needed dialogue, but we believe there’s 

already more than enough information to support changes. We’ve 

recommended that FERC phase out mandatory markets over time 

and replace them with voluntary, residual capacity markets. 

But in the meantime we propose two fixes. First, RTOs that have 

not yet implemented mandatory capacity markets should not do so 

without unanimous support of the states and their regions. Second, 

RTOs that already have mandatory capacity markets should not 

impair the ability of retail utilities or states to self-supply their 

own capacity obligations. 

Finally, APPA has concerns with Senator Udall’s legislation to 

establish a renewable electricity standard. 

Many of you know that public power utilities strongly support renewable energy. We have been leaders in developing it. However, 

APPA believes that at this point there is no need for legislation to 

create a Federal renewable energy standard. State and local governments are best placed to implement these policies. 

Moreover, the cumulative impact of various EPA regulations is 

leading to increased retirements of coal fired power plants in the 

United States. EPA’s soon to be finalized regulations to reduce CO2

emissions from fossil fired power plants are going to accelerate that 

trend. Utilities are already increasing the amount of electricity 

they generate from renewable resources and we’re taking other 

steps to reduce CO2 emissions. A Federal RES is therefore, unnecessary. 

Thank you for the opportunity to appear today. I’m happy to answer any questions you have. 

I know you have a whole slew of bills under consideration and 

some of them apply to our sector. We’ve reviewed those and we’re 

willing to work with the Committee as you move forward. 

Thanks again. 

[The prepared statement of Ms. Kelly follows:] 


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The CHAIRMAN. Thank you, Ms. Kelly. 

Mr. Livingston, welcome. 

STATEMENT OF RANDAL S. LIVINGSTON, P.E., VICE PRESIDENT, POWER GENERATION, PACIFIC GAS AND ELECTRIC 

COMPANY 

Mr. LIVINGSTON. Good morning. Thank you. 

My name is Randy Livingston. I serve as Vice President of Power 

Generation at Pacific Gas and Electric Company. 

PG&E is one of the nation’s largest combined electrical and natural gas utilities with more than 22,000 employees serving 

16,000,000 customers in California. We are also the owner and operator of America’s largest, investor-owned, hydroelectric system. 

With 26 FERC licenses we’re always in the process of relicensing. 

Today we have seven projects and one phaser, in order of relicensing. 

Our system generates nearly 3,900 megawatts of safe, clean, reliable and affordable power for millions of Californians, has been 

crucial in integrating other renewable energy sources. Additionally, 

it provides water supply, recreation, flood control, taxes and other 

benefits. Hydropower is an invaluable resource and it’s one that 

our country can and should do more to capitalize on. 

We appreciate the efforts made by past Congresses to advance 

hydroelectric generation. We believe this Congress has taken a very 

important step with the introduction of S. 1236, the Hydropower 

Improvement Act of 2015 and by holding today’s hearing. 

PG&E believes it’s critical for hydroelectric power generators to 

be able to move through the relicensing process more efficiently 

and more affordably so we can implement the environmental protections, community improvements and facility upgrades more 

quickly than we can today. 

We believe that S. 1236 accomplishes this fairly and effectively 

while maintaining important environmental protections and community interests. In particular, it does this by clarifying FERC’s 

exclusive authority to enforce, amend or otherwise administer all 

aspects of a FERC issued license. It clarifies that mandatory conditions and prescriptions should have a clear and direct nexus to the 

project. It allows FERC to establish the schedule for federal authorizations and providing findings of fact by a FERC administrative 

law judge be binding on all participants in trial type hearings. 

We believe these sensible and basic reforms can make hydropower licensing processes more efficient while keeping in place environmental protection and other benefits that we all agree are 

critical. 

PG&E places a priority on using collaborative processes to relicense a facility as both understanding and incorporating the interests of stakeholders is critical. However, as it stands today, the current process is very complex and protracted leading to higher costs, 

delayed implementation of improvements and upgrades. 

To put this in perspective, PG&E’s recent experience that even 

for a medium-sized license it consistently takes over seven years to 

renew an existing license and often well over ten. The cost just to 

complete the process for continued operation of a facility can run 

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cense routinely runs to $100 million. All these costs are ultimately 

borne by the energy consumer. 

The relicensing process involves numerous Federal and state 

agencies and stakeholders with interests that may not always 

align, therefore, we believe the following processes should be improved. 

We should assure that the environmental protections exist and 

we preserve hydropower at the same time, that we achieve the benefits of relicensing sooner, that we reduce cost and improve predictability and we enhance the collaborative process to be results and 

solutions oriented. S. 1236 would accomplish many of these objectives. 

Given this focus of this Committee on crafting and advancing an 

energy policy for the 21st century you and your colleagues have an 

important opportunity to bring meaningful change to the hydropower relicensing process and to ensure that it is consistent with 

America’s needs and opportunities today and for many years 

ahead. 

PG&E looks forward to continuing our work with Congress. 

Thank you. 

[The prepared statement of Mr. Livingston follows:] 


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The CHAIRMAN. Thank you, Mr. Livingston. 

Mr. Matzner, welcome. 

STATEMENT OF FRANZ MATZNER, DIRECTOR OF THE BEYOND 

OIL INITIATIVE, NATURAL RESOURCES DEFENSE COUNCIL 

Mr. MATZNER. Madam Chair and members of the Committee, 

thank you for the opportunity to testify today. I would also like to 

thank the Chair and Ranking Member for conducting such thorough bipartisan outreach ahead of these hearings. 

Renewables and energy efficiency are the best long term solution 

to almost any energy resource question you can ask. Clean energy 

creates domestic jobs that can’t be exported. It produces domestic 

energy that never runs out. It insulates consumers from the international price volatility that plagues other resources. It’s the source 

of real national security. It promises to lower consumer costs and 

keep America internationally competitive. It requires less water 

usage and reduces toxic air emissions. 

Clean energy cuts the carbon pollution that is driving dangerous 

climate change, the greatest environmental challenge of our time. 

According to the overwhelming scientific consensus the U.S. must 

reduce emissions at least 80 percent by 2050 to avoid the worst impacts of climate disruption. Fortunately there is ample evidence 

that this is achievable if the proper choices are made. Clean energy 

from solar to wind to energy efficiency represents an abundant resource. 

We’re already using less energy today per capita than a decade 

ago. According to ACEEE, an expert efficiency group, even greater 

savings are possible, as much as 40 percent by 2050. 

In 2012 the Energy Information Administration predicted we’d 

have three gigawatts of solar power in 2030. Three years later we 

already have more than three times that. 

The story for wind is similar, doubling its capacity between 2008 

and 2014, and the potential is enormous. Just one quarter of our 

nation’s offshore energy potential would match our nation’s entire 

existing fossil fuel based electricity generating capacity. 

We’ve also turned a corner on gasoline use, reversing many decades of rising consumption, and policies already in place will further that trend. 

This rapid expansion of clean energy is already providing more 

than 3.4 million American jobs, with more to come. 

Policy proposals should be evaluated on whether they will accelerate this trajectory of success. Those that reverse course should be 

rejected. A good example of the kind of legislation needed to move 

forward is S. 1264, to establish a Federal renewable energy standard, a strong RES with significantly advanced renewable energy 

and cut pollution. 

States that have embraced renewable energy standards have routinely met or exceeded the targets while growing jobs and reducing 

harmful pollution. A 30 by 30 target would secure America’s place 

as a global leader in clean energy while reducing carbon pollution 

by 11 percent below business as usual levels in 2030. 

On the opposite side of the ledger, opening new areas of our nation’s Arctic and Atlantic coast to oil and gas drilling should be 

taken off the table for two primary reasons. First, new offshore 


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drilling contradicts the international scientific consensus that the 

vast majority of known fossil fuel reserves must remain undeveloped, let along new reserves like the Atlantic and Arctic Oceans. 

Second, the risk of major oil spills is high and the impacts would 

be severe. In the Arctic alone the Department of Interior’s own assessment finds a 75 percent chance of a major oil spill just from 

the existing Chukchi lease. 

In the Atlantic drilling threatens coastal communities and economies up and down the eastern seaboard. Tourism and recreation 

are major contributors to the Atlantic Coast economy and they rely 

on healthy oceans. Communities in these regions should not have 

to risk their way of life or their economic health due to reckless offshore drilling. 

The road map exists to craft meaningful energy legislation that 

will create jobs by cutting pollution and help create a safer, 

healthier, more stable future for all Americans. We urge that this 

road map be followed. 

Thank you very much for the opportunity to speak. And I’m prepared to answer any questions the Committee might have. 

[The prepared statement of Mr. Matzner follows:] 


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The CHAIRMAN. Thank you, Mr. Matzner. 

Mr. Milito, welcome. 

STATEMENT OF ERIK MILITO, GROUP DIRECTOR, UPSTREAM 

AND INDUSTRY OPERATIONS, AMERICAN PETROLEUM INSTITUTE 

Mr. MILITO. Morning, Chairman Murkowski, members of the 

Committee, I’m Erik Milito, Upstream Director at the American 

Petroleum Institute. Thank you for the opportunity to testify on the 

importance of energy supply to our nation’s economy and our energy future. 

We are pleased to see the Committee moving forward with a robust debate to move the country toward a comprehensive energy 

strategy. We, as a nation, truly need a comprehensive approach to 

energy shaped by reason, common sense and experience. As the 

Committee considers and debates the pillars of infrastructure, supply, efficiency and accountability, the U.S. is well positioned to lead 

the world in the production of all energy sources and particularly 

in the production of oil and natural gas. 

As both the U.S. and global economies grow, the U.S. with its 

abundant supplies can effectively provide economic and energy stability to domestic and global markets through continued and expanded development of oil and natural gas. To successfully pursue 

this path, we must plan for the future. And the most sensible approach is to pursue safe and responsible energy development here 

at home. 

Given the expected global economic and population growth, more 

total energy will be needed both in the U.S. and globally in the decades to come. The Energy Information Administration forecasts 

that U.S. energy demand will grow by nine percent between 2013 

and 2040 with more than 60 percent of the energy demand expected to be met by oil and natural gas as is the case today. Fundamentally the facts in our energy reality demonstrate that our 

economy will rely on oil and natural gas for decades to come. 

Globally the change in energy demand is much greater, and 

when it comes to liquid petroleum products the U.S. competes on 

a global basis for these resources. Recent forecasts by the EIA estimate that growth in the global economy from 2014 to 2040 will require additional oil production of about 28 million barrels per day. 

That is an increase roughly equivalent to the current consumption 

of the U.S., Canada, Mexico and Japan, combined. 

Despite significant and much needed growth of renewable energy 

and improvements in energy efficiency, more than half the world’s 

energy demand will be met in 2040 by oil and natural gas. Again, 

as is the case today. 

Government policy plays a substantial role in the ability of the 

U.S. to tap its own supplies and help meet the projected growth in 

U.S. and global demand. The dramatic increase that we have seen 

in oil and natural gas production is occurring today on state and 

private lands. Production of oil and natural gas, when taken together, has decreased in areas under Federal control. The lack of 

growth and production on Federal lands is a result of policies that 

have effectively discouraged investment in those areas or simply 

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Fortunately three of the supply bills that are being discussed 

today will effectively move us past these self-imposed energy prohibitions. Senate Bills 1276, 1278 and 1279 would open highly promising areas in Alaska, the Gulf of Mexico and the Atlantic Outer 

Continental Shelf to energy exploration and production. It is these 

types of legislative proposals that acknowledge that we will need 

oil and natural gas for decades to come and recognize our strong 

capacity to safely and responsibly produce those resources here at 

home. 

These bills embrace a long term, comprehensive approach to energy policy because steps like these will help ensure we have got 

the necessary energy for our citizens, five, ten, fifteen and more 

than twenty years down the road. To be sure, the offshore energy 

that we produce today is available because of smart policy decisions 

made ten to fifteen years ago. 

Over the past 6 years we have seen increasing U.S. oil and natural gas production drive economic growth, global energy security 

and ensure affordable energy supplies. Moving forward we will 

need all the energy sources to meet our growing demand—solar, 

wind, air, nuclear, hydro, coal, but also oil and natural gas. Oil and 

gas development and the oil and natural gas supply chain are expected to create 1.3 million job openings over the next 15 years. 

We now need smart policy decisions today to secure these job opportunities and to secure our path to energy security for the decades ahead. This hearing and many of the proposed bills are constructive steps forward. 

Thank you. I look forward to your questions. 

[The prepared statement of Mr. Milito follows:] 


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The CHAIRMAN. Thank you. 

And let’s finally go to Mr. Sheets, welcome. 

STATEMENT OF BRENT SHEETS, DEPUTY DIRECTOR, ALASKA 

CENTER FOR ENERGY AND POWER, UNIVERSITY OF ALASKA 

FAIRBANKS 

Mr. SHEETS. Thank you, Chairman Murkowski and the other 

members of the Committee for having me. 

My name is Brent Sheets, and I’m the Deputy Director for the 

Alaska Center for Energy and Power. We’ve submitted our written 

testimony, and in there is a description of what we do. 

For many Americans, Alaska is the crown jewel of the nation’s 

wilderness resources, but it’s also the crown jewel of America’s energy resources both renewable and non-renewable. But despite that 

energy abundance the state’s lack of infrastructure and its distributed population contribute to extremely high energy costs for our 

citizens. The majority of the State lives off road, and unless you 

happen to live on the road system you are paying the highest energy costs of anywhere in the nation. 

Energy issues are where the national interests and where Alaskan interests intersect. The nation needs the energy security that 

is afforded on the conventional and unconventional fossil energy resources on the North Slope, and they need to be developed. 

Also, Alaskans need energy security, and for most of our villages 

that means access to reliable and affordable technology that allows 

the development of local energy resources, generally renewable, in 

a way that it can be used for electricity and heat generation in an 

environmentally responsible manner. 

Recognizing this need, the Alaska legislature has appropriated 

over $700 million in FY’14 alone. Much of that has gone for demonstration projects in geothermal and biomass and in river 

hydrokinetics, and to a lesser degree the state stands ready to assist in the development of methane hydrates by having some land 

set aside ready for a production test should that event ever happen. 

But the work that’s being accomplished in Alaska, especially in 

the renewable side and in the investment, is gaining international 

and national recognition. 

For example at the Alaska Center for Energy and Power, we 

have been working to develop a technology that helps overcome 

some of the hurdles of developing the in river hydrokinetic energy. 

We’ve had visitors from various countries to our site. We’ve had 

contracts with commercial vendors to help develop their technology 

and to demonstrate it at our site, all without Federal investment. 

And then recently in January of 2015 we were excited when the 

Northwest National Renewable Energy Center which is partially 

funded by DOE invited us to join. 

Two of our scientists are also on an international standards committee setting the standards for in river hydrokinetic technology or 

marine technology overall. 

And in addition to that the State of Alaska has invested in over 

29 biomass demonstration projects around the state. 

And finally, with some support from the Department of Energy, 

the Alaska Center for Energy and Power has worked to develop 


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ways to assess geothermal resources in remote, hard to get to areas 

and done so successfully. 

As a former Department of Energy employee I can say that I believe that Alaska is the nation’s energy laboratory. They’re actually 

investing. They’re putting their money where their mouth is. 

They’re developing things. They’re making a difference. 

We have industry at the table. We have other countries at the 

table. We have other Arctic nations at the table. 

What seems to be missing in a lot of our discussion is the Federal Government. They don’t seem to be at the table where we are 

in Alaska. 

I’m here to support the efforts of this Committee to expand the 

portfolio of energy options that are available to our nation, both renewable and non-renewable. For our communities we believe that 

renewable energies over the long term can provide energy costs 

that are less susceptible to the uncertainties inherent with relying 

solely on fossil energy which is what our communities do now. 

Demonstration projects for hydrokinetic energy, for low temperature geothermal, for biomass energy and for methane hydrates hold 

the potential for developing advances in technology that can lead 

to lower energy costs for all the citizens of the nation. Alaska does 

have world class energy resources, renewable and non-renewable, 

but we lack the technology to economically utilize them. Let’s 

change that. 

Thank you. I look forward to your questions. 

[The prepared statement of Mr. Sheets follows:] 


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The CHAIRMAN. Thank you, Mr. Sheets. I am going to be going 

out to Egegik in about six weeks looking at some of the new technology they are putting in the water. So as you say, we are the 

technology lab for a lot of interesting things going on. Thank you 

for your presentation and being here today. 

I wanted to focus on offshore for my initial round of questions, 

if I may, and I will start with you, Ms. Hopper. 

As you know, we have the proposed Arctic rule, obviously just 

one example of regulation affecting the offshore oil and gas industry. We also have other regulations that are out there. We have got 

the well control, blow up preventer rule. We have got the proposed 

changes in the evaluation of oil and gas and coal that would be significant for our offshore facilities. 

Senator Cassidy has introduced a bill that would require that the 

GAO report on the cumulative impact of regulations on offshore development. Does BOEM consider the cumulative impact of these 

rules, not just on the operations, but on the value of the lease sales 

and the bonus bids? 

Ms. HOPPER. Thank you for the question, Madam Chairwoman. 

We do, and when we issue our proposed rule there is a regulatory impact analysis that is included with those rules and we 

look at the impact of that rule. I do not believe that we look at the 

cumulative impact of all the rules together. 

The CHAIRMAN. So it would be important then with Senator 

Cassidy’s measure to look at that cumulative impact because I do 

think that is something, again, we deal with on a daily basis 

whether it is talking about things like the hydropower licensing 

and some of the overlay that we have with these regulations. I 

think this is where some of the costs and the delays come from. 

Ms. Hopper, I was discouraged with your comments about the 

revenue sharing issue. Secretary Jewell came before this Committee in 2013 and she pretty much made a commitment to work 

with us to put together a bipartisan proposal with respect to revenue sharing that would bring everybody together. 

She said, these are her words, ‘‘I’d be delighted to work with 

members of this Committee on that important proposal. I think 

revenue sharing is clearly a very important topic that deserves 

some attention from the Department of the Interior as well as this 

body.’’ 

So to hear your comments that, effectively, the way that you 

want to work with this is to redirect existing revenue payments 

from the revenue sharing plan that is in place for the Gulf, not to 

the states that are impacted, but basically to pull the rug out from 

underneath the promise that was already made is disconcerting. 

We are going to have to have some serious discussion about how 

we can make good on the Secretary’s promise to work with members of this Committee to make sure that issues like revenue sharing are meaningful and do work for the people that are impacted 

while at the same time allowing for that benefit to the taxpayers. 

Mr. Milito, I listened to some of the comments from Mr. Matzner 

about the concern about new drilling. Again, as I mentioned we 

have been out in the Beaufort and the Chukchi since the 80s with 

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The concern was raised that there is a 75 percent chance of a 

large oil spill. Looking at BOEM’s fact sheet they make it very, 

very clear that what we are talking about here is that if we have 

a hypothetical scenario over the course of more than three quarters 

of a century of oil and gas activities, there is a 75 percent chance 

of one or more spills of more than a thousand barrels of oil. Again, 

put it into context, 75 years. How much are we talking about? 

BOEM’s actual statement here is no. Is it accurate to say that 

if Shell’s Chukchi Sea exploration plan is approved there is a 75 

percent chance of a large oil spill? No. I do think it is important 

to get the facts on record. 

This came from the National Petroleum Council’s study that was 

just released at the request of the Department of Energy, and the 

study looks at different exploration and development timelines, 

particularly in these defined and closely monitored windows. 

Chukchi and Beaufort are different than anywhere else, probably, 

on the planet. 

Do you agree with the National Petroleum Council study that 

lease terms in the Beaufort and in the Chukchi need to be different 

to accommodate an operating environment that is different and, in 

my view, the additional regulatory demands proposed by BSSE in 

the proposed Arctic rule? 

Mr. MILITO. Absolutely. When you have additional time in your 

lease terms it gives the industry a greater amount of flexibility and 

the ability to put more planning into the operations, and it allows 

us to look at energy development from a long term standpoint. 

We know that we are going to need oil and natural gas for decades to come, and we know that when you are moving into new 

areas like this it takes a long time to get from exploratory activity 

to production. Bills like yours are a sensible approach to making 

sure that we are not ignoring these opportunities, but rather seizing these opportunities in a more constructive way. 

The CHAIRMAN. I think people forget that it is not like drilling 

in the Gulf. You have got a window, basically you get the go ahead 

to get in the water in July and you have to be out by September. 

If ice comes in, you are out. If whales come early, you are out. It 

is an entirely different environment. 

I think it is quite telling that President Obama actually agrees 

with much of what you have said about a transition process, that 

we will eventually need to transition off fossil fuels. It is going to 

take some time and until then, we are going to be using fossil fuels. 

So, as he says, would it not be better that we produce our oil and 

gas rather than importing it from others? 

My time has expired. Senator Cantwell is not here, so let’s go 

next to Senator King. 

Senator KING. Thank you, Madam Chair. 

In preparing for today’s hearing I realized I had a lot more to 

learn than to contribute. So I am going to pass on the questions 

and listen and learn. 

There is a famous saying of Golda Meir that Moses tramped all 

over the Middle East for 40 years and settled in the one place without oil. The people who founded Maine, in effect, did the same 

thing. 


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So I am going to learn about the issues of production today, and 

I appreciate you are having this hearing. Thank you. 

The CHAIRMAN. Thank you, and I think it is also fair to note that 

in your state of Maine you are pioneering some good things when 

it comes to ocean energy. We have got some joint relations between 

Alaska and Maine with some of the technologies that we are looking forward to utilizing as coastal states that have some significant 

tides too. So thank you for also being a technology pioneer there. 

Let us go to Senator Portman, sitting there patiently at the end. 

Senator PORTMAN. Thank you, Chair Murkowski. 

The CHAIRMAN. Thank you. 

Senator PORTMAN. I have been here since 10 soaking it all in. 

I appreciate the great testimony and the fact that this is our 

third opportunity to put together a comprehensive series of energy 

policies, and I appreciate the Chair and Ranking Member doing 

that. I think these have been great hearings, and the witnesses 

today did a terrific job laying out the supply issues. I have worked 

with a lot of you on different issues. 

Franz, thank you for being here and working with us on the efficiency bill and helping us get that moving again and back to the 

Floor, maybe in a comprehensive way as opposed to the legislation 

we did get through a couple of weeks ago. 

On supply, one of the things I heard this morning a lot about and 

particularly interesting was the question of permitting again, and 

we had got into that actually last week a little bit also. 

But I would focus, if I could, Ms. Kelly, on your testimony. I 

found particularly interesting your discussion of the hydropower licensing process. 

One of your members, AMP, came to me about five years ago 

when I was first elected to give me the stories about the Ohio River 

hydro frustrations. They were trying to build three hydroelectric 

plants on the Ohio River at that time. All of them would have been 

terrific, relatively inexpensive, renewable energy, but they have 

been delayed for years by an inefficient and redundant Federal permitting system. And that got us off on this issue. 

I know that there are a number of you who have talked about 

this in a broader context. But if you could, in your experience, is 

AMP’s story unique or are many of APPA members having to wrestle with this inefficient Federal permitting system? Also if you 

could comment on whether it goes beyond your hydro projects? I 

know you also have other sources of energy within your membership. 

Ms. KELLY. Thank you for those questions. 

Of course every hydro project is a little bit like a snowflake. 

They’re all a little bit different. They all have their own issues, 

their own environmental concerns, and they all have to travel the 

licensing process. But you are correct that AMP’s four run of the 

river projects on the Ohio have been a long travail for them, and 

it’s been incredibly frustrating because number one, these are run 

of the river projects. And number two, these are intended to provide clean, renewable, non-CO2 emitting resources, you know, 

power and to be used in RTO market regions. 

They have had a lot of issues with the hydropower licensing process. I think they’re finally coming to the, you know, hopefully, will 


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be coming to the end of that. But it’s been very protracted and has 

added to the years on the project and the cost. 

In addition I should note that after having gone through all that 

they are now facing changes in the capacity markets in PJM that 

may diminish the value of that capacity to them. So the investment 

that they thought they were getting for that project, they may find 

that they are not going to get the full benefit of those resources. 

So, it’s—you were talking, Senator Murkowski, about the cumulative impact of different sets of regulations. And this is a perfect 

example of that. We have the long travail to get these four wonderful projects sited and built, created a lot of jobs, a lot of, I think 

it’s 12 different states, 60 contracts. I mean, it’s really been a win/ 

win in many ways. 

And now as we finally get towards the end we find we may not 

be able to get the full benefit out of those projects. So you’re absolutely right, and thank you for the question. 

Senator PORTMAN. Susan, I suspect you have also had some permitting issues with some of your transmission and natural gas 

projects? 

Ms. KELLY. Yes. The transmission siting can be very long and 

very protracted especially if it’s on Federal lands. Our members in 

the West have really experienced those concerns as well. 

But transmission siting is really more of a state and local issue 

right now. There was an attempt to, kind of, federalize it with 

backstop siting in the Energy Policy Act of 2006. That was, frankly, 

eviscerated by a court appeal from the Fourth Circuit. So we don’t 

really have strong, Federal siting of transmission at this moment. 

Senator PORTMAN. When AMP came to me we worked with them 

on trying to figure out what the best way was to address their 

problem and found out it was this broader problem on energy 

projects, but also construction permits, generally and came up with 

this legislation that was reported out just about a week ago, S. 280 

which is the Federal Permitting Improvement Act. 

As you know, we now rank down 41st in the world now in terms 

of greenlighting projects. I know, Franz, you have worked with us 

on this and others, but I do hope we can get that legislation moving. I think it would affect energy projects in very direct ways as 

well as other construction projects. It has deadlines that have to be 

set. It also helps in terms of the litigation risk, and we think it 

would be appropriate to consider it as part of this package as well. 

It came out of the Homeland Security and Governmental Affairs 

Committee by a 12-to-1 vote, by the way, after working with the 

Administration on it. 

Just quickly I’ve got five seconds left, but let me just say I would 

love for the record, Mr. Milito, if you could give us a little more information about how long it takes to get necessary permits to drill 

a well or natural gas well. As you know in Ohio with Utica and 

Marcellus we are interested in that. If you could just give us a little sense of the permitting on the natural gas and oil side for the 

record, that would be terrific. 

Mr. MILITO. Yeah, on state and Federal, I mean, on state and 

private lands in states like Ohio and Pennsylvania, we have a permitting process that’s fairly reasonable and effective. Companies 


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are able to get their permits, generally, within a 30-day time period. 

When you move to the Federal lands it can take 200 to 300 days 

depending upon where you’re getting the permit from based upon 

where the BLM’s office is. So efficiency is key to maintaining and 

expanding our energy production. 

Senator PORTMAN. Thanks for what you can give us on the record 

on that. We’ll actually submit a question to you. 

Mr. MILITO. Great. 

Senator PORTMAN. A question to you for the record and like to 

get some more information on that. 

Senator PORTMAN. Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Portman. 

Ms. KELLY. Would you mind if I just could mention that I’ve been 

informed by wiser heads than mine that while I did not study up 

on your bill for this hearing, we support it. 

Senator PORTMAN. Great. Thank you, Susan, I appreciate it. 

The CHAIRMAN. Very good. 

Senator Heinrich. 

Senator HEINRICH. Thank you, Madam Chair. 

Ms. Kelly, you mentioned FERC backstop authority and the effort in the past to create that. That obviously is not in place now 

due to the litigation that you alluded to. Would APPA support 

FERC-based backstop authority for regional transmission lines, 

transmission lines that cross multiple states? 

Ms. KELLY. We would obviously want to take a look at the details 

of that legislation as a trade association composed of units of state 

and local government. 

Senator HEINRICH. Sure. 

Ms. KELLY. You know, we don’t take federalization lightly. 

Senator HEINRICH. Nor should you. 

Ms. KELLY. We came to support that section of EPACT 2005 because of the really substantial problems we saw in siting transmission. 

Senator HEINRICH. Right. 

Ms. KELLY. So we certainly would be open to considering that, 

but the details would matter. 

Senator HEINRICH. Have you got a chance to look at the legislation I introduced to do that? It basically tries to accomplish the 

same thing as the EPACT provisions but with a different basis in 

law that would be less subject to challenge in the courts. 

Ms. KELLY. I will probably, if it’s alright with you, have to get 

back with you on that for the record. But the more you’re coloring 

inside the lines of the legislation that we previously supported, the 

more likely it is we would. 

Senator HEINRICH. Right. 

Ms. KELLY. But I don’t want to commit without talking to my 

members. 

Senator HEINRICH. I understand. I would appreciate it, and we 

look forward to working with you on that. 

I also wanted to ask you about your position on national renewable portfolio standard. You mentioned that APPA believes that 

that’s not necessary. Given the substantial climate challenges that 


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we face at this point, what is APPA’s plan to reduce our carbon pollution profile and to meet those climate challenges? 

Ms. KELLY. Well it’s not necessarily APPA’s plan, but the EPA 

has a plan for us. It’s called 111D. The third building block in there 

calls for increased use of renewables. The state targets that have 

been set out under that incorporate that increased use of renewables. So assuming that survives in some version of the final rule 

and that those state limits are enforced, we will be doing that as 

part of that. 

This, again, gets back to the issue of cumulative impacts of regulations that Senator Murkowski mentioned earlier. I mean, we’re 

just seeing so many different mandates piled on us that it makes 

it increasingly difficult for us to do what we feel needs to be done. 

Senator HEINRICH. So, there are some conservative voices who 

have said, let’s get rid of 111D in its entirety, replace it with some 

sort of carbon fee that would be revenue neutral on the budget as 

a whole. 

Have you given any thought to that kind of an approach as a potentially less regulatory based approach that would be more purely 

economically driven? 

Ms. KELLY. Our association does not have any policy on that 

right now. We have been focused on the 111D proposal. We filed 

very extensive comments on that proposal. We raised both legal 

and practical and technical issues with it, but right now we are attempting to do the very best we can to work with the EPA and 

with other agencies such as FERC to get a livable, final 111D rule. 

Before I became CEO I was an appellate attorney for over 30 

years. I’ve spent a lot of time litigating cases in the DC circuit, and 

I don’t necessarily count, even if I think I have a winning case, on 

actually winning in the end. 

So I think we have to live in the world of the possible and have 

to assume that this may be implemented in some way and we have 

to work forward to try and make it the most livable regime we can. 

Senator HEINRICH. Mr. Livingston, while I’ve still got a couple of 

seconds here. I wanted to ask you a little bit, a couple of questions 

based on the fact that PG&E has several decades now of history 

managing now energy storage, historically in the case, in your case, 

pumped hydro. That has a lot of value, I think, to share with those 

of us looking at how we utilize storage more broadly moving forward, especially in a world where energy sources can be intermittent. 

Can you talk a little bit about how you use that storage in your 

daily operations? What opportunities you see moving forward for 

adding additional storage in PG&E system and whether or not you 

will be able to meet the 580 megawatt storage requirement called 

for by 2024 in California? 

Mr. LIVINGSTON. Yeah, thank you. 

Our Herald Pump Storage unit is 1200 megawatts. It pumps at 

900 and generates at 1200. There’s three units there. Those units 

have been absolutely superb in helping to manage the overall electrical system in California, especially during the energy crisis as 

supplies were more intermittent. But even more so today as we see 

much larger portions of wind and solar come in that we’re balancing in the whole side. 


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All of our hydro resource helps play in that arena and helps provide the ancillary services to do that, but importantly pump storage 

is one that’s a large and proven resource. It’s one that there’s technological advances that could make it even better, and is one of the 

few very large, large, proven technologies that can meet what is becoming very large demands for that type of service. 

And as far as meeting our requirements under increasing the 

storage requirements, those are all small blocks of storage and generally, you know, more suited towards development of batteries and 

so on. We do not see a problem with meeting those requirements. 

The CHAIRMAN. Thank you, Senator Heinrich. 

Senator Cassidy. 

Senator CASSIDY. Thank you, Madam Chair. Thank you for holding this meeting today related to energy supply. 

I will first begin speaking about Senate Bill 1276, the Offshore 

Energy and Jobs Act, that I am introducing along with Senators 

Cornyn, Vitter, Cochran and Wicker. This bill provides new access 

to frontier acreage in the Gulf of Mexico within areas 50 miles from 

the Florida coastline by redefining the Eastern Gulf moratoria in 

2017. 

According to current law the moratoria is scheduled to expire in 

2022. This directs the Department of the Interior to hold three new 

lease sales in the Eastern Gulf by 2020. Our legislation is supported by national energy and manufacturing organizations. In addition, the Florida State Hispanic Chamber of Commerce, the Florida Transportation Builders Association and the Florida Retail 

Federation have all called for the inclusion of the Eastern Planning 

Area in the Administration’s 2017 through 2022 offshore leasing 

program. 

According to the Energy Information Administration, in 2014 

about 27 percent of the petroleum we consumed as Americans was 

imported from foreign countries. We, as a nation, need greater access to fossil fuels to strengthen our energy security and independence. In fact, President Obama said last week, we are ‘‘going to be 

using fossil fuels and when it can be done safely and appropriately 

U.S. production of oil and natural gas is important.’’ Hopefully we 

all agree with that. 

In addition to preserving energy access, Senate Bill 1276 brings 

greater equity in revenue sharing for the Gulf States that host offshore energy production. According to the Department of the Interior, royalties from crude oil production in the offshore Gulf of Mexico for Fiscal Year 2014 was $4.6 billion. In the same year $3.4 million was shared with coastal states. 

Ms. Hopper mentioned how there is a commitment by the Congress to share with the coastal states. The Federal Government 

gets $4.6 billion. We get $3.4 million. Now that is about .07 percent. My children would be very unhappy with that level of sharing. 

To put this in perspective revenue shared from energy development on Federal shores onshore the state gets 50 percent of the 

royalties. Obviously it is different for coastal. 

For Louisiana revenue sharing is not only about fairness, it is 

about our survival. Louisiana is experiencing unparalleled land loss 

due to Federal engineering decisions that for nearly a century have 


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channeled the lower Mississippi for the benefit of inland ports. 

Louisiana’s 2,300 square miles of land loss is largely attributed to 

this channelization along with the placement of Federal levees 

along the river system. 

Louisiana, by our state constitution, uses this revenue sharing to 

restore our coastline. Now that is important, again, for the rest of 

the nation. Five hundred tons of water borne cargo pass through 

Louisiana’s system of deep water ports and navigational channels 

every year. If present land loss rates continue more than 155 miles 

of waterways and several of the ports will be exposed to open water 

within 50 years. 

Similarly, one fourth of our nation’s energy supply depends upon 

the support facilities in South Louisiana while working coasts create significant value benefitting the entire country. America cannot 

afford to lose what is perceived as only Louisiana’s resource. 

To that end, Mr. Milito, just a couple questions for the record. 

Based on the recent API study what is the increase in Federal Government revenue estimated to be derived from the development of 

the Eastern Gulf of Mexico? 

Mr. MILITO. If we move forward with development of the Eastern 

Gulf over an 18 year period, we’d be looking at about $70 billion 

going to the Federal Government. 

Senator CASSIDY. How much? 

Mr. MILITO. $70 billion. 

Senator CASSIDY. $70 billion. So when folks suggest that this bill 

will increase the nation’s deficit you have to, kind of, chuckle, $70 

billion more. 

Mr. MILITO. Yeah, this is all additive revenues coming into the 

Government. 

Senator CASSIDY. How much additional revenue would be allocated to the Land and Water Conservation Fund if the GOMESA 

revenue sharing paradigm applied to the Eastern Planning Area? 

Mr. MILITO. Twelve percent of a? 

Senator CASSIDY. A lot. Billions? 

Mr. MILITO. Yeah. 

Senator CASSIDY. Yeah, fair statement. 

Mr. MILITO. $10 billion or so. 

Senator CASSIDY. Yeah, that is not bad. 

Ms. Hopper complained that my legislation takes away secretarial discretion on the appropriateness of leasing in the Eastern 

Gulf of Mexico when a number of factors, including resource potential and infrastructure are needed to support oil and gas. Can you 

tell us what the resource potential in the Eastern Gulf of Mexico 

is? 

Mr. MILITO. I’m sorry—— 

Senator CASSIDY. Can you tell us what the resource potential is 

in the Eastern Gulf of Mexico? 

Mr. MILITO. Yeah, we’d be looking at, over time, a million barrels 

of oil equivalent per day for many years. 

Senator CASSIDY. A day? A million a day? 

Mr. MILITO. Yeah. 

Senator CASSIDY. And is there sufficient infrastructure to support the oil and gas development in the Eastern Gulf? 


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Mr. MILITO. Absolutely. You’re neighboring the existing development we have in the Western and Central Gulf which is driving 

economic development—— 

Senator CASSIDY. I’m out of time. I am going to interrupt you 

just to say that this legislation would create 230,000 working class 

jobs for Americans who currently are underemployed or unemployed, $70 billion in new revenue, $10 billion or so for the Land 

and Water Conservation Fund while providing access to America’s 

oil and gas for Americans. What’s not to like? 

I yield back. 

The CHAIRMAN. What’s not to like? 

Senator Franken. Maybe he’ll tell us. 

Senator FRANKEN. I’ll tell you. [Laughter]. 

I appreciate the Senator from Louisiana’s perspective. We talked 

about this during the vote-a-rama, and I understand that those offshore drilling jobs are good jobs, for middle class jobs and we want 

to build those. 

And I know that the Chairwoman talked about economic and energy security in offshore drilling and including in the Arctic. 

I also am very cognizant of the fact that we have climate change. 

When we had the hearing on the Arctic, something struck me as 

kind of ironic and that is what I used to do for a living. I used to 

identify those things, and it was that we have the Arctic now melting. And because of the melting more fossil fuels being available for 

drilling offshore and that climate scientists are telling us that the 

vast majority of known fossil fuel reserves need to actually remain 

in the ground if we want to avoid the worst impacts of climate 

change. 

So that is what I found ironic which is that we are going to be 

able to get to more fossil fuel in the ground even if it is under the 

ocean because of climate change. 

So Mr. Matzner, how much CO2 would be released in the atmosphere if we exploit and burn the oil and gas reserves in the Arctic 

Ocean? 

Mr. MATZNER. Thank you, Senator Franken. 

About 16 billion tons of CO2 would be emitted into the atmosphere. That’s the equivalent to the emissions from all of U.S. transportation modes in the U.S. over a nine year time period. That’s 

clearly a significant number. 

And what that illustrates is the point that you, yourself, raised 

is that if we’re really serious about tackling climate change we 

have to make smarter decisions about where and to what extent we 

use, particularly public resources, too. And the best available 

science we have is that we’ve already discovered four times as 

much fossil fuels as we can safely burn if we’re going to avoid the 

worst impacts of climate change and that doesn’t even account for 

these new undiscovered, unproven reserves. 

So if we’re really serious about this we’re going to have to take 

something off of the table, and I can’t think of anywhere better 

than places where there’s also high risks, other ecological values or 

ways of life. 

Senator FRANKEN. And what are the other risks in terms of—— 

Mr. MATZNER. Well, whether you’re focused on the Arctic or on 

the Atlantic, there’s risk of severe oil spills and we’ve seen what 


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happens when we have those major oil spills. The impacts are economically severe, ecologically severe and they’re persistent. 

Senator FRANKEN. Okay. So, that’s what’s not to like. I mean, 

that’s just, in answer to the question, which is so we have choices 

to make. I think that’s fair to say. 

On the other hand, what positive impacts do we see if we focused 

on meeting energy needs by developing clean energy technologies 

instead such as say, combined heat and power which I think the 

Chair and I agree on and energy efficiency and using energy efficiency technologies? 

Sir, you don’t have to answer that, I think. 

But I want to move on to, sort of, using combined heat and power 

and also using district energy use by using hazardous fuels in our 

forests because we are seeing also increased wildfires and longer 

seasons, et cetera. 

In my state of Minnesota, District Energy St. Paul was recently 

recognized for its leadership in using wood waste to generate heat 

and electricity for downtown St. Paul while providing its customers 

with stable and competitive energy prices and reducing CO2. Mr. Sheets, I will get right to the question because I have four 

seconds. I know that more and more Alaskan communities are 

turning to biomass as a local, reliable and clean source of energy. 

Can you talk about some of the benefits that your communities are 

seeing as a result of these biomass energy projects? 

Mr. SHEETS. Yeah, certainly and very briefly. There’s over 29 

communities that have invested in different biomass projects. Some 

have been successful. Some have been unsuccessful. 

The successful ones demonstrate a commitment to the increased 

manpower that’s associated with that. And then within the communities it provides local jobs cutting down the trees, delivering them, 

stacking them and in many of the rural communities unemployment is huge. So any cash that you can keep in the economy is 

good. 

So we have found that augmenting our other sources of power 

with heat from wood keeps cash in the community a little bit 

longer and circulating. So those are some of the benefits. 

Senator FRANKEN. Okay, well I want to pursue that, but on my 

time and I am out of it. So, there. 

The CHAIRMAN. Thank you. In deference to my colleague from 

Minnesota, I think some in the North, many in the North, believe 

that the irony is that the people of the North would be denied jobs, 

economic opportunities, the opportunity to access a resource responsibly, safely, to the benefit of the country and national security 

while people 4,000 miles away lock them up and put them effectively in a snow globe making them wards of the state and nation. 

That is where they feel the irony is. 

Let us go to Mr. Gardner. 

Senator GARDNER. Thank you, Madam Chair. Thank you, Chairwoman Murkowski and the Ranking Member Cantwell, for holding 

this hearing and thanks to all of you for being here today. I think 

Senator Daines and I, at least, and I am sure others have been 

going back and forth between a couple of different committees. So 

I apologize for attending a fun hearing on air traffic controlling for 

a while before being able to come back to this Committee. 


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Just a couple of questions for you. 

My legislation, S. 1720, the RIVER Act, is included in today’s 

hearing. Of course, the RIVER Act stands for the Reliable Investment in Vital Energy Reauthorization Act. I was hoping we could 

name it something like driving America’s manufacturing but I 

didn’t like the acronym for that. I thought it would be fun to have 

one that said that. 

Included in today’s hearing S. 1720 is a proposal to reauthorize 

Section 242 and 243 of the Energy Policy Act of 2005. These sections were designed to promote the conversion of non-powered 

dams into hydro facilities and accelerate the addition of new generation at existing hydro plants. 

According to the new Department of Energy reports there are 12 

gigawatts of untapped hydropower development using the nation’s 

existing dam infrastructure. These are dams with no power houses 

today. In my home state of Colorado there are approximately 30 

megawatts of untapped hydropower development potential. 

This program was initially authorized, 242 and 243, initially authorized back in the EPA of 2005, but the Department of Energy 

hydropower program only recently received Federal appropriations 

in Fiscal Year 2014 and the first round of awards are expected to 

be released any day now and they have not even been released as 

of yet. 

So just as this program is beginning to finally take off, it is set 

to expire later this year, and there is a little bit of urgency in the 

passage of the RIVER Act. 

So to Susan Kelly, Senate Bill 1720, the RIVER Act, reauthorizes 

the hydraulic production and efficiency improvement incentives. 

Could you comment on the value of hydropower to the grid, especially as utilities grapple with implementation of the EPA rule 

111D and early retirement of coal plants? 

Ms. KELLY. Yes, sir. I’d be happy to. We think hydropower is a 

very valuable resource to have in the portfolio as we move to comply with 111D. 

One of the reasons for that is that it is a clean, renewable resource and yet it has characteristics that some of the other ones, 

for example, wind and solar, do not. It can assist with what we call 

black start which is restoration of the system when there’s a blackout. It is much more controllable. 

So if it’s needed to back other resources like wind and solar, you 

can do that. You know, as their production goes up and down you 

can release water from over the dams to account for that. So it’s 

a good complement to these other resources. 

So we strongly believe in hydropower, and we support your act. 

That’s in my written testimony. 

Senator GARDNER. Thank you very much. 

You mentioned, Ms. Kelly, that hydropower is renewable energy. 

Is there anybody on the panel today that disagrees that hydropower is not a renewable energy source? So I guess the record will 

reflect that everybody on the panel today agrees that hydropower 

is a renewable energy source. 

Mr. Matzner. 

Mr. MATZNER. I think we would not categorize it as a renewable 

energy resource, but as an important clean energy source. 


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Senator GARDNER. Not renewable? Why is that? 

Mr. MATZNER. Well, it doesn’t have some of the characteristics of 

renewable energy and that, you know, we, sometimes are—others 

clearly affected by water shortages and droughts and we have to 

make sure that we’re being careful about our conservation of water 

as well. 

Senator GARDNER. What is not renewable about hydropower? 

Mr. MATZNER. One of the things that we’re concerned about is 

how hydroelectric power interrelates with other renewable resources. So I guess to clarify my point, it’s just about how it’s treated under standards like the renewable electricity standard. 

Senator GARDNER. Okay. So it is not so much that it is not renewable, it is just how it is defined by law. Is that right? 

Mr. MATZNER. Yes, that’s correct. So I will clarify my comment 

in the record as well. 

Senator GARDNER. Okay, very good. And I have a letter from the 

Western Small Hydro Association. If I could have it entered into 

the record talking about our efforts. 

[The information referred to follows:] 


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Senator GARDNER. I just want to finish with a comment that you 

made about jobs in the West. 

Recently a court decision in Colorado has basically called into 

question the permit for a mine in the Colowyo Mine. This is not 

the topic of today’s hearing, but this court decision which was 

brought an unbelievable eight years later, has the potential to wipe 

out two communities in Northwestern Colorado. 

Two hundred twenty jobs directly at the mine, millions of dollars 

in tax revenues, 220 jobs and two communities in Western Colorado, gone. 

That is the impact that some of these regulations have. That is 

the impact of litigation, and I hope that as we talk about moving 

forward on energy that we will recognize that these jobs, these 

mines, are important. If we just treat them as pieces of paper in 

litigation we are doing a lot of damage to our fellow members of 

the community. 

I thank you, Senator Murkowski, for that. 

The CHAIRMAN. Senator Daines. 

Senator DAINES. Thank you, Madam Chair, and thank you also, 

Ranking Member Cantwell, for holding this hearing on a very important topic, America’s energy supply. 

I associate myself with Senator Gardner’s comments. Certainly I 

scratch my head. Having spent 28 years in business, trained as a 

chemical engineer, this was the first place I ever stumbled across 

that defined hydropower as not being a renewable source of energy. 

So I appreciate the question, Senator Gardner, and I think, hopefully we can have sound science drive this discussion versus the political science as we look at our all of the above energy portfolio. 

Montana faces challenges to developing its vast energy sources 

on both Federal and tribal lands. Bills before us today help address 

some of these challenges. 

I firmly believe we truly must pursue an all of the above energy 

strategy in the U.S. In fact, Senator Gardner and I, along with 

Leader McConnell and a few other Senators were over in the Middle East several weeks ago meeting with leaders in Israel, in Jordan, in Iraq, in Afghanistan and coming back, I think one of our 

conclusions was the importance of continuing to develop an all of 

the above energy portfolio and more made in America energy, both 

in terms of our future economic security, but certainly from a geopolitical and national security perspective. 

There are two Montana hydro projects under review by FERC. 

One is called the Clark Canyon Dam and the other, the Gibson 

Dam. They have been facing uncertainty in the permitting process, 

though Senator Murkowski’s hydropower Improvement Act will address these challenges on a broader scale. 

Two bills on the agenda today that I introduced, Senate Bill 1103 

and Senate Bill 1104, would provide short term relicensing and extensions to these two important hydropower projects. I can tell you 

if you talk to a rancher or a farmer in Montana and ask him if they 

believe hydro is a renewable, I think common sense prevails and 

they will say, absolutely, yes. 

I introduced these bills with my colleague from Montana, Senator 

Jon Tester, my Idaho colleagues, Senators Risch and Crapo, and 

also my counterpart in the House, the lone representative from the 


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State of Montana, Ryan Zinke. My bills would allow FERC to extend licenses for non-Federal, hydropower development on existing 

dams in Montana. 

The first bill would extend for three years a contract for hydropower development on the Clark Canyon Dam in Dillon, Montana. 

It would allow for construction and operation for a project that will 

power about 1,200 homes per year, replace 18,000 metric tons of 

carbon each year, create 30 to 40 jobs during construction and generates $611,000 in state and Federal taxes and $37,000 in property 

tax contributions over the next five years. 

The second would provide a six year contract extension for nonFederal hydropower development on the Gibson Dam near Augusta 

and Choteau, Montana. Once completed the project will provide 

decades of stable tax revenues for Teton and Lewis and Clark 

Counties, the State of Montana and the Federal Government. It 

will benefit the environment as its FERC license requires the dam 

incorporate measures that would enhance fish and wildlife resources. 

I think one of the untold stories as an avid fly fisherman myself 

is a tremendous benefit. Frankly, the fisheries that we have with 

some of these tail water fisheries allow the water to stay cooler so 

in the hot summer months that we have in Montana where the 

waters increase in temperature and actually can create hardship 

for the fish. A dam, when built correctly to proper ecological standards, is a way to continue to enhance our fish and wildlife resources. 

It will replace 40,000 tons of carbon per year. It will strengthen 

area irrigation by providing a portion of the power sales to Greenfields Irrigation District to support irrigation improvements, operations, water conservation and urge enhancements. 

It generates $4 to $5 million in wages during construction and 

provides $200,000 per year in revenue for the Sun River Cooperative. I can tell you those are big numbers in rural America, in the 

rural counties we have in Montana. 

Hydropower development must be a key component of our all of 

the above strategy to meet our nation’s energy needs. These bills 

have received robust support from affected local communities. 

I ask unanimous consent to submit letters of support from Sun 

River Electric Co-op, the Sun River Watershed Group, Greenfield 

Irrigation District, Clark Canyon Hydro, Toll House Energy and 

Beaver Head County Commissioners certifying these bills will improve the environment and help sustain local communities for decades. 

The CHAIRMAN. They will be entered into the record. 


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Senator DAINES. Thank you, Madam Chair. FERC has also submitted a statement on these bills stating that they do not oppose. 


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Senator DAINES. With that, I yield back my time. 

The CHAIRMAN. Senator Barrasso. 

Senator BARRASSO. Thank you so much, Chairman Murkowski. 

Thank you for holding today’s hearing on legislation to boost America’s energy supply. 

Last month Senators Manchin, Heitkamp, Hoeven, Enzi and I introduced S. 1026, the North American Alternative Fuels Act. It is 

a bipartisan bill that would promote the production of alternative 

transportation fuels here in North America and help reduce our nation’s reliance on energy from overseas. 

Specifically our bill would repeal a provision enacted in 2007. 

This provision prohibits the Government from purchasing transportation fuels which emit more carbon than conventional petroleum 

fuel. While the authors of this provision were surely well intentioned, they have left us with a policy that makes little sense. 

In effect, the policy compels the U.S. Government, including the 

U.S. military, to favor energy produced in the Middle East and 

other hostile regions of the world over energy produced here in 

North America. So I think most Americans would find this absolutely absurd. That is why Senator Manchin and I are working to 

change this policy. 

We believe Congress should, at the very least, allow North American energy to compete on a level playing field with energy from 

overseas. We believe Congress should allow U.S. oil, gas and coal 

producers to sell the fuel range of their products to the U.S. military. This will enable oil, gas and coal producers to increase investments in jobs here in the United States. It will also allow the U.S. 

military to access additional energy resources here in North America which will enhance our nation’s energy security. 

Mr. Milito, would you explain how Sections 526 of the 2007 Energy Act favors energy from Middle East and other hostile regions 

of the world over energy produced in the United States? 

Mr. MILITO. Yes, Senator. Fundamentally, Section 526 simply 

limits the flexibility of the military to purchase its fuels from reliable partners like Canada. And then by doing that, you’re taking 

those partners off the table and turning the demand to other parts 

of the world, including the Middle East. So fundamentally, it’s extremely problematic. 

Senator BARRASSO. And could you explain how this Section 526, 

if it is not repealed, could actually increase transportation fuel 

costs for the military? 

Mr. MILITO. Yes. Anytime you’re limiting supply the fundamentals of economics are going to lead you to a position where you 

could increase the costs of the fuels to the purchaser, in this case 

the military. You know, the military is the Government’s largest 

consumer of fuels, and prohibiting the use of Canadian oil jeopardizes our national security and could increase those fuel costs for 

our military and it restricts the Pentagon’s ability to get the reliable energy it needs to fight the war on terror. I think the last 

thing we should be doing is limiting the ability of our military to 

get the necessary fuels for readiness, training, as well as operational needs. 

Senator BARRASSO. So it will also impact our ability to get reliable and secure sources of energy? 


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Mr. MILITO. Absolutely. And if you look at the recent Quadrennial Energy Review, there was a great focus in there about looking 

at energy from a North American standpoint and making sure that 

we’re looking holistically at both Canada and Mexico and working 

together to really create that energy security we need. 526 does the 

opposite, that’s why we need passage of S. 1026 so we can get over 

these hurdles and create the stability our military needs. 

Senator BARRASSO. In your testimony you also note that General 

Martin Dempsey, Chairman of the Joint Chiefs of Staff, has acknowledged that geopolitical benefits of energy exports. Could you 

tell us a little bit and discuss what those benefits might be? 

Mr. MILITO. Yeah. Last year in March, General Dempsey testified before House Appropriations and was asked about U.S. production and U.S. exports. He specifically stated that U.S. production 

and U.S. exports are a prominent tool as we move forward from a 

geopolitical standpoint, and we’ve seen that in the past four to five 

years where the key factor counterbalancing global supply disruptions has been our production. 

Our production has gone up over three million barrels a day. 

Global supply disruptions have been about three million barrels a 

day, so we’ve been able to counterbalance that. And we’ve gone beyond just counterbalancing by putting downward pressure on the 

price of oil as well as gasoline and creating huge benefits for consumers. 

So it’s having a tremendous benefit, and it’s impacting the ability 

of regimes like Iran, Russia, Venezuela to fund their own governments and militaries. 

Senator BARRASSO. Alright, thank you very much. 

Thank you, Madam Chairman. 

The CHAIRMAN. Thank you, Senator Barrasso. 

Senator Manchin. 

Senator MANCHIN. Thank you, Madam Chair and thank all of 

you. 

I’m so sorry. I was in a Commerce Committee meeting and that 

made me late for this hearing, but I appreciate you all being here. 

Last week my good friend, Senator Heidi Heitkamp from North 

Dakota, and I introduced a package of five bills to set a clear path 

forward for coal. I am happy to have three of these bills considered 

here today. 

The first of these would establish a new program to ensure the 

continued use of domestic coal resources by developing technologies 

that will improve the efficiency, effectiveness, cost and environmental performance of coal. The program would work to preserve 

low cost electricity, diversify our nation’s energy supply by keeping 

coal competitive and with other low carbon energy sources and 

speed up efforts to develop carbon emission reducing technologies. 

The second of these bills which is also sponsored by Senator 

Whitehouse, myself and Senator Whitehouse, would ensure carbon 

capture use and storage is a priority for the Department of Energy 

across the fossil program. CCUS is not just a coal technology but 

one that will be used across the fossil energy sector. 

The third bill, led by Senator Heitkamp, would give the Secretary of Energy the ability to help secure long term certainty for 

clean coal technology utilities and workers by allowing the SecVerDate Sep 11 2014 02:19 Nov 18, 2015 Jkt 095278 PO 00000 Frm 00111 Fmt 6633 Sfmt 6602 E:\HR\OC\A278.XXX A278

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retary to enter into private pricing stabilization agreements that 

keep the clean coal market price viable. This simple fix would create more incentives for public/private investment in carbon reducing clean coal projects and help remove barriers of uncertainty surrounding development of these critical technologies. 

I think you all know me. Coming from West Virginia we have an 

all in energy policy. We have been blessed with a lot of coal, 

blessed with gas, natural gas, Marcellus shale gas. We have hydro. 

We have wind farms. We are trying everything. We are just not 

picking and choosing. We are basically trying to make sure this 

country is energy secured, and we think the security of our energy 

basically secures our country and keeps it safer. 

With that, Ms. Kelly, if I could ask, how do members of your organization view the use of coal in their future generation portfolio 

and what technology would they recommend be pursued to maintain coal as a future option? Because I’ve talked to the Department 

of Energy, EIA, it is in the mix for the next three to four decades. 

Ms. KELLY. Well, first of all we do definitely want to keep coal 

on the table as a viable option for us. Every time an option is taken 

off the table we have a diminished ability to have a full array of 

resources to use to provide the most economical, reliable and environmentally responsible power. 

Senator MANCHIN. Do you believe that the country can make it 

without coal right now in the mix? 

Ms. KELLY. Not right now. 

Senator MANCHIN. It’s not reliable. Won’t be affordable, right? 

Ms. KELLY. It’s too, well at this moment it’s too large a portion 

of our generation mix. I mean, if you just look at the numbers. We 

see reducing that over time. 

We support the bills you’ve noted, by the way. 

Senator MANCHIN. Yeah. 

Ms. KELLY. Because we do believe that with new research and 

development we can find better ways to use it. And we are, but let 

me just note one thing which is if we are going to go the sequestration route we need to think about the impacts of the sequestration 

and the potential liability for those people who do do that. 

But yes, I agree with you that in the short run, you know, it’s 

part of the mix. 

Senator MANCHIN. I would like to go on record basically saying 

I have spoken to all the utilities, major utilities of the United 

States of America. Not one of them told me that the portfolio they 

have, the diversity of their portfolio, is one they would accept as 

a good business practice. They are all concerned of what they are 

being forced to do by regulations and by the different directions of 

this Administration. 

To Mr. Hopper, if I may? Has the Bureau of Ocean Energy Management worked with the DOE to access the ability of storing CO2

in offshore geological reservoirs? 

There is a lot of oil and gas being produced, as we know, and developed offshore. Have you looked into potentially using those depleted sites as a medium for storing CO2? 

Ms. HOPPER. Senator, I’m going to have to get back to you on 

that. I don’t actually know the answer to that question. But I will 

get back to you on that. 


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Senator MANCHIN. Okay. The only thing that we are trying to do 

is find a sensible way. Myself and Sheldon Whitehouse, that you 

would not suspect coming from two different spectrums. We both 

agree that we have a responsibility as humans for the climate and 

that basically they’ve got to find a balance between the economy 

and the environment. And we’re trying to do that with legislation. 

I have been to Rhode Island and seen basically the algae that 

they have been using from CO2. We think that is doable. We think 

that can be expanded tremendously. 

Senator Whitehouse has been to West Virginia to see what coal 

has done for the country and what we continue to do and what we 

are asked to do every day. We are just finding it very hard in West 

Virginia working with a hostile environment in Washington. 

Ms. KELLY. Can I just say? 

Senator MANCHIN. Yes. 

Ms. KELLY. That, you know, our job as utilities is to provide reliable, affordable and environmentally responsible power supply. 

And we have to balance those three factors every day as we move 

forward. So I appreciate the bipartisan nature of the work—— 

Senator MANCHIN. We try. 

Ms. KELLY [continuing]. You’re doing with Senator Whitehouse. 

And we really do support those kinds of efforts. 

Senator MANCHIN. Thank you very much. 

The CHAIRMAN. Thank you, Senator. 

Senator King. 

Senator KING. Madam Chair, I did discover something I knew 

something about. 

The CHAIRMAN. I knew you would. [Laughter]. 

Senator KING. I helped permit my first hydro project in 1983. It 

was a massive 1.5 megawatt on the Cobbossee Stream in Gardiner, 

Maine. So I have been working, I have worked in hydro permitting 

for many, many years. Any permitting program that takes seven to 

ten years and costs $50 to $100 million is not a permitting program, it is an annuity for lawyers and consultants. [Laughter.] 

I want to just associate myself in the discussion of this Committee on the hydro relicensing provisions because it definitely 

needs to be fixed. So I want to commend the Chair for making that 

part of this discussion. 

Hydro is an enormous resource in America. Clean, renewable and 

it is one that, I think, we have to clear away some of these issues 

that make it such a lengthy and expensive process. 

One other point on this. We can talk about a $50 million process 

in seven years. What we do not know are the projects that never 

come forward because of that. It is the opportunity cost of companies who say, we cannot afford this. 

By the way, that is high risk money because you can do seven 

years, spend $50 million, not get one of the necessary permits and 

you have nothing. So I believe that the country is losing potential 

resources because of the in terrorem effect of an uneconomic, unpredictable and untimely permitting process, particularly in the 

field of hydro. 

So, I look forward to working with the Committee on this issue. 

Thank you. 


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The CHAIRMAN. Well, Senator King, thank you for that, and I 

look forward to working with you on this. 

It is fascinating to me when we talk about hydro it seems that 

the assumption or the stereotype of hydro is some massive Hoover 

Dam. In Alaska most of our dams are small facilities. They provide 

for the needs of one community. They intertie with others to provide support in Southeast Alaska to a considerable degree. About 

25 percent of our renewable energy comes from hydro in Alaska. 

But it is not the big projects. It is probably more akin to what 

you helped permit there. Again, when you think about the time 

that is involved and the time value, then that’s money that adds 

to the cost. It does put off the possibilty of some projects that could 

help make a difference, bring down our costs, which is particularly 

important in our more remote areas. 

I wanted to ask you as a follow on to this, Mr. Livingston and 

then I will ask you, Mr. Sheets, about Alaska specifically. We did 

reforms back in 2005 in EPACT to require trial type hearings to 

allow the consideration of alternative condition and prescriptions, 

but what we understand is the reforms either did not take or they 

were not sufficient. 

I agree with you, Senator King. When you are talking about a 

relicensing of a project, not licensing first time around, a relicensing taking eight to ten years, costing $50 to $100 million, it 

just does not work. 

I believe you said, Mr. Livingston, that you felt that S. 1236 does 

take what we attempted to do, I guess, back in 2005 and really 

does address the concerns that Senator King has raised and that 

we have identified. Do we, in fact, now move closer to a reform that 

will actually be meaningful for the licensing and the relicensing of 

these hydro facilities? 

Mr. LIVINGSTON. Yes, it does. I think the EPACT 2005 created 

some reforms which, you know, in use today the ILP process works, 

especially at the beginning of the process but in between two 

things happened. 

One of those is how the regulations of EPACT 2005 were put into 

place. They allowed trial type hearings on preliminary conditions 

but not on final conditions so that the final conditions can actually 

look different and be submitted to FERC than what your trial type 

hearing outcome was. So that’s one of the things that is a fix here. 

There was also a court case that left lack of clarity in the extent 

of the condition and authority of the agencies so that as you think 

about where a condition might apply, should it apply to just the 

Federal lands within the FERC license? 

Nobody doesn’t think that the Federal Government for work done 

on its lands shouldn’t have a say and shouldn’t direct how those 

lands are treated. But right now should those conditions apply to 

private lands outside the boundary of FERC? Should they apply to 

third party lands outside of the boundary of FERC? Should they 

have a clear nexus? And those are the things that need better definition in the process because without that clarity to those conditions, those mandatory conditions, can become fairly far ranging. 

So I think your bill does a fine job of making sure we achieve 

the balance of looking at the process. 


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We’ve got hard working people all trying to do the right things 

on this that helps fix the process issues we have today, takes a lot 

of things that happen sequentially and puts them parallel and 

helps better define the box. So we can get a five year relicensing. 

So that those hydro projects that today are relatively small and 

couldn’t afford a relicensing can go into licensing with greater certainty. And for those new projects coming along, they can be permitted in a way that at least we can get to a decision, one way or 

another, yes or no, earlier in the process and with a lot less money. 

The CHAIRMAN. Well, we would like to think that we are going 

to get it right this time. 

Mr. LIVINGSTON. Yeah. 

The CHAIRMAN. Which is key, it is critical for that. 

Mr. Sheets, I wanted to give you an opportunity this morning to 

speak to some of what we are seeing. You mentioned it briefly in 

your opening statement. You did not say that we are the incubator 

or the guinea pig for energy projects, but I like to think that we 

really are that testing ground for some very innovative energy 

technologies on the renewable side. 

We are pioneering what microgrids are all about. When you recognize that most of the communities in the state are not attached 

to any grid and how you have to figure it out on your own, the resiliency that comes from being in a remote place and a high cost 

energy state, challenges us to be ever the more innovative. 

I would like you to speak specifically to our opportunities within 

geothermal. We have great prospects out in Nome. What more can 

we be doing around the state to encourage that but also to take 

this model and replicate it elsewhere? 

Also, given the fact that we have got policies back here that consider traditional geothermal to be this, so called, mature technology 

and as such, it is perhaps not eligible for certain Federal assistance. We have issues going on with our low temperature geothermal. We have some research and development projects going on 

with low temperature that in other parts of the country they would 

have said, it is not possible to even do what you are doing. Yet we 

know that in places like Chena, we have taken low temperature 

geothermal and we have powered a little resort. We have made it 

possible, but can we take what we have learned in Alaska and replicate that elsewhere? 

Mr. SHEETS. Yes, yes, Madam Chairman, thank you for the opportunity to speak to that. 

Alaska is blessed with a lot of low grade geothermal, meaning 

low temperature geothermal. In other states that are blessed with 

a high grade geothermal they can build large power plants that 

feed into the grid system. In Alaska we have very remote locations, 

and it’s often hard to even characterize the geothermal resource 

that we have because in some of our areas that are permafrost. 

There are hot seeps, not necessarily hot springs in some of those 

places. 

So conventional ways of determining the geothermal potential involves going out there, having a flow test, if you will, for a spring 

that’s identified or some flowing hot water, that doesn’t exist in 

some parts of Alaska. It’s very marshy, and the whole region can 


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be very warm and pinpointing where the source of that hot water 

is very difficult in those circumstances. 

So we’ve had the opportunity to develop some technologies that 

allow us to fly over that area with FLIR, forward looking infrared 

cameras, and kind of help define the basins. And then by measuring nearby lands we can figure out how much heat it takes in 

that hot area to heat the ground temperature to that level. 

So these are some innovative ways of just, kind of, reassessing 

these remote resources that we believe could work around the 

world in other situations that perhaps are underexplored for geothermal. 

Another area for us that’s really key, as the Senator pointed out, 

was making things smaller. We have a small population. We have 

small microgrids. We need to integrate these resources into the 

communities that we have. 

We can’t do anything with five megawatts of power. That’s like 

ten times the size of many of our communities need. We need small 

technology that enables us to convert those local resources into useable energy, and the technology for that doesn’t exist and the lower 

48 could care less about it because they do have the grid system 

that they can rely on. 

And so in Nome, for example, we have done quite a bit of work 

to de-risk that resource. We’ve done quite a bit of work to see if 

it’s economic to string 60 miles of transmission wire into Nome. 

Nome, if you recall, just a few years ago ran out of diesel fuel, and 

we had to bring in the ice breakers to help them. They need local 

resources. You talk about energy security. That’s energy security 

for Nome. 

What happened in our case was we got to the point where now 

the private sector has taken notice and is interested in possibly 

pursuing that further. Maybe we’ll see an IPP come in and develop 

that resource and sell it to the community of Nome, thereby providing reliable energy year round. 

But it’s not just low grade geothermal too. We’re doing that in 

small photovoltaics. Several years ago when Galena, if you recall, 

was flooded and nearly wiped out, there was quite a bit of emergency money coming to that community. A lot of folks looked at it 

as an opportunity to put PV on every rooftop, if you will. You know, 

when we rebuilt the community let’s go ahead and do that. 

Well, the problems that you have with that is again, if you put 

too much renewable into a small grid system and a cloud comes 

over, suddenly you’ve destabilized that grid. So you still need conventional forms of energy to provide that base loader to follow. In 

our case we’re using diesel generators, small diesel generators. And 

as the Senator pointed out, there are communities throughout the 

State of Alaska that have to make these microgrids work. 

At our center we do a lot of research on integrating renewables 

with the conventional resources in microgrids. That is catching the 

attention of the nation because the nation is losing confidence in 

the reliability of its grid sources. So you see military bases, you see 

hospitals, you see, you know, critical infrastructure going to the 

microgrid format where they’re installing diesel generators so that 

if they become islanded by choice or by happenstance, if they become isolated from the grid, they can make things work. 


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Alaska has had to do that for pretty much its entire life as a 

state. And so, that’s why I, you know, I didn’t use words like incubator because we’re doing things. We are leading it. Now what we 

want to do is export that knowledge to the rest of the states and 

to the rest of the world, and invite them to see what we’ve done. 

We’re not really looking for Federal handouts. We’re just looking, 

you know, maybe for the Feds to come alongside of us and help us 

figure out on those projects that weren’t successful but they were 

just really, really close. It’d sure be nice to see a little bit of investment to find out why we’re that close and we just can’t quite get 

there yet. 

The CHAIRMAN. Yeah, yeah. 

Mr. SHEETS. So that’s where we try to focus our attention is what 

can we do to get that extra little step? That’s where, I think, a 

partnership like the demonstration projects that are listed in some 

of these bills are so important, and that’s why I’m here today. 

The CHAIRMAN. Well, I thank you for that, and I did not want 

to cut you off from your answer because I think the information 

that you are providing is so important. 

Senator King and I are the co-chairs of the Arctic Caucus here 

in the Senate. One of my hopes is that while the United States is 

Chair of the Arctic Council for these next two years, one of the 

things that we lead on, that we help set the agenda on, is discussing and moving forward with some of the energy issues that, 

particularly, are lacking in the remote areas of the Arctic. 

The European Arctic for the most part, they have got their energy infrastructure grids that are built out. Not so much in Canada, the U.S., and Russia. How we can take some of these technologies and as you say, this is not just research and development. 

This is on the ground. Sometimes it is a little bit of duct tape and 

just the crazy inventor out there. But when you don’t have—— 

Senator KING. Sounds like something Maine and Alaska have in 

common, duct tape. 

The CHAIRMAN. Maine and Alaska would really get together well 

here on some of these because again, you have got challenges with 

your cold. You have got challenges with not having anybody else 

to rely on. This is something that again, when we talk about technologies and public/private partnerships, we have such an opportunity here. 

I have got a couple more questions. 

I will just let the witnesses know that it is not because of lack 

of interest that Senator Cantwell is not here this morning. As you 

know, we have TPA on the Floor and Senator Cantwell has been 

very involved with that, so she has been pulled away to deal with 

issues on the Floor, otherwise I know that she would be here asking questions as well. 

I would like to try to wrap up within the next couple minutes, 

but I wanted to ask you, Mr. Milito, we have had a lot of discussion 

here in this Committee about the prospect for LNG exports and 

what we might be able to do from just a process perspective to ensure that we are able to share the abundance of our natural gas 

resource with friends and allies around the world. Now that subject 

is moving to the export of oil. Senator Cantwell brought it up in 

her opening statement. When we are talking about workforce 


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issues and the nation’s growing energy portfolio, what potential for 

challenges, I guess, or maybe there is greater opportunity there, do 

we see with a qualified and trained workforce if we are successful 

in advancing opportunities for lifting the ban on oil exports which 

would ultimately increase production? 

Can you just speak to the workforce piece of it because we really 

have not had that conversation here this morning? 

Mr. MILITO. Absolutely, and it’s a great topic that we need to discuss. I mentioned how the industry is looking at 1.3 million new 

jobs, excuse me, over the next 15 years, but that’s going to be tied 

to access on the one side, making sure that we have the opportunity to develop oil and gas so we can secure those jobs. But on 

the other side, making sure that we are putting our young people 

and our college-age students in a position to be able to move into 

those jobs from a qualified standpoint. 

So we are working very hard with your office and other offices 

in trying to make sure that we’re engaged in this dialogue. We’ve 

created a website called oil and gas workforce.com. So anybody can 

go there and look at the type of jobs that are available. 

But in that study we noted that over 60 percent of the jobs are 

blue collar which is great. They’re all well-paying. They pay double, 

triple the national average in terms of looking at the Bureau of 

Labor statistics data. 

But we need to make sure that we’re putting qualified people in 

those positions, so working with community colleges, working with 

universities, working with our companies and kind of bridging together. And part of our effort is also creating outreach to African 

American, Hispanic communities to make sure that we’re creating 

a diverse workforce which is the way the U.S. is moving. We’re becoming more and more diverse and we have to really create these 

opportunities for all the communities out there who have a stake 

in this. 

So it’s a critical issue, and the only way we’re going to be able 

to be successful is making sure that we move forward in a strategic 

way to develop this qualified workforce. It’s the great crew change 

that’s occurring, and we need to fill that void with good people so 

they have the good paying jobs. 

The CHAIRMAN. Thanks, I appreciate that. 

Senator KING. Madam Chair, before we leave the hearing. 

The CHAIRMAN. Senator King. 

Senator KING. One important point for the record in our discussion about hydro relicensing and the licensing and permitting process, neither you nor I nor I think anybody else here is talking 

about lowering environmental standards. 

The CHAIRMAN. Right. Right. 

Senator KING. We’re talking about the process. 

The CHAIRMAN. Absolutely. 

Senator KING. My goal in Maine was that we would have the 

highest environmental standards in the country and the most timely, efficient and predictable environmental process. And I don’t 

think those two goals are in any way in conflict. 

So I think it is important that we emphasize we are not talking 

about cutting environmental corners. We are talking about estabVerDate Sep 11 2014 02:19 Nov 18, 2015 Jkt 095278 PO 00000 Frm 00118 Fmt 6633 Sfmt 6602 E:\HR\OC\A278.XXX A278

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lishing a process that makes sense and does not impede the development of these important resources. 

So I just wanted to—— 

The CHAIRMAN. Yeah. 

Senator KING [continuing]. Make that comment for the record. 

The CHAIRMAN. No, I appreciate you doing that, and know that 

I concur. Again, I want to work with you on some of these hydro 

issues. 

My last question is going to be for you, Ms. Kelly. As you know, 

I have focused a lot in this Committee about the concerns that I 

have in so far as making sure that there is a reliable infrastructure, that there is reliability and affordability within our energy 

sector here. You have not only in your comments but in fielding different questions here this morning, talked a fair amount about the 

RTO rules and the requirements for public utilities to participate 

in capacity markets to supply their own capacity, trying to find this 

balance forward. 

You spoke relatively favorably of my bill, S. 1222, which would 

among other things, require the RTOs to make filings with FERC 

to satisfy a set of resource adequacy objectives and moving then towards the self-supply. So just hopefully very quickly, would you 

agree that base load plants are critical for reliability? 

Ms. KELLY. We need all types of plants to ensure reliability. We 

need base load. We need shoulder, what we call shoulder units. We 

need peaking units. And in order to comply with coming environmental regulations, we need to have a diverse fleet as well. 

The CHAIRMAN. Yes. 

Ms. KELLY. For example, one of the problems we know are that 

some new nuclear, you know, old nuclear units have difficulty operating. They have a proper place in our fleet. 

We have new nuclear units that we would like to construct. We 

have members that are doing four new nuclear units. They’re in 

Georgia and South Carolina because they cannot be supported in 

these capacity markets which are too short term in nature to permit that. 

So yes, we believe there needs to be all kinds of resources. We 

prefer, as I said in our discussion with Senator Manchin, that we 

have all options on the table to do that because we need that to 

meet the, kind of, triple play of reliable, affordable and environmentally responsible. 

The CHAIRMAN. I would assume further that you would agree 

that base load plants in RTO markets should have the opportunity 

to earn a reasonable rate? 

Ms. KELLY. Yes, they should have the opportunity to earn a reasonable rate. 

The CHAIRMAN. Then while self-supply may not be the answer 

that most of your members prefer as their first choice, it may provide a basis for enabling your members to join with others who 

care about preserving base load nuclear and other plants in the 

RTO markets. I am assuming, again, that this is where your members would like to go? 

Ms. KELLY. We have an abiding interest in being able to self-supply our resources. In the three eastern RTOs where these mandatory markets operate, most other utilities no longer have an obligaVerDate Sep 11 2014 02:19 Nov 18, 2015 Jkt 095278 PO 00000 Frm 00119 Fmt 6633 Sfmt 6602 E:\HR\OC\A278.XXX A278

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tion to serve their customers. That has been undone through retail 

access. 

So our business model is actually the minority model. We still 

supply our member’s resources. We still try to do that at the lowest 

reasonable cost with a diverse portfolio of different kinds of resources. 

But that’s not the business model for some of these others and 

for most of the other entities in these RTOs. That’s why we want 

to be able to self-supply because we want to be able to serve our 

own loads, with our own resources, at our own economics. When 

these markets were first introduced we negotiated those provisions, 

especially in ISO New England and PJM. We made that deal, but 

then later those provisions were revised and taken away from us. 

So that, you know, we feel there’s substantial overarching problems 

with these markets but we also want to be able to self-supply our 

own members because our business model is different than everybody else’s. I hope that’s helpful. 

The CHAIRMAN. Yes, that is helpful. Thank you. 

Ms. KELLY. And we can comment for the record if you wish as 

well. 

The CHAIRMAN. You know, I would appreciate that. 

I mentioned in the first round of questioning the BOEM fact 

sheet as it related to oil spill risk in the Chukchi Outer Continental Shelf. This was in reference to a comment that Mr. Matzner 

had made about a 75 percent figure, and I am going to include that 

fact sheet in the record itself. 

I think it is important to note that in the BOEM fact sheet their 

numbers assumed 500 wells producing 4.3 billion barrels of oil over 

77 years. So through the year 2092, .00002 percent of the oil produced might be spilled. 99.99998 percent would be delivered safely 

to Americans while creating jobs, generating revenue, improving 

trade balance and increasing security throughout. 

Again, I want to make sure that when we talk about the figures 

that are out there that we give full definition to where those numbers came from. That BOEM fact sheet will be included as part of 

the record. 

[The information referred to follows:] 


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The CHAIRMAN. I think it is important for people to recognize, 

and I know that my colleagues on the Committee recognize that 

when we said we were going to do a supply hearing it was not just 

supply as may come out of the State of Alaska. Although, as I have 

listened to all of you, everything that you have touched on comes 

from my state. So again, I think it goes to prove the point that we 

do have a little bit of everything and a lot of a lot of things. 

My purpose in focusing on supply as a title is not to say that we 

are going to focus on renewables at the expense of fossils or we are 

going to focus on nuclear at the expense of coal or natural gas. It 

is to appreciate and understand that in this country we have an 

abundance of supply when it comes to our energy assets, and that 

is something worth celebrating because not every country has this. 

We see this from our friends and neighbors. The reason that I 

am pushing for oil exports is because we have friends that are 

truly being held hostage because they do not have a source, a safe 

source of supply that they can turn to. 

Murkowski pays attention to what goes on in Poland. Poland is 

96 percent dependent on Russia for their oil. We have an abundance of supply so why would we not work to encourage that production in this country where our environmental standards are second to none, that will allow for jobs and economic opportunity and 

at the same time with that wealth of supply help our friends and 

our allies? 

So part of what we are trying to craft here in this Committee is 

a view of the energy sector that is fair and balanced and does have, 

truly, a little bit of everything, all of the above. People are getting 

tired of that phrase, but I think it does denote what it is that we 

have here. 

If we choose to sit on it or to close it off or to lock it up, then 

I think we need to answer for that. If we are going to lock up our 

oil and gas resources in Alaska’s North Slope whether in ANWR 

or NPRA or offshore are we going to be satisfied then that we will 

continue to receive that resource from somebody else who does not 

have the same environmental standards, who will continue to provide supply? 

My colleague speaks of the irony that he sees with us accessing 

our resources in the North. I do not think that any of us would find 

it ironic when a Senator from Colorado says we need to access our 

shale gas or when a Senator from Minnesota says that we need to 

access our biomass. We have resources within the regions that we 

all represent. 

I think the challenge for us is how we access it safely, responsibly and for the benefit of the people who are engaged in that economic opportunity. That is what I am trying to do here within the 

Committee. 

I appreciate what you all have contributed here this morning 

with your views and your perspectives. I thank you for taking the 

time to travel here to Washington. 

Certainly, Mr. Sheets, you have come the furthest, but again, I 

thank you for helping to educate not only my colleagues here, but 

others around the country about some of the extraordinary opportunities that we have when we are challenged. I think we can rise 


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to the occasion, do well and perhaps even surprise some folks with 

our abilities. 

So, with that, I have held the Committee over longer than I intended. I thank you for your time and again for your resources here 

today. 

The Committee stands adjourned. 

[Whereupon, at 12:12 p.m. the hearing was adjourned.] 


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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 359 here 95278A.239
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 360 here 95278A.240
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 361 here 95278A.241
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 362 here 95278A.242
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 363 here 95278A.243
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 364 here 95278A.244
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 365 here 95278A.245
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 366 here 95278A.246
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 367 here 95278A.247
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 368 here 95278A.248
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 369 here 95278A.249
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 370 here 95278A.250
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 371 here 95278A.251
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 372 here 95278A.252
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 373 here 95278A.253
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 374 here 95278A.254
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 375 here 95278A.255
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 376 here 95278A.256
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 377 here 95278A.257
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 378 here 95278A.258
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 379 here 95278A.259
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 380 here 95278A.260
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 381 here 95278A.261
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 382 here 95278A.262
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 383 here 95278A.263
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 384 here 95278A.264
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 385 here 95278A.265
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 386 here 95278A.266
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 387 here 95278A.267
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 388 here 95278A.268
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 389 here 95278A.269
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 390 here 95278A.270
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 391 here 95278A.271
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 392 here 95278A.272
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 393 here 95278A.273
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 394 here 95278A.274
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 395 here 95278A.275
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 396 here 95278A.276
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 397 here 95278A.277
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 398 here 95278A.278
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 399 here 95278A.279
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 400 here 95278A.280
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 401 here 95278A.281
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 402 here 95278A.282
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 403 here 95278A.283
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 404 here 95278A.284
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 405 here 95278A.285
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 406 here 95278A.286
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 407 here 95278A.287
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 408 here 95278A.288
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 409 here 95278A.289
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 410 here 95278A.290
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 411 here 95278A.291
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 412 here 95278A.292
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 413 here 95278A.293
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 414 here 95278A.294
342 


emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 415 here 95278A.295
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 416 here 95278A.296
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 417 here 95278A.297
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 418 here 95278A.298
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 419 here 95278A.299
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 420 here 95278A.300
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 421 here 95278A.301
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 422 here 95278A.302
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 423 here 95278A.303
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 424 here 95278A.304
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 425 here 95278A.305
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 426 here 95278A.306
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 427 here 95278A.307
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 428 here 95278A.308
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 429 here 95278A.309
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 430 here 95278A.310
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 431 here 95278A.311
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 432 here 95278A.312
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 433 here 95278A.313
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 434 here 95278A.314
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 435 here 95278A.315
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 436 here 95278A.316
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 437 here 95278A.317
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 438 here 95278A.318
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 439 here 95278A.319
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 440 here 95278A.320
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 441 here 95278A.321
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 442 here 95278A.322
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 443 here 95278A.323
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 444 here 95278A.324
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 445 here 95278A.325
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 446 here 95278A.326
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 447 here 95278A.327
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 448 here 95278A.328
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 449 here 95278A.329
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 450 here 95278A.330
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 451 here 95278A.331
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 452 here 95278A.332
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 453 here 95278A.333
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 454 here 95278A.334
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 455 here 95278A.335
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 456 here 95278A.336
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 457 here 95278A.337
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 458 here 95278A.338
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 459 here 95278A.339
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 460 here 95278A.340
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 461 here 95278A.341
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 462 here 95278A.342
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 463 here 95278A.343
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 464 here 95278A.344
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 465 here 95278A.345
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 466 here 95278A.346
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 467 here 95278A.347
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 468 here 95278A.348
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 469 here 95278A.349
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 470 here 95278A.350
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 471 here 95278A.351
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 472 here 95278A.352
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 473 here 95278A.353
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emcdonald on DSK3SPTVN1PROD with HEARINGInsert graphic folio 474 here 95278A.354