U.S. GOVERNMENT PUBLISHING OFFICE

27–432 WASHINGTON : 2018

S. HRG. 115–318 

PENDING LEGISLATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY 

OF THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

ON

S. 186 

S. 1059 

S. 1337 

S. 1457 

S. 1799 

S. 1860 

H.R. 1109 

OCTOBER 3, 2017 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://www.govinfo.gov 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

CORY GARDNER, Colorado 

LAMAR ALEXANDER, Tennessee 

JOHN HOEVEN, North Dakota 

BILL CASSIDY, Louisiana 

ROB PORTMAN, Ohio 

LUTHER STRANGE, Alabama 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

TAMMY DUCKWORTH, Illinois 

CATHERINE CORTEZ MASTO, Nevada 

SUBCOMMITTEE ON ENERGY

CORY GARDNER, Chairman 

JAMES E. RISCH 

JEFF FLAKE 

STEVE DAINES 

LAMAR ALEXANDER 

JOHN HOEVEN 

BILL CASSIDY 

ROB PORTMAN 

LUTHER STRANGE 

JOE MANCHIN III 

RON WYDEN 

BERNARD SANDERS 

AL FRANKEN 

MARTIN HEINRICH 

ANGUS S. KING, JR. 

TAMMY DUCKWORTH 

CATHERINE CORTEZ MASTO 

COLIN HAYES, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

BRIANNE MILLER, Senior Professional Staff Member and Energy Policy Advisor 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SCOTT MCKEE, Democratic Professional Staff Member 
(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Gardner, Hon. Cory, Subcommittee Chairman and a U.S. Senator from Colorado ....................................................................................................................... 1 

Manchin III, Hon. Joe, Subcommittee Ranking Member and a U.S. Senator 

from West Virginia ............................................................................................... 2 

WITNESSES 

Danly, James, General Counsel, Federal Energy Regulatory Commission ........ 7 

McNamee, Bernard, Deputy General Counsel, U.S. Department of Energy ...... 15 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

American Chemistry Council: 

Statement for the Record ................................................................................. 3 

Danly, James: 

Opening Statement ........................................................................................... 7 

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

Responses to Questions for the Record ........................................................... 29 

Edison Electric Institute: 

Letter for the Record ........................................................................................ 33 

Gardner, Hon. Cory: 

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

Inhofe, Hon. James M.: 

Statement for the Record ................................................................................. 35 

Manchin III, Hon. Joe: 

Opening Statement ........................................................................................... 2 

Markey, Hon. Edward J.: 

Statement for the Record ................................................................................. 36 

McNamee, Bernard: 

Opening Statement ........................................................................................... 15 

Written Testimony ............................................................................................ 17 

Northeast Public Power Association: 

Letter for the Record ........................................................................................ 38 

Oklahoma Utilities: 

Letter for the Record ........................................................................................ 39 

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

Committee’s website at: https://www.energy.senate.gov/public/index.cfm/hearings-and-businessmeetings?ID=4E54A5F4-134D-4D11-B6DC-41D3A59AFA06 

(1) 

PENDING LEGISLATION 

TUESDAY, OCTOBER 3, 2017 

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

The Subcommittee met, pursuant to notice, at 2:31 p.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. Cory Gardner, 

Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. CORY GARDNER, 

U.S. SENATOR FROM COLORADO 

Senator GARDNER [presiding]. The Subcommittee will come to 

order. 

Good afternoon, everyone. Thank you for being here. 

The Subcommittee comes together today for a legislative hearing 

on a variety of legislation. As always, I appreciate the opportunity 

to work with the Subcommittee’s Ranking Member, Senator 

Manchin, to address key topics in the energy space. 

This legislative hearing will allow us the opportunity to receive 

testimony from and ask questions of key personnel from the two 

agencies that would be responsible for implementing the changes 

laid out in the various pieces of legislation before us today. 

My bill, the Responsible Disposal Reauthorization Act, would extend the life of a uranium mill tailings disposal site in Western 

Colorado through 2048. This disposal site, itself, is a former uranium and vanadium mill that produced roughly 2.2 million tons of 

tailings during its 20-year operation. Those mill tailings were made 

available for use in the 1950s and 1960s as fill material and sometimes mixed with concrete and mortar. 

We continue to find and remediate sites with these tailings 

mixed in them, and we need a safe and secure place to store them 

which is what the Grand Junction Disposal Site provides. The site 

is a valuable asset to the Department of Energy (DOE) which 

should continue to be used until it is full. 

I am proud to be an original co-sponsor of Senator Heinrich’s Energy Technology Maturation Act, a bill that would further the Department of Energy’s ability to commercialize the technology that 

results from their R&D programs. Without an emphasis on this 

commercialization, we risk leaving too many great ideas on the 

shelves of our national labs. DOE needs a variety of tools at their 

disposal to get these worthwhile technologies to market, and this 

bill adds a few more of those to the toolbox. 
2 

The Ranking Member’s bill, Capitalizing on American Storage 

Potential, looks to expand the eligibility of regional energy storage 

projects for the loan guarantee program. 

We will also be discussing Senate bill 186, the Fair Ratepayer 

Accountability Transparency and Efficiency Standards Act; S. 1457, 

the Advanced Nuclear Technologies Act; S. 1860, the Parity Across 

Reviews Act; and H.R. 1109, to amend Section 203 of the Federal 

Power Act, a bill very similar to S. 1860. 

I would like to welcome our two witnesses today, Mr. James 

Danly and Mr. Bernard McNamee. 

I will first turn to Senator Manchin, for his opening comments. 

STATEMENT OF HON. JOE MANCHIN III, 

U.S. SENATOR FROM WEST VIRGINIA 

Senator MANCHIN. Thank you, Chairman Gardner, and I want to 

thank you for holding this hearing and thank you all for being here 

today. 

I would like to also thank our witnesses from the Department of 

Energy and FERC. It is very important to have you both here before us. 

The proposals before Congress, before the Committee, cover a 

range of energy and electrical issues but I want to highlight two, 

in particular, which Chairman Gardner has just briefly gone over. 

Senate bill 1799, the Energy Technology Maturation Act, led by 

Senators Heinrich and Chairman Gardner, will help the national 

laboratories work with the private sector to commercialize innovative energy technology. I was happy to co-sponsor this bill and look 

forward to ensuring it helps the National Energy Technology Laboratory, we know it as NETL, in Morgantown, West Virginia, as it 

works to bring the technology, the development around coal, rare 

earth elements and natural gas to market. 

I would also like to briefly discuss my bill which is Senate bill 

1337, the Capitalizing American Storage Potential Act which I introduced with my friend, Senator Capito, also from West Virginia. 

I ask consent that this statement from the American Chemistry 

Council, in support of Senate bill 1337, be submitted to the record. 

Senator GARDNER. Without objection. 

[The information referred to follows:] 
3 

merican~ 

hemistry 

nell 

American Chemistry Council Statement for the Record 

Submitted to the Senate Energy and Natural Resources Subcommittee on Energy 

Legislative Hearing on S. 1337 

October 3, 2017 

The American Chemistry Council (ACC) is pleased to submit a statement for the record in support 

of S. 1337, the Capitalizing on American Storage Potential (CASP) Act. 

The CASP Act has the potential to turn the Appalachian Region into a major center of 

petrochemical and plastics products manufacturing in the United States, according to an ACC 

analysis, thanks to its world-class supply of energy resources and proximity to customers. 

ACC' s report, The Potential Economic Benefits(){ an Appalachian Petrochemicallndusfly, found 

that the quad-state region of West Virginia, Pennsylvania, Ohio and Kentucky could become a 

leader in America's chemical manufacturing renaissance. 

The basic building blocks of innovation 

Ethane and propane are natural gas liquids (NGLs) found in Appalachia's massive shale gas 

formations. They're also key raw materials that U.S. chemical manufacturers rely on to create 

materials and solutions used in countless products that make our lives safer, healthier, more 

comfortable, and more convenient. 

That's a big reason why America's shale gas resources have been able to make the United States 

the most attractive place in the world to invest in chemical manufacturing- driving a 

manufacturing revival of the sort not seen in decades. 

americanchemistry.com® 700 Second St., NE I Washington, DC 20002 11202) 249.7000 
4 

Thanks to abundant, affordable domestic natural gas, $185 billion in new chemical industry 

investment has been announced nationwide since 20 I 0, supporting 310 projects including new 

factories, expansions, and restarts of facilities shuttered during the recession. The investment will 

translate into an estimated 823,000 permanent new jobs by 2025. 

Historic opportunity for Appalachian region 

Much of the new chemical industry investment announced so far has been concentrated along the 

Gulf Coast, longtime center of the U.S. chemical industry, with more to come. The Appalachian 

region could be next to join in. 

ACC' s report projects that much-needed jobs and tax revenue could come to the quad-state region. 

It could result in about 100,000 permanentjobs, including 25,700 new chemical and plastic 

products manufacturing jobs, 43,000 jobs in supplier industries, and 32,000 payroll-inducedjobs 

in communities where workers spend their wages. The new investment could also lead to $2.9 

billion in new federal, state, and local tax revenue annually. 

Several companies have already announced investment projects, and there is potential for a great 

deal more. 

americanchemistry.com® 700 Second St., NE I Washington, DC 20002 I {202) 249.7000 
5 

New energy infrastructure is the missing link 

To touch off a new wave of investment in the Appalachian petrochemical industry, there needs to 

be a way to store and transport NGLs and chemicals. Only then will manufacturers have ready 

access to the resources needed to develop a community of petrochemical and derivative producers 

and support a supply chain of industries throughout the region. 

What's needed is the Appalachian Storage and Distribution Huh -an NGL storage facility and 

pipeline distribution network. In ACC's report, we present a hypothetical scenario that includes 

the development of a storage hub for NGLs and chemicals, a 500-mile distribution network, 

petrochemical and plastics manufacturing, and potentially other energy infrastructure and 

manufacturing. 

Policymakers must do their part 

Private industry can develop the Hub, but Congress and the Administration need to help get things 

started: 

• Uncertainty around financing is a key barrier to the development of energy infrastructure 

in the Appalachian region. Policymakers should affirm that the Hub is eligible for existing 

private-public financing programs. 

• As Congress and the Administration consider infrastructure modernization legislation, the 

Appalachian Hub should be a priority. 

• Ensuring a timely and efficient regulatory permitting process is essential. 

In June, Senators Joe Manchin and Shelley Moore Capito introduced the 

"'""'"'f'll'n Stora~;e (('ASP) Act (S. 1337). The legislation would make a regional storage 

hub eligible for the U.S. Department of Energy's successful Title XVII loan guarantee program. 

For decades, those who live in and study the Appalachian region have envisioned a thriving center 

of manufacturing activity. And they know that energy infrastructure- the Hub will be critical 

to unlocking the opportunity. We urge the Committee to support this important piece of 

legislation. 

americanchemistry.com® 700 Second St., NE I Washington, DC 20002 I (202) 249.7000 
6 

Senator MANCHIN. West Virginia and the greater Appalachian 

region has an extraordinary opportunity in its hands. The quad 

states of West Virginia, Ohio, Pennsylvania and Kentucky possess 

certain attributes that make the region a prime location for an energy storage hub. The region’s shale formations, the Marcellus and 

Utica, contain abundant wet natural gas and natural gas liquids 

(NGL) like ethane, butane and propane. 

In order to access the vast resources of natural gas in Appalachia, we must also remove and separate out the NGLs. NGLs, 

like ethane, are the building blocks of thousands of other consumer 

products that you and I use every day, including clothing and footwear, electronics, food packaging and aerospace equipment. 

I would also note that as cars become more fuel efficient they 

must become lighter which means the increased use of plastics out 

of manufacturing and the increased portions of NGLs. The environmental benefits are notable. 

A reliable supply of these products is a critical piece of the consumer product’s supply chain and, therefore, our national economy. 

Coupled with expanding energy infrastructure in the region, geologic storage, which is naturally occurring, a storage hub for NGLs 

will play a role in attracting much needed manufacturing investment and associated economic activity. The development and construction of a hub to store these high-value products in underground geological formations could ultimately lead to a petrochemical manufacturing hub and a revitalization of the area’s manufacturing center. 

In fact, a report released earlier this year by the American 

Chemistry Council estimated that the development of a storage 

hub would drive up to $36 billion in new investment, 68,706 direct 

and indirect jobs and about $2.9 billion in annual tax revenues. 

West Virginia is a state that is rich in natural resources, and I believe the Appalachian storage hub offers an excellent chance for geographic diversification of our manufacturing sector. 

Additionally, the hub will help insulate our nation from supply 

disruptions due to ongoing extreme weather events in the Gulf, and 

I don’t think we have to elaborate on that. It is just horrible. 

Senate bill 1337 highlights the importance of federal support and 

partnerships to innovative projects like this one. This bill reflects 

the role that the government can play in revitalizing the Appalachian region by further clarifying the scope of eligibility for the 

Title 17 loan program. 

Mr. Chairman, you know as well as I do, the importance of R&D 

funding, particularly funding that partners the public and private 

sectors. 

While I recognize the fiscal challenges we face, I believe that it 

is important, very important, that we work hard to ensure that effective programs are sustained. 

I look forward to discussing this bill today because a storage hub 

is an efficient utilization of our natural energy resources and will 

lead to economic development and greater energy security. 

I have been working diligently with the stakeholders involved, as 

well as with Secretary Perry, who visited West Virginia this summer to learn more about this opportunity and continues to work 

with us on it right now. 
7 

I look forward to working in a bipartisan way to find opportunities for this Committee to support that effort, and I want to thank 

the Chairman for being so kind and working with me. 

Mr. Chairman. 

Senator GARDNER. Thank you, Senator Manchin. 

Mr. Danly is our first witness. He is the General Counsel for the 

Federal Energy Regulatory Commission. We will begin with your 

testimony. 

STATEMENT OF JAMES DANLY, GENERAL COUNSEL, 

FEDERAL ENERGY REGULATORY COMMISSION 

Mr. DANLY. Chairman Gardner, Ranking Member Manchin, I 

very much appreciate the opportunity to come today to testify. 

My name is James Danly, and I am the General Counsel of the 

Federal Energy Regulatory Commission. Before I begin, I just want 

to mention that I’m coming here as a staff witness and the views 

that I present today are not those of the Commission as a body or 

those of any individual commissioner. 

I’ve been asked to appear in order to testify on three bills today. 

The first two would modify Section 203 of the Federal Power Act, 

and the third would modify Section 205 of the Federal Power Act. 

The first two bills, as I said, modify Section 203. Section 203 of 

the Federal Power Act subjects to the Commission’s approval a 

number of different types of financial transactions among jurisdictional entities. These bills together seek to amend Section 203 in 

order to establish a $10 million cap for the ‘‘merge or consolidate’’ 

subsection of Section 2013. Right now, there is no such limit. The 

value of these bills is that they would both bring that ‘‘merge or 

consolidate’’ subsection into conformity with the remaining subsections of Section 203 and they would help relieve an administrative burden on the agency and relieve regulatory burden on the jurisdictional entities that are seeking to conduct these relatively 

small transactions. In my view, exempting the transactions that 

are below this reasonable $10 million threshold does not present 

any problem for market power or rate prices going forward. 

The third bill, which modifies Section 205, is another matter. Ordinarily, when a public utility seeks to amend its tariff it has to 

make a filing under Section 205 with a 60-day time limit. In the 

almost invariable course of the Commission’s activity the Commission takes action, one way or another, within that 60 days on that 

filing to amend the tariff. In exceptionally rare circumstances the 

Commission does not act within those 60 days and the tariff filings, 

the tariff changes go into effect by operation of law. 

This bill seeks to alter Section 205 so as to allow for parties 

agreed in the 205 proceeding to seek rehearing should they not like 

the outcome of the rates going into effect by operation of law. 

As the Subcommittee considers whether or not to adopt this legislation, I would urge it to keep in mind several points. The first 

one is that even as Section 205 is currently constituted there is still 

redress available for aggrieved parties under Section 206. Second, 

the legislation may not produce the intended relief that, I believe, 

the Subcommittee is looking for. It may not provide, as a practical 

matter, the relief that, I think, the bill might be thought to. And 

I can get into details with that, if you’re interested, in questions. 
8 

And lastly, I think that the language of the bill might be a little 

bit overbroad to accomplish that narrow goal. 

So, with that, I just want to thank you for the chance to speak 

about these bills, and I look forward to any questions you might 

have. 

[The prepared statement of Mr. Danly follows:] 
9 

Introduction 

Testimony of James Danly 

General Counsel 

Federal Energy Regulatory Commission 

Before the United States Senate 

Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 

Chairman Gardner, Ranking Member Manchin, and members of the Subcommittee: 

Thank you for inviting me to testify today. My name is James Danly, and I am the 

General Counsel of the Federal Energy Regulatory Commission (the Commission). I 

appear before you as a staff witness, and the views I present are not necessarily those of 

the Commission or any individual Commissioner. 

I have been asked to testify on three bills that would amend the Federal Power Act (FPA 

or the Act): (1 and 2) H.R. 1109 and S. 1860, bills that would modify Section 203 of the 

FP A to set a minimum threshold value of $10 million on the merger or consolidation of 

jurisdictional facilities that would be subject to Commission approval; and (3) S. 186, a 

bill that would amend Section 205 of the FP A to permit a party to seek rehearing after a 

rate change filed under Section 205 takes effect by operation of law due to Commission 

inaction. 

Background 

Part II of the FPA charges the Commission with oversight of wholesale electric markets 

and the public utilities that transmit or sell electricity at wholesale in interstate commerce. 

The Commission is required to ensure that the terms and conditions of jurisdictional 

services and the rates charged by public utilities are just and reasonable, and not unduly 

discriminatory or preferential. The FP A provides the Commission with multiple statut01y 

tools to carry out this mission, two of which are at issue in the pending bills. 

First, Section 203 of the Act requires public utilities to seek Commission approval before 

engaging in a wide range of corporate transactions. 

Second, Section 205 of the Act provides that public utilities may not change their rates or 

other provisions of their tariffs without providing at least 60 days' prior notice to the 

Commission and the public. In typical practice, a public utility makes a Section 205 

filing with the Commission, and the Commission takes action on the filing within the 60-

day period. If, however, the Commission does not take action on the filing within that 

period, the public utility's filing automatically goes into effect when the 60-day period 

expires. 
10 

A Bill to Amend Section 203 

S. 1860 (the "Parity Across Reviews Act" or the "PARs Act" and H.R. 1109) 

The bills are identical and would add a minimum dollar value to Subsection 203(a)(l)(B) 

of the FP A such that public utilities would only need prior Commission approval to 

"merge or consolidate" (that is, to acquire) facilities subject to the Commission's 

jurisdiction if the facilities have a value in excess of $10 million. In other words, mergers 

or acquisitions of facilities with a value less than that amount would not need 

Commission approval. 

The bills would align this provision of the FPA with the other three subsections of 

Section 203(a)(1). Subsections (A), (C), and (D) only require Commission approval if 

the transaction at issue exceeds $10 million in value. Subsection 203(a)(l)(A) requires 

Commission approval before a public utility sells, leases, or othe1wise disposes of 

facilities worth more than $10 million. Subsection 203(a)(l)(C) imposes the same 

obligation for the acquisition of more than $10 million in securities of another public 

utility. Finally, Subsection 203(a)(l)(D) mandates Commission approval before the 

acquisition of a generating facility worth more than $10 million. 

While the current statute is the result of the Energy Policy Act of2005, the requirement 

for merger approval dates back to the original 1935 Federal Power Act. The prior version 

of Section 203 combined the cmTent statut01y mandates of Subsections 203(a)(1 )(A)-(C) 

in a single subsection that included a $50,000 threshold. Under this statutory language, 

the Commission had issued regulations imposing a $50,000 threshold exception for all of 

the provisions. After the 2005 legislation that subdivided the section, added what is now 

in Subsection (D), and imposed the three $10 million thresholds, the Commission 

interpreted the statute as precluding the Commission from applying a $10 million dollar 

threshold to the "merge and consolidate" clause. As a result, the requirement for 

approval now applies even to acquisitions of jurisdictional facilities that are less than 

$50,000. Adding a $10 million threshold to the "merge and consolidate" clause in 

Subsection 203(a)(l)(B) would, to some extent, retum the statute to the situation that 

existed prior to the 2005 legislation where the same minimmn threshold applies equally 

to every subsection of the statute. 

In my view, the proposal to add a $10 million threshold to Subsection 203(a)(1)(B) of the 

FP A would ease the regulatory burden on industry without impeding the Commission's 

regulat01y responsibilities. Transactions below the proposed tlu·eshold are unlikely to 

impose a significant negative impact on competition or the rates of utility customers. 

Previously, Commission staff has noted that one potential concem involves serial 

mergers. That is, under the proposed bill, the Commission would no longer have the 

authority to review and approve mergers and acquisitions valued at less than $10 million 

even in situations where the transaction took place as one of a series of transactions that 

exceeded the limit in total. I believe that the Commission wonld have tools to protect 

consumers and the public interest if such circumstances arose. 
11 

For one, the proposed bills would add a new Subsection 203(a)(7)(A) to establish an 

additional reporting requirement on certain transactions under the $10 million threshold. 

Specifically, a public utility undertaking a merger or acquisition where the facilities being 

acquired have a value in excess of $1 million but less than $10 million would have to 

notify the Commission of the transaction 30 days after consummation. This after-the fact 

reporting would be for infonnational purposes only- that is, the Commission would not 

take action as to any of these transactions. However, the notifications would provide the 

Commission and the public with greater transparency as to these types of transactions. 

Moreover, I believe that the Commission has tools under its existing statutory framework. 

For example, if an entity with market-based rates obtained the opportunity to exercise 

market power as a result of such transactions, the Commission could limit or eliminate its 

ability to engage in transactions at market-based rates. Additionally, the Commission has 

a range of market power mitigation measures that limit market power within the 

organized wholesale electric markets. Finally, if the exercise of market power involves 

market manipulation or violation of a Commission rule, regulation, order or tariff 

provision, the Commission can bring an enforcement action. 

One concem I should note about the proposed bills is the placement of the $10 million 

threshold clause in revised Subsection 203(a)(l)(B). As revised, Subsection 203(a)(l)(B) 

would read: "No public utility shall, without first having seemed an order of the 

Commission authorizing it to do so ... (B) merge or consolidate, directly or indirectly, 

such facilities, or any part thereof, of a value in excess of $10 million with those of any 

other person, by any means whatsoever." There is some risk that the statutory language 

could be read as modifying the wTong set offacilities and imposing the $10 million 

threshold on the value of the pre-existing assets of the acquiring public utility rather than 

on the assets that are being acquired (that is, the assets merged or consolidated with the 

pre-existing assets ofthe acquiring public utility). Placing the $10 million threshold 

language after the "any other person" may address this concem. Proposed Subsection 

203(a)(7)(A) presents a similar issue. 

A Bill to Amend Section 205 

S. 186 (The "Fair Ratepayer Accountability, Transparency, and Efficiency 

Standards Act" or "Fair RATES Act") 

As discussed above, when a public utility seeks to change its rates or other provisions of 

its tariff, FP A Section 205 requires the utility to file the proposed change with the 

Commission sixty days in advance of when the change is to take effect. The Commission 

then provides the public the opportunity to intervene in the proceeding and to comment 

on the proposed change. Prior to expiration of the statutory, sixty-day notice period, the 

Commission will take action on the proposed rate or tariff provision, typically by issuing 

a Commission order. Under Section 313 of the FPA, any party aggrieved by a 

Commission order may seek rehearing of that order. Once the Commission acts on the 

request for rehearing (or fails to act within 30 days), review is available in the United 
12 

States Courts of Appeals. A request for rehearing, though, is a prerequisite for appellate 

review. Under Section 313, parties may not seek review from the Court of Appeals if 

they did not seek rehearing. 

ln exceedingly rare cases, a public utility's filing under Section 205 has taken effect by 

operation of law without a Commission order. I am familiar with only six occasions 

where this outcome has occurred under either the FP A or under the comparable 

provisions of the Natural Gas Act. One such occunence was in September 2014, when 

capacity auction results filed by ISO New England (IS O-NE) became effective by 

operation of law. At the time, the Commission had only four sitting Commissioners. 

Public statements issued by the Commissioners after lSO-NE's filing took effect revealed 

a 2-2 split on the question of whether to accept the auction results, which was why the 

Commission never issued an order regarding the filing. 

When filings have taken effect under Section 205 without a Commission order, parties 

have occasionally sought rehearing. The Commission has dismissed those rehearing 

requests on the grounds that rehearing was not available because the Commission did not 

issue an order. The Commission followed that approach with respect to rehearing 

requests filed in the IS O-NE case, and, when challenged on appeal, the Commission's 

approach was affirmed by the United States Court of Appeals for the District of 

Columbia Circuit. The Court agreed with the Commission that, consistent with the 

cunent statutory language and relevant precedent, where there is no Commission order in 

a Section 205 proceeding, rehearing and appellate review are precluded. 

S. 186 could partially change that outcome. Under the bill, absence of Commission 

action resulting in a filing taking effect by operation of law would constitute an order 

accepting the filing for purposes of rehearing and appeal under Section 313 of the FP A. 

As a result, the proposed legislation would permit any pru1y aggrieved by the filing to 

seek rehearing. If the Commission acts on that request for rehearing, the aggrieved party 

could seek review in the Court of Appeals. 

The proposed legislation offers the possibility for aggrieved parties to pursue further 

administrative and judicial process when a disputed rate goes into effect even though half 

of the seated Commission would not have accepted the rate in an order. Oddly, under the 

cmTent statutory framework, a party who manages to persuade only one of four 

Commissioners, and loses on a 3-1 vote, may request rehearing at the Commission and 

seek redress at a Court of Appeals. However, a party that is perhaps more persuasive 

and manages to convince two of four Commissioners, resulting in a 2-2 split- and thus 

no Commission order is currently barred from seeking rehearing and appellate review. 

This bill potentially represents a step toward correcting this exceedingly rare, but not 

unimportant, problem. However, it is only a partial measure, and there are several issues 

that l would like to bring to the Subcommittee's attention as it considers this legislation. 
13 

First, the mere fact that aggrieved parties are foreclosed from requesting rehearing and 

subsequent appellate review does not mean that they are without means of redress under 

the cun·ent formulation of the FPA. Should a public utility's filing take effect by 

operation of law, and the aggrieved patiy believes those rates to be unjust and 

unreasonable or unduly discriminatory, they may avail themselves of the procedures 

afforded under section 206. They can file a complaint in a separate action and, if they 

meet their burden, they will be able to have the rates altered. While this option increases 

the cost to litigants and shifts the burden to the party filing the complaint, any amendment 

to the FP A should be adopted knowing that this alternative route to redress already exists. 

Second, the bill may not afford the relief anticipated by the Subcommittee. Should the 

Commission's inaction be the result, as in the IS O-NE case, of a 2-2 split, a similar result 

could obtain for a later order on rehearing. In that case, there would be another 2-2 split 

and no order on rehearing would issue. In such a case, it would be exceedingly unlikely 

that a Court of Appeals would entertain a petition for review. Moreover, even if a Court 

of Appeals accepted the petition, the Court would almost certainly remand the case back 

to the Commission for further adjudication. When sitting in review of agency action, 

Courts of Appeals review the evidentiary record compiled below and the reasoning the 

agency employed as reflected in its orders to support its decision based on that record. 

ln the case of a serial 2-2 split, no orders would issue and such a review would be 

impossible. Remand would appear to be the Comt's only option. 

Finally, the proposed language might be overbroad. As drafted, the bill's effects are not 

restricted to the occasion, like that presented in the IS O-NE case, of a deadlocked 

Commission, but instead apply to "[a]ny absence of action" by the Commission that 

allow rates to go into effect by operation oflaw. If the Subcommittee's primary objective 

is to provide remedy following inaction by a deadlocked Commission, it might consider 

nan-owing the circumstances under which the bill's provisions would apply in order to 

limit unintended consequences. 

In summary, while the Subcommittee may ultimately decide that this change to 205 is 

necessary, it is my view that it only partially advances the interests of an exceedingly 

nanow categmy of aggrieved parties in very rare occasions of Commission inaction. 

Given that the right to seek rehearing under such circumstances does not, as a practical 

matter, guarantee a rehearing order or appellate review, and given the fact that parties can 

always challenge rates under section 206, l would counsel discretion in your deliberations 

on whether to alter the central provision of the Federal Power Act. Unlike S. 1860, 

which seeks to ameliorate a serious problem that affects the whole of the regulated 

community and represents an administrative burden on the Commission, this bill, while 

perhaps defensible, is not required to ensure the success of the Commission's role 

regulating the wholesale power markets, nor to guarantee the rights of aggrieved patties. 

Conclusion 
14 

Thank you for inviting me to testify on the proposed legislation. I look forward to 

working with you in the future and I am happy to answer any questions you have. 
15 

Senator GARDNER. Thank you, Mr. Danly. 

Mr. McNamee, the Deputy General Counsel for Energy Policy at 

the Department of Energy, thank you for joining us. 

STATEMENT OF BERNARD MCNAMEE, DEPUTY GENERAL 

COUNSEL, U.S. DEPARTMENT OF ENERGY 

Mr. MCNAMEE. Thank you, Senator. 

Chairman Gardner, Ranking Member Manchin and members of 

the Subcommittee, I am the Deputy General Counsel for Energy 

Policy at the Department of Energy and it’s a privilege and honor 

to represent the Department here today. I just want to thank you 

for the opportunity to testify before you on behalf of the Department. 

The Department of Energy is an agency tasked with a number 

of important responsibilities, many of them you already know, but 

among them are assuring the nuclear readiness, overseeing the nation’s energy supply, carrying out the environmental cleanup from 

the nuclear mission and managing the Department’s 17 national 

labs. 

In support of the Administration’s goals of establishing energy 

dominance and economic competitiveness, the Department’s energy 

and science programs are focused on research and development 

across the variety of technologies and variety of fuel sources. 

By carefully setting priorities and focusing on the most promising 

research, the Department and its national laboratories will continue to support the world’s best enterprise of scientists and engineers. These are the great men and women who create the innovations that help drive American prosperity, security and competitiveness for the next generation. 

I’ve been asked to testify on multiple bills today which the Administration continues to review. They are: Senate bill 1059, the 

Responsible Disposal Reauthorization Act; Senate bill 1337, the 

Capitalization on America’s Storage Potential Act; Senate bill 1457, 

the Advanced Nuclear Energy Technologies Act; and Senate bill 

1799, the Energy Technology Maturation Act. I look forward to discussing these bills in further detail and answering your questions. 

The Department also appreciates the ongoing bipartisan efforts 

to address our nation’s energy challenges and looks forward to 

working with the Subcommittee and the entire Committee on legislation on today’s agenda and into the future. 

Our nation will achieve our economic, energy and environmental 

goals by ensuring that the United States continues to be a leader 

in energy technology, development and delivery and by unleashing 

America’s ingenuity to unlock our natural resources. 

Through research and development, collaboration at all levels of 

government and the private sector, the Department of Energy and 

our national labs aim to support America’s energy renaissance. 

The Administration looks forward to continuing to work with 

Congress on the legislation to enhance U.S. competitiveness and 

job creation as a whole. 

I would ask that my written testimony be entered into the 

record. I thank you for the opportunity to be here and look forward 

to your questions. 

Thank you. 
16 

[The prepared statement of Mr. McNamee follows:] 
17 

Testimony of Deputy General Counsel Bernard McNamee 

U.S. Department of Energy 

Before the 

U.S. Senate Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 

Introduction 

Chainnan Gardner, Ranking Member Manchin, and Members of the Subcommittee, it is a 

privilege and an honor to serve at the Department of Energy, an agency tasked with, among other 

important responsibilities: assuring our nuclear readiness, overseeing the Nation's energy supply, 

carrying out the environmental clean-up from the nuclear mission, and managing the 

Department's 17 National Laboratories. Thank you for the opportunity to testify today on behalf 

of the Department of Energy (DOE) regarding legacy waste cleanup responsibilities, expanding 

the U.S.'s ethane storage infrastructure, commercializing DOE National Lab developed 

technologies, and accelerating the maturation of advanced nuclear energy. 

In support of the Administration's goals of establishing energy dominance and economic 

competitiveness, resources within DOE's energy and science programs are focused on research 

and development (R&D) across a variety of technologies that support American energy 

independence and domestic job-growth. Through careful prioritization and ensuring funding 

goes to the most promising research, DOE, through its National Laboratories, will continue to 

support the world's best enterprise of scientists and engineers who create innovations to drive 

American prosperity, security and competitiveness for the next generation. 

l have been asked to testify on multiple bills today, which the Administration continues to 

review. 

The Department appreciates the ongoing bipartisan efforts to address our Nation's energy 

challenges, and looks forward to working with the Committee on the legislation on today's 

agenda and any future legislation. 

S. 1059, Responsible Disposal Reauthorization Act of2017 

Legacy waste cleanup is a top priority for the Department of Energy. The Grand Junction, 

Colorado disposal site was authorized by Congress as part of the Uranium Mill Tailings 

Radiation Control Act of 1978. 

The disposal site is the only active site available for receiving uranium mill tailings managed by 

DOE's Office of Legacy Management (LM). The Department works closely with locaJ, state, 
18 

and federal officials to ensure the protection of public health, safety, and the environment by 

moving contaminated materials away from public places. 

The Grand Junction Disposal Site contains about 4.5 million cubic yards of low-level radioactive 

waste and receives approximately 2, 700 cubic yards of waste per year. The disposal site has 

sufficient space to receive an additional estimated 235,000 cubic yards indicating the site could 

operate for 87 more years at current rates. 

New waste materials come from numerous locations- primarily the City of Grand Junction 

continues to excavate waste tailings previously used in roads, sidewalks, and homes. DO E-LM 

operates groundwater treatment systems at several sites that will continue to generate waste 

eligible for disposal in the Grand Junction Disposal Site, and that valuable capacity should 

continue to be utilized. 

The Department of Energy looks forward to continuing to work with this subcommittee on 

responsible disposal management of the Nation's legacy sites. 

Energy Landscape 

There has been an American energy renaissance in the United States over the last decade. 

Through the increase in production of crude oil and other liquid fuels, refined petroleum 

products, and production of natural gas, the United States has become an energy powerhouse. 

Wind and solar power generation also play an important role in our energy mix and vehicles 

have reached historic levels of efficiency. 

The United States is, however, at an energy crossroad. Our energy landscape is dramatically 

changing with implications for all parts of the energy sector and our economy as a whole. These 

rapid and dramatic changes have created enormous opportunities. At the same time, they pose a 

set of challenges for energy policy makers, investors, non-governmental organizations and 

industry. 

The changing resource mix from traditional baseload generation, recent severe weather events, 

and the dynamic nature of grid technologies including changes on the demand side are 

bringing grid resilience to a new, more prominent place in the discussion. Specifically, as we 

keep one eye on day-to-day reliability and resource adequacy, we must also begin to incorporate 

resilience into the discussion. Weather events such as the Polar Vortex, Superstorm Sandy, or 

Hurricanes Harvey, Irma, and Maria are stark reminders of the need to have a bulk power system 

that can withstand stresses and recover quickly. 

These challenges come in many forms, and addressing them will require action by many parties, 

including Congress, the private sector, and public sector. The Administration looks forward to 

working closely with the Congress on this important topic. 

S. 1337, Capitalizing on American Storage Potential Act 

2 
19 

This new energy landscape also presents opportunities. I appreciate the chance to discuss the 

legislation on hydrocarbon feedstock storage infrastructure in Appalachia. The Marcellus Shale 

and Utica Shale sites are blessed with an abundance of hydrocarbon feedstock, such as ethane, 

which can be used as a building block for plastics. 

The U.S. Energy Information Administration estimates that natural gas production in the region 

has grown from just over 2 billion cubic feet per day (Bcfd) in 2010 to 23 Bcfd mid-20 17. In the 

same period, natural gas liquids production has grown six fold (from l 06,000 barrels per day to 

621,000 barrels per day). With an increase in energy production, there is often a need for 

workforce development in the same region. The Department of Energy's National Energy 

Technology Lab (NETL) is supporting workforce development to support growth of ethane 

production and storage in the region. 

This Administration believes that the private sector has the most important role to play in the 

development of late stage energy projects. The Administration is committed to reasserting the 

proper role of what has become a sprawling Federal Government and reducing deficit spending. 

To that end, the Administration supports an increased reliance on the private sector to fund laterstage research and development of energy technologies, and focuses Federal resources toward 

early-stage research and development. 

The Department looks forward to continuing our general dialogue on ethane-related issues. 

Recently, the Secretary of Energy had the opportunity to participate in a very productive 

roundtable discussion with relevant stakeholders, and the Department looks forward to engaging 

this subcommittee further. 

S.l799, Energy Technology Maturation Act of2017 

As a science agency, the Department of Energy plays an important role in the innovation 

economy. DOE's 17 National Laboratories engage in research that expands the frontiers of 

scientific knowledge and generates new technologies that address the Nation's greatest energy 

challenges. 

Accelerating the transition of technologies from the laboratory bench to the marketplace is an 

important component of increasing America's economic prosperity and energy security. This 

mission is the focus of the Department of Energy's Office of Technology Transitions, which 

oversees the technology transfer programs across the National Laboratories, including industry 

and other stakeholder engagement for the purpose of private sector access to lab-developed 

technologies and capabilities for the purpose of moving these to the marketplace. 

DOE-funded energy R&D will continue to prioritize early-stage R&D where the federal role is 

strongest and reflect an increased reliance on the private sector to fund later-stage research, 

development and commercialization of energy technologies. DOE is actively working with the 

National Laboratories to reduce barriers to industry engagement with the laboratories to 

accelerate energy innovation in America. DOE has made it a priority to stren1,>then the 

engagement between National Laboratories and industry and other partners. 

3 
20 

In response to investors and corporate partners, the DOE Office of Technology Transitions and 

its recently launched Energy Investor Center are streamlining industry-lab connections and 

access with a broad strategy of both live interaction through workshops and other events and 

with web-based tools to increase, improve and integrate information flow through the Lab 

Partnering Service. 

DOE currently uses its Technology Commercialization Fund (TCF), to assist the private sector 

increase the commercial impact and number of National Laboratory-developed energy 

technologies transitioned into commercial development. Just last month the Department 

announced $19.7 million in funding to help businesses move promising energy technologies 

from DOE's National Laboratories to the marketplace. This funding supported through the 

Office of Technology Transitions' TCF- which requires that government funds be matched by 

private sector capital -will support 54 projects across 12 National Laboratories involving more 

than 30 private-sector partners. 

Through these efforts, DOE is fostering an environment that promotes responsible investment, 

increased efficiency and development of new technologies, as well as predictability and ease of 

access by the private sector to the National Laboratories and Facilities. 

I look forward to continuing our dialogue on how to bring to market National Lab technologies. 

Nuclear Energy Research 

Nuclear energy is a key part of our diverse energy mix, providing essential reliability and 

resiliency services for our grid. Early-stage research into advanced reactors, including advanced 

small modular reactor technologies (SMRs), is a key part of the DOE's goal to enable the 

development of safe, clean and affordable nuclear power options. The Department recognizes 

the potential transformational value that advanced SMRs can provide to the Nation's economic, 

energy security and environmental outlook. 

S. 1457, Advanced Nuclear Energy Technologies Act 

Nuclear energy is clean, reliable, and safe, but the nuclear power industry needs to continue to 

innovate. 

Advanced reactors, including small modular reactors, hold great promise as a clean, reliable, and 

secure power source for our nation. The Department recognizes that advanced reactors face 

challenges to ultimately achieving commercialization. Accordingly, the Department plans to 

partner with nuclear technology developers, including those involved with existing fleet, small 

modular reactor and other advanced reactor designs, in cost-shared early-stage research and 

development. 

In addition to cost-shared early-stage research and development, as well as specific funding 

opportunities, the Administration supports prioritized investments in nuclear energy research 

infrastructure to enable private sector innovation. 

4 
21 

Conclusion 

Our Nation will achieve our economic, energy, and environmental goals by ensuring the United 

States continues to be a leader in energy technology, development and delivery, and by 

unleashing America's ingenuity to unlock our natural resources. Through research and 

development, collaborations at all levels of government and the private sector, the Department of 

Energy and our National Labs aim to support an efficient transition during our Nation's energy 

revolution. 

The Administration looks forward to continuing to work with Congress on legislation to boost 

U.S. competitiveness and job creation. 

Thank you again for the opportunity to be here today, and I look forward to your questions. 

5 
22 

Senator GARDNER. Thank you. 

Your written testimony will be entered into the record. Thank 

you for that. 

Thank you both for being here today. 

Senator Heinrich, Senator Manchin and I have already bragged 

about your legislation in our opening comments. Did you want to 

make a few opening comments here? We will get to you in questions in a little bit, but do you want to make an opening statement? 

Senator HEINRICH. I will keep it short and just say, I sure appreciate you holding this hearing and we are excited to get this legislation moving. Thank you for participating and being a co-sponsor, 

both you and the Ranking Member. 

Thank you very much. 

Senator GARDNER. We will start with our questions. 

Mr. McNamee, in your testimony you talked about the Grand 

Junction disposal site, that it is the only active site managed by 

the Department of Energy’s Office of Legacy Management and that 

it collects low-level radioactive waste, primarily from the local area. 

Could you talk about the assessment that went behind the support of finding the cost effectiveness of extending the facility authorization for another 25 years is appropriate? Is it appropriate, 

in your judgment, to extend the facility use period? 

Mr. MCNAMEE. The Department has not taken a specific position 

on the bill for the actual disposal site itself. As you’re aware, 

there’s about—there’s sufficient space in order to keep that site 

available and taking what has been on average, about 2,700 cubic 

yards of material a year and it could be extended for up to 85 

years. So your legislation is within that time period. 

Senator GARDNER. Great. 

I understand that it has about 250,000 cubic yards of additional 

material that the site could accommodate, so thank you. 

Mr. MCNAMEE. That’s correct. 

Senator GARDNER. I want to turn to the Heinrich/Manchin/Gardner legislation. The bill under discussion would expand the authorization for the Department of Energy and its national labs to focus 

on the commercialization of innovative technologies, as we have 

discussed. 

Could you talk a little bit more about the effectiveness of the existing Technology Commercialization Fund program at DOE and 

what we have seen from that existing fund? 

Mr. MCNAMEE. The existing fund has available to it, under the 

way that Congress has structured funding, about $20 million a 

year in order to provide funding. And it is focused currently on providing a way to bring the technologies that’s being developed by the 

labs and the other national entities under DOE in order to help not 

only create the innovation but also giving an opportunity for the 

private sector. And that has been under this Administration, particularly Secretary Perry, trying to make sure that there’s more access. 

This bill enhances that approach making sure that, especially, 

small businesses would have access to that technology and have an 

ability to tap into certain funds in order to bring that to market. 

Senator GARDNER. Is that one of the biggest challenges the current fund has, that inability or perhaps not quite as robust ability 
23 

to have the participation from the private sector partnerships that 

you have just described? 

Mr. MCNAMEE. I don’t have the specific information about the 

challenges they’ve had, in that sense, but clearly, being able to 

make sure that small businesses have access to the great technology and insights that the labs have is an important thing. And 

so, therefore, this legislation is consistent with that. 

Senator GARDNER. Thank you. 

Senator Manchin. 

Senator MANCHIN. Thank you, Mr. Chairman. 

Mr. McNamee, on the proposed Appalachian storage hub, it is a 

regional hub providing storage for natural gas liquids. I think you 

are familiar with what we are trying to accomplish. It is in a quad 

state—West Virginia, Pennsylvania, Ohio and Kentucky. 

I have been encouraged by Secretary Perry’s interest in the 

project. He came to West Virginia and we went over the entire 

project, the opportunities we might have. And the storage hub promotes the efficient utilization of the natural resources, energy resources, we have. 

So I would like to give you a chance today to provide the Committee with a DOE perspective on that hub, if you all had a chance 

to go in depth on it? And for the security of our nation? And the 

other part of my question is going to be—it has been a very busy 

hurricane season, as we have seen, and every time we hear of a 

hurricane even coming close to the coast in the Southwest, we 

know gasoline prices, shortages—there will be every excuse in the 

world and every reason in the world to start changing the flow of 

energy. This would stabilize, I believe, the entire country. Your insight on that would be very much appreciated. 

Mr. MCNAMEE. Thank you, Senator Manchin. 

You’re correct that the idea of this energy hub has created great 

interest. As you mentioned, Secretary Perry, I believe in July, attended a conference dealing with this in Morgantown, West Virginia. 

Senator MANCHIN. Right. 

Mr. MCNAMEE. And clearly the energy renaissance that has 

taken place in this country has been phenomenal in terms of not 

only in its gas production, but its natural gas production and especially in the Utica and Marcellus shale production. 

What’s happened in this area of the country, especially where 

your legislation and where the discussion about the energy hub 

would be, would be in the center of one of the major centers for 

that and also expand from it, centers that are usually perceived for 

this sort of activity in the Southwest United States. 

The—— 

Senator MANCHIN. Did you all consider the protection as far as 

the natural geographical location and protection from the severe 

weather storms that we are having? 

Mr. MCNAMEE. Yes, sir. 

It clearly, that even being in this central location of the country 

away from the hurricane centers, makes a large difference. It also 

makes a difference that the resource is there and so there’s not as 

much transportation cost. 

Senator MANCHIN. Right. 
24 

Mr. MCNAMEE. You know, through the pipelines or otherwise 

and that will also provide—I believe as I’ve understood it, that the 

theory behind this hub is also that it will attract other businesses 

to the area in order to create an economic engine to provide new 

jobs to a region that’s been so hard hit. 

Senator MANCHIN. Right. 

Mr. MCNAMEE. You know, because of the challenges on environmental issues and coal issues. 

Senator MANCHIN. Yes. It would be a win/win for all of us. 

Mr. Danly, if I may. Last week, as a follow-up to a report that 

was released in August, Secretary Perry sent a proposal to FERC 

directing FERC to write a rule which will enhance reliability and 

resilience of our electric grid by more appropriate valuing of the 

central reliability services that many plans and financial straits 

offer but are not compensated for. Do you know? 

It is especially timely because we have seen several recent natural disasters putting the grid in danger. I know how close we 

came in January 2014 during the Polar Vortex—the frigid temperatures resulted in a record of 141,132 megawatts called up on in 

PJM to meet the demand. We came close to lights out and we have 

had them testify before us before, all the different carriers, and 

PJM especially. 

Following the winter of 2014, AEP reported that nearly 90 percent of its coal plants that were scheduled for retirement ran during the vortex. That means without that, the lights would have 

gone off. 

So we keep talking about the reliability that we have to have in 

the grid system. I am curious what FERC intends to do following 

the order and what are the Commission’s next steps? 

Mr. DANLY. Thank you, Senator. 

You’re right. Last week under Section 403 the Secretary exercised his privilege to initiate a rulemaking. Today, the Commission 

issued a notice, a schedule notice, that invited comments and reply 

comments. Right now the Commission is internally reviewing the 

Notice of Proposed Rulemaking (NOPR) that was put forward by 

the Secretary. We’re reviewing the options that are available and 

we are in the process of building the record by soliciting these comments and reply comments. Once they’re assembled we’re going to 

review them and take the appropriate action within the 60-day 

timeframe established by the NOPR. 

Senator MANCHIN. I know FERC is very much aware of the baseload plants and basically I think we have baseload today, and the 

definition of baseload means uninterruptible power, that is going to 

be coal and nukes. 

Natural gas plants are coming on strong replacing a lot of the 

baseload plants. Natural gas is considered a baseload today in our 

grid delivery, in the delivery system to the grid, but it is still interruptible and it can still have some concerns with that. 

I do not know how you all are weighing that on potential disasters we may have or with blackouts or terrorist attacks or 

cyberattacks and things of that sort? 

Mr. DANLY. It would be premature at this point, with the Notice 

of Proposed Rulemaking only having come out on Friday and us noticing the request for comments to assemble the record at this 
25 

point, for me to even imagine what the method of approach in the 

subject is going to be. Rest assured the Commission is diligently 

working and reviewing the rulemaking proposal, and it is attempting to assemble as many comments as it can. 

Senator MANCHIN. Thank you. 

Thank you, Mr. Chairman. 

Senator GARDNER. Thank you, Senator Manchin. 

Senator Heinrich. 

Senator HEINRICH. Mr. McNamee, as you know DOE’s recent 

staff report on power markets actually concluded that the grid is 

currently operating reliably. I was surprised by Secretary Perry’s 

directing FERC to implement cost-based rates in fully competitive 

markets for bulk power in what is an apparent attempt to subsidize both nuclear- and coal-fired generation. 

What was the basis for the Secretary to conclude that there is 

an urgent need based on reliability given the outcome of that report and its conclusions? 

Mr. MCNAMEE. Thank you, Senator. 

As you know, the reasons for issuing the NOPR were stated by 

the Secretary, both in his letter and the preamble to the NOPR. 

But to your specific question, the difference was pointed out both 

in the letter and in the grid study about the difference between reliability and resiliency. 

And so, as discussed in the NOPR and identifying both from the 

grid study, the staff report by DOE, comments by NERC and others, there is a difference between reliability and resiliency and that 

the conclusions in those commentaries, both the staff report and by 

NERC, observed and to be honest, FERC has had a technical conference trying to deal with some of the resiliency issues, to identify 

that there are issues about fuel security being able to be available, 

not just today, but during extreme events. That’s the driving thrust 

and the difference between reliability and resiliency, sir. 

Senator HEINRICH. Mr. Danly, what has been FERC’s approach 

to addressing long-term issues of grid reliability and resiliency? 

Does FERC pick generation technologies and fuels in competitive 

markets or is that a matter best left to state and local officials? 

Mr. DANLY. Senator, historically, FERC has not decided what 

fuel would be used. Our job is to, or I should say, the Commission’s 

job is to ensure that when the electricity is generated we can make 

certain that the wholesale markets produce just and reasonable 

rates. 

Senator HEINRICH. I think that is a very reasonable approach. I 

would just want to warn all of my colleagues, I think if you want 

to go down this slope of picking winners and losers without letting 

the markets make those decisions, it may take you places you did 

not expect to go. 

Senator GARDNER. Thank you, Senator Heinrich. 

We will go another round here. We both have additional questions. 

Mr. Danly, I want to talk a little bit about the Section 205 issue 

that you brought up and a question of whether it actually provides 

the kind of relief that, I think, was intended by the legislation, 

whether or not the expansion might be a little too broad and not 

get to the relief that they are looking for. 
26 

Regarding Senate bill 186, is it possible that this legislation 

could limit the delegation of authority of the FERC Commissioners 

to staff in the event of a loss of a quorum? 

Mr. DANLY. I’m sorry, can you say that again? 

Senator GARDNER. Is it possible that Senate bill 186 could limit 

the delegation authority of the FERC Commissioners to staff in the 

event of a loss of a quorum? 

Mr. DANLY. I have not thought about that subject specifically, 

Senator, but I don’t see why delegation orders aren’t still possible 

given this bill, if it’s passed. 

Senator GARDNER. Okay. 

I understand that the proposed bill tries to resolve some infrequent situations of an activity at FERC, but would you talk a little 

bit about how the incentives for action or inaction would be different under the proposed law versus current law—— 

Mr. DANLY. Um. 

Senator GARDNER. ——and would we end up with additional split 

decisions as a result? 

Mr. DANLY. Right. 

So, the—thank you. 

The reason why this may not practically affect the relief that I 

think the bill is aiming toward is that should we have a case of 

a deadlock and that be the reason for inaction and therefore, the 

reason for the rates going into effect by operation of law, like we 

did in the ISO New England Forward Capacity Auction rate case 

which everybody here presumably remembers pretty well. 

The likelihood of the party, the aggrieved party, seeking rehearing and then getting an order on rehearing is virtually zero. If you 

have a deadlock in the first instance, you’re likely to have a deadlock in the second. 

Though it is important that we have procedures for review, both 

in the form of rehearing at the Commission and then judicial review after the fact, the under—courts that sit in review of agency 

decisions have to review an order of that agency that sets out the 

reasoning that the agency has for the decision. 

Even if we were to afford the possibility of a rehearing which 

would not produce an order under these circumstances and even if 

it managed to get into a Court of Appeals, which it likely wouldn’t 

given the precedent from the DC Circuit, the Court of Appeals 

would simply remand back to the agency anyway because there 

would be no reasoning upon which to base its review of the action. 

So I simply believe it to be, probably, not a promise of relief to the 

parties who are aggrieved by the rates that go into effect. 

Senator GARDNER. Thank you. 

Mr. McNamee, nuclear energy made up roughly 20 percent of the 

utility scale generation in the U.S. in 2016. It is a no-carbon-footprint source of energy, a reliable source. 

How important is it to the energy security of the United States 

that we continue the research and development of nuclear sector 

technology? 

Mr. MCNAMEE. Thank you, Senator. 

You’re correct that nuclear is an important part of both the reliability of the—reliability and resiliency—of the electric grid, as 

demonstrated in the staff report. 
27 

But I think your question also goes further in discussing it more 

broadly and its best we, in regards to the legislation before you 

talked about it, advanced nuclear technology, that we don’t take a 

particular position on this legislation. It is clear that the Department has been very robust in trying to develop advanced nuclear 

reactors and making sure that America continues to be a leader in 

nuclear technology. 

That is something, you know, whether it be small nuclear reactors or the various types of water reactors, it’s something that’s important that the Department is engaged in every day. I understand 

that this legislation’s intent is to advance that as well. 

Senator GARDNER. Thank you, Mr. McNamee. 

Mr. McNamee, again, the 2005 Energy Policy Act amended the 

Federal Power Act in an attempt to reduce the 203 review workload of FERC by streamlining its review structure and raising the 

monetary threshold that triggered the reviews which had not been 

changed from the $50,000 level it was set at in 1935. 

Can you explain how unclear language in 2005, in the Energy 

Policy Act (EPAct 2005), actually had the opposite effect of increasing the workload? 

Mr. MCNAMEE. I believe, Senator, that might be more appropriate for my colleague to answer. 

Senator GARDNER. Mr. Danly? 

Mr. DANLY. You’re asking about the amendment for 203 to make 

the $10 million threshold? 

Senator GARDNER. Correct. 

Mr. DANLY. As written before there was a single provision rather 

than the split provisions for the different types of transactions in 

Section 203, and with EPAct 2005 that was split into different sections and a $10 million threshold was applied to each of the sections with the exception of the ‘‘merge or consolidate’’ section which 

is the one that’s at issue here. 

When that happened, we had before had a $50,000 threshold for 

everything because it was a single provision with that single value. 

And now, every one of the different types of transactions are subject to a threshold of $10 million except for ‘‘merge or consolidate.’’ 

The effect after the Commission gave its reading of what the 

statutory language meant was that there was no minimum conception whatsoever from ‘‘merge or consolidate’’ and this would be a 

step in bringing the entirety of 203 back to the effective regime we 

had in the previous version which was to allow a threshold for all 

of the different types of transactions subject to Commission approval. 

Senator GARDNER. Mr. Danly, Mr. McNamee, we have run out of 

Senators here, so thank you very much for your time and testimony 

today on the legislation before us. 

We will keep the record open until tomorrow, close of business, 

if any member wishes to submit questions for the record, and we 

ask for your timely response should additional questions be submitted. 

Thank you, to both of you, for your time and testimony today. 

With that, the Committee is adjourned. 

[Whereupon, at 3:00 p.m. the hearing was adjourned.] 
(28) 

APPENDIX MATERIAL SUBMITTED 
29 

United States Senate Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 Hearing: Pending Legislation 

Questions for the Record Submitted to Mr. James Danly 

Questions from Chairman Lisa Murkowski 

Question 1 How often since the Commission was established in 1977 has it permitted a Section 

205 rate filing to become effective by operation of law? How many of these proceedings were 

uncontested'> How many of these proceedings involved a Commissioner issuing a statement 

which described circumstances related to the failure to take action? 

Answer 1: 

Research by FERC staff identified five Federal Power Act (FPA) section 205 

filings that became effective by operation oflaw since 2002, the earliest discovered 

instance. All five filings were contested. 

In two of the five proceedings, two or more Commissioners issued separate 

statements reflecting their stance on the subject filing. None of the statements 

specifically explained the Commission's failure to take action, but the nature of the 

statements suggests that no particular approach garnered a majority vote. Further details 

regarding these proceedings are provided below in response to Question 4. 

Two other filings apparently became effective due to the Commission mistakenly 

not acting in time, with the filings becoming effective by operation oflaw as a result. In 

both cases, soon after the filings took effect, the Commission instituted proceedings 

under FPA section 206 to investigate the rates. In one of the section 206 orders, the 

Commission explained that, in fact, it inadvertently failed to act on the filing under 

section 205. 

The fifth filing involved a utility's withdrawal of its initial section 205 filings; 

both the withdrawal and the filings were contested. Withdrawals of section 205 filings 

are themselves considered section 205 filings, and, as explained in the Secretary's notice 

regarding this particular withdrawal, the Commission "allowed" the withdrawal to be 

accepted and become effective by operation oflaw. 

Question 2: For more than 80 years, the right ofFERC (and FPC, as predecessor) to avoid 

acting could have been a helpful option in the toolbox of possible FERC options when dealing 

with a rate change. How would the broader dynamic of moving toward consensus and 

compromise among the Commissioners be hampered by taking away that option? 

Question 3: Under current law, it would appear that a 2-2 split at FERC is highly unlikely 

because of the consequences of failing to take action. But if those consequences change, and 

become less severe, then Commissioners are relieved of pressure to resolve their internal 

disputes. Thus, a law allowing appeal from 2-2 splits potentially could have the result of the 
30 

United States Senate Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 Hearing: Pending Legislation 

Questions for the Record Submitted to Mr. James Danly 

Commissioners arriving at more 2-2 splits. As you see it, how are the incentives to avoid 2-2 

splits likely to change if S. 186 becomes Iawry 

Answers 2 and 3: 

For the reasons you note, it is possible that enactment of S. 186 could alter the 

dynamics among and incentives for the Commissioners in their consideration of section 

205 filings. As l explained in my testimony, the mere fact that an order will be deemed 

to have been issued when a section 205 filing goes into effect by operation of law 

following a 2-2 deadlock will not change the fact that there will likely be a subsequent 2-

2 split when the issue appears before the Commission again on rehearing. If it does, then 

there will be no order at either the initial or the rehearing stage for an appellate court to 

review. While this might indicate that the incentives would not be drastically altered by 

the enactment of S. 186, it is difficult to know how much the current provisions of section 

205 have influenced past commissioners' decisions, especially in light of how rarely such 

splits have occurred. Likewise, it is difficult to predict the etTect of the incentives created 

by the new regime contemplated by S. 186. It is unclear how much effect this change 

would have given how rarely 205 filings go into etTect by operation oflaw. 

Question 4: !fit can be determined, how often has FERC taken no action and allowed rates to 

go into effect after a 2-2 deadlock? Please describe the circumstances surrounding each such 

decision to take no action after a 2-2 deadlock. 

Answer 4: 

Staffs data indicates that since 2002, a 2-2 deadlock has twice resulted in rates 

submitted under FP A section 205 taking effect by operation of law. 

In the most recent case, in 2014, ISO New England, Inc. submitted an FP A 

section 205 filing reflecting the rates resulting from its eighth Forward Capacity Auction 

(FCA 8 results). Protestors argued that the rates resulted from the unmitigated market 

power of certain resource owners, and that ISO-NE might have violated its Tariti in 

conducting the auction. One day after the statutory 60-day notice period expired, the 

Secretary issued a notice informing the public that the rates had taken effect by operation 

oflaw. On the same day, the four sitting Commissioners issued statements expressing 

their individual opinions regarding the FCA 8 results; the statements revealed a 2-2 split. 

In individual statements, Chairman LaFleur and Commissioner Moeller stated that, if 

they had an opportunity to vote on an order, they would have voted to accept the auction 

rates. In a joint statement, Commissioners Clark and Bay stated that they would have set 

the matter for hearing to evaluate the justness and reasonableness of the auction rates. 

In an earlier case, in 2004, PJM Interconnection, L.L.C. (PJM) submitted a 

section 205 filing to permit market-based rate offers, subject to a cap, for regulation 

2 
31 

United States Senate Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 Hearing: Pending Legislation 

Questions for the Record Submitted to Mr. James Danly 

seiVice in an expanded region ofPJM. Protestors aq,'Ued, among other things, that any 

such filing should be based on actual, not expected, regulation supply in the expanded 

region. Sixty days after the filing, the Secretary issued a notice informing the public that 

the filing would take effect by operation oflaw. The Secretary's notice stated that 

Chairman Wood and Commissioner Kelly, two of the four Commissioners at the time, 

were dissenting in a joint statement. In their joint statement attached to the notice, 

Chainnan Wood and Commissioner Kelly explained that they would have retained 

mitigation for certain suppliers until new evidence, based on actual experience, 

demonstrated lack of market power. The two other seated Commissioners, Brownell and 

Kelliher, issued no statements, but the circumstances indicated that the Commission 

deadlocked in a 2-2 split 

Questions from Ranking Member Maria Cantwell 

Ouestion 1: In your testimony regarding S. 186, you stated that in a case in which the 

Commission deadlocks, a similar deadlock could occur on a petition for rehearing. You 

continued, "[i]n such a case, it would be exceedingly unlikely that a Court of Appeals would 

entertain a petition for review. Moreover, even if a Court of Appeals accepted the petition, the 

Court would almost certainly remand the case back to the Commission for further adjudication." 

Given that any Section 205 proceeding would have an associated record, the length of which is a 

matter the Commission controls, why would you presume that a court would not consider 

substantive issues raised in a petition for review? 

Answer 1: 

Treating Commission inaction under section 205 as an order could potentially 

allow a court to review the merits of the Commission's "acceptance" of a rate change, if 

an aggrieved party first seeks rehearing. Seeking judicial review, however, would pose 

significant challenges. Although it is true that the record in a section 205 proceeding 

could contain substantial pleadings and evidence, it is unclear how an appellate court 

would evaluate that record, especially since the Commission would not have weighed the 

competing evidence and arguments or provided reasoning for its decisions. This is 

critical because appellate courts are required, when sitting in review of agency action, to 

consider not just the agency's result, but also the agency's reasoning. See Sprint Nextel 

Corp. v. FCC, 508 F.3d 1129, 1132 (D.C. Cir. 2007) ("We therefore require more than a 

result; we need the agency's reasoning for that result."). Thus, were a section 205 filing 

to become effective by operation oflaw, and were an order deemed to have issued under 

S. 186, the lack of Commission reasoning would render the Commission's "order" 

effectively unreviewable. 

Ouestion 2: In your testimony, you stated that there is already a remedy for aggrieved parties 

that are foreclosed from requesting a rehearing under Section 205 of the Federal Power Act 

3 
32 

United States Senate Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 Hearing: Pending Legislation 

Questions for the Record Submitted to Mr. James Danly 

(FPA) under the procedures available under Section 206 of that Act. However, whereas Section 

205 places the burden on the proposer of a rate revision to demonstrate that rates are just and 

reasonable, under Section 206, the burden is on the aggrieved parties to demonstrate that the 

existing rates are unjust and unreasonable. Do you disagree that the burden on aggrieved parties 

is significantly different under Section 206 of the FPA than under Section 2057 

Answer 2: 

As you note, a party that submits a complaint under section 206 of the FP A bears 

an additional burden compared to a party that files an intervention and protest of a filing 

submitted under section 205. It is true that this remedy is more burdensome than that 

faced under section 205, but there is a path available for aggrieved parties to seek redress 

as the statute is currently constituted. 

4 
33 

Edison Electric 

INSTITUTE 

October 3, 2017 

The Honorable Cory Gardner 

Chairman 

Subcommittee on Energy 

Energy and Natural Resources Committee 

United States Senate 

Washington, DC 20510 

The Honorable Lisa Murkowski 

Chairman 

Energy and Natural Resources Committee 

United States Senate 

Washington, DC 20510 

The Honorable Joe Manchin 

Ranking Member 

Subcommittee on Energy 

Energy and Natural Resources Committee 

United States Senate 

Washington, DC 20510 

The Honorable Maria Cantwell 

Ranking Member 

Energy and Natural Resources Committee 

United States Senate 

Washington, DC 20510 

Dear Subcommittee Chairman Gardner, Subcommittee Ranking Member Manchin, Chairman 

Murkowski, and Ranking Member Cantwell: 

On behalf of the Edison Electric Institute (EEl), I want to express our strong support for S. 1860, 

"Parity Across Reviews Act," introduced by Senators lnhofe and Heinrich. This legislation is 

necessary to clarify Federal Energy Regulatory Commission (FERC) authority over mergers and 

acquisitions and to achieve common-sense consistency under section 203 ofthe Federal Power 

Act (FPA). As Senators lnhofe and Heinrich noted, enactment of S. 1860 will enable FERC to 

operate more efficiently while reducing barriers for grid infrastructure investments. 

In the 2005 Energy Policy Act (EPAct 05), Congress amended FPA section 203 to, among other 

things, increase the minimum dollar threshold from $50,000 to $10 million for FERC authority to 

pre-approve certain facilities transactions. FERC has strictly interpreted the law to eliminate the 

monetary threshold entirely for acquisitions-but not for sales or other transactions-involving 

jurisdictional facilities. As a result, FERC requires prior approval for the acquisition of utility 

property that has any value (or no monetary value at all), leading to obvious regulatory delays 

and costly business inefficiencies. Unfortunately, legislation is required to correct this problem. 

The solution to this problem is not partisan or controversial. The House more than once has 

passed legislation to clarify FPA section 203 to expressly include a monetary threshold of greater 

than $10 million for FERC pre-approval of mergers and acquisitions of jurisdictional utility 

property, as Congress intended when it passed EPAct 05. In the 114'h Congress, such language 

President 
34 

October 3, 2017 

Page 2 

was passed as part of H.R. 8, the comprehensive energy bill. Most recently, on June 12, 2017, 

the House passed by voice vote H.R. 1109, bipartisan legislation that also was approved by 

unanimous voice vote in the Energy and Commerce Committee earlier in June. Further, FERC has 

testified in support ofthe $10 million threshold for both sales and acquisitions. 

EEl appreciates the promptness with which the Senate Energy Subcommittee is holding a hearing 

on S. 1860. We urge the Committee to expeditiously advance this bill for Senate floor 

consideration to ensure consistent, common-sense, implementation of FPA section 203. We look 

forward to working with you on this and other important energy-related issues. 

Sincerely, 

Thomas R. Kuhn 

President 

cc: Senator James lnhofe 

Senator Martin Heinrich 
35 

STATEMENT OF SENATOR JAMES M. INHOFE ON S. 1860, PARITY 

ACROSS REVIEWS ACT, AT THE OCTOBER 3, 2017 SENATE 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

SUBCOMMITTEE ON ENERGY 

October 3, 2017 

Thank you, Chairman Gardner and Ranking Member Manchin, for holding this 

Subcommittee hearing on S. 1860, the Parity Across Reviews Act (PARs ACT). I am proud to 

work with Senator Heinrich on this bipartisan, common-sense legislation. 

The law should be clear and fair when it comes to the Federal Energy Regulatory 

Commission's (FER C) merger and consolidations authority. By holding all reviews under 

Section 203 of the Federal Power Act to the same standard, the PARs Act empowers FERC to 

operate more efficiently and eliminate burdensome requirements saving consumers money. 

In 2005, Congress passed the Energy Policy Act of 2005. This important legislation 

updated antiquated $50,000 review thresholds to $10,000,000. In updating these thresholds, the 

Energy Policy Act of2005 was inadvertently- and tmfortunately- silent on Section 

203(a)(l )(B). This silence led to interpretations consistent with the letter of the law, and not its 

spirit. The PARs Act will restore the intent of the Energy Policy Act of 2005. 

The PARs Act will also allow electricity providers, including municipalities and 

cooperatives, to better serve their customers. Filing transactions for review with FERC is costly 

it may cost hundreds of thousands of dollars to submit a complete application. For smaller assets, 

these costs can be prohibitive. The PARs Act will let electricity providers decide what is in their 

customers' best interest In some cases, it will be to utilize Section 203(a)(l)(B) of the Federal 

Power Act and to redeploy transaction proceeds to improve reliability for the rest of their 

transmission or distribution system or to invest in rural broadband. 

Thank you again, Chairman Gardner and Ranking Member Man chin, for holding this 

Subcommittee hearing. I look forward to working with you and the full Committee as you 

consider the PARs Act. 
36 

Statement of Senator Edward J. Markey (D-Mass ) 

on 

S. 186, Fair Ratepayer Accountability, Transparency, and Efficiency Standards (RATES) Act 

Senate Committee on Energy and Natural Resources 

Subcommittee on Energy 

October 3, 2017 

Chairman Gardner, Ranking Member Manchin, thank you for holding today's hearing on 

legislation that I have introduced, the Fair RATES Act. 

I want to also thank Chairman Murkowski and Ranking Member Cantwell for working with me 

on this legislation and their tremendous commitment to bipartisanship. I believe that the Fair 

RATES Act should present just such an opportunity to work together on a bipartisan basis to 

ensure that consumers can always be protected when it comes to eneq.,>y rates. 

S. 186 would address an infrequent but important problem when it comes to how the Federal 

Energy Regulatory Commission (FERC) approves energy rate changes. 

The Fair RATES Act would allow for ratepayers or other aggrieved parties to appeal a FERC 

energy rate change decision when there is a deadlock at the Commission, either because of a 

vacancy or recusal or ifFERC fails to take action on a rate decision. Right now, consumers can 

find themselves unable to appeal a rate change if there is a tie vote at FERC on approving an 

energy rate change or ifFERC fails to act. That opportunity to appeal whether rates are just and 

reasonable is afforded to the public in every other scenario when FERC approves a rate decision. 

But not if the Commission is deadlocked, which may in fact be the cases where such an appeal is 

most needed. 

Right now, if the Commission has a vacancy and deadlocks 2-2, rate decisions go into effect 

through operation of law even though they are not approved by a majority of commissioners and 

there is no official order. That would also be the case ifFERC were to fail to act within the 

timeframes allowed on approving a rate decision. 

This prevents the public or other entities from challenging decisions in such an instance. Because 

FERC does not issue an official order in such a scenario, the way the law is written, there is 

nothing to actually challenge. 

While these sorts of situations have happened relatively rarely, that does not minimize their 

potential impact when they do occur. In fact, we found ourselves in just such a situation in New 

England in 2014 following the eighth Forward Capacity Auction for our region. FERC split 2-2 

on approving the results of the Forward Capacity Auction, amidst questions about some actions 

that had been taken by market participants prior to that auction. 

As a result, a rate increase of roughly $2 billion went into effect even though a majority ofFERC 

commissioners had not approved it as being just and reasonable. Despite having two FERC 

Commissioners raising concerns about circumstances in that auction, there was no remedy for 
37 

ratepayers in our region who will have to bear those increased costs. Indeed, ratepayers in New 

England are going to start having to endure those increased costs later this year. 

We should ensure that ratepayers are fully protected from any potential unjust increases in 

energy rates. Without the Fair RATES Act there is nothing to ensure that consumers in New 

England or elsewhere in the country will not find themselves in a similar situation in the future. 

Indeed, the DC Circuit Court of Appeals has concluded that because of the way that the Federal 

Power Act is written, it is up to Congress to correct this issue. 

Some have argued that there is no need to ensure that ratepayers or aggrieved parties can 

challenge such a rate decision under Section 205 of the Federal Power Act (FPA) because they 

have an ability to seek remedy under Section 206. But this claim misses the fact that burden 

under Section 206 is significantly different than under Section 205. Under Section 205, the 

Commission must determine that rates are just and reasonable. Section 206 flips that 

presumption on its head and parties seeking a challenge must instead show that the rates are 

unjust and unreasonable a significantly higher burden. We should ensure that FERC does not 

forego its responsibility to ensure that rates are just and reasonable and consumers are protected 

under Section 205 of the FP A 

There has already been bipartisan support for the Fair RATES Act. It passed the House of 

Representatives by voice vote in March 2016 and again by voice vote in this Congress in January 

2017. 

I thank the Chairman and Ranking Member for holding this hearing today and I look forward to 

working with the Committee on a bipartisan basis on this legislation. 

Thank you. 
38 

The Hon. Lisa Murkowski, Chair 

Senate Committee on Energy 

and Natural Resources 

~~~?!!!!_- 304 Dirksen Senate Office Building 

- Washington, DC 20510 est. 1965 

The Hon. Cory Gardner, Chair 

Subcommittee on Energy 

354 Russell Senate Office Building 

Washington, DC 20510 

Dear Senators: 

October 6, 2017 

The Hon. Maria Cantwell, Ranking Member 

Senate Committee on Energy 

and Natural Resources 

304 Dirksen Senate Office Building 

Washington, DC 20510 

The Hon. Joe Manchin !II, Ranking Member 

Subcommittee on Energy 

306 Hart Senate Office Building 

Washington, DC 2051 0 

On behalf of the Northeast Public Power Association (NEPP A), the trade association 

representing 78 not-for-profit electric companies in the six New England States, I want to thank 

you for holding a hearing on S. 186, the "Fair Ratepayer, Accountability, Transparency and 

Efficiency Standard\· (RATES) Act." The bill makes a critical change to the Federal Power Act to 

allow consumers to challenge rates that go into effect under operation oflaw, and l write to offer 

NEPPA's endorsement of and support for this bill. 

As you may know, most NEPPA members participate directly in the mandatory capacity markets 

administered by ISO-New England. We have observed firsthand as these markets have become 

more complex, and more costly, as they try to increase revenue to generators. Since public 

power systems are motivated by consumer objectives, rather than by profit, the capacity market 

is particularly challenging for us. 

After the cost of capacity skyrocketed in Forward Capacity Auction 8, many of us had questions 

about whether the market rules had produced a rate that was just and reasonable. Had this 

legislation been law at that time, we believe the consumers we serve could have gotten an answer 

to that question. While we believe there is much work to be done to reform the capacity markets, 

the Fair RATES Act is an important first step. 

To that end, please do not hesitate to call on me, any member of my staff, or other NEPPA 

members to provide technical expertise, local experience, or independent analysis you may need 

related to this issue. 

Again, thank you for your on-going commitment to fighting for consumers. 

Sincerely, 

David F. White, Executive Director 

NEPPA 
39 

October 2, 2017 

The Honorable James M. Inhofe 

205 Russell Senate Office Building 

U.S. Senate 

Washington, DC 20510 

Dear Senator Inhofe: 

On behalf of the undersigned Oklahoma utilities, we are writing to express our appreciation for 

introducing the Parity Across Reviews Act, and to offer our support as it moves through the 

legislative process. 

The Oklahoma Municipal Power Authority (OMP A) is a consumer-owned public power entity that 

provides electrical power and enerb'Y to 42 municipally-owned electric systems in Oklahoma. Tri 

County Electric Cooperative (TCEC) is a not-for-profit distribution cooperative owned and 

controlled by its members that serves approximately 23,000 households and businesses in the 

Oklahoma Panhandle. GridLiance is an independent electric transmission company currently 

partnering with OMP A and TCEC to develop customized solutions to their transmission challenges, 

including planning and constructing transmission upgrades for their benefit. GridLiance currently 

owns and operates over 400 miles of transmission lines and related substation facilities in 

Oklahoma's panhandle, which it acquired from TCEC in 2016. That sale allowed TCEC to focus on 

distribution system improvements. 

As you know, by failing to hold all energy transactions to the same standard, the 2005 Energy Policy 

Act's provisions governing Federal Energy Regulatory Commission (FERC) authority over mergers 

and acquisitions of jurisdictional utility property have proven extremely problematic for industry, 

utility customers and FERC alike, and cry out for rebalancing. In our experience in Oklahoma, these 

requirements are prohibitively expensive for prospective buyers and sellers of small utility 

transmission assets and are unnecessarily increasing customer costs. Further, they've led to costly 

business and regulatory inefficiencies and delayed our efforts to provide customers requested service 

upgrades and reliability improvements. By ensuring that section 203(a)(l)(b) transactions below $10 

million avoid FERC approval, your legislation will bring needed parity between the types of 

transactions FERC reviews. On a more tangible local level, this narrow statutory change will ensure 

that the additional transmission asset-only transactions we're considering are consummated without 

undue delay. Finally, eliminating the considerable cost and effort required to prepare and file such 

applications will allow us to better focus these resources on serving our Oklahoma utility customers. 

Thank you for your leadership on this important issue affecting Oklahoma utilities and the broader 

electric power industry. We look forward to working with you and your staff to see that your 

legislation is passed swiftly. 

Sincerely, 

Calvin Crowder 

President and CEO, GridLiance 

Zac Perkins 

CEO,TCEC 

0 

David Osburn 

General Manager, OMP A