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99–742 2016

OVERSIGHT OF THE FEDERAL ENERGY 

REGULATORY COMMISSION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

DECEMBER 1, 2015 

Serial No. 114–104 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

(III) 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

PETE OLSON, Texas 

Vice Chairman 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

ROBERT E. LATTA, Ohio 

GREGG HARPER, Vice Chairman 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

BILL FLORES, Texas 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

DAVID LOEBSACK, Iowa 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(V) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Jerry McNerney, a Representative in Congress from the State of California, opening statement .................................................................................... 3 

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

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

Prepared statement .......................................................................................... 5 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 6 

Prepared statement .......................................................................................... 7 

WITNESSES

Norman C. Bay, Chairman, Federal Energy Regulatory Commission ................ 8 

Prepared statement .......................................................................................... 10 

Answers to submitted questions ...................................................................... 91 

Cheryl A. LaFleur, Commissioner, Federal Energy Regulatory Commission .... 18 

Prepared statement .......................................................................................... 20 

Answers to submitted questions ...................................................................... 113 

Tony Clark, Commissioner, Federal Energy Regulatory Commission ................ 29 

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

Answers to submitted questions ...................................................................... 120 

Colette D. Honorable, Commissioner, Federal Energy Regulatory Commission 39 

Prepared statement .......................................................................................... 41 

Answers to submitted questions ...................................................................... 124 

SUBMITTED MATERIAL

Statement of the American Public Power Association .......................................... 84 

(1) 

OVERSIGHT OF THE FEDERAL ENERGY 

REGULATORY COMMISSION 

TUESDAY, DECEMBER 1, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY AND POWER, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in room 

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

of the subcommittee) presiding. 

Present: Representatives Whitfield, Olson, Shimkus, Pitts, Latta, 

Harper, McKinley, Pompeo, Kinzinger, Griffith, Johnson, Long, 

Ellmers, Flores, Mullin, Hudson, Upton (ex officio), McNerney, 

Tonko, Green, Capps, Doyle, Castor, Sarbanes, Welch, Yarmuth, 

Loebsack, and Pallone (ex officio). 

Also Present: Representative Kennedy. 

Staff Present: Nick Abraham, Legislative Associate, Energy and 

Power; Will Batson, Legislative Clerk, Energy and Power, Environment and the Economy; Leighton Brown, Press Assistant; Allison 

Busbee, Policy Coordinator, Energy & Power; Patrick Currier, Senior Counsel, Energy & Power; Tom Hassenboehler, Chief Counsel, 

Energy & Power; A.T. Johnston, Senior Policy Advisor; David 

McCarthy, Chief Counsel, Environment and the Economy; Tim 

Pataki, Professional Staff Member; Chris Sarley, Policy Coordinator, Environment and the Economy; Dan Schneider, Press Secretary; Christine Brennan, Minority Press Secretary; Jeff Carroll, 

Minority Staff Director; Timia Crisp, AAAS Fellow; Rick Kessler, 

Minority Senior Advisor and Staff Director, Energy and Environment; and Tim Robinson, Minority Chief Counsel. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. I would like to call the hearing to order this 

morning and welcome everyone. Today, we are going to have an 

oversight of the Federal Energy Regulatory Commission, and I 

want to welcome all the commissioners and chairmen. We appreciate the four of you being with us. We had one vacancy over there, 

but we appreciate your time. We look forward to the dialogue with 

you on some very important issues. At this time, I recognize myself 

for a 5-minute opening statement. 

America’s energy policy is changing rapidly, changing not only 

from the dramatic increases in domestic energy supplies, but also 

from the unprecedented Federal regulatory burdens, and a number 

2 

of other emerging threats. And FERC’s responsibility places it right 

at the very center of these changes. 

The rapid rise in domestic natural gas production and the increased reliance on it for electricity generation has created many 

challenges for FERC. For one thing, it has increased the burden on 

FERC to make timely decisions on many new natural gas pipeline 

project applications. We see bottlenecks in regions like New England, where high natural gas prices and limited supplies are harming consumers, destroying jobs and threatening wintertime electric 

reliability, even though natural gas in nearby Pennsylvania is plentiful and affordable. 

FERC also plays a central role in the approval of LNG export facilities, which hold the potential to create jobs at home and help 

our allies abroad. In fact, on a regular basis, we have representatives of foreign European countries coming and asking for LNG exports. Both the substance and the timeline of FERC’s review process for such projects have, justifiably, come under review. Challenges also come from the actions of other Federal agencies, and 

particularly, EPA. EPA’s Clean Power Plan and other regulations 

pose a significant threat to fuel diversity and electric reliability. 

The loss of existing coal-fired capacity, as a consequence of new 

rules, is already a cause for concern, and the number of retirements will only grow in the years ahead. At the same time, EPA 

has all but banned the options of new coal-fired generation, despite 

its proven reliability, and it even places constraints on natural gas 

in favor of intermittent renewables like wind and solar. 

These and other actions by EPA and their impact on electric reliability and affordability, also raise questions about the working relationship between EPA and FERC. EPA has leap-frogged beyond 

FERC and granted itself authority over electricity well beyond anything set out in the Federal Power Act. There are valid concerns 

that FERC is allowing itself to become a bystander as EPA increasingly dominates the electricity sector, and does so in ways that 

serve to exacerbate the very problem FERC is supposed to protect 

consumers against. 

Grid security is another growing concern in FERC’s jurisdiction. 

The electricity system faces all the traditional risk from severe 

weather and earthquakes and the like, but we also see emerging 

threats from things like cyber and EMP attacks. FERC’s role in ensuring the security of the grid is more important than ever. 

So in some respects, the energy situation in America is better 

than it has been in decades. But nonetheless, there are challenges 

in the years ahead, and FERC must play a critical role and meet 

its responsibilities as we deal with these transitions that we face 

today. 

So I really look forward to this opportunity to have a dialogue 

with the commissioners, to get their views on these important 

issues, and let you hear some of the concerns that we have. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

As we all know, America’s energy picture is rapidly changing, not only from the 

dramatic increases in domestic energy supplies but also from the unprecedented fedVerDate Nov 24 2008 14:31 Apr 21, 2016 Jkt 037690 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-104 CHRIS
3 

eral regulatory burdens and a number of other emerging threats. The work that 

FERC does often places it at the center of this change. 

For example, the rapid rise in domestic natural gas production and the increased 

reliance on it for electricity generation has created many challenges for FERC. For 

one thing, it has increased the burden on FERC to make timely decisions on many 

new natural gas pipeline project applications. We see bottlenecks in regions like 

New England, where high natural gas prices and limited supplies are harming consumers, destroying jobs, and threatening wintertime electric reliability, even though 

natural gas in nearby Pennsylvania is plentiful and affordable. FERC also plays a 

central role in the approval of LNG export facilities, which hold the potential to create jobs at home and help our allies abroad. Both the substance and the timelines 

of FERC’s review process for such projects has justifiably come under review. 

Challenges also come from the actions of other federal agencies, and particularly 

EPA. EPA’s Clean Power Plan and other regulations pose a serious threat to fuel 

diversity and electric reliability. The loss of existing coal-fired capacity as a consequence of new rules is already cause for concern, and the number of retirements 

will only grow in the years ahead. At the same time, EPA has all but banned the 

option of new coal-fired generation, despite its proven reliability, and has even 

placed constraints on natural gas in favor of intermittent renewables like wind and 

solar. 

These and other actions by EPA and their impact on electric reliability and affordability also raises questions about the working relationship between EPA and 

FERC. EPA has leapfrogged beyond FERC and granted itself authority over electricity well beyond anything in the Federal Power Act. There are valid concerns that 

FERC is allowing itself to become a helpless bystander as EPA increasingly dominates the electricity sector and does so in ways that serve to exacerbate the very 

problems FERC is supposed to protect consumers against. 

Grid security is another growing concern in FERC’s jurisdiction. The electricity 

system faces all the traditional risks from severe weather and earthquakes and the 

like, but we also see emerging threats from things like cyber and EMP attacks. 

FERC’s role in ensuring the security of the grid is more important than ever. 

In some respects America’s energy situation is better than it has been in decades, 

but nonetheless there are challenges in the years ahead and a critical role for FERC 

in dealing with them. 

Mr. WHITFIELD. At this time, I would like to recognize the gentleman from California, Mr. McNerney, for 5 minute opening statement. 

OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. MCNERNEY. I thank the chairman. This is an important 

hearing and I am glad that we have all four of our commissioners 

available here this morning. Our Nation’s electric grid touches all 

of our lives. FERC’s jurisdiction, your jurisdiction, and the cooperation with the States and the stakeholders throughout the transmission and distribution system make it critically important. 

The grid, from both the technological and resource-mix standpoint, is evolving, and it is ours and your responsibility to ensure 

that the public and private sectors are prepared and working together while maintaining reliability, resiliency, and affordability. 

And this is happening at a time when some feel that our electrical grid is our Nation’s most vulnerable section of infrastructure. 

So we have challenges in front of us. Preparing for our future will 

require significant investments in our energy industry infrastructure. Utilities are often the ones leading the way on these efforts, 

but it will require cooperation among all stakeholders to maintain 

and improve our current energy and electrical systems. The needs 

are clear: Reduce carbon emissions; increase efficiency; affordVerDate Nov 24 2008 14:31 Apr 21, 2016 Jkt 037690 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-104 CHRIS
4 

ability, affordable prices for consumers; job creation, reliability; and 

resilience. 

So you know that when you flip on the lights, they will turn on. 

The shift to more natural gas, as well as renewables in places such 

as California, has forced utilities and consumers to rethink how 

they manage electricity. And electricity continues to shift to be consumer-driven with things like demand response, microgrids and the 

Internet of things. Well, these are positive developments, but ones 

that are still relatively new and will need continued oversight from 

FERC and Congress to analyze what works and what doesn’t work. 

There is no shortage of challenges facing our Nation’s energy system. 

We will hear from the commissioners today. FERC is facing a 

daunting task with a seemingly endless increase in the number of 

your requests. Nearly 2 dozen LNG export facility requests now are 

under FERC consideration; approximately 500 hydropower licenses 

in the coming years; the need for timely investments in infrastructure; and the impacts of these and the increased physical and cyber 

threats to the electric grid are tremendous. FERC will be at the 

forefront of each of these, reducing carbon emissions while protecting reliability, increasing physical and cyber resilience while 

managing cost for consumers; fostering development and implementation of policies and technology that supports all grid stakeholders. 

I look forward to your testimony, and I appreciate you taking 

time to be with us today. And with that, Mr. Chairman, I yield 

back. 

Mr. WHITFIELD. Thank you very much. At this time, I would like 

to recognize the chairman of the full committee, Mr. Upton of 

Michigan, for 5 minutes. 

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

Mr. UPTON. Thank you, Mr. Chairman. 

Quite a few energy-related issues in the news today fall under 

FERC’s jurisdiction. So it is important and very timely for this subcommittee to hold this oversight hearing. 

FERC plays a key role regulating the transmission, reliability 

and wholesale sale of electricity and interstate commerce, the 

transmission and sale of natural gas for resale in the interstate 

commerce, and the transportation of oil by pipeline in interstate 

commerce as well. 

FERC is responsible for the approval of interstate natural gas 

pipelines, LNG export facilities, and licensing of non-Federal hydropower projects. America’s growing energy abundance and its growing role as a global energy superpower has led to more infrastructure projects being proposed. 

However, there are problems with the timeliness of FERC approvals. If left unaddressed, these delays may cost us lots of jobs, 

raise energy prices, and compromise reliability. H.R. 8, the North 

American Energy Security and Infrastructure Act, which will be 

considered by the full House tonight and tomorrow and Thursday, 

contains provisions that help expedite the job-creating energy infrastructure projects. First, FERC also has the responsibility related 

5 

to the security of the Nation’s electric grid, including physical and 

cybersecurity threats, geomagnetic disturbances, electromagnetic 

pulse and severe weather. H.R. 8 also includes provisions that seek 

to strengthen our ability to prevent these risks, and minimize the 

impact, when, in fact, they occur. 

FERC and its predecessor agencies have addressed many issues 

since 1920. But over that span, it has never faced a rival Federal 

agency setting policy at odds with FERC’s core mission. In recent 

years, the EPA has taken on such a role, especially related to electricity. In particular, EPA’s so-called Clean Power Plan, which mirrors the regulatory cap and trade scheme that failed to pass in the 

Democratically-controlled Congress in 2010, places severe constraints on coal-fired generation in favor of renewables, jeopardizing reliability and giving priority to greenhouse gas reductions 

over cost considerations in setting the generation mix. Whether 

FERC can effectively fight back against EPA’s agenda when it conflicts with FERC’s responsibilities is a matter of considerable debate. 

There are serious implications for a State like mine, Michigan, 

where affordable and reliable electricity and sufficient supplies of 

natural gas are vital to making it through the long and severe winters. Michigan and other industrial States also need affordable and 

reliable energy for manufacturers to remain globally competitive. 

So I look forward to this important debate on FERC’s current 

and future role. A better functioning FERC matters to jobs and affordable energy. And I yield back the balance of my time. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Quite a few energy-related issues in the news today fall under the Federal Energy 

Regulatory Commission’s (FERC) jurisdiction, so it is important and very timely for 

the Energy and Power Subcommittee to hold this oversight hearing. FERC plays a 

key role regulating the transmission, reliability, and wholesale sale of electricity in 

interstate commerce, the transmission and sale of natural gas for resale in interstate commerce, and the transportation of oil by pipeline in interstate commerce. 

FERC is also responsible for the approval of interstate natural gas pipelines, LNG 

export facilities, and licensing of non-federal hydropower projects. America’s growing 

energy abundance and its growing role as a global energy superpower has led to 

more infrastructure projects being proposed. However, there are problems with the 

timeliness of FERC approvals. If left unaddressed, these delays may cost jobs, raise 

energy prices, and compromise reliability. H.R. 8, the North American Energy Security and Infrastructure Act, which will be considered by the full House later this 

week, contains provisions to help expedite these job-creating energy infrastructure 

projects. 

FERC also has responsibilities related to the security of the nation’s electric grid, 

including physical and cybersecurity threats, geomagnetic disturbances, electromagnetic pulse, and severe weather. H.R. 8 also includes provisions that seek to 

strengthen our ability to prevent these risks and minimize the impact when they 

do occur. 

FERC and its predecessor agencies have addressed many issues since 1920, but 

over that span it has never faced a rival federal agency setting policy at odds with 

FERC’s core mission. But in recent years, the EPA has taken on such a role, especially related to electricity. In particular, EPA’s so-called Clean Power Plan, which 

mirrors the regulatory cap-and-trade scheme that failed to pass a democraticallycontrolled Congress in 2010, places severe constraints on coal-fired generation in 

favor of renewables, jeopardizing reliability and giving priority to greenhouse gas reductions over cost considerations in setting the generation mix. Whether FERC can 

effectively fight back against EPA’s agenda when it conflicts with FERC’s responsibilities is a matter of considerable debate. 

6 

There are serious implications for a state like my home state of Michigan, where 

affordable and reliable electricity and sufficient supplies of natural gas are vital to 

making it through the long and severe winters. Michigan and other industrial states 

also need affordable and reliable energy for our manufacturers to remain globally 

competitive. I look forward to this important debate on FERC’s current and future 

role. A better functioning FERC matters to jobs and affordable energy. 

Mr. WHITFIELD. The gentleman yields back. At this time, the 

chair recognizes the gentleman from New Jersey, Mr. Pallone, for 

5 minutes. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Chairman Whitfield. I want to welcome the commissioners, particularly Chairman Bay and Commissioner Honorable, who are before us for the first time in their current roles. Frankly, this hearing is long overdue. I believe that we 

are in a time of great transition and uncertainty with regard to 

those aspects of our Nation’s energy policy overseen by FERC. 

Ten years ago, we enacted the Energy Policy Act of 2005, and 

that was quickly followed by the Energy Independence and Security Act of 2007. Both of these laws made significant changes to our 

Nation’s energy policies, particularly in the areas regulated by 

FERC. 

We continue to feel the reverberation of those changes today, and 

the commissioners are, in many ways, front and center in having 

to wrestle with the forces unleashed by those laws. In particular, 

we have seen tremendous expansion in the supply transmission 

and use of natural gas as prices have dropped. We have also seen 

a drop in electricity prices as a move towards market has spurred 

competition and innovation in many regions of the country. 

The change is never easy, and with it comes questions, problems 

and new needs. The rise of cheap gas, falling renewable energy 

prices, and tighter competition has really called into question old 

assumptions and boundary lines. It is getting close to the time 

when we will need to consider fundamental questions about what 

areas are best suited for the State to regulate and what should be 

handled by FERC. 

We also need to begin thinking about the diversity of our electricity regulations system and whether or not we need to have 

more certainty and conformity rather than the current patchwork 

of regulated and deregulated States and regional wholesale markets that might benefit from some common ground rules. 

Are these markets providing real benefits to residential and 

other consumers? Are they setting the right price signals to developers of generation resources? What is the role and efficiency and 

demand response in the wholesale market? How do we prevent bad 

actors from manipulating the market while ensuring the rules are 

not overly burdensome for those suppliers who play by the rules. 

These are but a few of the questions before us and before the 

Commission, and the Commission still has to grapple with similar 

questions regarding the gas and markets and pipeline siting, as 

well as dam safety, hydroelectric licensing, oil pipeline pricing, and 

so many other issues. 

7 

I know that we will hear, we already have heard rhetoric about 

EPA’s recent rules on carbon, and not just on the floor this afternoon. The truth is that the grid is reliable and no clean air regulation has ever resulted in the loss of reliability. The system is reliable and it is flexible and will adapt to the new carbon rules, just 

as it has to every previous action taken under the Clean Air Act. 

So I hope that today’s hearing will move on from the tired topic 

and worn out rhetoric that we continue to hear from the other side 

of the aisle. It is time to start having a real dialogue about the 

areas FERC regulates, about the future of our energy markets, natural gas pipeline systems, and hydroelectric resources. If we fail to 

engage soon seriously and thoughtfully, we risk harming consumers, the economy and the environment. 

Thank you, Mr. Chairman, I yield back. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

I want to thank Chairman Whitfield for holding today’s oversight hearing on the 

Federal Energy Regulatory Commission (FERC). I also want to welcome the Commissioners, particularly Chairman Bay and Commissioner Honorable who are before 

us for the first time in their current roles. 

Frankly, this hearing is long overdue. I believe that we are in a time of great 

transition and uncertainty with regard to those aspects of our nation’s energy policy 

overseen by FERC. 

Ten years ago, we enacted the Energy Policy Act of 2005 and that was quickly 

followed by the Energy Independence and Security Act of 2007. Both of these laws 

made significant changes to our nation’s energy policies, particularly in the areas 

regulated by FERC. 

We continue to feel the reverberation of those changes today and the Commissioners are, in many ways, front and center in having to wrestle with the forces unleashed by those laws. 

In particular, we have seen tremendous expansion in the supply, transmission 

and use of natural gas as prices have dropped. We’ve also seen a drop in electricity 

prices as the move toward markets has spurred competition and innovation in many 

regions of the country. 

But change is never easy and with it comes questions, problems and new needs. 

The rise of cheap gas, falling renewable energy prices and tighter competition has 

really called into question old assumptions and boundary lines. It is getting closer 

to the time when we will need to consider fundamental questions about what areas 

are best suited for the state to regulate and what should be handled by FERC. We 

also need to begin thinking about the diversity of our electricity regulation system 

and whether or not we need to have more certainty and conformity rather than the 

current patchwork of regulated and deregulated states and regional wholesale markets that might benefit from some common ground rules. Are these markets providing real benefits to residential and other consumers? Are they sending the right 

price signals to developers of generation resources? What is the role of efficiency and 

demand response in the wholesale market? How do we prevent bad actors from manipulating the market while ensuring the rules are not overly burdensome for those 

suppliers who play by the rules? 

These are but a few of the questions before us and before the Commission. And, 

the Commission still has to grapple with similar questions regarding the gas markets and pipeline siting, as well as dam safety, hydroelectric licensing, oil pipeline 

pricing and so many other issues. 

I know that we will hear rhetoric today about EPA’s recent rules on carbon—and 

not just on the floor this afternoon. But the truth is that the grid is reliable and 

no Clean Air Act regulation has ever resulted in a loss of reliability. The system 

is reliable and it is flexible and it will adapt to the new carbon rules just as it has 

to every previous action taken under the Clean Air Act. 

I hope that today’s hearing will move on from that tired topic and worn out rhetoric. It’s time to start having a real dialogue about the areas FERC regulates, about 

the future of our energy markets, natural gas pipeline systems, and hydroelectric 

resources. If we fail to engage soon, seriously and thoughtfully, we risk harming 

consumers, the economy and the environment. 

8 

Thank you. 

Mr. WHITFIELD. The gentleman yields back. And that concludes 

our opening statements, so we will get right to our panel. And I 

am going to introduce each one of you right before you give your 

opening statements. 

So we will start this morning with the Chairman, the Honorable 

Norman Bay, and thank you very much for being with us Mr. Bay. 

We look forward to your testimony. You are recognized for 5 minutes. 

STATEMENTS OF HON. NORMAN C. BAY, CHAIRMAN, FEDERAL 

ENERGY REGULATORY COMMISSION; HON. CHERYL A. LAFLEUR, COMMISSIONER, FEDERAL ENERGY REGULATORY 

COMMISSION; HON. TONY CLARK, COMMISSIONER, FEDERAL 

ENERGY REGULATORY COMMISSION; AND HON. COLETTE D. 

HONORABLE, COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION. 

STATEMENT OF HON. NORMAN C. BAY 

Mr. BAY. Thank you. Good morning, Chairman Whitfield, Ranking Member McNerney and members of the committee. Thank you 

for the opportunity to appear before you to discuss the work of the 

Federal Energy Regulatory Commission. My testimony will discuss 

my priorities in light of the change that is happening in the energy 

space, a change a number of you have alluded to this morning. 

Underpinning each of these priorities is a belief that in approaching matters that come before the Commission, it is essential to be 

fair, balanced, and pragmatic to decide cases on the merits based 

on the facts and the law and to be consensus-oriented. 

My first priority is to focus on the fundamentals in the competitive markets, to continue to look for ways to improve the efficiency 

of the markets, and to deliver greater value to consumers. The 

Commission continues to work to promote greater efficiency, competition and transparency in the wholesale markets, including and 

reviewing the capacity markets and looking at price formation in 

the energy markets. 

Second, the reliability of the grid is a core responsibility for the 

Commission. This encompasses not only the everyday responsibility 

over reliability standards, including physical security and 

cybersecurity, but it also includes gas-electric coordination issues. 

While the Commission’s reliability authority is limited, it will continue to use what authority it has in a conscientious manner. In 

my view, it is important for utilities to push beyond the requirements of the standards to implement best practices on 

cybersecurity. 

Third, I believe that infrastructure continues to be an important 

issue at the Commission. Right now, there is a need for more infrastructure in terms of both gas facilities and electric transmission, 

and FERC plays a critical role in permitting and incenting the development of that infrastructure. 

Finally, to accomplish my priorities, I will need to focus on the 

human capital at the Commission. The work of the Commission 

cannot be done without its outstanding staff. And it is important 

to me that the Commission focus on retaining our current highly 

9 

qualified employees, ensure knowledge transfer from those employees who do retire, and recruit highly-skilled people to replace any 

departures while maintaining our status as one of the very best 

places to work in government. 

I am very proud of the fact that the recent Federal employee 

viewpoint survey ranked FERC one of the very best agencies in 

government. We were third overall for employee satisfaction among 

large government agencies. We were fourth in terms of employee 

engagement. The challenge is that in the next few years, 30 percent of our workforce is eligible to retire. 

To meet all of these priorities, it is essential to use the tools that 

Congress has given the Commission. I look forward to working 

with you in the future on my priorities, and would be happy to answer any questions that you have. Thank you. 

[The prepared statement of Mr. Bay follows:] 

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Mr. WHITFIELD. Thank you very much, Chairman Bay. Our next 

witness is the Honorable Cheryl LaFleur. We are delighted you are 

back with us, Ms. LaFleur, and look forward to your testimony. 

You are recognized for 5 minutes. 

STATEMENT OF HON. CHERYL A. LAFLEUR 

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

Congressman McNerney, and members of the subcommittee. I am 

Cheryl LaFleur, I have been on the Commission since 2010; appeared before this committee several times, and was also honored 

to be chairman from November 2013 to April 2015. I appreciate 

your holding this hearing and the opportunity to testify. 

Since joining the Commission, my top priority has been reliability, focused on the reliability of the Nation’s electric grid. And 

I am going to devote my comments this morning to two aspects of 

our work on reliability, the reliability standards, and the competitive market. 

The Commission oversees the work of NERC, the North American Electric Reliability Corporation, in developing and implementing mandatory reliability standards for the bulk electric system. And I know the committee is aware this is one of the only 

pieces of critical infrastructure subject to mandatory standards, 

thanks to Congress’ work in 2005. The standards range from nutsand-bolts rule to keep the lights on, and more forward-looking 

standards on emerging issues. And on the emerging issues, in particular, we have worked hard to try to put in place meaningful 

cost-effective protections, even though things are changing and we 

know our knowledge is imperfect. 

In March of last year, the Commission directed NERC to develop 

physical security standards for critical facilities. Those done, approved in November and are now in place and being implemented. 

Since the beginning of our authority, we have worked on 

cybersecurity, a growing challenge that was recognized specifically 

by Congress in the Energy Policy Act. In late 2013, we approved 

a fifth generation of cybersecurity that requires that all cyber assets on the bulk electric system receive a level of protection commensurate with their impact on the system. 

Also in 2013, we directed NERC to develop standards to address 

field magnetic disturbances caused by solar storms. This issue is 

one I have been very personally involved in, given—and I am concerned about given the potentially catastrophic effects that a GMD 

event could have on the Nation. The first set of standards is already in place, it calls for operating procedures: What happens if 

a storm happens? What kind of immediate steps do you take? 

What we are working on right now is a more comprehensive set 

of standards that would require transmission owners to put in 

place mitigation to prepare for, if a GMD event happened, to limit 

its effect on the bulk electric system, and those are pending right 

now. 

Secondly, I want to talk about wholesale electric markets, because they also relate to reliability because that is what they are 

for, to ensure reliability at just and reasonable rates. Two-thirds of 

the Nation are served by organized wholesale electric markets, although those markets differ in what kind of products they work on. 

19 

The markets have been expanding. In recent years, we have seen 

huge additions to the mid-continent ISO, the Southwest Power 

Pool, and most recently, the California ISO with its Energy Imbalance Market. 

The market operators across the Nation are working to adapt 

market structures to big changes in the Nation’s generation resource mix set, several of you have already referred to. These 

changes are being driven primarily by the increased use of domestic natural gas, the growth of renewable generation and demand 

side technologies, and new environmental requirements, especially 

the Mercury and Air Toxic Standards, and the Clean Power Plan. 

When so much is changing, and in many places we have a need 

for new investment, it is particularly important that markets send 

accurate price signals, both to existing resources, so they can stay 

in place if needed, and new resources where they are needed. We 

have been focused very hard on making sure the markets do just 

that. In the last year and a half, we approved capacity market 

changes in the eastern RTOs to help the markets identify and buy 

resources that will perform at the time when they are both most 

needed to keep the lights on, because the system is under stress, 

particularly baseload resources. 

We are also examining the energy markets, trying to make sure 

that the energy prices include all the things it takes to keep the 

lights on so they send accurate and transparent price signals, and 

we have been working on price formation and have several dockets 

started in that area. 

Finally, we are focused on gas-electric interdependence, due to 

the increased use the gas for generation. We have put out rules to 

better harmonize scheduling of the gas and electric markets, and 

promote communication between them, that are intended to help 

sustain reliability at a time when the gas system is stressed, both 

by generation and heating load in the winter. 

Finally, I know my colleagues are going to discuss it as well, but 

we have been engaged with the Environmental Protection Agency 

for the last several years on the Mercury and Air Toxic Standards, 

as it goes into place in different regions of the country, and really 

just starting our work, or we have been involved in it, but the implementing is just starting on the Clean Power Plan, which is 

something we will be very focused on in the next several years. 

Thank you and I look forward to your questions. 

[The prepared statement of Ms. LaFleur follows:] 

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Mr. WHITFIELD. Thank you very much. Our next witness is the 

Honorable Tony Clark. Mr. Clark, welcome back and we look forward to your testimony and you are recognized for 5 minutes. 

STATEMENT OF HON. TONY CLARK 

Mr. CLARK. Thank you, Mr. Chairman and members of the committee, Mr. Ranking Member, for the invitation to be with you here 

today. My name is Tony Clark, and I am honored to be a commissioner on the Federal Regulatory Agency since June of 2012. 

I don’t plan to re-read my testimony verbatim for you, but what 

I would like to draw your attention to a few points, and perhaps 

expand on a few ideas and comments that I made in my submitted 

testimony. 

The nature of my testimony is focused on those areas of Commission jurisdiction that relate to infrastructure development. The 

Commission has a lot of impact on infrastructure development of 

all kinds, be it generation, electric transmission. But most clearly 

where we have the greatest authority is over those areas where we 

have not only economic jurisdiction, but siting jurisdiction as well, 

which is the case of hydropower and interstate natural gas pipelines. So the bulk of my testimony focuses on that, and then transitions to the importance of infrastructure in regard to EPA’s 111(d) 

regulation. 

On the hydropower side, the Commission has been active in implementing the Hydropower Regulatory Efficiency Act of 2013 that 

you all passed, and that has been going well. 

I draw your attention to just a couple of things under that in the 

testimony. What I think is really important to folks in going forward is what Ranking Member McNerney pointed out, which is 

that we are entering a period in which there are going to be a lot 

of licenses that are coming up for renewal. As all of you who are 

members who have those hydropowered licenses in your district 

know, those can become contentious issues, the sorts of things that 

your constituents want to keep abreast of. So it is something that 

I know FERC will want to be working with all of you in terms of 

getting information out about how that process evolved and how it 

worked. It is going to be a great undertaking for the Commission. 

I spent the rest of the bulk of my testimony talking about the 

issue of interstate natural gas pipelines, one of the tables that I 

submitted in there indicates that as of up to this point, we are 

within the historical norm of the number of certificates that the 

Commission has been processing in terms of compression, throughput and the number of applications that we have been getting. 

Something that I really want to draw your attention to are the 

challenges that the Commission is going to face on a going-forward 

basis. This expands upon my testimony here. If you look at the 

number of pending applications that we have, as compared to the 

historical trend, we are truly seeing the impact of low-cost natural 

gas, and the environmental regulations which are shutting down 

coal and really requiring utilities to have some combination of natural gas and renewables. 

If you look at August of 2014, the Commission had pending pipeline projects of about 24 Bcf per day, and about 1,000 miles of pipe. 

If you fast forward just about a year later to November of this year, 

30 

the number of pending applications we have is 50 Bcf per day capacity, so over a doubling in just 1 year, and 4,600 miles of pipe. 

The Commission is very proud that up to this point, we have been 

able to process in 92 percent of all cases, pipeline applications. 

Within a year, I think it is going to be very difficult to maintain 

that high average when you have this volume of pipelines. 

And this is where I get into the 111(d) regulations, and I think 

it is important for the committee to understand the challenge that 

regulators at all levels are going to be facing, Federal level and 

state, which is, there are tremendous infrastructure needs in terms 

of pipeline development, in terms of generation on the state side 

of things, in terms of transmission. But all of this is being done in 

a time when we have heightened opposition to that very infrastructure itself. And it is very important to understand that in terms 

of where the 111(d) regulations are going in terms of timing. Although the EPA did extend timelines for compliance for states by 

up to 2 years. If you remember the timelines on that, in many 

states, utilities won’t be receiving the state implementation plans 

until about 2018, compliance timeline begins in 2022. And yet, it 

is quite clear, at least historically, that it takes, for major pipeline 

projects and certainly for interstate electric transmission projects, 

it is a 3 to 5 to 12 years or more timeline to develop that infrastructure. 

The concern is, if you make a rapid transition to a new electric 

generation fleet before you have the infrastructure in place to accommodate that change, there will be an impact on cost and that 

has been the case just about everywhere that that transition has 

been made, but you don’t have the adequate infrastructure. So it 

is going to place a lot of pressure on agencies like FERC to ensure 

that as we go through our processes, that we do it right, but it is 

going to create a timeline challenge, I think, potentially a consumer 

challenge as well. 

I finally wrap up my testimony just indicating that where we 

stand on the CPP is often where you sit, and this plan does not 

burden all states equally. So there are certain parts of the country, 

certain states that shoulder a much greater burden under this, and 

will have a much more difficult time meeting it than other parts 

of the country. 

Mr. Chairman, with that, I will be happy to take any questions 

that—— 

[The prepared statement of Ms. Clark follows:] 

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Mr. WHITFIELD. Thank you very much. And our remaining witness is the Honorable Colette Honorable. And we appreciate your 

being with us today, and look forward to your testimony. You are 

recognized for 5 minutes. 

STATEMENT OF HON. COLETTE D. HONORABLE 

Ms. HONORABLE. Thank you, Mr. Chairman, Ranking Member 

McNerney, and members of the subcommittee, good morning. My 

name is Colette Honorable. And as ranking member of the full 

committee, Mr. Pallone referenced, Congressman Pallone referenced, this is my first appearance before this subcommittee. I am 

grateful for the opportunity. 

Prior to joining the Federal Energy Regulatory Commission, I 

served as chairman and commissioner at the Arkansas Public Service Commission for 7 years, I also served as president of the National Association of Regulatory Utility Commissioners, and it gave 

me an opportunity to get to interact with a number of states that 

come from different places, different ideologies, and it gave me a 

great appreciation for the diversity in states and regions. 

It also allowed me to continue my focus here in my present role 

on reliability, on infrastructure development, a new focus for me, 

markets, and also continuing to work on workforce development 

issues. 

Our mission at FERC is to regulate the interstate transmission 

of electricity, natural gas and oil. This work is especially significant 

because our economy is increasingly dependent upon reliable and 

affordable energy. 

My written testimony goes into more detail regarding my 

thoughts about reliability and infrastructure development and markets, but this morning, I would like to focus on something you want 

to hear about, and that is our interaction with the EPA concerning 

the Clean Power Plan. 

Our focus on the EPA’s Clean Power Plan finalized in August 

has involved engagement, collaboration and outreach with a diverse group of stakeholders. In early 2015, the Commission hosted 

four technical conferences on whether and how the plan would impact reliability of the bulk power system. We heard from state regulators, from utilities, from regional system operators, from environmental groups, and consumer organizations. 

These conferences raised a host of issues that informed the Commission’s advice and counsel in a letter we sent to the EPA in May 

of 2015. In this unanimous document, we advised the EPA to consider revising its interim compliance timeline in the draft plan to 

ensure flexibility in the early years of compliance. We also encouraged the EPA to consider including both a reliability safety valve, 

which would allow the Commission to work with the EPA to address temporary unexpected impacts on reliability, and a forwardthinking process to provide for ongoing reliability, monitoring an 

assistance which would rely upon existing planning procedures in 

States and regions to initially review State plans for potential reliability concerns. The EPA accepted our recommendations in the 

final rule. 

Going forward, FERC stands ready to support the work of the 

states, the regions and NERC, and other reliability entities. The 

40 

Commission has offered to review analyses or requests additional 

assessments as necessary. We continue holding technical conferences or other workshops as states and utilities will begin complying with the rule, and pursuant to a joint staff-working document that informs our interagency work, we will continue participating in future discussions with the EPA and the Department of 

Energy, and others as necessary. 

Since the issuance of the Clean Power Plan, I have continued my 

engagement with diverse groups. For instance, in October, I participated in a workshop hosted by the bipartisan policy center in the 

Great Plains Institute, which focused on compliance in the Midwest. Although most of these states are challenging the rule in 

court, many are also working on compliance plans should the plan 

be upheld. 

For example, agencies in my home State of Arkansas are evaluating compliance options, even though the State has joined the litigation. And 13 other states have reportedly indicated that they will 

follow a similar path. I mention this to say that many states are 

on a dual path. 

A number of studies indicate that if the rule is upheld, fully contemplated compliance plans will have considerable potential to reduce compliance costs, particularly those undertaken in regional efforts. In the Midwest, both the Southwest Power Pool and the 

Midcontinent Independent System Operator has released studies 

completing that regional compliance with the Clean Power Plan is 

more efficient, less costly, and, therefore, better for consumers. It 

is imperative that all effective stakeholders engage and work collaboratively to maintain reliability, while minimizing any potential 

cost impacts of plan implementation. 

I would like to take this opportunity to show my appreciation for 

our staff, which have worked very hard in this regard, and also to 

support the ongoing work in the sector by industry, regulators and 

other stakeholders, which is vital for a thriving economy. We take 

our job seriously, and I am proud to be a member of the Commission at this time. I am also appreciative and grateful for the important oversight work of the Energy and Power Subcommittee. I look 

forward to working with you throughout my tenure, and I stand 

ready to answer my questions you may have. Thank you. 

[The prepared statement of Ms. Honorable follows:] 

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Mr. WHITFIELD. Well, thank you for your testimony. And we appreciate all of you for your opening comments. At this time, we will 

open it up for questions from the members of the subcommittee. 

And I would like to recognize myself for 5 minutes to begin with. 

We all recognize we have different political philosophies in different regions of the country that we come from, and as a result 

of that, we have a lot of different views on a lot of these key issues. 

But the Federal Power Act was very explicit that interstate electricity transmission authority was given to FERC, wholesale prices 

issues were given to FERC. And the states maintain control over 

electricity generation in intra-state distribution, and yet the clean 

energy plan gives EPA a lot of authority, in fact, immense authority on what has traditionally been a state responsibility. 

And this was done without any legislation being involved; it was 

done by regulation. And we heard EPA talk a lot about how they 

worked extensively with the states; they want to give the states 

maximum flexibility. And yet, 27 states have filed lawsuits on this 

as well as a multitude of other entities. And then one of the surprising things for many of us, and Mr. Clark touched on this, was 

these timelines, in trying to make this transition with the infrastructure needs that we have, EPA frequently, on major regulations, to give states up to 3 years. And yet in this instance, they 

are giving them until September of 2016. So—and Ms. Honorable, 

you came from Arkansas, and you were on the public service commission there, I believe, and your state has filed a lawsuit as well. 

So it is one thing for EPA, as a regulatory body in order to implement the President’s Clean Energy Plan, to come with this unprecedented regulation. And I understand people say, Oh, it is all the 

about politics, but it is more about politics; it is about existing 

laws; it is about customary ways that we do business in the country. And that is why I think you see so many lawsuits. But I would 

like for you, Mr. Clark, just to expand a little bit on this timeline 

issue that you touched on, and just give us some practical insight 

into that just from the standpoint of, say, North Dakota. 

Mr. CLARK. Sure, thank for the question, Mr. Chairman. My concern about the timeline that, say, you have the 2016 timeline, you 

have the possibility for states to push that out if they request from 

EPA to about 2018 for the State Implementation Plan, should they 

decide to go that route. 

The compliance targets begin in 2022, some of them are quite 

steep for certain states, will be challenging to me. For example, a 

State like North Dakota, whose target emissions reduction went 

from 11 percent in the draft to 45 percent in the final rule. 

Mr. WHITFIELD. Kentucky went from 18 to 41. And all of those 

caps were set by EPA. 

Mr. CLARK. It is the math, every state is impacted differently by 

the math, and the manner in which the historical generation plate 

is operated. So for some states, it is a bit of a non event for some 

states, depending on the vintage and type of fleet that they have. 

It will be much more of an event. 

The concern with the timeline is, for a pipeline project, any sort 

of major pipeline project, 3 to 5 years is probably a conservative 

timeframe implement—from engineering and permitting to construction and in service states. 

51 

Electric transmission lines typically are even more difficult than 

that. Five years to 10 might be a little bit more average. Heaven 

forbid, you cross any Federal land as happens out west. It could be 

12, 15 years to get all the permits that you need to do for a major 

electric transmission line. 

And so that is the concern. If you are going to change dramatically the generation fleet and you need to have a lot more renewables, which really only work over a larger geographic area, and 

you will need a lot more natural gas to back up those renewables 

or to replace baseload coal that may be going off-line. It is going 

to require some major infrastructure projects. We are starting to 

see it on the gas transmission side, likely happen on the electric 

transmission side. These are not projects that are conceived of, permitted and built within a very short timeframe. And the concern 

is, if you change that generation fleet, it could end up costing consumers. 

Mr. WHITFIELD. Well, thank you very much. I had a couple of 

other questions, and my time has already expired. So, Mr. 

McNerney, you are recognized for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. Again, I thank the 

commissioners for coming today. I got a lot out of all of your testimony, so thank you for your work. And this is an area that I care 

a lot about. I spent 20 years in the energy industry before coming 

to Congress. 

Mr. Chairman, do you have a mission statement, or does the 

Commission have a mission statement? Could you sort of paraphrase what that statement is? 

Mr. BAY. Yes. FERC does have a mission statement. And it is to 

provide efficient, reliable, and sustainable energy to consumers. 

That has been our mission statement for some time now. 

Mr. MCNERNEY. Sustainable, hmm, that is a whole different subject. Now, considering reliability, that is one of your primary missions is reliability. Do you feel, Mr. Chairman, that Clean Power 

Plan threatens the reliability of our electrical infrastructure or any 

of our energy infrastructure? 

Mr. BAY. So reliability is one of our core responsibilities, and 

Congress gave us that responsibility in the Energy Policy Act of 

2005. As Commissioner Honorable noted, FERC held a series of 

technical conferences. On reliability and the Clean Power Plan, I 

am pleased to say that the EPA sent someone to each one of those 

technical conferences, and they had a high-level official appear before us and testify. 

We later sent a letter to the EPA with certain recommendations. 

I am pleased to say that all five members of the Commission at the 

time signed that letter. And then the EPA issued its final rule. And 

I think it is noteworthy to focus on certain aspects of the EPA’s 

final rule. One thing it did was to push back the initial compliance 

date from 2020 to 2022. So it allowed industry to have, in the 

states, to have 2 more years. It implemented a reliability assurance 

mechanism in that it required state plans to be reviewed by reliability authority, whether it is NERC, a regional reliability authority, and RTO or ISO, or someone else. 

The EPA also recognized the reliability safety valve, which Commissioner Honorable noted as well. In addition, the EPA glide path 

52 

towards compliance, so that the period 2022 to 2030 is broken up 

into 3-year periods, where if a state fails to hit its target in one 

year, it underachieved in one year, it overachieved in the next, that 

can still help make its requirements, meet its requirements. 

Finally, of course, the EPA built in a lot of flexibility. One of the 

things that they did in the rule to ensure that reliability issues 

could be addressed was that they allowed states to consider using 

emissions credits as a means of achieving compliance. 

The other thing that we have done at FERC is we have entered 

into an agreement with the EPA and the Department of Energy to 

meet on a quarterly basis at the staff level to discuss any potential 

reliability issues. I am pleased to say that staff has held its first 

meeting with the EPA and DOE. So this is something we are going 

to be watching very closely. 

In my view, while it will take a lot of hard work, communication 

and collaboration between FERC, the EPA, DOE, the states, 

NERC, the RTOs, ISOs, and industry, I believe that any potential 

reliability challenges can be addressed. 

Mr. MCNERNEY. Thank you. Honorable LaFleur, do you feel the 

cyber threats and geo threats are more significant threats to reliability than the Clean Power Plan? 

Ms. LAFLEUR. Well, there are different kinds of threats, but I 

would say they are more significant because they are systemic, 

where the Clean Power Plan could have, as several of my colleagues have referred to, different impacts in different areas. Solar 

storm could have an impact over a larger part of the United States. 

They are both things we need to obviously focus on. 

Mr. MCNERNEY. Thank you. Mr. Clark, you mentioned the number of pending applications. What would help, how could Congress 

facilitate your response, the increasing number of applications? 

Mr. CLARK. I think one of the things that Congress could help 

with would be to encourage other agencies that inform the FERC 

siting process, whether it be through LNG siting, whether it be 

through the LNG side of things, whether it be on the pipeline side 

of things. There are a lot of different agencies that inform our process to the degree that they can do their work in a timely manner, 

to inform our process. That would be helpful from a timing standpoint. 

Mr. MCNERNEY. Thank you. Mr. Chairman. 

Mr. WHITFIELD. Yes, sir. At this time, I recognize the gentleman 

from Texas, Mr. Olson, for 5 minutes. 

Mr. OLSON. I thank my friend from Kentucky. And welcome to 

our friends from FERC. You-all’s good morning gets even better, 

because my own State of Texas, it is a fact that fellow Texans take 

care of our own grid for 90 percent of our State. So we don’t get 

impacted but what you do in many cases, but, they are very important to our State. Critically important to our home State of Texas. 

My first question is for you, Mr. Chairman, and Commissioner 

Clark. Chairman Bay, you have talked about the importance of 

building gas-electric infrastructure for quite some time. It was one 

of the key things listed in your Senate confirmation hearing. Obviously, when it comes from an energy state like I do, I want to know 

how resources get to market. And Commissioner Clark, your comments about these supposed pipeline application in the future and 

53 

your testimony talked about how much more dramatic opposition 

to energy projects is becoming. It is out of control. We are going 

from a ‘‘not in my backyard,’’ to a ‘‘not in anybody’s backyard.’’ So 

my question to both of you all is, can we speak for a moment on 

the LNG energy infrastructure, and whether you see any trends on 

efforts to block development? The range is clear, fire at will, no 

agency is spared. Chairman Bay. 

Mr. BAY. Congressman Olson, I think at FERC, we have clearly 

seen increased opposition to infrastructure. One of the things that 

has happened at FERC over the last—at this point, it has probably 

been 15 months or so—is that our open meetings have been disrupted by protesters who will suddenly stand up during our meeting and try to interfere with our meeting. 

So we are clearly seeing that, and even in the field when we are 

holding scoping hearings, it is not uncommon for the staff who do 

those hearings to report back that there seems to be a great deal 

of opposition in many communities to the construction of more infrastructure. 

Mr. OLSON. Commissioner Clark, your comments, sir, on a ‘‘not 

in anybody’s backyard’’ attitude in America right now? 

Mr. CLARK. Sure. Thank you, Congressman, for the question. I 

reference this in my testimony that, for years, the Commission has 

always taken testimony from, say, affected landowners, who might 

prefer that a particular pipeline go on this piece of their property 

as opposed to that piece of the property, or maybe on someone 

else’s property, but it is very specific to the line itself. We have 

seen a bit of a transition, a type of intervention that has appeared 

before the Commission, which is—my testimony, I call it ‘‘just say 

no’’ intervention, which is no infrastructure anywhere. The challenge is that that causes all kinds of reliability and cost impacts 

to consumers if all energy infrastructure is blocked. 

The Commission has a very important job in balancing the interest of all intervenors. The goal of our process is to ensure that the 

Natural Gas Act is faithfully implemented and that the orders that 

we get out are ultimately upheld by a judge who can review it and 

see if the Commission made a recent determination, and we have 

very a fairly good track record in that regard. 

Mr. OLSON. Chairman Bay, as you know, the cost of carbon is 

being discussed in Paris right now at the U.N. Convention on Climate Change. And as a former naval aviator, it seems to me that 

some world leaders are writing, proposing checks that they can’t 

cash. I want to dive down on the cost of carbon, the social cost of 

carbon. FERC has said recently that the cost of carbon ‘‘calculator’’ 

isn’t appropriate for individual LNG projects. You said so in a past 

decision back in June. 

You gave me a long answer in writing. But very shortly, can you 

tell me why it isn’t appropriate to use the cost of carbon for individual projects, why it doesn’t work, sir? 

Mr. BAY. I would have to review that particular order, Congressman Olson. To my knowledge, FERC has not tried to calculate the 

social cost of carbon. It is true that when we are reviewing an infrastructure application, under NEPA, we were required to give a 

‘‘hard look’’ at what the courts require of us, a hard look at environmental look at claims that have been raised. So it may be that 

54 

someone who was protesting the construction of that facility raised 

a claim tying into the cost of carbon. I do know that at the end of 

the day, the Commission did end up permitting that facility, the 

certificate was granted, as you know. 

Mr. OLSON. One final question for you, Chairman Bay. Former 

Chairman Wellinghoff made it his mission to clear a path for energy efficiency, he focused on things, like demand response. As you 

took over as the chairmanship, there were some people who said 

they didn’t know what your number one priority would be. What 

is your number one priority as the chairman of FERC? 

Mr. BAY. I thank you for that question, Congressman Olson. I 

have tried to take a very balanced approach to my role as chairman. As many of the members have noted this morning, we are 

going through this period of tremendous change in energy space. So 

I think it is important for FERC to use the statutory authorities 

that Congress has given FERC to help the markets, market participants and industry adapt to that change while maintaining reliability and just reasonable rates. 

And so, I have been looking at what I have been calling the 

basic, the fundamentals, and that includes authority over wholesale markets, and thus, we have been engaged in this price formation of rulemaking proceeding. We have looked at reliability, and 

as Commissioner LaFluer noted, we have engaged in looking at 

GMD, and we are continuing to work on cybersecurity, gas-electric 

coordination issues. And then, of course, there is infrastructure. 

And that is always going to be an important part of what FERC 

does. 

Mr. OLSON. Thank you. I yield back. 

Mr. WHITFIELD. This time the chair recognizes the gentleman 

from Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, chair and ranking member, for holding 

the hearings. And following up my colleague and neighbor from 

Texas, I would hope my concern is electricity and reliability, I hope 

your goal is to make sure that the lights can turn on, and in August in Texas, we can still have air conditioning. I know FERC’s 

responsibility to maintain the reliability of the grid, but you also 

have a lot of other responsibilities with pipelines, LNG facilities, or 

pipeline rates to name a few. 

Chairman Bay, in your testimony, you cite the many responsibilities FERC is tasked with, including reliability, security and infrastructure. 

Can you provide additional details on FERC staffing and work 

products? Does FERC have the resources and personnel necessary 

to meet the increasing demands placed on the Commission? If you 

could just briefly, because we only have 5 minutes. 

Mr. BAY. That is a very important question that you raise, Congressman Green, in light of the workload that Commissioner Clark 

alluded to, and that workload is real. One of ways that we responded to it administratively is that we have added resources to 

the Office of Energy Projects, and they are going to need more resources. At some point, we may update our budget to Congress; I 

hope you look favorably upon that. But we are trying to respond 

by adding resources to the offices that need them. 

55 

Mr. GREEN. With the growth and natural and implementation of 

the Clean Power Plan, what types of resources does FERC anticipate needing in the future to ensure projects and plants can still 

stay on schedule? Is that being built into the request to the appropriations process? 

Mr. BAY. It certainly will be, and we are responding to that now, 

which is why we added resources to that particular office. 

Mr. GREEN. I still have this concern about permitting approval 

of LNG export facilities. We spent considerable time working on 

these issues, and want to ensure our country’s benefits for the 

nearly 389 trillion cubic feet of gas reserves we possess. Can you 

provide an overview of the current permitting regimen, and have 

you encountered any delays that would slow these important 

projects? 

Mr. BAY. I think the main thing about those projects is that that 

they are complex projects, there has to be a review by staff. We 

worked closely with staff, and we work well as a Commission, to 

review those project applications. As Commissioner Clark noted, 

basically about 90 percent-plus of the projects that we receive are 

certificated within one year after the application is filed with 

FERC. 

So we understand the importance of these projects and doing a 

thorough and timely review, and we are certainly very committed 

to doing that. But clearly, there is a high volume of work now than 

in the past, which is why we are trying to address that by adding 

more resources. 

Mr. GREEN. I have one port in the State of Texas, actually had 

five pieces, tracks that were set aside for five different LNG export 

facilities. I think there is effort to do one in that particular port. 

Chairman Bay, as director of enforcement, your office is responsible for violations and inquiries in the market manipulation. Unlike other Federal agencies, FERC does not have an office of compliance or any other resources to regulate community to address 

questions or answers. This week, the House will take up H.R. 8 

that contains provisions relating to the FERC transparency. Do you 

believe an office of compliance would be of benefit to the regulatory 

community? 

Mr. BAY. In my view, that office is not necessary. Certainly, if 

Congress creates that office, we will do everything that we can to 

implement congressional intent, but if I could, I would just like to 

explain, Congressman Green, the different avenues that an entity 

can pursue with FERC to get guidance. First, there is informal outreach where the company, or the entity, can seek a meeting with 

staff, or even with the Commission, at least if there is not an investigation. 

Second, there is a compliance help desk, so an entity can call 

staff to get guidance. Then there is the no-action letter process. So 

if they want something more than that, they can seek a no-action 

letter from the Commission. And then, of course, an entity has ability to seek a petition for declaratory order from the Commission if 

it seeks greater regulatory certainty. So no-action letter comes from 

staff, the petition from declaratory order comes from the Commission itself. My own view is that given that many avenues an entity 

can use, can pursue to seek guidance from FERC, that it would not 

56 

be necessary to create that office. I would also add that years ago, 

Congress created an Office of Consumer Advocate at FERC, but 

has never sought to fund that office. 

Mr. GREEN. Well, I would hope that if we do create an Office of 

Compliance, we would fund it. It seems like some of things you are 

talking about would be rolled into an Office of Compliance. Mr. 

Chairman, I know I am out of time and thank you for your courtesies. 

Mr. WHITFIELD. Thank you. At this time the gentleman from Illinois, Mr. Shimkus, is recognized for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman, and welcome. I am 

going to get a little parochial. MISO released an issue statement 

acknowledging that no forward planning process exists to ensure 

long-term reliability in southern Illinois. And that reform to its capacity market process may be required to sustain existing investment and drive future investments and help ensure a reliable electricity supply for consumers. Of course, I am in southern Illinois, 

and we have talked about some of the concerns on the most recent 

auction. But so this is kind of a jump off for whoever wants it. How 

does the Commission plan to ensure sufficient existing and new 

generation resources are in place for MISO zone 4? 

Ms. LAFLEUR. Well, thank you, Congressman Shimkus. As you 

know, we can’t specifically discuss zone 4, because there are several 

complaints, including from the state of Illinois, pending before us 

now—— 

Mr. SHIMKUS. But you don’t need to talk about the adjudication. 

This is just a generic question on the question. 

Ms. LAFLEUR. Yes. I think the primary thing we have been doing 

is looking very closely at the way the capacity markets actually define the product and what they call for to make sure that they 

properly pay for what it really takes to keep the lights on. In both 

PJM and ISO New England, they have set up structures where 

they create performance requirements and hold generators to them 

that are, in many cases, baseload generation are the ones that will 

be needed because they can be there at any time when they are 

needed. I think those are the sorts of things that have promised to 

make sure that I think there has been a concern whether there is 

something about baseload generation as being not properly valued, 

and we have to look closely at the market—— 

Mr. SHIMKUS. This follows up on my question. MISO has conceded with your endorsement, the FERC endorsement, to largely 

leave control of resource adequacy to the states. Is that appropriate? 

Ms. LAFLEUR. That is different in different parts of the country. 

In the—— 

Mr. SHIMKUS. I am worried about southern Illinois right now. 

Ms. LAFLEUR. Well, Illinois is in a somewhat unique situation 

because it deregulated generation, has merchant generation, like 

the Eastern markets do. Yet it is in the mid-continent ISO where 

the other states don’t have that system. I think that there will be 

choices to make of both how MISO accommodates the states so different from the rest of them, and how Illinois does it. 

Mr. SHIMKUS. Well, please keep an eye on this. Similarly, Chairman Bay, because we know we have decommissioning of coal-fired 

57 

power plants because of the war on coal, and that is accepted. You 

all have basically said that. We also are concerned about the decommissioning of nuclear power plants now in Illinois because of 

just what Commissioner LaFleur just mentioned. So the question 

is, should baseload generation be compensated for other benefits 

they provide, such as reliable power, providing essential reliable 

services, and fuel diversity that they bring to the market, including 

on-site fuel availability? 

Mr. BAY. One of the things that the Commission has done to try 

to address in a general way that particular concern, Congressman 

Shimkus, is to work on price formation in the energy market itself. 

And so for that reason, the Commission has held a series of technical conferences, and in September, issued a rulemaking that 

seeks to align the settlement periods and dispatch intervals in a 

real time market and then to allow a shortage pricing to be triggered when shortages occur. Those sound very complicated. The 

basic premise is simple, and that is, that resources should be compensated for the value they provide when they provide it. So that 

certainly will help baseload resources that can steadily produce 

power at many different times of the day. And so the hope is that 

with more effective price formation, that that can send better signals to different kinds of resources, including the kinds of baseload 

resources that you noted. 

In addition, the Commission is doing more than that. In November, we issued an order that seeks to gain greater transparency 

into the causes of uplift and uplift drivers in the RTO/ISO markets. 

And we have also signaled that we are going to look at the offer 

price caps in the organized markets as well as mitigation issues. 

So we are doing a whole host of things that are seeking to improve 

the efficiency of the wholesale markets. 

Mr. SHIMKUS. So should this occur in an organized wholesale capacity and energy markets subject to your jurisdiction? 

Ms. LAFLEUR. Well, in Midwest and the southern Illinois as part 

of the mid-continent ISO does not have a mandatory capacity market. Just 2 weeks ago, we denied rehearing on an order allowing 

MISO to continue to have a voluntary capacity market. That would 

be a major change if they went to a mandatory capacity market as 

the eastern states have. So right now, Illinois does have the resource adequacy control because they are not required to participate in the mandatory market. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time, the chair recognizes the gentlelady 

from California, Mrs. Capps, for 5 minutes. 

Mrs. CAPPS. Thank you, Mr. Chairman, for holding this hearing. 

And I thank Chairman Bay and all the commissioners for your testimony today. You have covered the many and varied tasks that 

FERC is responsible for and how these activities directly impact 

the provision, the transport, and reliability of energy from a variety 

of sources. 

However, it is also clear that as we better understand the ramifications of our energy use, we have a greater responsibility to minimize the negative impacts that are associated with our actions. 

And part of this responsibility is to ensure that appropriate sources 

of energy are utilized to minimize harmful emissions through the 

58 

integration of renewables. But we also must look at the impact of 

transporting these dirty fuels. And that is where I would like to 

focus my questions today. 

While this committee has recently been focused on the work of 

the Pipeline and Hazardous Material Safety Administration, or 

PHMSA, FERC also has jurisdiction over certain pipeline regulations. Pipelines are ubiquitous in this country. Whether transporting oil or natural gas, these pipelines crisscross the entire 

country, transporting fuels, both within and between states. And 

depending on the particulars of the pipelines, they are regulated by 

local, state, or Federal groups and agencies. It is also clear that 

transporting fuels and pipelines may have many risks associated 

with them. In my district, we witnessed this danger firsthand when 

the Plains pipeline ruptured and spilled full across the land and 

into the ocean this past May. 

My first question is for Commissioner Tony Clark. Several agencies are responsible for regulating both oil and gas pipelines in various stages of siting construction operations. Can you please explain and elaborate on the responsibility of FERC in regard to both 

oil and natural gas pipelines? 

Mr. CLARK. Sure. Thank you for the question, Congresswoman. 

With regard to oil and liquid pipelines, the Commission’s jurisdiction comes from the Interstate Commerce Act, and is primarily associated with economic regulation of the pipeline and nondiscriminatory access to the pipeline, common carrier-type regulations, but 

does not include safety or the siting of pipelines, things like that, 

which would be either under PHMSA or some combination of 

PHMSA and state and local government. 

In the case of interstate natural gas pipelines, the Commission 

has a much greater degree of oversight of the interstate natural 

gas pipeline. So in addition to the economic regulation, the Commission also oversees the physical siting of the project itself, again, 

with regard to safety, although some of those safety costs work 

their way into FERC jurisdictional tariffs and rates, the actual 

safety regulations themselves would not be FERC jurisdictional. It, 

again, would be—— 

Mrs. CAPPS. As a follow-up, could you please describe how FERC 

ensures that sensitive environments like those in coastal regions of 

my district are not negatively impacted by the siting and construction of natural gas pipelines? 

Mr. CLARK. Sure. Thank you, again, for the question. The way 

that FERC ensures environmental protection is through being the 

lead agency for NEPA reviews on any interstate natural gas pipeline. And so FERC basically plays a role ensuring that all of the 

other agencies that might wish to comment, public which might 

wish to comment, and are able to do so in a way that we have a 

fully-developed record in front of us to ensure that we are meeting 

the environmental standards that are set up, both in the Natural 

Gas Act, but also those requirements that are set forward through 

NEPA. 

Mrs. CAPPS. Thank you. 

For Chairman Bay, while FERC has jurisdiction over some aspects of pipelines, as Commissioner Clark has just outlined, FERC 

is just one of several agencies with pipeline jurisdiction. After the 

59 

Plains oil spill in my district earlier this year, we dealt extensively 

with both the EPA and PHMSA. But it is clear that our communities are relying on many agencies and their cooperation, or lack 

of, to protect our local lands. 

So, Mr. Chairman, does FERC work with other agencies to ensure that the siting and operations of pipelines is done in a way 

to maximize safety and minimize risks? And how does this happen? 

Mr. BAY. Yes. Thank you for the question, Congresswoman 

Capps. During the application process in which a pipeline is seeking to receive a certificate from FERC, as Commissioner Clark 

noted, we have to do a NEPA review. And as part of that NEPA 

review, we have to work with many other agencies; state agencies, 

but Federal agencies as well. And the Federal agencies include 

EPA and PHMSA. And so we work with them. We also work with 

state authorities. And if there is an aspect about the proposed pipeline route that is problematic, certainly we have the authority to 

tell the pipeline to reroute the line. During the application process, 

pipelines will provide alternative routes as well for FERC to consider. And then we have to do an analysis about what which pipeline route seems to be more prudent. 

Mrs. CAPPS. Thank you. I am out of time, Mr. Chairman, but I 

had a follow-up question that I wish I could get a written reply to, 

and that is, the collaboration between FERC and agencies like EPA 

and PHMSA. Are they successful in working together to mitigate 

negative impacts? Or are there opportunities to improve the level 

of collaboration and communication? And, these pipelines make a 

very complex intersection around the country. So if we could get 

that back in writing, I would appreciate it. 

Mr. WHITFIELD. Absolutely. So we will note that. And we hope 

you can get back to us on that. 

At this time, the chair recognizes the gentleman from Ohio, Mr. 

Latta, for 5 minutes. 

Mr. LATTA. Thank you, Mir. Chairman. And to the commissioners today, we greatly appreciate you being here for your testimony. I am going to kind of follow up on the gentlelady from California on questions that she has. It is FERC’s responsibility to 

make information available and notify the public about a project’s 

status and its schedule. FERC staff testified in support of bringing 

this information together in one location on FERC’s Web site. And 

this is addressed to the chairman and Commissioner Clark. Do you 

support the concept of a project dashboard where the public can see 

the schedule established by FERC and the list of actions required 

by each applicable agency to complete permitting? Chairman? 

Mr. BAY. Thank you, Congressman Latta. I think that is an interesting idea. And certainly, I share the goal of providing transparency into the project applications that FERC is considering. 

Currently, that information is available through eLibrary, where 

all the filings relating to a project are placed and where they are 

accessible to the public. It can be harder, I think, for a member of 

the public, however, to find the right document. 

So the idea that you presented is an interesting one. And I would 

like to talk to staff some more, as well as my colleagues on the 

Commission, to get their views. Certainly, though, we support the 

idea providing transparency into the work that we do. 

60 

Mr. LATTA. Thank you. Commissioner Clark? 

Mr. CLARK. Congressman Latta, I think it is an absolutely worthy goal. The issue of transparency into exactly how commission 

processes work is very important in terms of—especially a land 

owner who, for example, may be being contacted by an infrastructure development company, a pipeline company, and doesn’t know 

where to turn to next. And for those of us who live and breathe the 

world of regulation every day, sometimes it can seem simple to maneuver our processes. To someone who has never seen the FERC 

Web page before, they might not be quite so simple. So a look at 

that with fresh eyes is probably something that makes a lot of 

sense. 

Mr. LATTA. Thank you. And, again, both to Commissioner Clark 

but also to the chairman, based on hearing from my constituents’ 

reviews of such as route planning and safety coordination would be 

important to include in this project dashboard to make the information more easily accessible to the public. Would these kinds of 

ideas be included? Chairman? 

Mr. BAY. I am certainly happy to consider those ideas, Congressman Latta. One thing I would note is that FERC actually has a 

toll free number for landowners who have questions or concerns. 

We receive hundreds of calls each year from landowners. The calls 

go to our dispute resolution service. And I am pleased to say that 

they oftentimes can provide helpful information and guidance to 

landowners who have some sort of concern. 

Mr. CLARK. I would concur with the chairman’s comments. I 

would also add that one of the things that I have talked about with 

FERC staff is, as we go out into the public and have scoping meetings and public meetings and things like that as we have talked 

about before, there is a lot more interest in these hearings than we 

have had in the past. Sometimes it is from interveners and folks 

who just simply don’t want infrastructure at all. But what is, I 

think, very important is that we ensure, from a staff standpoint, 

that we continue to ensure that the actual landowner who is affected when they walk into that room has that opportunity to 

speak on the record so that they can have their views known about 

a particular infrastructure project that is directly affecting them. 

And it is getting to be more of a challenge because the hearings— 

there are a certain number of hours, and there is a lot of people 

that show up. But we need to make sure that we have those avenues for people who are directly impacted by the infrastructure. 

Mr. LATTA. Thank you. And, Commissioner Clark, I understand 

that under the Clean Power Plan, municipal electrics and a rural 

electric cooperative that are not currently regulated by State public 

utility commissions would be required to come under State regulatory jurisdiction for purposes of the Clean Power Plan compliance. In your experience, is this a dramatic change? And how will 

this impact the ways munies and co-ops do business in the future? 

Mr. CLARK. Congressman Latta, I think depending on the state, 

and how the state decides to go about an implementation plan, or 

a Federal implementation plan, it could be a big change. I know 

in my home State of North Dakota it would be. The issue is that 

you are effectively requiring a state to come up with a sort of carbon integrated resource plan for the state as a whole. Obviously 

61 

municipals and co-ops are a big player in certain states, but traditionally have not been regulated in an integrated resource plan 

way that traditional utilities have been. So depending on the state, 

it could be a big change. 

Mr. LATTA. Thank you very much. 

And, Mr. Chairman, my time is about to expire. And I yield back. 

Mr. WHITFIELD. Gentleman yields back. 

At this time, the Chair recognizes the gentleman from Pennsylvania, Mr. Doyle, for 5 minutes. 

Mr. DOYLE. Thank you, Mr. Chairman. And Chairman Bay and 

members of the Commission, welcome. And thank you for appearing before the committee today. 

Commissioner Honorable, welcome to your first hearing. In your 

testimony, you mention reliability measures in the final rules of 

the Clean Power Plan. And one of the concerns that I have voiced 

repeatedly in these hearings is that the Clean Power Plan may 

jeopardize our fuel diversity. And in particular, that we could lose 

baseload power like coal and nuclear. Do you share these concerns? 

And if so, what do we do about that? 

Ms. HONORABLE. Thank you for the question, Congressman 

Doyle, and thank you for the welcome. I, indeed, share your concerns, even hearkening back to my days as a state regulator. I believe that fuel diversity is really key in ensuring reliability in going 

forward, even in these dynamic times. Even aside from the implementation of the Clean Power Plan, industry and states are already moving toward cleaner and more efficient energy portfolios. 

And so, it is imperative that we protect fuel diversity. I believe we 

need it all, and we especially will going forward. 

Mr. DOYLE. Thank you. Commissioner LaFleur, in your testimony, you highlight the recent shift in resources used to generate 

power. And you go on to highlight FERC’s oversight of capacity and 

where it could change to ensure reliability as properly valued and 

sustained. So given the pressure from markets and rules like the 

new Clean Power Plan that shift away from traditional baseload 

sources of power, what is FERC doing to ensure our constituents 

that we can turn on the lights when they are needed most? 

Ms. LAFLEUR. Well, thank you, Congressman Doyle. I think we 

are really working on several fronts. First of all, in the markets, 

we are trying to make sure that the markets properly and transparently value the reliability, including the reliability that baseload 

provides. And that has resulted in changes in the capacity market 

and ongoing work that may lead to changes in the energy market 

to make sure that those resources, especially the existing resources, 

are fairly paid for what they contribute. Secondly, the reliability 

standards have a role in making sure that essential reliability services, things like Black start and voltage support, that some of those 

big plans provide are properly accounted for and required. And 

there is a lot of work going on under the auspices of NERC to 

adapt the standards to changes in power supply. 

And finally, I think we need to work closely with the EPA as we 

did on MATS so that as implementation starts, we keep an eye on 

regions of the country that may have an issue and be there early 

enough to intervene if we need to. 

62 

Mr. DOYLE. I know in light of the polar vortex at PJM included 

additional capacity performance standards in their markets. Do 

you think that they properly value baseload power? 

Ms. LAFLEUR. Well, we do have a rehearing pending, but I voted 

for the order and strongly supported the early order because I 

thought that it was a fuel-neutral way to define what reliability 

meant in a way that, yes, it has an impact on baseload power, but 

it was defined in a neutral and fair way. So I supported that order. 

Now we are starting to see the results, and we will be looking very 

closely as it is implemented. 

Mr. DOYLE. And since the adoption of those reforms, have you 

seen any adverse effect on renewables, demand response, energy efficiency, or any other non-baseload products in PJM? 

Ms. LAFLEUR. Well, there has only been one transitional auction 

run so far, but no. 

Mr. DOYLE. I want to talk briefly, too, about cybersecurity, because I believe that is very important, too. And, Commissioner, you 

have mentioned the growing importance of that and how this presents a relatively new challenge for FERC. You said that these 

issues present different challenges and continue to say, in many 

cases, we don’t have the benefit of decades of experience to draw 

upon. Well, 

I am proud to point out that we do have decades of experience 

in Western Pennsylvania, particularly at Carnegie Mellon University CyLab, which is a global leader in this field. And to what extent can FERC grow and develop relationships with institutions 

like CyLab to ensure our grid remains secure? 

Ms. LAFLEUR. Well, institutes like Carnegie Mellon are doing 

critically important work. And we do have an office of energy infrastructure security. They don’t work on standards, but they work on 

collaborative relationships with universities, industry, and other 

agencies. And we would welcome more engagement with Carnegie 

Mellon. One of the things that is going on at the university level 

that I think is so critical right now is designing parts of the grid 

to build in more resilience on the front end. So we will get away 

from standards and retrofitting and really building the grid better. 

That is where the future lies. 

Mr. DOYLE. Thank you, Mr. Chairman. I yield back. 

Mr. WHITFIELD. Gentleman yields back. 

At this time, the chair recognizes the gentleman from Mississippi, Mr. Harper, for 5 minutes. 

Mr. HARPER. Thank you, Mr. Chairman. And thanks to each of 

you for being here and the work that you are doing. Chairman Bay, 

if I may ask you, many retail tariffs allow net metering of consumption of electric power by end use customers against on-site 

generating sources. In particular, we are seeing a proliferation of 

these on-site rooftop solar arrays by commercial and residential retail customers. The cost of distribution grid and transmission grid 

are interconnected, and both constitute the stream of interstate 

commerce. Should FERC exert jurisdiction over net metering arrangements in any respect? 

Mr. BAY. The Commission issued an order in 2009, Congressman 

Harper, called Sun Edison, in which the Commission ruled that 

rooftop solar was not subject to FERC’s jurisdiction over wholesale 

63 

markets as long as, during the relevant billing period, the person 

who owned the rooftop facility or unit was a net user, not a net 

seller of energy. And so that has been the line that FERC has 

drawn in its order. And I think it is important to note that that 

order, as a result, respects traditional state authority in this area. 

One concern that I think some would have were FERC to go further, would be a fairly dramatic preemption of state authority by 

FERC. And so, I think that poses some real questions about where 

you want to draw that line regarding the allocation of authority between a Federal Government and the states. 

Mr. HARPER. Yes, sir. You know, of course, technically, you could 

argue that these net metering arrangements constitute a wholesale 

sale. And wholesale sales are expressly identified in the Federal 

Power Act as being FERC jurisdictional. So with that, why isn’t 

FERC exerting jurisdiction over them? 

Mr. BAY. Well, as I said, there is that decision from 2009, Sun 

Edison, which is the controlling FERC precedent now. 

Mr. HARPER. Right. Has there been any thought on revisiting 

that? 

Mr. BAY. Well, certainly, I have heard rumors that we may be 

receiving a complaint from different entities in industry regarding 

this very issue. But when you look at the Federal Power Act, the 

purpose of it, when Congress passed it decades ago, was to ensure 

competition in the markets, and to ensure that rates remain just 

and reasonable. And so, to my mind, it is not clear that when Congress passed this law, it intended some individual who has a rooftop solar unit to be viewed as a utility within the meaning of the 

Federal Power Act, and to be subject to Federal regulation. 

And I think the further argument can be made that those kinds 

of units, far from impeding competition, are actually furthering it. 

So I think that there are a number of arguments there, not only 

based on the language and the history of the Act, but also based 

on a traditional recognition of state sovereignty in the area. 

Mr. HARPER. Chairman Bay, I appreciate your insight on that. 

But, while a companion memorandum of understanding to the final 

Clean Power Plan rule outlines conferencing powers between the 

EPA, FERC, and DOE, neither that Memorandum of Understanding nor the final rule provide for a formal role or process for 

the Commission to carry out its statutory duty to maintain reliability. As a practical matter, how will the Commission actually ensure reliability as the CPP is implemented? And what will the 

Commission’s role be in the event reliability and environmental 

regulations conflict? 

Mr. BAY. Thank you for the question, Congressman Harper. One 

of our core responsibilities is reliability. And we are going to remain very engaged on reliability issues and any potential reliability 

issues relating to the Clean Power Plan. So we have already entered into this agreement with the DOE and EPA to have staff 

meet on a quarterly basis. As I indicated, staff has already met. 

And we are going to be monitoring what happens during the process. And also a potential resource, if States have questions of us, 

with respect to their plans. And as Commissioner Honorable noted, 

if necessary, we will hold technical conferences and do other followVerDate Nov 24 2008 14:31 Apr 21, 2016 Jkt 037690 PO 00000 Frm 00069 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-104 CHRIS
64 

up. But I want to assure you that we are very engaged on this 

issue. 

Mr. HARPER. Do you think reliability may become subject to litigated outcomes? 

Mr. BAY. Not clear to me since there is a reliability safety valve, 

and there is basically this glide path towards compliance. So we 

will have to see what happens. 

Mr. HARPER. Thank you. And I appreciate that very much, 

Chairman Bay, and I yield back. 

Mr. WHITFIELD. The gentleman yields back. At this time, the 

chair recognizes the gentleman from New York, Mr. Tonko, for 5 

minutes. 

Mr. TONKO. Thank you, Mr. Chair. I know numerous Members 

of the House and Senate have expressed their concerns with the 

pipeline permitting process. And, Mr. Chair, your testimony states 

that there is a need for more natural gas pipeline infrastructure. 

I don’t necessarily disagree, but I do know many communities to 

which these pipelines pass have legitimate concerns about safety, 

noise, and air and water pollution from construction and the operation of those associated facilities. 

And I know Commissioner Clark’s testimony mentions a ‘‘just 

say no’’ attitude to any new project. That might be the case for 

some, but there are many, many people that have legitimate concerns and believe the public has been shut out of the process. So, 

Mr. Chair, can you explain FERC’s public comment process for 

pipeline siting? 

Mr. BAY. Thank you for the question, Congressman Tonko. FERC 

tries to provide a tremendous amount of process to stakeholders 

who could have an interest in a pipeline project. And so, throughout the process, whether it is pre-filing when scoping meetings are 

being held, or even after a filing has been made by the project developer, we welcome comments from the public. And so, there are 

many ways that people can get those comments to us. They can get 

those comments to us at the meetings, the scoping meetings that 

are held. But they can also send us written comments as well. And 

those comments will be made part of the record. 

But it is very important for us to hear from members of the public who have an interest in the project, whether they are for it or 

against it, and for us to consider those comments when we evaluate 

the project. 

Mr. TONKO. And just specifically, how does FERC proactively 

conduct its outreach to affected communities? 

Mr. BAY. One thing that we do is to provide notice of the scoping 

meetings that we hold. And so those notices go out to communities 

along the path of the pipeline. They typically last for several hours. 

There is a court reporter there. The meeting can be transcribed. So 

that is one of the ways we get notice to the public. But certainly, 

throughout this process, staff tries to make clear to the public that 

their comments are welcomed, and that they can submit those comments to FERC for FERC’s consideration. 

Mr. TONKO. And then how are comments from Federal, state, 

and local officials, as well as the general public considered, particularly concerning the request to extend those deadlines that are associated with the review process? 

65 

Mr. BAY. So we certainly consider the requests of other officials 

as well, including state officials; and we then decide, when we get 

those requests, whether or not more time is warranted. I should 

note that even if a formal window has closed with respect to some 

stage of the processing of an application, if a member of the public 

submits a comment, that can still be made part of the record. So 

it is not like the door is slammed shut on someone. 

Mr. TONKO. And have you found engaging local stakeholders to 

be productive in determining the appropriateness of a project or its 

scope? 

Mr. BAY. I think it is critical that we engage with local stakeholders. And one of the things that we have also done is to publish 

a best practices manual for pipelines. And one of the things that 

we do in this manual is to encourage them to do the outreach to 

the communities along the path of the pipeline. That it is very important, in other words, for the pipeline to start to develop a relationship with the members of the public who could be impacted by 

the infrastructure. 

Mr. TONKO. And when a project is changed, such as being rerouted to pass through different communities, does FERC make an 

effort to extend the public comment period and engage newly impacted people? 

Mr. BAY. It probably depends upon the stage of the process when 

that change is occurring. Many changes can actually occur during 

a pre-filing process. And so there might be an opportunity there for 

the public to provide comment. I might have to talk to staff and 

get back to you on that one, Congressman Tonko, so that I can explain in a more specific way how the record can be developed. So 

I would be happy to do that. I can tell you, though, that even when 

we issue a certificate, there are dozens of conditions that are attached to the certificate. And these conditions are intended to remediate any potential impact from the pipeline. 

Mr. TONKO. And when any of that new information is released 

late in the scoping process, do you believe it warrants more time 

for public comments and analysis? 

Mr. BAY. I think it depends upon what the development is. But 

certainly, again, we welcome comments from affected stakeholders. 

Mr. TONKO. I thank you, Mr. Chair. I yield back, Mr. Chair. 

Mr. Whitfield. The chair, at this time, recognizes the gentleman 

from West Virginia, Mr. McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. I guess to understand 

FERC, you have to understand how we got here, what are the 

issues that you have to face. And I am looking back on just globally 

with what has been said over the years, and certainly being said 

in Paris today and in the next few weeks. Because all of this sets 

the tone for the issues that you have to face. And I look back at 

some of the quotes that have been used over the years. People have 

said things like that the IPCC, one of the lead authors said, on energy, he said that, We must clearly, must redistribute, de facto, the 

world’s wealth by climate policy. Then you have a former Canadian 

minister who said that, that no matter, this science of global warming is all phony. Climate change provides the greatest opportunity 

to bring about justice and equality in the world. 

66 

Or then we go to, at the Earth Climate Summit down in Rio is 

that, we may get to a point where the only way of saving the world 

will be for the industrialized civilization to collapse. 

That sets the stage, then, for this administration and the EPA 

to be emboldened to enact a lot of regulations because they are 

drinking the Kool-Aid. So what we have here is they have moved 

on this. And as a result, I feel sorry for you at FERC because, I 

think primarily, you are just cleaning up after someone else. It 

doesn’t come across to me as you have a seat at the table on our 

national energy policy. You are just having to implement what 

someone else has done, how they have been influenced by the global community. You remind me of Captain Smith on the Titanic, 

just managing a sinking ship. So I am wondering, given that that 

is the attitude all these regulations, and I can remember sitting 

here just a few years ago when Commissioner Moeller made the remark that if we don’t do something to replace the coal-fired power 

plants that have been shut down across America, his quote was, 

‘‘The new Federal environmental regulations could lead to rolling 

blackouts in Midwest by the summer of 2016, unless action is 

taken to boost reserve generating capacity.’’ 

I don’t think we are doing anything on that. And 2016 is just 

around the corner. And then I look at your own policy statement 

that says that you are to regulate reasonable cost, at reasonable 

cost. I live in a state that 98 percent of the power is generated from 

coal. And because of the regulations and the closure of seven power 

plants, and ultimately more gigawatts of power, we are already experiencing a 47 percent rate hike on utilities. How is that reasonable? I think you failed. But maybe you failed, because I don’t 

know that you have a seat at the table. 

So I guess it would go back to, Commissioner Clark, how would 

you respond? Where are we building the coal-fired power plants? 

How are we going to reject this globalization that is going on and 

the attitude that has got us to the point that we are afraid to burn 

coal, we are afraid to burn gas? 

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

the Clean Power Plan 111(d) regulations certainly put regulators at 

both the State and Federal level in a very precarious position, 

which is that while it is not being promulgated by FERC or by a 

state public utility commission, most of the potential negative outcomes that could be related to it, whether it is matter of affordability or reliability in that state, all directly fall on our shoulders 

because those are the areas that we have responsibility over. And 

we know if the lights go out, or if costs are to spiral out of control, 

it will be public utility commissions at the state level, and FERC 

at the Federal level that will be answering those questions. So certainly, it creates challenges for us. 

With regard to the concern about cost, I think in certain states, 

it is something that is a very real concern to have. It is one that 

I have as a North Dakotan. I indicated in my testimony that our 

state health department who is putting together our CIP estimates 

that if we were to enter a carbon credit trading program in North 

Dakota, it would be a $400 to $450 million annual tag. It is an estimate. It could be more; it could be less. But that is the figure that 

67 

they are using in a state of about 750,000 people. That is, obviously, a huge impact. So these are all concerns that are legitimate. 

Mr. MCKINLEY. OK. Mr. Chairman, in the time I have left, what 

are we doing? What is FERC doing about authorizing more power 

plants to be constructed or was Moeller wrong? 

Mr. BAY. Under the Federal Power Act, we don’t have the authority to order the construction of new power plants. And under 

the Federal Power Act, FERC has always taken the position that 

it has to be resource neutral. But what we have tried to do is to 

improve the efficiency of the energy markets and the capacity markets so that they send the right signal to resources. And so that 

is where we have focused our attention, while also, always making 

reliability a priority. Mr. Whitfield. The gentleman’s time has expired. 

At this time, we recognize the gentlelady from Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Thank you very much, Mr. Chairman. And good 

morning and thank you all for being here. 

The former FERC Chair, John Wellinghoff, recently raised a concern over the very significant investments in natural gas resources 

by utilities. He said that these huge investments are happening at 

a time when battery storage and renewable resources appear to be 

growing. And that such significant, maybe even unbalanced investments in gas resources could put customers at risk, the folks we 

represent back home, for future—our neighbors could be on the 

hook for these investments. 

You can’t argue with the fact natural gas prices have remained 

very low. This has been a benefit. But Mr. Wellinghoff warned that 

the falling cost of renewable energy and energy storage could outpace cheap gas in the future. He called it very risky for consumers. 

And some utility leaders have echoed this concern. Chairman Bay, 

you just talked about how FERC has a responsibility to look at the 

energy markets. What is FERC’s view, especially now with the incentives of the Clean Power Plan to reduce carbon pollution? 

Mr. BAY. FERC has relied upon economic signals from the market to determine whether or not additional gas infrastructure is 

needed. And one of the ways we evaluate that is when a project 

developer holds an open season, we look to see whether or not the 

capacity that would be provided by the pipeline is subscribed, 

whether there are precedent agreements. 

And so that can be a pretty clear signal as to whether or not the 

market thinks that that capacity is necessary. But it is important 

to note that it is the market that is driving these decisions. So it 

is not like ratepayers are necessarily on the hook for the contracts 

that might be entered into with the gas pipelines. And so that does, 

I think, provide some protection to consumers. And if the payoff 

time is quick enough on this pipeline, and the investment, I think 

that that investment in the pipeline can be a benefit to consumers. 

It really depends upon the capacity constraints in a given region 

in the country. 

Ms. CASTOR. And furthermore, on consumer protection and demand response, traditionally, demand response was viewed as applicable to retail electricity policies and, therefore, within the jurisdiction of the state public utility commissions. However, as elecVerDate Nov 24 2008 14:31 Apr 21, 2016 Jkt 037690 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-104 CHRIS
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tricity markets evolved in the wake of the Energy Policy Act of 

2005, demand response began to evolve into a wholesale issue, and, 

accordingly, FERC issued Order 745 which attempted to deal with 

compensation for demand response offered at wholesale. If you are 

a consumer out there, the benefits are quite robust. And for states 

now under Clean Power Plan, reduced short-term electricity costs, 

avoid the need for more investments in generation transmission of 

very expensive plants, you have to build, and bring environmental 

benefits. 

Now, the order was challenged. It was argued before the U.S. Supreme Court. Chairman Bay, you have a very distinguished legal 

career. Did you attend the oral argument at the Supreme Court? 

Mr. BAY. Yes, I did, Congresswoman Castor. Actually, I think 

every member of the—— 

Ms. CASTOR. Ah, everyone did. Isn’t it interesting to—you should 

do that if you are ever here in Washington. Please go to an oral 

argument. It is fascinating. But can you read the tea leaves for us 

and give us what the outlook is? I know one Justice had to recuse 

himself. So what is your expert analysis of the Court? 

Mr. BAY. You are right. Justice Alito recused himself. Eight 

members of the court will be deciding the issue. If there is a tie, 

then the decision of the D.C. Circuit stands. I think it is really impossible to read the tea leaves. I have to confess—— 

Ms. CASTOR. I knew you were going to say that. 

Mr. BAY. I have to confess to you, though, Congresswoman Castor, that every time I have ever tried to read the tea leaves, I get 

it wrong. So probably, if I ventured an opinion today, you would 

do well to bet on exactly—— 

Ms. CASTOR. So could you go through—there are a couple of potential outcomes. Could you run through those quickly? I mean, the 

awful thing would be if FERC does not have—if we don’t continue 

to promote demand response. 

Mr. BAY. I think there are a number of possible outcomes. The 

Court could say that FERC does have jurisdiction. And it could also 

affirm the compensation that Order 745 allowed for demand response. So that is at one end of the spectrum. At the other end of 

the spectrum, the Court could either deadlock, which means the decision of the D.C. Circuit stands. Or the Court, a majority of the 

court, could decide that FERC lacks jurisdiction, in which case it 

doesn’t reach the compensation issue. 

Somewhere in between, the Court could say that FERC has jurisdiction but that its compensation scheme was not sufficiently explained and could remand on that particular issue. So there are a 

range of possible outcomes. My colleague, Commissioner LaFleur, 

likes to cite to Yogi Berra for that famous saying that the difficulty 

with predicting the future is that it hasn’t yet happened, and I 

have to confess to sharing Yogi Berra’s sentiment in that regard. 

Ms. CASTOR. Thank you very much. 

Mr. WHITFIELD. Gentlelady’s time has expired. At this time, recognize the gentleman from Illinois, Mr. Kinzinger, for 5 minutes. 

Mr. KINZINGER. Thank you, Mr. Chairman. And thank you all for 

being here today and spending your morning with us. I am sure it 

is exciting. 

69 

Chairman Bay, as part of FERC’s responsibility to oversee the 

reliability of the bulk power system, you recently approved new 

critical infrastructure protection standards to address physical 

threats and weaknesses of the grid. These standards are designed 

to enhance the grid’s physical security, and reduce areas of vulnerability. In your mind, what more can and should be done to ensure 

the physical security and reliability of the grid? 

Mr. BAY. Thank you for the question, Congressman. I have to say 

that Commissioner LaFleur and Commissioner Clark deserve a lot 

of credit for the physical security standard because they were on 

the Commission at the time that the Commission adopted it. And 

under Commissioner LaFleur’s leadership, that standard was 

adopted. So I think that is a very important start. In addition, 

there are critical infrastructure protection standards that have 

been in place for some time now. We are up to version 5. The Commission is considering version 6. One of the things that we are 

looking at with respect to the CIP standards is GMD, the second 

stage of that particular standard, which would create a benchmark 

event, require utilities to assess their system against that benchmark event, and then come up with strategies to deal with any potential problems. So that is certainly something that we are looking 

at. 

Another aspect of cybersecurity that we are looking at deals with 

the supply chain, and whether or not there should be a standard 

in that area. We had issued a notice of proposed rulemaking. And 

we have decided to do a technical conference on that issue. So we 

will be bringing in industry and we will be getting their views. 

Mr. KINZINGER. OK. I might have to cut you off because I have 

two more quick questions, if you don’t mind. 

And in regards to the EPA’s Clean Power Plan, what position 

would FERC take if it were asked to issue a declaratory order related to the reliability impacts of state plans and requests for the 

exercise of the reliability safety valve? 

Mr. BAY. I guess I would want to know what the specific details 

were with that particular proposal. Under MATS, the EPA can request a technical opinion from FERC relating to the reliability 

issue that would be posed if a unit closed down. Under the reliability safety valve currently contemplated by the EPA’s Clean 

Power Plan, there is no mechanism, no formal mechanism, requiring FERC input, although certainly we are happy to provide it if 

the EPA requests our views. 

Mr. KINZINGER. So if you were asked to make a declaratory 

order, you would be willing to, or be open to working with them 

on that? 

Mr. BAY. Yeah. I don’t know that I would call it a declaratory 

order, but certainly, we could provide them with our technical 

views. 

Mr. KINZINGER. OK. And then, Mr. Clark, recently you spoke on 

efforts at the state level to support nuclear power. Specifically, you 

pointed out that states that encourage the growth of nuclear power 

are going to end up with two different regulatory regimes that 

don’t fit together very well. And that this is going to impact FERC 

and negatively impact how prices are formed in wholesale markets. 

If you want to expand on that, and also, doesn’t a two-tier system 

70 

basically already exist since all clean resources, other than nuclear, 

have out-of-market payment subsidies and everything that impact 

their bid price? 

Mr. CLARK. Thank you for the question. It is an excellent one. 

It often comes into play with regard to nuclear power, and it especially becomes a question and an issue with regard to the Clean 

Power Plan being out there because remember, the grid operates 

on a regional basis in terms of market signals that are sent, but 

states, state by state, have to meet their in-state requirements or 

will should the Clean Power Plan be upheld. So they are managing 

their fleet in a way that is sort of agnostic of the market itself. The 

concern with nuclear power is right now if you present a scenario 

where you have a restructured state, so it is a merchant generation 

state, you have high state renewable portfolio mandates, you have 

low cost natural gas that is the marginal unit and you have big nuclear investments, it is very difficult for that plant to stay open in 

that regard. So what it will cause states to do that have restructured is to probably, in some way, if they want to keep that nuclear 

plant open to meet their Clean Power Plan goals, it will probably 

cause them to, in some way, soft re-regulate utilities that they had 

previously restructured. 

The concern is, if you end up in a market that, from a wholesale 

standpoint, has been set up to allow pure price signals to determine where investment dollars go and where investment decisions 

get made, you can reach a tipping point where there are so many 

out-of-market solutions that are being imposed on the market, that 

the market isn’t creating the proper price signals that are needed. 

Mr. KINZINGER. OK. Thank you. And from my district with four 

nuclear power plants, it is very important. So I yield back, Mr. 

Chairman. 

Mr. WHITFIELD. The gentleman yields back. At this time the 

chair recognizes the gentleman from Iowa, Mr. Loebsack, for 5 minutes. 

Mr. LOEBSACK. Thank you, Mr. Chair. This has been an enlightening hearing. I really appreciate all of you being here today. The 

poor folks who are still here, they get to hear me talk about Iowa 

all the time, and how much wind energy we have in the State of 

Iowa. The last report was 28 1⁄2 percent of our electricity comes 

from wind. It will probably be 30 or more by the end of this year. 

And we are pretty proud of that, I have to say. 

I really think we have to move not only toward wind but solar, 

and go as far in that direction as we possibly can, recognizing that 

it is going to take some time, obviously, to get to a portfolio that 

I think would be more sustainable, be cleaner, be better for our environment, no question about it, and also would provide a lot of 

jobs, and has, in my state, and other states. But I have a question 

about reliability. I know we have all been talking about that today. 

And that seems to be the big issue out there in moving from fossil 

fuels to more sustainable energy. What specifically can we do? 

What measures have been taken, can be taken, as we make that 

transition, assuming, you know, that the Clean Power Plan, it is 

now, in fact, there and that we do implement that? What specifically can we do, Chairman Bay, when it comes to reliability? 

71 

And what specifically is being done at the present time? Mr. Bay. 

I think the main thing that we can do is to work closely, we at 

FERC, to work closely with the EPA, DOE, state regulators, 

NERC, the regional reliability entities, the RTOs, ISOs, industry. 

I think we just have to work very closely together, and to monitor 

the situation to see whether or not there are any potential reliability issues. And if so, what needs to be done to address them. 

I don’t think that you necessarily need a new reliability standard 

or anything like that, but I think you take the standards that you 

do have and you make sure that they are being followed, and you 

make sure that you work well with others. 

Mr. LOEBSACK. Did you want to say something, ma’am? I do have 

a question for you, Ms. LaFleur. Yeah. When we were talking 

about the grid, I have a real concern about the physical protection 

of the grid. Cyber is one thing, but actual physical protection of the 

grid is another thing entirely.We are a big country. It is very, very 

difficult, obviously, to protect the grid from some kind of attacks 

from someone abroad, domestic, whatever the case may be. But can 

you address that question? 

Ms. LAFLEUR. Yes. I think the physical security of the grid is 

very important. I think the most frightening thing would be some 

kind of coordinated attack that was a physical attack or a systemic 

attack on different parts of the grid. I think that the standards 

that we have put in place, which require every transmission owner 

to identify the most critical facilities and then protect them are an 

important step. But I think beyond that, a lot of the protection has 

to come from how we build the grid. Building in more redundancy, 

so we kind of decriticalize those places so that a physical attack 

won’t cause as much damage. And building in more standardization, so if something goes wrong, we can share transformers more 

rather than having to build a custom one in every place. 

Mr. LOEBSACK. You are kind of answering my next question, 

which was building the grid better, that is what you mentioned 

earlier, that, specifically, is the kinds of things that you are talking 

about when you say building the grid better? 

Ms. LAFLEUR. Yes. I think that is really the future, is to think 

about how do we build a more robust grid in a world where there 

are so many more security issues? 

Mr. LOEBSACK. Right. Does anybody else want to weigh in on 

that particular issue on the grid? Did you want to say anything, 

Mr. Clark? 

Mr. CLARK. I would second everything that Chairman Bay and 

Commissioner LaFleur have indicated. One of the—it occurred to 

me during one of the questions, something that I think the Commission can do in terms of reliability and integrating the renewables that you talked about is something that the Commission recently had a series of presentations on at one of our recent meetings, which is the issue of energy storage. If renewables are to be 

brought on in a way that really makes sense and makes them even 

more valuable, energy storage as a means of compensating for their 

inherent intermittency, is something that could be very important. 

So the Commission has been studying that. 

Mr. LOEBSACK. I think that is a great idea. Thank you very 

much. Thank you, Mr. Chair. I yield back. 

72 

Mr. WHITFIELD. The gentleman’s time has expired. At this time 

recognize the gentleman from Missouri, Mr. Long, for 5 minutes. 

Mr. LONG. Thank you, Mr. Chairman. And I figured you were 

going to ask me where I am going after this hearing. And where 

I am going is down to the Rayburn Foyer to sign cards for our 

troops for the American Red Cross. And I would like to remind our 

other members of the committee that they can join me down there. 

So you just looked like you wanted to ask that question, Mr. Chairman. 

Mr. WHITFIELD. I really appreciate your letting us know about 

that. Thank you. 

Mr. LONG. Commissioner Clark, in referring to the EPA’s carbon 

regulations, you mention in your testimony that there is a potential 

tension between the 111(d) rules and infrastructure, especially in 

the timeline for compliance and in potential for a large generation 

resource shift away from coal in order to comply. In my State of 

Missouri, for instance, we rely on 83 percent coal for our energy 

generation. My question is: What is FERC doing to help ensure 

that the reliability resource adequacy is maintained during this period of transition given the length of time needed to develop and 

implement infrastructure projects? 

Mr. CLARK. Sure, Congressman. Thank you for the question. I 

think it comes forward in a number of different ways. As I indicated, the infrastructure challenge is a key one. So FERC needs to 

continue to do its work in terms of how we process those applications that are in front of us. In terms of the Clean Power Plan, I 

think it is going to be critically important for FERC to be actively 

involved with other stakeholders. Sometimes it is with the markets 

in a region that is very market-oriented; sometimes it is going to 

be close collaboration with states since those states have chosen to 

remain fully vertically integrated. But collaboration with those 

stakeholders is going to be absolute key. 

I think we are going to need to do a lot of work with entities like 

NERC, who have technical expertise in terms of the operations of 

the grid. It needs to be under constant assessment, and we need 

to do that assessment as soon as we know what these those State 

Implementation plans look like, because until we know what the 

State Implementation plans and Federal Implementation Plans for 

those states that chose to go that route, until we know what they 

look like, we are kind of shooting in the dark here because we can’t 

really model scenarios that are that open ended. 

So I think after we begin to see what those look like, we will be 

able to do more substantive work. But I think it is something that 

we absolutely have to have a voice in given our technical expertise 

in both markets and reliability at FERC. 

Mr. LONG. OK. Thank you. I found something else real interesting in your testimony. You also state that intervention in regulatory proceedings is trending towards ‘‘just say no,’’ which is designed to block entire classes of infrastructure projects through a 

strategy of outright denial, or defeat through delay. Can you expand on that? 

Mr. CLARK. Sure, Congressman. What I was noting is something 

we have talked a little bit about here this morning, which is the 

trend towards intervention that we typically didn’t have in the 

73 

past, which is that certain resources, in and of themselves, you 

have intervenor groups that wish to block the entire development 

of that resource; not that they believe that there is a particular 

problem with a particular line, it is that they have a concern with 

all infrastructure and would like to see it blocked. But the challenge becomes in an era where it is quite clear, in my mind, that 

to meet environmental regulations, and where the market is going, 

in some cases, in an affordable, reliable manner, you are going to 

have to have the infrastructure. Dealing with that tension is going 

to be a challenge for Commissions at both the state and Federal 

level going forward. We want to ensure—— 

Mr. LONG. What kind of impact will it have on the Commissions? 

Mr. CLARK. Well, from one standpoint, I think the Commissions, 

and we have seen this here at FERC, I think you probably have 

seen it at the state level as well, you have a lot more applications 

that are being put forward in terms of infrastructure needs. So you 

have more pending dockets. At the same time, you have more intervention and opposition to those dockets. It creates a challenge for 

commissions. Ultimately, if the infrastructure is blocked in total, it 

creates challenges for consumers because you don’t have access to 

the otherwise affordable energy that you might have. 

Mr. LONG. What type of projects are you talking about that—— 

Mr. CLARK. In the case, Congressman, of the electric sector, it 

can be transmission lines which are sited at the state level, although FERC has a lot of authority over interstate transmission, 

we don’t site it. But the interstate transmission lines are often put 

up to accommodate renewables that have seen significant growth. 

In the case of interstate natural gas pipelines, it is because you 

have coal plants that are going off. And as of right now, the market 

signals indicate that in most cases you are building natural gas to 

replace the coal. So you need to hook up the new natural gas plant. 

Sometimes it is because you have to have peaker units that tend 

to be natural gas, because they pair well with renewables, because 

they have fast ramping resources. So everywhere where there has 

been a transition to higher intermittent resources and more natural gas units, but you don’t have the electric transmission lines 

and pipelines in place at the time that that transition is made, you 

end up with very high costs for consumers. It has been the case 

across the world where that has happened. It has been the case in 

certain regions of the country, as the chairman noted in his opening statement. 

Mr. LONG. OK. I see my time has expired, Mr. Chairman. I yield 

back. 

Mr. WHITFIELD. The gentleman yields back. At this time the 

chair recognizes the gentleman from Vermont, Mr. Welch, for 5 

minutes. 

Mr. WELCH. Thank you very much, Mr. Chairman. I have got two 

questions, one relating to renewables, and then the other about 

how we pay for natural gas infrastructure. By the way, what you 

were just saying about the ‘‘just say no,’’ I mean, it really does sort 

of have an element of public participation, whether it is about coal 

plants or it is even about solar. So we in Vermont, have a lot of 

renewables. But the siting issues are oftentimes very, very conVerDate Nov 24 2008 14:31 Apr 21, 2016 Jkt 037690 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-104 CHRIS
74 

troversial. So it is something that we have to wrestle with independent of what that power source is. 

And the chairman indicated in his opening statement that the 

whole array of power sources, from coal to renewables, is a big 

deal. And depending on what your State mixes, it really has a significant impact on what you think is the proper approach on infrastructure. 

In Vermont, we have had a long tradition of utility-supported renewables. In fact, Green Mountain Power, our major utility, has 

been the leader in this. Efficiency has played a major role, again, 

with the support of our major utilities, and demand response, obviously. 

So I will ask first, Mr. Bay and Mr. Clark, in respect to infrastructure planning, where does that fit in to your scheme? Because 

the decisions that are made about an infrastructure decision really 

do have an impact on the power that can be deployed with the benefit of that. I will start with you, Mr. Bay. And just quickly on it, 

because we don’t have much time. 

Mr. BAY. Sure. I think that is an important question, Congressman Welch. States obviously engage in integrated resource planning. FERC itself does not. And FERC has always taken the position that it should be resource neutral under the Federal Power 

Act. So as a matter of choice, we have not tried to evaluate or to 

pick which resources should prevail in a market. 

Mr. WELCH. Right. But there is a practical issue. This is something we are debating in Vermont. If you put in a major infrastructure item, it is going to then drive power decisions to that. So how 

do you find that balance? By the way, I want to say thank you to 

Member Honorable for coming to Vermont. We were delighted to 

have you up there. I mean, can you comment on that? 

Ms. HONORABLE. Certainly. And great to see you again, Congressman Welch. It goes back to our embracing fuel diversity while 

we recognize we need to move toward a cleaner and more efficient 

energy infrastructure, for all of the reasons that have been discussed, to ensure reliability, diversity, energy security. 

Mr. WELCH. Go ahead. I only have a couple minutes. I didn’t 

mean to interrupt, but thank you. 

Let me get to financing of natural gas infrastructure by electric 

ratepayers. We have had a lot of discussion in New England about 

natural gas supplies. Traditionally, it has been addressed and paid 

for by the merchant generators. Now there is a move among some 

to suggest that be spread out across all electric rate customers. 

Obviously that would have a significant impact on energy markets. What is FERC’s view on this? I will ask you, Mr. Clark, first. 

And thank you all for your work and your testimony. 

Mr. CLARK. Sure, Congressman. Thank you for the question. I 

understand this has undergone a great deal of debate in New England, as you have certain states especially that have a concern for 

getting more natural gas access to natural gas infrastructure. As 

I understand it, the New England states originally had through 

NEPKA or NESCOE, the State council, some thoughts about potentially building into ISO New England tariffs the cost of the buildout of natural gas. They came in and talked with each of us individually about that—well, I didn’t prejudge any matter. I think 

75 

that there are probably some challenges to that type of approach. 

I understand in recent months, New England governors have gone 

back, taken a relook at that, and are now not planning that particular approach, but are looking at potentially financing pipelines 

through the state authority that each of the states still retain over 

their load-serving entities. 

I am interested in seeing how that plays out, in addition to their 

authority that they have over the natural gas distribution companies. So it is a little bit different approach. It hasn’t been presented 

to the Commission yet. I am interested in learning about it. I think 

that that stateside approach probably has more opportunity to be 

successful than what—— 

Mr. WELCH. Commissioner LaFleur, do you have anything to 

add? And then my time is up. So you get the last word. 

Ms. LAFLEUR. I agree with what Commissioner Clark said. This 

has arisen in New England, as you know, because there is tremendous pipeline constraints there. And the way the markets are 

structured, it is difficult for any merchant generator to commit to 

firm capacity. I believe the issue is raised indirectly in the Kinder 

Morgan pipeline that has been filed. And there is another one that 

is in pre-filing that will raise it more directly. While not prejudging 

it, I would seek to be as flexible as we can under our authority to 

try to find a way to accommodate something a region is trying to 

do, but it would have to be lawful. That is why the transmission 

solution has been turned away from. 

Mr. WHITFIELD. At this time, the chair recognizes the gentlelady 

from North Caroline, Mrs. Ellmers, for 5 minutes. 

Mrs. ELLMERS. Thank you, Mr. Chairman and Ranking Member 

Rush, for holding this hearing today so that we can continue our 

oversight. And thank you, panel. Commissioners, thank you so 

much for being with us today. As co-chair of the Grid Innovation 

Caucus, I look forward to hearing from each of you regarding the 

threats that the Clean Power Plan poses to affordable and reliable 

electricity, as well as the path forward to securing our grid, as well 

as modernizing our Nation’s infrastructure, energy infrastructure. 

Chairman Bay, I would like to start with you. I have a question 

regarding cybersecurity. Currently, the electric sector has mandatory cyber asset and incident reporting requirements through 

FERC, NRC, and DOE regulations. Chairman Bay, do you think 

FERC has sufficient authority over cybersecurity? 

Mr. BAY. I think we do at this time, while recognizing that there 

is always more work to be done. So we are up to CIP version 5, 

and we are considering CIP version 6. There are additional standards that we are examining right now. A lot of work has happened, 

but there will always be more work that we have to do given the 

nature of the threat. 

Mrs. ELLMERS. Do you believe that FERC needs help with your 

statutory mandate to protect the bulk power system with cyber 

threats and harm? 

Mr. BAY. I should note one caveat. There should be emergency 

cyber authority. So thank you for that follow-up question. I understand that the House is addressing this very issue. That emergency 

authority does not need to reside with FERC. It could reside elsewhere in the Federal Government, but someone needs to have it. 

76 

The other suggestion I would make, and again, the House legislation considers this issue, is whether or not FOIA rules should apply 

to information that is shared between industry and government 

and vice versa. I think a fix there could be very helpful as well. 

Mrs. ELLMERS. Thank you very much, sir. 

Commissioner Honorable, I have a question for you. Last year, 

NARUC approved a resolution seeking to ‘‘preserve states’ authority to decide the type, amount, and timing of new or existing generation facilities that will be constructed or maintained within the 

state to achieve legitimate state policy objectives.’’ Then it goes on 

to say ‘‘to safeguard and guarantee states’ continued right to operate programs to procure new generation or maintain existing generation for reliability, affordability, and environmental purposes.’’ 

Does the EPA’s Clean Power Plan impact any of these areas 

which NARUC has expressly resolved to preserve? 

Ms. HONORABLE. Thank you for the question, Congresswoman. I 

certainly think this will play out. Clearly, the EPA endeavored to 

provide the states with flexibility. I served as NARUC president 

during that time that the resolution evolved, and that was very important and continues to be very important that the states maintain control, and I support that, even in my current role. 

I do believe that the states have the ability to plan their own resources. There is certainly a lot of opportunity to ensure fuel diversity and reliability as we move forward to a cleaner energy infrastructure. 

Mrs. ELLMERS. Thank you so much. My last question is for Commissioner Clark, this has to do with some of the EPA rulemaking, 

and I am going to use an example. The reliability safety valve, 

though very well intended, is really only useful after the rule has 

gone into effect. Is this correct? 

Mr. CLARK. Congresswoman, that is correct. 

Mrs. ELLMERS. And that is wonderful, and we are happy that 

that safety net is there, except it is kind of after the fact, it is an 

afterthought. And these decisions are already being made by many 

of these companies in our states having to prepare. So in your opinion, do you believe that as far as the rulemaking for EPA goes, 

FERC should have a much earlier and much more formal role in 

the rulemaking process? 

Mr. CLARK. Congresswoman, there is contemplated in what EPA 

issued, as a final rule, some sort of consultative process with regional planning authorities. I think FERC needs to ensure that we 

have a robust part in that particular project that will be undergone. So that would be answer number one. I think there is a second related part of your question that I might address which is 

this: There is a concern in states that will need to be moving forward potentially if this is upheld, that they get going on it rather 

soon. The problem is, I hope we don’t end up with a MATS-type 

situation, a mercury and air toxic standard situation, where you 

may have certain States make enormous investments in meeting a 

rule that ultimately, 3 of 5 years down the line, is vacated by the 

Supreme Court. I would, either through legislation or through litigation, that there at least be a pause in this so it doesn’t go into 

effect, and we don’t start having some of these large investments 

77 

being made and then have the states find out that the rule itself 

wasn’t valid. I think that is a concern. 

Mrs. ELLMERS. Thank you, sir, and I agree, and I have gone over 

my time. Thank you, Mr. Chairman, and thank you to our panel. 

Mr. WHITFIELD. Thank you. At this time, the chair recognizes the 

gentleman from Maryland, Mr. Sarbanes, for 5 minutes. 

Mr. SARBANES. Thank you, Mr. Chairman. I want to thank the 

commissioners for being here today. Your testimony has been very 

helpful. Commissioner Bay, it is a pretty straightforward question. 

There is, I think, bipartisan interest on this committee already reflected in some of the hearings we have held, and some of the 

markups on how to continue to increase the intelligence of our grid, 

if you will, kind of smart grid technologies, how we stimulate more 

thinking in that regard and advance those technologies. 

And there is a recognition, obviously, that there is a major role 

to play in that on the part of states, also ratepayers can become 

a part of the equation, the private sector for sure, and that that 

advances all of our goals in terms of dealing with resilience and 

cybersecurity and distributed energy resources, giving customers 

more choice in how they relate to the grid, obviously going forward. 

I am interested as well, and I know there are others on the committee; I think Congresswoman Ellmers and Congressman 

McNerney share this perspective in what, for example, the Department of Energy might be able to do by establishing some sort of 

grant opportunities, programs, collaborative initiatives that they 

could initiate with the states, and with other partners that come 

together. 

So for example, utilities partnering with entities such as National Labs and universities, state and local governments where 

they are developing some of these advanced smart grid technologies, and benefiting with some support from the Department of 

Energy. I want to ask you to speak to whether that would be helpful and useful in continuing to push forward that effort on the 

smart grid? 

Mr. BAY. Thank you for the question, Congressman Sarbanes. I 

think that is an important question that you are raising.Many of 

these developments, as you know, are very exciting and they are 

happening at the distribution level. And so I do think it is very important for Federal agencies, including the DOE and FERC, to 

work with state agencies and state authorities to see where we can 

be helpful. 

My sense is that DOE will be more helpful than FERC in the 

sense that DOE does a lot of research and development, but FERC 

certainly can be helpful in incenting some of those technologies as 

well, not at the distribution level, but at the transmission level because of incentives that we can offer under section 219 of the Federal Power Act. But as Commissioner Clark noted, we just did a 

panel recently on energy storage, and a lot of exciting things are 

happening there with some analysts predicting that costs will drop 

another 50 percent over the next 5 years from 2015 to 2019. So, 

I guess, that is actually 4 years. So a lot of things are happening, 

and ultimately, they will impact both the transmission network as 

well as the distribution system. 

78 

Mr. SARBANES. Thank you. Actually, President Obama this morning, at his press conference in Paris, spoke about how goals were 

set on where the cost of certain kinds of power generation would 

be. And 2, 3 years ago, we set these targets and we have already 

exceeded them. It shows what happens when you get these 

synergies in place, and I think you are right to point to the opportunity for a number of different Federal agencies, like the Department of Energy and like FERC and others to collaborate in helping 

to stimulate that in partnership with states, with ratepayers, with 

the private sectors, so I appreciate your answer. Thank you very 

much and I yield back. 

Mr. WHITFIELD. This time the chair recognizes the gentleman 

from Oklahoma, Mr. Mullin, for 5 minutes. 

Mr. MULLIN. Thank you, Mr. Chairman. And commissioners, first 

of all, I want to thank you for your thorough review of the Grand 

Lake Dam Authority, GRDA, for granting the variance. It was very 

important to Oklahoma and to that area, so thank you. I really do 

appreciate that. 

I would like to first start with an issue going on with the nuclear 

plants. Several nuclear plants that operate in the wholesale competitive markets have recently announced premature retirements 

for economic reasons. These plants tend to be highly reliable. Is 

FERC concerned about potential impacts of reliability of the electrical grid due to these retirements? Commissioner Bay, I might 

start with you on that. 

Mr. BAY. So this is something that we are monitoring very closely. Certainly, we are aware of the news of some of the retirements 

of those plants, and, again, one of the things that we are doing is 

using our authority over the wholesale market to see whether or 

not more effective or efficient price signals can be sent, and that 

is both in the capacity market as well as in the energy market. 

So that has been where we have been focusing our efforts. We 

can’t—as I said, we don’t pick winners in the energy markets. We 

try very hard to be resource-neutral. I believe we have to be under 

the Federal Power Act. With that being said, improved price signals, improved transparency can be helpful to all efficient resources. 

Mr. MULLIN. One of the things that is going on, obviously, is with 

the coal-fired power plants coming down too; now we have nuclear 

plants coming down. And one area that we are lacking in is the 

ability to build new gas pipelines, too, to get some of these plants. 

We find, through the industry, very difficult to get the permits that 

are needed. And so, I will stick with you, Chairman Bay, for a little 

bit. Does FERC have the needed resources to handle these permitting issues? I mean, considering the reliability, we can only take 

so much off the grid before reliability becomes an issue. And being 

that we are already concerned with the alarming amount of electricity leaving our grid, surely there is a way that we can speed up 

this process. 

Mr. BAY. So we are very much focusing on the issue of the resources that we have, that we devote to infrastructure project reviews. And one of the things that we have done in this past year 

is to increase the number of staff who are assigned to the division 

79 

that does that particular work. So this is something that we are 

watching very carefully. 

Mr. MULLIN. Watching, Chairman, no offense here, but watching 

isn’t actually engaging. We are going to speed this process up of 

the amount of electricity hitting our grid going backwards at a very 

alarming rate. And so watching it is watching a crash happen. I 

would like to try to use the word of being proactive and not reactive. And if I am hearing you correctly, what you are going to end 

up being is reactive. 

Mr. BAY. I probably was not clear enough. We added more resources, so we created an additional branch of staff who are doing 

project reviews in the Office of Energy Projects. Having added 

those additional resources, we are continuing to monitor what happens, and as Commissioner Clark’s testimony noted, actually more 

than 90 percent-plus of the projects that we receive are certificated 

within 1 year after receiving the application. So it is important for 

us not only to do our work in a thorough way, but also a timely 

way, and we are very much aware of that. 

Mr. MULLIN. Is there a way that we can help you with this? Is 

there a resource that we can help you streamline? Is there a process that we can help engage in? I say ‘‘we’’ as those sitting up here 

on the committee. 

Mr. BAY. I certainly would be interested in hearing the views of 

my colleagues on that particular question. But one thing we may 

be coming to you with for our next budget request is a request for 

more resources. 

Mr. MULLIN. Money? 

Mr. BAY. I think you could characterize it in that way in as far 

as the money results in our ability to hire more people. 

Mr. MULLIN. I think all of that would come, too, with the idea 

of making sure we are being very responsible with the resources 

we have, that has already been given to FERC under the current 

circumstances. My time has run out, and Chairman, thank you so 

much for allowing me to ask these questions, and Chairman Bay, 

thank you for being very thoughtful with your answers. 

Mr. WHITFIELD. At this time, the chair recognizes the gentleman 

from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. I appreciate 

what you all do. I know it is a tough job. I will say we have some 

natural gas pipelines coming through my area, and earlier, Commissioner Clark indicated, and I think some of you all have 

touched on it as well, that there are folks who are saying that they 

just want to slow everything down in order to stop gas pipelines 

and other things. But I have a situation where I have got folks who 

may feel that way, but I have got a lot of folks who just want answers to questions, and while, in regard to the Mountain Valley 

Pipeline, certainly some of those issues were raised by the Mountain Valley Pipeline not contacting folks like the Roanoke County 

Board of Supervisors before announcing they were coming into the 

community and starting to do work. 

But likewise, the Roanoke and New River Valley has a population of roughly 300,000, you have a pipeline coming through. 

West Virginia, they had four hearings; in Virginia, we had two. 

Only one was in the Roanoke Valley, New River Valley area diVerDate Nov 24 2008 14:31 Apr 21, 2016 Jkt 037690 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-104 CHRIS
80 

rectly. And so as a result of that, the Roanoke County Board of Supervisors requested an additional hearing. 

I am not saying it would have been fun for your folks, but it 

would have been helpful, and likewise, because both Congressman 

Goodlatte and I thought that it was appropriate. We sent a letter 

saying we agree with them, and we would ask you to hold additional hearing. You signed the letter, Commissioner, saying yes, we 

can’t do that. I think that does, sometimes, makes the problem a 

little bit worse. I know it is not easy, I know, as you just said to 

my colleague, you may need more resources because of what is 

going on. But a lot of my folks are reasonable people, but when 

they feel like they are not getting answers, they become more aggressive, and as a result of that, both Craig County and Roanoke 

County, and I am sure there were other factors, but one of the factors they both intervened in the process because they felt like this 

a was the only way they could keep a finger on what was happening. 

So I don’t know there is anything you can comment on in that 

specific case, I just pointed out as a note. 

I have got a lot to get over and not as much time as I would like, 

of course. The first regulations currently require the Agency to consider the use of existing right-of-ways, Commissioner Bay, Chairman Bay. What do you all do to make sure they actually look at 

existing right-of-ways, because we recently had a factory that 

brought in natural gas, and now, here we have another gas pipeline coming through generally the same area of Giles County, and 

then that is where the factory was. 

What do you all do to make sure that they actually did look at 

using co-location possibilities, particularly when you are looking 

at—we have—my district has a lot of natural forest and the Appalachian Trail. So what do you all do in that regard? And if you 

could be quick, I would appreciate it. 

Mr. BAY. Sure. During our review process, we examined the impact of the proposed route, but also alternatives. And so, if there 

is an existing right-of-way that is feasible, that can be very helpful, 

both to the company and to FERC in making a decision about 

whether or not to certificate the project. So it certainly is a factor 

we take into account. 

Mr. GRIFFITH. So if folks in Roanoke County, Giles County, Craig 

County think that there is a better path that would be co-located, 

they should let you know, is that what you are telling us? 

Mr. BAY. I should say that that is an option to be considered. In 

some cases, it is not easy to co-locate two pipelines where they are 

side by side, that can present its own challenges. 

Mr. GRIFFITH. And I recognize that and appreciate that. I am 

going to switch gears on you. I am concerned with grid reliability; 

I am concerned with the problems we had with MATS, when several facilities in my district were closed down just before the Supreme Court ruled that they didn’t do it right at the EPA. I am 

concerned that you all don’t get noticed under the Clean Power 

Plan for interaction about what is going to happen when the plants 

close down. These are great concerns. But I have one that may not 

seem as big, but a number of my colleagues have touched on the 

81 

grid reliability issues, and that is the shore issues related to lakes 

where there are hydropower facilities and plants. 

And I am concerned about private property rights. And I can’t 

speak for any other State, but I have several of these located in or 

near my district, and as many of the members of the committee 

know, I am a recovering attorney, I used to be a small-town country lawyer, and I have looked at the deeds. So one of things I have 

that I don’t know that you all take into consideration, not only do 

I think folks ought to be able to use the lakes for recreational purposes, but I think there may actually be a taking that you all are 

unaware of, because in some of those deeds that I had occasion to 

look at over the course of 28 years of private practice, the power 

company didn’t get the land under the water. They only got the 

right to flood. And in that case, under Virginia law, you extend 

those property lines out. 

So if you come in and you say somebody can’t build a dock, you 

are actually telling them they can’t build a dock on their property, 

which I would think is a taking. I don’t know if you all are aware 

of that. I don’t expect an answer today, but could you look into that 

for me and see if you all are aware of that issue, and whether or 

not—how that impacts your requirements on the shoreline, because 

that is where people are very, very concerned, and I am concerned 

that there may be some liability for the Federal Government there 

that people aren’t really aware of. I have seen the deeds written 

three different ways, two of them you all are in control, one of them 

you aren’t. 

So I just raise that for your attention. Let’s go back to grid reliability now that I have raised that issue in regard to the shore, and 

I think it is very important people be able to access big money generator in our area where we are losing lots of jobs. I am already 

over. I thought I had 30 more seconds. Thank you, Mr. Chairman. 

I appreciate that and I yield back. 

Mr. WHITFIELD. Thank you, Mr. Griffith. At this time, we recognize the gentleman from Ohio, Mr. Johnson, for 5 minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman. And I want to thank 

the members of the panel for being with us today. Chairman Bay, 

or Commissioner LaFleur, consumers in our economy need reliable 

power, but some feel that FERC-approved market constructs may 

not be adequately compensating baseload power plants for the reliability attributes they bring to the grid. Therefore, some States in 

competitive markets, Ohio, New York and Illinois, for example, 

have begun to look at ways to consider options to preserve those 

baseload plants. So the question is, why do you think that these 

states find it necessary to step in to try and prevent the loss of 

these resources? Mr. Chairman. 

Mr. BAY. States have the authority to engage in integrated resource planning, and as part of that planning, they often look at 

the generation next within the state. And if, in the competitive 

marketplace, certain resources are not doing well, then the state 

may feel a need to support certain kinds of units. One of the things 

that is happening right now is that gas is very, very cheap, in part, 

because of gas production in states like Ohio and Pennsylvania, 

and many other states around the United States. Last night I 

checked the futures contract price for natural gas on NYMEX, it 

82 

is, like, $2.22 going into January, which is the heart of the heating 

season. It was at the $2.20 range throughout the rest of the winter. 

And so, I think that is putting a lot of pressure on different resources across the United States. 

The difficulty for FERC is that in markets, signals are being 

sent, right? And FERC does not view itself as having the authority 

under the FPA to pick the winners and losers for a marketplace. 

Mr. JOHNSON. OK. Commissioner LaFleur, do you have a response? 

Ms. LAFLEUR. I think that the biggest thing that we are doing 

is trying to work on the markets and make sure they compensate 

what it takes to keep light on for customers, including what baseload brings. And I believe the markets will protect reliability. It is 

difficult any time a power plant closes, and I used to work for a 

company that owned them, they had their huge economic drivers 

in their communities and all, and I think it is natural that a state 

would be concerned, but we are trying to do our job to make sure 

that where the power plants that are needed for reliability they 

don’t close, because they are fairly paid. 

Mr. JOHNSON. OK. Well, if reliability attributes and essential reliability services are being adequately compensated under current 

market rules, why do we see units that are essential to maintaining reliability leaving the market? 

Ms. LAFLEUR. Well, it is a little bit of a circle, if they are essential to maintain reliability, and we still have reliability, they should 

not be closing. Some of the rules—— 

Mr. JOHNSON. But they are. 

Ms. LAFLEUR. Well, some of the rules that we put in place are 

fairly new, and we just started to run the first couple of auctions, 

and I think we will see impacts. We did see baseload plants that 

previously didn’t clear the auctions clear in new auctions under the 

new rules. 

Mr. JOHNSON. Uh-huh. Commissioner Clark, I understand that 

under the Clean Power Plan, traditional state-based, least-cost resource planning will need to be replaced with carbon resource planning. What are the implications of such a shift? Would this environmental dispatch be more expensive than traditional economic 

dispatch, and if so, how so? 

Mr. CLARK. It depends on how each of those states decide to implement their plans, it could be through some sort of credit trading 

program. It could be through some sort of, perhaps, environmental 

dispatch, which really would conflict with the market. So we don’t 

know exactly how they will all be proposing to meet their standards. It probably does mean, in certain states, significant increased 

cost. I would say another impact—a similar question of what you 

asked Chairman Bay and Commissioner LaFleur is, I think 111(d) 

regulation, the potential of that is having an impact on some of 

these states that have restructured their marketplaces. They see 

nuclear units closed, even if they may not be needed for ‘‘reliability’’ in order to meet the Clean Power Plan they may be needed 

because it is very difficult to replace a large baseload unit that 

emits no carbon. 

So, I think it is causing some of the states to go back to, as I 

said earlier, some form of soft reregulation of their marketplace, 

83 

simply to keep that plan open in the state, not for market efficiencies or for reliability, but to meet the constricts of the Clean 

Power Plan. 

Mr. JOHNSON. OK. Well, thank you, Mr. Chairman. My time has 

expired. 

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

That concludes the questions from the members. I want to thank 

the commissioners. Once again, we appreciate you being here with 

us, we look forward to continue to work with you. 

Just one follow-up question I had, Chairman Bay. How many 

people are in your legal department? Do you know that number? 

Mr. BAY. I believe there are about 180 people in the Office of 

General Counsel. 

Mr. WHITFIELD. Do you know how many pending lawsuits are 

against FERC in which FERC is a defendant? 

Mr. BAY. Do you mean in a regulatory context or—— 

Mr. WHITFIELD. I mean, the regulatory context has been exhausted and now we are in Federal court or Court of Appeals or 

Supreme Court. 

Mr. BAY. I know that there are two matters pending before the 

Supreme Court. I can probably get this information for you. I don’t 

know it off the top of my head. Certainly, every year there are commission orders that are appealed to the Court of Appeals. 

Mr. WHITFIELD. Right. 

Mr. BAY. And then there are some other matters that are being 

litigated at the district court level. 

Mr. WHITFIELD. Ms. LaFleur? 

Ms. LAFLEUR. Well, just to chime in, most of those 180 lawyers 

work on generating commission orders that are outgoing for the 

6,000 cases we do a year, including there are ones that work on 

projects and ones that work on regs. There may be 10 to 20 people 

that work on our cases in the courts of appeal, something like a 

dozen. It is small group. 

Mr. WHITFIELD. And what is the total budget for FERC at this 

time? 

Mr. BAY. I believe FERC’s total budget is a little over $300 million. 

Mr. WHITFIELD. OK, oK. Do you have anything else? 

Mr. MCNERNEY. No. 

Mr. WHITFIELD. Thank you all so much. We look forward to 

working with you and the hearing is adjourned. The record will be 

kept open for 10 days for additional materials. And thank you all 

once again. 

[Whereupon, at 12:33 p.m., the subcommittee was adjourned.] 

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