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80–256 2013

AMERICAN ENERGY SECURITY AND INNOVATION: 

THE ROLE OF A DIVERSE ELECTRICITY 

GENERATION PORTFOLIO 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MARCH 5, 2013 

Serial No. 113–12 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

STEVE SCALISE, Louisiana 

Vice Chairman 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

EDWARD J. MARKEY, Massachusetts 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

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

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

Prepared statement .......................................................................................... 3 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

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

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 5 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 6 

Prepared statement .......................................................................................... 8 

WITNESSES

Mark C. McCullough, Executive Vice President, Generation, American Electric Power .............................................................................................................. 10 

Prepared statement .......................................................................................... 12 

William M. Mohl, President, Entergy Wholesale Commodities ........................... 33 

Prepared statement .......................................................................................... 35 

Benjamin G.S. Fowke, III, President and CEO, Xcel Energy .............................. 45 

Prepared statement .......................................................................................... 47 

Marc S. Gerken, PE, President and CEO, American Municipal Power, Inc. ...... 50 

Prepared statement .......................................................................................... 52 

Robert Gramlich, Interim Chief Executive Officer, American Wind Energy 

Association ............................................................................................................ 76 

Prepared statement .......................................................................................... 78 

Answers to submitted questions ...................................................................... 125 

John C. McClure, Vice President, Government Affairs, and General Counsel, 

Nebraska Public Power District .......................................................................... 82 

Prepared statement .......................................................................................... 84 

SUBMITTED MATERIAL

Statement of the American Public Power Association, submitted by Mr. 

Whitfield ............................................................................................................... 111 

Statement of the American Chemistry Council, submitted by Mr. Whitfield .... 115 

Article entitled, ‘‘California Girds for Electricity Woes,’’ Wall Street Journal, 

February 26, 2013, submitted by Mr. Whitfield ................................................ 117 

Article entitled, ‘‘In New England, a Natural Gas Trap,’’ The New York 

Times, February 15, 2013, submitted by Mr. Whitfield .................................... 119 

Charts on Virgin Islands, submitted by Ms. Christensen .................................... 122 

Map of fuel diversity regions .................................................................................. 124 

(1) 

AMERICAN ENERGY SECURITY AND 

INNOVATION: THE ROLE OF A DIVERSE 

ELECTRICITY GENERATION PORTFOLIO 

TUESDAY, MARCH 5, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:04 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Ed Whitfield 

(chairman of the subcommittee) presiding. 

Members present: Representatives Whitfield, Scalise, Shimkus, 

Pitts, Terry, Latta, Cassidy, Olson, McKinley, Gardner, Pompeo, 

Kinzinger, Griffith, Barton, Rush, McNerney, Green, Doyle, Barrow, Christensen, and Waxman (ex officio). 

Staff present: Nick Abraham, Legislative Clerk; Charlotte Baker, 

Press Secretary; Allison Busbee, Policy Coordinator, Energy and 

Power, Annie Caputo, Professional Staff Member; Patrick Currier, 

Counsel, Energy and Power; Andy Duberstein, Deputy Press Secretary; Tom Hassenboehler, Chief Counsel, Energy and Power; 

Heidi King, Chief Economist; Ben Lieberman, Counsel, Energy and 

Power; David McCarthy, Chief Counsel, Environment and the 

Economy; Mary Neumayr, Senior Energy Counsel; Chris Sarley, 

Policy Coordinator, Environment and the Economy; Tom Wilbur, 

Digital Information Technology; Jeff Baran, Democratic Senior 

Counsel; Greg Dotson, Democratic Staff Director, Energy and Environment; Kristina Friedman, Democratic EPA Detailee; and Caitlin 

Haberman, Democratic Policy Analyst. 

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

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

morning, and certainly want to thank our witnesses for being with 

us, and after opening statements, of course, I will be introducing 

each one of you. We certainly look forward to your testimony. 

At today’s hearing, we are going to be focusing on the role of a 

diverse source of fuel for electricity generation. We frequently all 

hear a vocal chorus about the need for ‘‘all of the above’’ to meet 

our Nation’s demand for electricity at an affordable cost so that we 

can be competitive in the global marketplace, create a strong economy, and create jobs. 

2 

But I think it is also important that we be realistic, and we know 

that there are people in the administration, that are political leaders around the country, that there are national and international 

environmental groups, that there are nonprofit groups and others 

who really do have a desire to stop the use of fossil fuel and production of electricity. Just yesterday, for example, Mayor Michael 

Bloomberg of New York—and I didn’t say this, but the article said 

that he was gleefully writing the obituary for coal, and he was 

quoted as saying ‘‘It used to be said that coal is king, and regrettably, coal remains king in Nations like India and China.’’ But then 

he went on to say ’’Here in the United States, I am happy to say 

that the king is dead. Coal is a dead man walking.’’ 

Now, the mayor says that he supports natural gas, but he gives 

millions of dollars to groups that want to reduce the use of hydraulic fracturing. And of course, he made his money and he can spend 

his money any way that he wants to, but I think it is important 

that we have a national discussion about the reality of trying to 

eliminate fossil fuel as a source for electricity generation. 

Robert Mann, the Sierra Club President, was quoted as saying 

‘‘Fossil fuels have no part in America’s energy future. Coal, oil, and 

natural gas are poisoning us. The emergence of natural gas as a 

significant of our energy mix is particularly frightening, because it 

dangerously postpones investment in clean energy at a time when 

we should be doubling down on wind, solar, and energy efficiency.’’ 

The EPA, without question, has established an unmistakable 

trend line. Coal is being taken out of the national fuel mix and 

EPA is methodically establishing a regulatory framework to dramatically reduce fossil fuel use throughout the economy. EPA’s regulatory framework is taking fuel choice decisions away from the 

private sector, while it bases those decisions on a single determinate, the environment, climate change, so forth, but ignoring 

equally important national goals and energy security, economic 

growth, lower consumer costs, and electric reliability, I believe, will 

lead to serious problems in America. In fact, we already see signs 

of it. A few days ago, there was an article—which I have a copy 

here—that said ‘‘California is weighing how to avoid a looming 

electricity crisis that could be brought on by its growing reliance 

on wind and solar power. Even though California has a lot of 

plants, it does not have the right mix. Many of the solar and wind 

sources added in recent years have actually made the system more 

fragile.’’ Those are not my words, those are the words of the author. 

And then in the New York Times, ‘‘Electricity prices in New England have been four to eight times higher than normal as the region’s reliance on natural gas for power supplies has collided with 

a surge in demand for heating.’’ 

This is a little harbinger of things to come. The Northeast is littered with coal plants that have been retired. Gas pipeline capacity 

is inadequate, and without nuclear power plant at Indian Point, 

New England would have been toast. And then we have the energy 

bill 2007 that prohibits the use of fossil fuel for providing electricity 

to government buildings new and modified by the year 2030. We 

have greenhouse gas regulations that will not allow you to build a 

new coal-powered plant in America if they are finalized, and now 

they are thinking about applying that to existing. 

3 

So I think this hearing is a great place to have an honest discussion about the reality of trying to meet the electrical needs of 

America without fossil fuels, nuclear power, and those fuels that 

provide our base load needs. I, for one, believe we do need all of 

the above, but I think that it is wrong that people in America and 

groups in America are trying to absolutely stop the use of fossil 

fuels. 

I see my time is expired. At this time, I recognize the gentleman 

from Illinois, Mr. Rush, for his opening statement. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

American electricity is like the American people—our strength is in our diversity. 

And that is the topic of discussion for today’s hearing, which is entitled ‘‘American 

Energy Security and Innovation: The Role of aDiverse Electricity Generation Portfolio.’’ 

Americans are fortunate to have a variety of electricity sourcesavailable to us. 

Each source brings its own unique mix of assets and liabilities. Some are inexpensive, while others are not. Some are reliably available 24 hours a day and seven 

days a week and ideal for baseload power, while others are not. Some can be quickly 

ramped up or down to match quick changes in demand, while others cannot. Some 

can be located almost anywhere, while others are geographically limited. Some can 

be easily integrated into the existing electric grid, while others would necessitate 

costly new infrastructure investments. 

As a result, there is no one ideal means of generating electricity. The best approach for affordability and reliability is a broad mix of generation sources, be it 

coal, natural gas, nuclear, or renewables. Each source can serve a purpose in the 

electricity mix, and each has strengths that can compensate for the other’s weaknesses. And the best way to strike the right balance is through market forces—not 

government mandates or other market distorting policies. 

Of course, Washington State is not Kentucky, and Kentucky is not Texas. The 

best generation mix will vary significantly from region to region, which is why Congress needs to be cautious about imposing onesize- fits-all measures such as federal 

renewable portfolio standards, and the EPA should be considering the impacts of its 

regulations on fuel diversity, especially as it relates to baseload power. 

The ideal electricity mix will also vary over time. That is why we need the flexibility to allow the mix to change with the times and with the inevitable fluctuations 

in the price of various electricity sources. This is becoming increasingly important 

as EPA regulations limit the options of resources and technologies available for utilities. 

The best way to deal with the electricity challenges of today and tomorrow is to 

expand the options available, not to reduce them. That is why I believe that EPA’s 

regulatory assault on coal is bad policy. Coal is the leading source of electricity generation in the U.S., and it certainly remains the fastest-growing source of energy 

for China and many of our other global competitors. We gain nothing when we foreclose the option of new coal-fired generation by regulating it out of existence. 

Government should not tilt the playing field against coal, nor should it tilt it in 

favor of other sources like wind and solar. The reality is that these non-hydro renewables are neither cheap nor reliable at the present time, which is why they are 

so heavily reliant on federal subsidies. The government should not be intervening 

on behalf of wind and solar or any other fuel source for that matter. Sound energy 

planningmeans that you don’t rely on one energy source, in essence putting all of 

your eggs into one basket. 

Federal policies should encourage an all-of-the-above approach to electricity production that takes advantage of all affordable domestic energy resources. Rather 

than pursuing policies that could limit the diversity of energy resources, the U.S. 

instead should be pursuing opportunities to transition to the most advanced generation fleet in the world, inclusive of all affordable and reliable resources and technologies. 

4 

# # # 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman, for holding today’s hearing, and Mr. Chairman, I commend you for allowing the 

Minority side to invite witnesses who have had success in renewables so that today’s panel actually reflects the title of this hearing, 

and we are hearing from a diverse energy source base, besides just 

coal and nuclear. 

Mr. Chairman, I believe in a truly ‘‘all of the above’’ energy policy, and fortunately, Mr. Chairman, we are indeed seeing more diversity in the Nation’s electric generation portfolio, as we move towards more natural gas and renewable energy and away from our 

heavy reliance on carbon-intensive coal. 

In 1993, Mr. Chairman, coal was responsible for 50 percent of 

the electric generation in the U.S., while natural gas accounted for 

less than 15 percent. However, the Energy Information Agency reports that in 2012, there was indeed a shift in electricity generation away from coal-fired generation, which declined by 12.5 percent, and towards cleaner sources of electricity, including natural 

gas, which increased by 21 percent, wind generation, which increased by 16 percent, and solar generation, which increased by 

over 138 percent in just a single year. Mr. Chairman, due to this 

shift in 2012, coal accounted for 37 percent of the Nation’s electric 

generation. Natural gas accounted for 30 percent. Nineteen percent 

came from nuclear, and 12 percent of the Nation’s electric portfolio 

came from renewable sources, including solar, hydropower, and 

wind. In fact, Mr. Chairman, the wind industry experienced rapid 

growth in 2012, and for the first time, wind was responsible for the 

largest increase of adding capacity, with 12,600 megawatts of 

added generation. Wind power is very important to my home State 

of Illinois, and in fact, there are up to 13 international wind companies headquartered in the city of Chicago alone. So I am very 

pleased to have witnesses here today who can discuss the importance of investing in renewable sources of energy, whose costs continue to fall and capacity continues to rise. 

Mr. Chairman, the EIA also notes that U.S. energy-related combustion emissions was expected to decrease by 3.4 percent in 2012 

to the lowest levels since 1994. This is as a result of the increased 

use of renewable energy, the transition from coal to natural gas, 

and also due to the slow economic growth. While energy-related 

carbon emissions have declined 11.5 percent since 2005, they are 

still 5.4 percent above 1990 levels, and Mr. Chairman, without significant policy action, the EIA expects U.S. carbon pollution emissions to increase by 6 percent between 2012 and 2020. 

This is precisely why the new source performance standards are 

so very, very critically important. These standards, which are mandated by law, will require new facilities to install the best demonstrating technologies while also taking into account cost and allowing States to show flexibility. Implementing these proposed 

standards will ensure that the power generation industry has regulatory certainty and will avoid penalizing companies who have 

5 

made significant investments into their future, while not allowing 

the can to constantly be kicked down the road. 

So Mr. Chairman, I look forward to today’s hearing, and I look 

forward to the challenges and opportunities that are before us of 

maintaining fuel diversity in the Nation’s electricity generation 

portfolio. With that, I yield back the balance of my time. 

Mr. WHITFIELD. Thank you, Mr. Rush. 

At this time, I recognize the gentleman from Texas, Mr. Barton, 

for 5 minutes. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. I won’t use that entire 

time. 

I have served in Congress and on this committee for over a quarter of a century, and when I first got elected, we had wellhead 

prices on natural gas, we had the Fuel Use Act that said you 

couldn’t use natural gas for new power plant electricity generation. 

The general economic model was that electricity generation was a 

natural monopoly and had to be regulated very heavily at the State 

and federal level. That has evolved in the last 25 years, and we are 

now at a point where we still allow States that wish to, to regulate 

their electricity markets, but we also accept that a true market can 

function, and in Texas, we have deregulated the wholesale generation of electricity. We still regulate the wholesale transmission and 

the retail distribution, but we have a thriving wholesale generation 

market in which we have power plants, independent power plants 

that are owned by companies all over America generating and selling electricity. We also have the largest wind generation capacity 

in the country, and as a consequence of that, with the subsidies 

that we have been providing to wind power, which I support to 

some extent, have had the situation where wind generators have 

priced their product negatively into the market simply to get the 

subsidy to keep their wind turbines turning. 

So economic theory for electricity generation is a big deal, and we 

have an excellent panel today to discuss where it is today. I look 

forward to hearing that, and now would like to yield 1 minute to 

Mr. Scalise of Louisiana. 

Mr. SCALISE. I want to thank my colleague from Texas for yielding, and first, before we talk a little bit about ‘‘all of the above’’ energy, I want to welcome Mr. Mohl for being here, speaking on behalf of Energy Wholesale Commodities, which is a Fortune 500 

company based in Louisiana. We are proud to have them there. Appreciate the work you are doing in nuclear power specifically, 

which you are going to be talking about, I believe, today. 

You know, when we talk about ‘‘all of the above,’’ what we mean 

is truly all of the different sources of energy, and when you look 

at the portfolio that this country uses today, the things that actually run America, that help us not only enjoy our daily lives and 

increase our standard of living, but also to produce things. If we 

are going to be able to be a manufacturing country and actually 

create jobs here, it is going to take energy to do it, and under the 

current breakdown we have today, roughly 87 percent of the electricity that is generated in this country comes from coal, from nuVerDate Nov 24 2008 12:15 Jun 12, 2013 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-12 CHRIS
6 

clear power, and from natural gas, and unfortunately, all three are 

under attack by this administration. The war on coal has been duly 

noted, you know, you see so much coal being exported because you 

can’t even use it in this country today, yet it represents over 37 

percent of the electricity that is generated. How you can continue 

to enjoy the standard of living we have as a country today when 

the administration is attacking 37 percent of that resource, and 

then in addition, it is all of the other things that are produced in 

this country. You can’t just do it on wind and solar. We support the 

advancement of those technologies, but when 87 percent of your 

electricity comes from the other sources and you are going after 

them, that is truly the government picking winners and losers and 

ultimately, the losers are families who are paying higher electricity 

costs when this kind of policy goes into effect. 

So we are going to continue to push an ‘‘all of the above’’ energy 

strategy. It is not only good for America, it helps families and it 

helps the ability for our economy to create jobs and compete. So I 

appreciate all the panelists today, especially you, Mr. Mohl, for 

what you have to say as well, and with that, I would yield back 

to my colleague from Texas, Mr. Barton. 

Mr. BARTON. I am going to yield the remaining time to Mr. 

Shimkus of Illinois. 

Mr. SHIMKUS. Thank you, Joe, for giving me the time. 

The ‘‘all of the above’’ should be all of the above. I think my 

friend, Mr. Scalise, said it well. 

You know, the State of Illinois is a 50 percent nuclear, 50 percent coal, so we have the benefits, but we are both being, I think, 

disenfranchised in both those generating sectors. Natural gas, 

there is going to be a big natural gas plant in my State. It is going 

to be very, very helpful, but that commodity product is going to go 

where that commodity product can be used. I will just end with 

high electricity prices hurt everybody. They hurt jobs and the economy, they hurt the poor rural folks, expensive gas and the like, so 

an ‘‘all of the above’’ strategy should be a lower cost fuel for everybody, whether electricity generation or liquid transportation fuels. 

Thank you, Joe, and I yield back. 

Mr. BARTON. Yield back, Mr. Chairman. 

Mr. WHITFIELD. Thank you. 

At this time, I recognize the gentleman from California, Mr. 

Waxman, for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

Today the subcommittee is going to look at the electric utility industry and America’s evolving electricity generation portfolio. 

There is no question that a significant transition is underway, and 

today’s hearing is the first in a series. 

Cheap natural gas is also helpting to transform our electricity 

sector. This market reality is driving a shift away from the use of 

polluting coal to generate electricity. Even boosters of coal acknowledge that it is not cost effective to build new coal plants today. 

7 

State and federal renewable energy policies are paying off. We 

have doubled our capacity to generate renewable electricity from 

wind and solar in just 4 years. This has cut pollution and invigorated clean energy manufacturing. The cost of renewable energy 

is rapidly declining. Wind power is already cost competitive with 

fossil fuel generation in some parts of the country. Last year, for 

the first time, wind power added more electricity generation capacity than any other resources. Nearly half of all new generation capacity came from wind. 

These changes are positive developments, but we will hear today 

that controlling carbon pollution would reduce the diversity and resilience of our energy supply. 

I have exactly the opposite view. In this committee, we like to 

pretend that there is no connection between how we generate our 

energy and climate change. But the fact is, climate change is the 

biggest energy challenge we face as a country. We can’t have a conversation about America’s energy policy without also having a conversation about climate change. 

In November, the International Energy Agency concluded that if 

the world does not take action to reduce carbon pollution before 

2017, that it will be impossible to prevent the worst effects of climate change because of the carbon dioxide emissions that would be 

locked in by the energy infrastructure existing at that time. 

That means the energy policy decisions that we make today will 

have a real and direct impact on whether we can prevent the worst 

impacts of climate change in the future. Every decision to build a 

new fossil fuel-fired power plant poses climate risks. We need to 

understand and weigh those risks. 

Otherwise, we are going to be locking in infrastructure that will 

produce carbon pollution for decades to come, or creating stranded 

investments that must be shut down before they have served their 

useful life. 

Ideally, this committee would listen to the scientific experts and 

enact a responsible energy policy that recognizes the reality of climate change. But as the President said in his State of the Union 

Address, he will act if we don’t. EPA’s proposed carbon pollution 

standard for new power plants is a good first step. It is a fuel-neutral standard that requires new plants to keep their pollution 

below a specified level. 

The proposed standard provides compliance flexibility and incentives for the deployment of carbon capture and sequestration technologies. Both natural gas and clean coal can meet this standard, 

which creates a level playing field for fossil fuel-fired generation. 

Some utilities don’t like this proposed rule. The question we 

should ask them is how can they reconcile unrestrained and everincreasing carbon pollution with the scientific reality of climate 

change? 

I am glad we are providing a forum to hear from the electric utilities today. I know we are going to have a second hearing to hear 

from federal and State electricity regulators. That will help us get 

another valuable perspective on the issues facing the electricity 

sector. 

But we also need to hear from the scientists who can explain to 

us why EPA should take action to address climate change. ChairVerDate Nov 24 2008 12:15 Jun 12, 2013 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-12 CHRIS
8 

man Whitfield, I would like to make a request at this time that you 

schedule such a hearing as a third in this series to ensure that the 

subcommittee hears all sides of the issue. 

If you want an ‘‘all of the above’’ portfolio, well, we have got to 

have policies that will encourage alternatives to fossil fuels. And by 

denying the tax breaks for wind and solar energy, by subsidizing 

oil, by ignoring the full consequences of fossil fuels and the impact 

they have and the cost they have on public health and the environment, we are not giving a level playing field. We are skewing our 

policies to more fossil fuel pollution that will cost us in the climate 

problems for years to come. 

I yield back my time. 

[The prepared statement of Mr. Waxman follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

Today, the Subcommittee is going to look at the electric utility industry and 

America’s evolving electricity generation portfolio. There is no question that a significant transition is underway and today’s hearing is the first in a series. 

Cheap natural gas is also helping to transform our electricity sector. This market 

reality is driving a shift away from the use of polluting coal to generate electricity. 

Even boosters of coal acknowledge that it is not cost-effective to build new coal 

plants today. 

State and federal renewable energy policies are paying off. We have doubled our 

capacity to generate renewable electricity from wind and solar in just four years. 

This has cut pollution and invigorated clean energy manufacturing. The cost of renewable energy is rapidly declining. Wind power is already cost competitive with 

fossil fuel generation in some parts of the country. Last year, for the first time, wind 

power added more electricity generation capacity than any other resource. Nearly 

half of all new generation capacity came from wind. 

These changes are positive developments, but we will hear today that controlling 

carbon pollution would reduce the diversity and resilience of our energy supply. 

I have exactly the opposite view. In this Committee, we like to pretend that there 

is no connection between how we generate our energy and climate change. But the 

fact is, climate change is the biggest energy challenge we face as a country. We can’t 

have a conversation about America’s energy policy without also having a conversation about climate change. 

In November, the International Energy Agency concluded that if the world does 

not take action to reduce carbon pollution before 2017, then it will be impossible 

to prevent the worst effects of climate change because of the carbon dioxide emissions that would be locked-in by energy infrastructure existing at that time. 

That means that the energy policy decisions that we make today will have a real 

and direct impact on whether we can prevent the worst impacts of climate change 

in the future. Every decision to build a new fossil fuel-fired power plant poses climate risks. We need to understand and weigh those risks. 

Otherwise, we are going to be locking in infrastructure that will produce carbon 

pollution for decades to come or creating stranded investments that must be shut 

down before they have served their useful life. 

Ideally, this Committee would listen to the scientific experts and enact a responsible energy policy that recognizes the reality of climate change. But as the President said in his State of the Union Address, he will act if we don’t. EPA’s proposed 

carbon pollution standard for new power plants is a good first step. It is a fuel-neutral standard that requires new plants to keep their pollution below a specified 

level. 

The proposed standard provides compliance flexibility and incentives for the deployment of carbon capture and sequestration technologies. Both natural gas and 

clean coal can meet this standard, which creates a level playing field for fossil fuelfired generation. 

Some utilities don’t like this proposed rule. The question we should ask them is 

how they can reconcile unrestrained and ever-increasing carbon pollution with the 

scientific reality of climate change. 

I am glad we are providing a forum to electric utilities today. I know we’re going 

to have a second hearing to hear from federal and state electricity regulators. That 

9 

will help us get another valuable perspective on the issues facing the electricity sector. 

But we also need to hear from the scientists who can explain to us why EPA 

should take action to address climate change. Chairman Whitfield, I would like to 

make a request at this time that you schedule such a hearing as the third in this 

series to ensure that the Subcommittee hears all sides of the issue. 

If you want an all-of-the-above portfolio, we’ve got to have policies that will encourage alternatives to fossil fuels. And by denying the tax breaks for wind and 

solar energy, by subsidizing oil, by ignoring the full consequences of fossil fuels and 

the impact they have and the cost they have on public health and the environment, 

we are not giving a level playing field. We are skewing our policies to more fossil 

fuel pollution that will cost us in the climate problems for years to come. 

I yield back my time. 

Mr. WHITFIELD. Thank you very much. 

At this time, I would like to introduce our witnesses. We have 

a distinguished panel of witnesses. I am going to introduce all of 

them except for one, and then I am going to call on—— 

Mr. WAXMAN. Mr. Chairman, may I just comment that I wish I 

could stay here to hear all the witnesses. I did get a chance to review your testimony, but we have several subcommittees meeting 

at the same time, so I will be back and forth. 

Mr. WHITFIELD. OK, thank you. 

First of all, we have Mr. Mark McCullough, who is the Executive 

Vice President, Generation, at American Electric Power. We have 

Mr. William Mohl, who is the President of the Energy Wholesale 

Commodities that Mr. Scalise referred to. We have Mr. Benjamin 

Fowke, who is President and CEO, Xcel Energy. We have Mr. Marc 

Gerken, President and CEO, American Municipal Power. We have 

Mr. Robert Gramlich, who is the Interim Chief Executive Officer of 

the American Wind Energy Association. 

At this time, I would like to recognize the gentleman from Nebraska, Mr. Terry, for the introduction of our last witness. 

Mr. TERRY. Thank you. I want to introduce someone I consider 

a friend, and I pick his brain on electrical generation issues as they 

come up, and that is John from Nebraska Power, John McClure, 

Nebraska Public Power District. He is the VP and General Counsel 

of Nebraska Public Power, a very diverse energy group. I yield 

back. 

Mr. WHITFIELD. That was a wonderful introduction, Mr. Terry. 

Thank you. 

Once again, welcome to all of you. I am going to call on you and 

each of you will be given 5 minutes. There is a little box on the 

table that will turn red when your time is up, and obviously, we 

will let you go over a little bit, maybe, but not too far. But Mr. 

McCullough, thanks for being here, and we look forward to your 

testimony. 

10 

STATEMENTS OF MARK C. MCCULLOUGH, EXECUTIVE VICE 

PRESIDENT, GENERATION, AMERICAN ELECTRIC POWER; 

WILLIAM M. MOHL, PRESIDENT, ENTERGY WHOLESALE COMMODITIES; BENJAMIN G.S. FOWKE, III, PRESIDENT AND CEO, 

XCEL ENERGY; MARC S. GERKEN, PE, PRESIDENT AND CEO, 

AMERICAN MUNICIPAL POWER, INC.; ROBERT GRAMLICH, 

INTERIM CHIEF EXECUTIVE OFFICER, AMERICAN WIND ENERGY ASSOCIATION; AND JOHN C. MCCLURE, VICE PRESIDENT, GOVERNMENT AFFAIRS, AND GENERAL COUNSEL, NEBRASKA PUBLIC POWER DISTRICT 

STATEMENT OF MARK C. MCCULLOUGH 

Mr. MCCULLOUGH. Good morning, Chairman Whitfield, Ranking 

Member Rush, and distinguished members of the Subcommittee on 

energy and Power. Thank you for inviting me here today, and for 

this opportunity to offer the views of American Electric Power on 

this very critical issue. We applaud your efforts to examine energy 

diversity, and are encouraged that you have identified the importance of innovative technology as part of the solution. 

AEP has long been an industry leader in technology development 

and fuel diversity planning, which has led to dramatic improvements in the reliable, efficient, and clean production and delivery 

of our product. Recent AEP initiatives include Mountaineer Plant’s 

2009 startup of the world’s first carbon capture and storage demonstration at a coal power plant, and the commissioning of an 

ultra-supercritical John W. Turk coal power plant, one of the 

world’s most efficient coal power plants. AEP has also demonstrated industry leading technologies in energy efficiency and 

grid intelligence. 

Energy diversity plays an important role in reducing the potential exposure of our company and our customers to major fluctuations in markets, costs, regulations, and electric demand. This allows for the use of the lowest cost resources possible while enabling 

rapid response to demand changes. However, policies that could 

prevent the construction of new base load generating units or force 

the retirement of existing capacity could lead to significant shifts 

to this balanced energy mix and reduce capacity diversity. 

For example, the proposed CO2 NSPS for new sources effectively 

prohibits the construction of any new coal-fired power plant because of a lack of commercially available CO2 control technology. 

Due to these regulations, as well as numerous other challenges facing nuclear energy, our Nation’s electric grid will become increasingly reliant on a single fuel for new base load generation capacity, 

likely eliminating both diversity and flexibility in new power plant 

builds. Federal policy should support fuel diversity, not preclude it. 

The importance of fuel diversity cannot be overstated given. Too 

great a reliance upon any one energy source creates a significant 

risk of exposure to electricity price spikes and supply disruptions. 

Among other benefits, coal and nuclear plants buffer against fuel 

supply disruptions because they can inventory months of fuel on 

site, a fundamental value to any energy security solution with national security benefits. 

Over the past 12 years, AEP has added more than 5,000 

megawatts of natural gas fuel diversity, enabling our company to 

11 

switch between fuel sources based on price fluctuations. While we 

recognize the value that natural gas brings to the diversity equation, AEP is concerned that a prolonged ‘‘dash’’ to gas will lead to 

over reliance on one fuel and have adverse consequences for the 

balance and diversity of the power sector and the economy. 

With the current low cost of natural gas, coal, and uranium, now 

is the ideal time to look to the future and adjust the focus of technology development to truly innovative, revolutionary paradigms 

for energy conversion and use. We support commercialization of 

Small Modular Reactor, or SMR, technology for the next generation 

of nuclear power. For fossil fuels, the United States must invest in 

technologies that show promise of a step change move of the needle 

regarding cost, fuel efficiency, and environmental performance. 

With success, technologies like chemical looping and other new revolutionary technologies will enable our next generation of power 

plants to use coal with extremely high efficiency and ultra-low 

emissions, while producing a pure stream of CO2 with no added energy penalty. These technologies can open a vast, yet untapped, oil 

reserves in this country to enhanced oil recovery production by 

making enormous quantities of low-cost CO2 available for EOR purposes, bringing an even higher level of energy security. 

However, these technology innovations require attention now to 

enable industry to overcome the high cost of commercialization. Encouragingly, as stated in the CURC–EPRI Technology Roadmap, 

the necessary funding to develop and commercialize these concepts 

is not beyond the levels invested in recent years with DOE’s Fossil 

Energy clean coal programs. This funding just needs to be focused 

on the proper technologies. Similarly, SMR development could address nuclear risk that prevents its broad deployment today. 

In summary, AEP urges the development of federal polices that 

promote fuel diversity to use gas, coal, nuclear, and renewable energy in revolutionary ways that minimize volatility and environmental impacts, while increasing energy efficiency. This not only 

addresses energy and economic security in the U.S., but brings 

technology solutions to the globe, where real emission impacts can 

be realized. It is important, as U.S. is now less than 12 percent of 

global carbon emissions and is getting less every year. 

Thank you, chairman and members, for the opportunity to participate in this important hearing. 

[The prepared statement of Mr. McCullough follows:] 

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Mr. WHITFIELD. Thank you, Mr. McCullough, and now Mr. Mohl, 

you are recognized for 5 minutes. 

STATEMENT OF WILLIAM M. MOHL 

Mr. MOHL. Good morning, Chairman Whitfield, Ranking Member 

Rush, Vice Chairman Scalise, and members of the committee. My 

name is William Mohl and I am the President of Entergy Wholesale Commodities. I appreciate the opportunity to discuss the importance of nuclear generation to a diverse electricity generation 

portfolio. My company’s view and my personal perspective is that 

all fuel sources have something to offer, and a diverse portfolio is 

key to a reliable electric grid. This general approach to national energy policy is consistent with the supply planning principles of 

many electric utilities where generation portfolio decisions reflect 

the consideration of numerous factors and numerous risks. 

Entergy is one of the largest nuclear operators in the United 

States. We currently operate 11 nuclear power facilities in New 

York, Vermont, Michigan, Massachusetts, Arkansas, Louisiana, 

and Mississippi. Entergy was the first U.S. utility to voluntarily 

stabilize greenhouse gas emissions, and has earned local, national, 

and international recognition for its leadership on a wide range of 

issues, including those related to environmental policy and corporate governance. 

Nuclear plants are an essential part of this Nation’s energy portfolio. Regional electric grids require a mix of base load, load-following, and peaking facilities. While each regional electric system 

has its own unique characteristics, in general, coal and nuclear 

plants have long supplied base load power, while natural gas-fired 

units have been used as the predominant source of load-following 

and peaking capacity. 

There are 103 operating nuclear power plants in the United 

States, generating approximately 20 percent of the Nation’s electricity. Those nuclear plants operate as base load, high capacity 

factor units that power and help stabilize the electric grid in or 

near many major American cities. Throughout the Nation, nuclear 

generators help keep wholesale electricity prices lower than they 

otherwise would be. 

A simple way of looking at the economic value of the existing nuclear generation fleet is to consider the potential cost of replacing 

it. Using data from the Energy Information Administration, we 

have calculated that replacing the 100,000 megawatts of nuclear 

capacity with new combined cycle technology gas plants would cost 

more than $110 billion. To put that number in perspective, in 2011, 

American utilities invested slightly more than $30 billion in transmission and distribution facilities, less than 1/3 of the nuclear for 

combined cycle replacement cost. Moreover, this replacement cost 

estimate does not include any costs of expanding pipeline capacity 

to serve new gas-fired plants. The adequacy of pipeline capacity is 

a key consideration, as was recently demonstrated in New England. 

Nuclear power is also a crucial contributor to maintaining America’s air quality. Nuclear generation produces virtually no carbon 

emissions. Since 1995, nuclear plants in the U.S. have prevented 

the release of over 11 billion metric tons of carbon dioxide into the 

34 

atmosphere. As reliable sources of base load generation, nuclear 

plants provide a foundation in the power supply portfolio to support emerging wind and solar power projects, which are characterized by intermittent availability. 

Safe operation of our facilities is our top priority. Entergy has 

made capital investments of more than $300 million to upgrade 

safety and security systems at its Northeast and Midwest merchant nuclear plants. We ensure safety and security through a defense-in-depth approach that integrates constant training, robust 

design, multiple layers of redundant safety systems, comprehensive 

plant security, and detailed emergency planning. 

We believe the fuel diversity, economic, reliability, and environmental benefits of nuclear power are clear, but every source of energy has advantages and disadvantages. The bottom line is that 

America needs a balanced portfolio that includes all existing generation technologies while continuing to focus on the development 

of new technologies for power supply resources. Nuclear plants are 

a critical part of that diverse portfolio and provide critical reliability, economic, and emissions benefits to the United States. To 

preserve those benefits for the public, we have to maintain our primary focus on safety while engaging with policy makers, and especially regulators, to ensure that market rules foster open competition and that regulation is rational and evidence-based. 

Thank you for the opportunity to testify today. I look forward to 

answering your questions. 

[The prepared statement of Mr. Mohl follows:] 

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Mr. WHITFIELD. Thank you, Mr. Mohl. 

Mr. Fowke, you are recognized for 5 minutes. 

STATEMENT OF BENJAMIN G.S. FOWKE, III 

Mr. FOWKE. Thank you, Chairman Whitfield, Ranking Member 

Rush, and members of the subcommittee for the opportunity to testify at today’s hearing. My name is Ben Fowke, and I am Chairman, President, and Chief Executive Officer of Xcel Energy. We are 

a public utility holding company headquartered in Minneapolis, 

Minnesota. We serve 3.4 million electric customers and 1.9 million 

gas customers in eight States throughout the upper Midwest, Colorado, panhandle of Texas, and New Mexico. 

The topic of today’s hearing could not be more important at this 

critical juncture for the energy sector. We all share the goal of satisfying the country’s growing energy demands in the least expensive, most reliable, and cleanest way possible. Xcel Energy has 

been successful in pursuing a strategy that has reduced customer 

risk and promoted clean energy while maintaining reliable service 

at a competitive price. Fuel diversity is an important part of that 

strategy. Our system is a strong example of an ‘‘all of the above’’ 

strategy. 

Xcel Energy owns a power generation fleet that includes more 

than 17,000 megawatts of electrical capacity from sources including 

coal, natural gas, nuclear, wind, hydro, biomass and solar. We are 

unique among utilities in our commitment to renewable energy. 

Today, we have about 4,900 megawatts of wind on our system. 

We are also leaders in energy efficiency and innovative State emission reduction and fleet modernization programs. 

Our strategy has put us on track to reduce our carbon dioxide 

emissions over 20 percent from 2005 levels by 2020. At the same 

time, we have been able to maintain power prices at or below the 

national average. 

We are achieving these remarkable results by maintaining a robust, diverse system. Although clean energy plays an important 

role in our electric system, we do continue to rely on coal and nuclear power to provide the low-cost base on which our system depends. 

These reliable energy sources have not stood in the way of our 

environmental achievements: Our company has been able to 

achieve significant emissions reductions despite the recent addition 

of Comanche 3, a large coal plant in Colorado. We are also in the 

process of extending and uprating our three nuclear plants for another 20 years of service. Coal and nuclear energy remain critical 

to the efficiency and reliability of our system. 

For that reason, we have been proactive in seeing the need either 

to invest in coal fleet improvements or to retire and repower aging 

coal plants through programs like the Colorado Clean Air-Clean 

Jobs Act and the Minnesota Emission Reduction Program. Like 

many utilities, we have taken advantage of low natural gas prices 

to serve growing customer demand and allow replacement of aging 

coal plants. However, because of our renewable portfolio, we have 

been able to avoid becoming too reliant on natural gas. Wind energy acts as a natural hedge against fuel price risk, reduces our 

emissions and meets our customers’ interest in clean energy. 

46 

In fact, wind is key to our strategy. We recently contracted for 

wind power in Colorado at a price that is competitive with natural 

gas-fired generation even at today’s low gas prices. As a result, 

we’re now integrating wind at levels that we never before imagined—up to 57 percent of our energy in Colorado in the peak hour. 

Our annual average wind energy will reach 20 percent this year in 

Colorado and 14 percent in Minnesota. Now, the integration of 

these renewables is manageable, but it is not free. At the penetration rates we have achieved, and look to expand, our customers 

bear increasing costs of ensuring system reliability. 

With the help of the wind development community, we are working to modify federal renewable policy to ensure some benefits flow 

directly to utilities responsible for integrating wind on their systems and, by extension, their customers. Importantly, these 

changes, which we call the Customer Renewable Credit, would constitute just a small fraction of the current cost of federal incentives 

flowing to renewable energy. 

Much of our diversification strategy results from our long-standing desire to prepare for federal regulation of carbon dioxide emissions. Without passing judgment as to the wisdom of such regulation, we do believe there are principles that should guide government action in this regard. These principles include the belief that 

legislation is better than regulation; State flexibility is key; and 

Early Action Credit is essential. Because future legislation is uncertain, we are preparing for EPA’s regulation of carbon dioxide 

from existing power plants. We hope that the EPA will allow States 

to develop diverse emission reduction strategies like those that 

have been successful in Colorado, Minnesota, and elsewhere. 

For my company, it is most critical that carbon dioxide regulation gives credit to States and energy companies that have already 

acted early to address carbon issues. Many customers are already 

are paying for clean energy programs and should be rewarded for 

having done so. 

We believe with these approaches to policy, the Nation can assure continued diversity of its energy resources and achieve what 

Xcel Energy has been working towards in our States for more than 

a decade: clean energy and environmental improvement at a competitive price. 

Thank you for the opportunity, and I am happy to take any questions you may have. 

[The prepared statement of Mr. Fowke follows:] 

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Mr. WHITFIELD. Thanks, Mr. Fowke. 

Mr. Gerken, you are recognized for 5 minutes. 

STATEMENT OF MARC S. GERKEN 

Mr. GERKEN. Good morning, Chairman Whitfield, Ranking Member Rush, and the subcommittee members. I am Marc Gerken, 

CEO of American Municipal Power, and I am pleased to have the 

opportunity to appear before you to discuss the importance of the 

electric sector’s fuel diversity. My remarks will focus on the role hydropower can play in these diverse resource portfolios, and also the 

challenges that are faced in the development process. 

Ohio-based AMP is a wholesale power supplier and service provider for 130 municipal electric systems in seven States. Collectively, AMP serves more than 625,000 meters and has had a system peak in 2012 of 3,500 megawatts. Last year, AMP had power 

sales revenue of about $775 million and total assets of about $5.5 

billion. 

AMP is currently constructing four hydro projects on the Ohio 

River at existing U.S. Corps of Engineers locks and dams. These 

projects total more than 300 megawatts and a $1.6 billion investment, which represents the largest deployment of new run-of-theriver hydropower in the country today. 

One of our projects is the Smithland project in Chairman 

Whitfield’s district. Another is the Willow Island project in Representative McKinley’s district. The power from these projects will 

benefit our members in districts of dozens of Members of Congress, 

including Representatives Griffith, Latta, and McKinley. Importantly, AMP’s projects are resulting in around 1,200 jobs through 

a period of 4 years, as well as contracts with major vendors in over 

12 States in this country. 

Our hydro projects are part of AMP’s overall ‘‘all of the above’’ 

energy strategy, which embodies the importance of fuel diversity. 

AMP works with the nationally recognized firm of SAIC to develop 

strategic long-term power supply resource plans for each one of our 

members, and that is a key component in our ability to undertake 

generation investments, and that our members are able to take a 

longer term look at these investments because they care about the 

long-term future of their customers. 

AMP has long used the term ‘‘diversified’’ to describe our portfolio, which includes to own, operate, and then purchase output 

from natural gas, coal, hydropower, wind, solar, diesel, and landfill 

gas generating facilities, as well as strategic wholesale market purchases and a robust energy efficiency program. Our projects represent fuel technology and geographic diversity, and will yield longterm risk-balanced portfolio with predictable rates. 

Run-of-the-river hydro projects are capital-intense, but have 

many positive attributes, as I listed on pages 7 and 8 of my written 

testimony. I would ask you to look at those, because I think as a 

renewable, hydro does set itself apart from wind and solar when 

it comes to load dispatch and other things. 

Of the more than 80,000 dams in the United States, the more 

than 78 gigawatts of hydropower available today are provided by 

just 3 percent of these dams. In an April, 2012, report by DOE’s 

Oak Ridge National lab, found that adding power to the national 

51 

non-powered dams has a potential to add 12 gigawatts of new capacity. Additionally, the National Hydropower Association job 

study shows that between 230,000 and 700,000 jobs could be created through the development of new hydropower. 

Despite hydropower’s positive attributes, the role as a diverse energy portfolio in the process from inception to construction for the 

new facilities is extremely challenging. Most developers don’t enter 

the regulatory process with unreasonable expectations. We understand the need to balance the environmental protection with development. One of the key challenges is to keep costs down and stay 

on schedule, which makes the regulatory process very critical. Developers must carefully time the required modeling studies, the site 

assessments, because the studies have seasonal and weather limitations. A hydropower developer must also have significant capital, 

millions of dollars for larger projects to cover the costs through permitting. Of the regulatory process, we found that the critical path 

sometimes is strictly the PJM interconnection, in our case, that 

could take 24 months and commonly is filled with delays in that 

process. 

AMP’s experience has been—with hydropower projects on nonpowered core dams, key regulatory approvals are FERC license and 

the Corp’s 404 and 408 permits. Some of these studies required— 

are required in the FERC process are repeated in the Corps process. 

In order to obtain a 404 permit, applicants must demonstrate 

that the discharge of dredged and fill material would not significantly impact or degrade the national waters, and there is no—and 

also that there is no practical alternatives to damaging the aquatic 

environment. Prior to the issuance of the 404 and 408 permits, approvals must be provided by the Corps to ensure that the locks and 

dams are not compromised. AMP was the first entity required to 

obtain a 408 permit in lieu of—as well as a 404 permit. We saw 

considerable delays. We witnessed delays in financing, which cost 

us significant dollars, and we see the need to streamline that process. 

What can be done to improve the process and bring more hydropower online is to help diversify the national energy portfolio. AMP 

is pleased that a bipartisan legislation sponsored by Representative 

McMorris Rodgers has been favorably considered in the House. The 

Hydropower Regulatory Efficiency Act will improve the process for 

smaller hydropower projects and require study of additional improvements to a broader scale. 

I believe that fuel diversification is paramount to our Nation’s 

energy security. This includes ensuring that reliability and affordability are considered in rulemakings, impacting existing generation resources, and that more efficient regulatory processes are in 

place to help facilitate the development of new infrastructure to 

meet our Nation’s energy capacity and reliability needs. I commend 

the subcommittee for reviewing this topic, and I wish to thank you 

very much, and will be happy to respond to questions. 

[The prepared statement of Mr. Gerken follows:] 

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Mr. WHITFIELD. Thank you, Mr. Gerken. 

Mr. Gramlich, you are recognized for 5 minutes. 

STATEMENT OF ROBERT GRAMLICH 

Mr. GRAMLICH. Thank you, Chairman Whitfield, Ranking Member Rush, members of the subcommittee. I appreciate the opportunity to be here today to represent the views of the American 

Wind Energy industry. 

As you have heard today from the electric utilities on the panel, 

diversity is a crucial issue for the electric industry. As you have 

also heard, when utilities seek to diversify, wind power is a natural 

choice. Wind power tends to be the next least cost source of new 

electric generation capacity behind natural gas. It serves as a natural hedge, or insurance policy, because fuel price risk is zero. 

Wind energy production has grown dramatically in the last decade. Today wind projects in 39 States and Puerto Rico offer enough 

energy to power nearly 15 million American homes. At least 66 

electric utilities bought or owned new wind power installed in 2012, 

up by 50 percent from just a year ago. Last year alone, $25 billion 

in private investment went into building new U.S. wind projects. 

Wind projects in the U.S. have brought economic growth to rural 

communities; roughly $400 million in property taxes or similar payments to communities; and annual lease payments to farmers and 

ranchers of around $120,000 per turbine over the turbine’s lifetime. 

Already, Iowa and South Dakota produce enough wind energy to 

meet more than 20 percent of their electricity needs, and wind energy produces more than 10 percent of the electricity in 9 States. 

Grid reliability benefits greatly from fuel diversity. Just like the 

Mississippi River takes water from many States and tributaries 

and keeps a steady flow into the Gulf of Mexico, the grid takes 

power from many sources to meet total demand. The grid can provide reliable energy as long as enough power is available from the 

diverse generation sources across the wide geographic areas of our 

power grids. Wind power has been an important part of that diverse portfolio, providing energy at many geographic points around 

the grid, helping grid operators meet demand. 

Diversity promotes reliability because there is operational risk 

for all resources on the system, whether it is from a mechanical 

failure or natural causes. In many cases, what affects other resources does not affect wind energy. Wind turbines continued to operate after Hurricane Sandy, the Japanese tsunami, and the freak 

cold snap in Texas in February 2011. During the Texas cold snap, 

some 50 conventional power plants abruptly shut down due to the 

cold weather, contributing to rolling blackouts. But wind turbines 

continued to produce as expected. Water savings from wind energy 

are another important benefit for utilities and policy makers, especially with large parts of the country still facing a persistent 

drought. 

Fuel diversity requires continued attention and support from 

Congress, utilities, and state regulatory commissions. Without that 

attention, there would be a tendency to rely on a single resource 

and effectively put all of the Nation’s electric resource ‘‘eggs in one 

basket.’’ At the federal level, the primary means of supporting fuel 

diversity has been tax credits. Tax credits played a major role in 

77 

bringing down the cost of shale gas, and they are rapidly bringing 

down the cost of both wind and solar energy. The U.S. wind energy 

industry is now getting back to work building turbines and projects 

after the recent extension of the production and investment tax 

credits. The primary challenge is that renewable tax incentive support has been sporadic and unpredictable. With more policy certainty, like that enjoyed by other energy sources, the wind energy 

industry could invest in the remaining cost and performance improvements needed to finish the job of becoming fully cost-competitive. 

Diversity through wind power development has held rates down 

for homes and businesses across the country. Wind energy costs 

have fallen by 1⁄3 in the last 4 years, and the technology continues 

to improve. Over the long term, wind energy’s zero fuel cost protects consumers from fluctuations in the price of other fuels. Wind 

power is an important component of a diverse domestic energy 

portfolio that promotes economic growth, energy security, and a 

clean environment. 

Again, thank you for the opportunity to be here today. I look forward to answering your questions. 

[The prepared statement of Mr. Gramlich follows:] 

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Mr. WHITFIELD. Thank you very much. 

Mr. McClure, you are recognized for 5 minutes. 

STATEMENT OF JOHN C. MCCLURE 

Mr. MCCLURE. Good morning, Chairman Whitfield—— 

Mr. WHITFIELD. Be sure and turn your microphone on if it is not. 

Mr. MCCLURE. Good morning, Chairman Whitfield, Ranking 

Member Rush, members of the committee. I am John McClure, 

Vice President and General Counsel with Nebraska Public Power 

District. I am here today substituting for our CEO, who unfortunately broke a bone on Sunday and was unable to travel. I appreciate being able to appear before you today to discuss some of the 

significant challenges facing the electric utility industry. 

Everything we do in society, whether it involves commerce, communication, comfort, or convenience, has one or more crucial ties 

to the electric system. Consequently, it is imperative to understand 

the consequences of policies and regulation, since electricity usage 

impacts everything we do. 

I am here today on behalf of the Alliance for Fuel Options, Reliability, and Diversity, or AFFORD, as we call ourselves. We are a 

group of consumer-owned electric utilities serving in 14 States, and 

have recently published a white paper which details our concerns. 

Our message is simple: there is no single option for producing electricity, and due to regional differences and other considerations, 

public policy should encourage electric utilities to pursue diverse 

fuel mixes that account for local, regional and national circumstances. A ‘‘one size fits all’’ energy policy will not work in the 

electricity sector. The chart in the back of the room does a great 

job describing how different the regional mixes are around the 

country, and that is worth 10,000 words that are not in my testimony in terms of educating us about the diversity around the country. 

NPPD is primarily a wholesale power provider, and we have a 

diverse generation mix, especially compared to those in our region. 

Due to the proximity of low cost Wyoming low-sulfur coal, coal is 

a popular choice for fuel. Several large and small utilities in the 

region receive 75 percent or more of their electricity from coal-fired 

generation. At NPPD, we get approximately 60 percent from coal, 

with the remaining mix being nuclear, hydro, wind, and natural 

gas. 

During the past 2 years, NPPD has been planning for the future. 

We began a customer and stakeholder process designed to promote 

dialogue about the choices and consequences of power supply and 

demand side options. We found customers expect the following from 

their power supplier: affordability, high reliability, fast outage restoration, and environmental stewardship. Achieving all of these is 

no simple task, as some choices may serve one or more of the criteria, but may challenge others. 

The final product of our effort will be a new integrated resource 

plan, and must consider numerous areas of uncertainty facing our 

industry. Some of the key drivers of uncertainty include future regulatory requirements for fossil fuel, nuclear and renewables. One 

specific uncertainty involves the future price of carbon emissions. 

As you well know, a number of utilities have decided to close older, 

83 

smaller coal plants because the known cost of more stringent environmental regulations and the unknown cost of future carbon restrictions is deemed either too high or too uncertain to continue 

with coal. 

You also know that natural gas is the current fuel of choice for 

new generation. Its environmental characteristics are superior to 

coal and its widespread development has created a plentiful near 

term supply with attractive pricing. 

While the supply and price of natural gas has been a game 

changer and is a critical part of a diverse fuel mix, it is not a silver 

bullet. What many do not realize is that coal remains a more competitively priced fuel for certain regions of the country due to the 

proximity of supply, especially in the central and western U.S. Natural gas may be a great option if your power plant is located near 

a robust network of gas pipelines, but unfortunately many of the 

existing coal plants do not have access to pipeline capacity to convert from coal to natural gas. 

As was mentioned earlier, we have been through other period of 

major changes. At one time, gas was taken out as a fuel option. 

Now, many of us are concerned coal is going to be taken out as a 

fuel option. We need all of the above. As the owner and operator 

of a nuclear power plant, we believe this, too, must be part of our 

Nation’s mix. Nuclear remains an important part of a carbon free 

generation mix, but significant expansion is now less likely and 

again reinforces the need for diversity. 

Wind and solar receive considerable attention, and like many 

other fuels, are significantly impacted by natural regional attributes and infrastructure availability. Some of the areas with the 

greatest wind potential are relatively remote and have limited 

transmission. 

In summary, as you work through these challenging issues, it is 

critical that policies be developed that promote reliability and affordability through fuel diversity. Thank you for the opportunity to 

testify today. 

[The prepared statement of Mr. McClure follows:] 

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Mr. WHITFIELD. Mr. McClure, thank you, and thank all of you for 

your testimony. 

At this time I will recognize myself for 5 minutes of questions. 

Mr. McCullough, you had mentioned the Turk plant in Texarkana, Arkansas, and I would ask you from the time you obtained 

the first permit or applied for the first permit, how long did it take 

to complete the construction of that plant and begin operation? 

Mr. MCCULLOUGH. We applied for the first permit in the fall of 

2006, and the unit went commercial in December of 2012, so over 

6 years. 

Mr. WHITFIELD. And now is that technology—would you say that 

is one of the cleanest coal burning plants in America? 

Mr. MCCULLOUGH. It is. 

Mr. WHITFIELD. Would you say it is one of the cleanest coal burning plants in the world? 

Mr. MCCULLOUGH. It is. 

Mr. WHITFIELD. And you know, our carbon emissions in the U.S. 

are at the lowest point in 20 years, and as someone indicated in 

their opening statement, the U.S. today has less than 12 percent 

of global emissions. We are responsible for less than 12 percent. 

With that ability to build a plant that clean, if the greenhouse gas 

regulation—when it becomes final, would you be able to build that 

plant in America today? 

Mr. MCCULLOUGH. We would not build that power plant. 

Mr. WHITFIELD. You would not legally be able to meet the emissions standards, would you? 

Mr. MCCULLOUGH. I can’t answer that question entirely. That 

may be true. The economics of the overall situation—when you add 

CCS to Turk, because CCS would be required, it is not commercially available, so we would not be able to meet—— 

Mr. WHITFIELD. Plus it was the first time that EPA ever required 

one fuel source to meet the emissions standards of another fuel 

source, so coal has the emissions standards of natural gas. 

So the thing that bothers me, all of us talk nonstop about ‘‘all 

of the above,’’ but we do know that there is a concerted efforts by 

groups, individuals, and others in the country to eliminate some 

fossil fuels from being used for generating electricity. And of 

course, I am from an area of Kentucky that uses a lot of coal, but 

it is more than just that. In my opening statement, I talk about 

in New England they are talking about how natural gas prices are 

eight times higher because of lack of pipeline capacity. 

Mr. Mohl, you talked about the importance of nuclear energy, 

and yet, they are talking about in New York State they are trying 

to close down the plant—the nuclear plant; that if that were not 

in operation, as they say, New England would be toast. And then 

in California, it talks about California is weighing how to avoid 

looming electricity crises brought on by its growing reliance on 

wind and solar power. 

So when we are out here trying to stimulate the economy, create 

jobs, compete in the global marketplace, I mean, we have to have 

all of the above, and in my humble view, it is irresponsible for 

groups out there trying to deliberately shut down the use of fossil 

fuels, which is one of the base loads of our electricity needs. 

88 

One of the comments that you made, Mr. Gramlich, you had 

talked about the increasing costs—you were talking about the use 

of wind is not free—the increasing costs, and you specifically mentioned system reliability. Would you just elaborate on that a little 

bit for me, please? 

Mr. GRAMLICH. Well, we get questions about reliability a lot, as 

everybody does. It is crucial. I used to work for one of the largest 

grid operators in the country, and it always sort of seemed to me 

that the grid could sort of be viewed as taking from really a thousand sources or more of energy and then trying to meet aggregate 

supply with—aggregate demand with aggregate supply. So wind 

energy fit very nicely, I thought then, and think now, into that 

portfolio. Not as a single bullet, not to run a whole system on, not 

to be relied on by itself, but as part of that diverse portfolio. 

Mr. WHITFIELD. But what do you mean by increasing the cost of 

the system reliability? 

Mr. GRAMLICH. I think that comment was about if you have a 

large grid operator like the one I described, you can add wind energy, significant amounts of it, without the need for significant additional reserves. There are reserves or back-up capacity for all resources, because any of the resources you have heard about today 

or on the grid can go down from time to time. It does not mean 

they are unreliable. It does not mean I am saying any of those resources are unreliable or wind is. But when they are operating, the 

grid can use them and you need a good grid operator with the right 

tools to keep the system—— 

Mr. WHITFIELD. You know, in the fiscal cliff legislation there is $12 billion of production tax credits for wind energy, and in your 

comments, you had mentioned that shale gas would not have been 

successful without equivalent types of production tax credits. 

Would you provide the committee with a detailed analysis of what 

you were referring to with that comment, please? 

Mr. GRAMLICH. I would be happy to. 

Mr. WHITFIELD. Thank you very much. My time is expired. 

At this time I recognize the gentleman from Illinois, Mr. Rush. 

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. Gramlich, wind power is very important to my home State, 

and as I mentioned in my opening statement, 13—at least 13 international wind companies that are headquartered in Chicago. Last 

year, I am sure you witnessed me battling Congress at the end of 

the year to extend the production and tax credit, and many arguing 

that wind is not really a viable source of energy and investing in 

wind is not worth the money. It is money wasted. 

For this hearing, can you discuss the benefits of investing in 

wind on both the federal level as well as the private level, and 

what are some of the advantages of investing in wind, especially 

as it relates to job creation, electricity diversification and reliability, and implications for addressing climate change. I am not 

sure, I was in India several weeks ago, and we had a chance to 

visit the GE facility there in New Delhi, and we—they showed us 

some technology that was dealing with this issue of reliability. I 

don’t know if you are familiar with that, but in their technologies 

that are being developed that would address some of the issues of 

our reliability. 

89 

Mr. GRAMLICH. Sure. Yes, I witnessed that debate about the PTC 

in the last Congress. We are proud to be saying with that extension, the industry is getting back to work in creating a lot of jobs, 

75,000 jobs in the industry. Importantly, we have really brought 

the manufacturing of the wind turbines to this country. Nearly 70 

percent of the 8,000 parts in a turbine are made here. We have 

nearly 500 manufacturing facilities around the country, including 

in Illinois. So we are very proud of the jobs that we are creating 

in our industry, as well as the rural economic development that our 

projects are creating in the communities where wind is being developed, rural Illinois and much of the rest of—— 

Mr. RUSH. Are we exporting that technology? 

Mr. GRAMLICH. I am sorry—oh, exporting. Not so much, but in 

some cases, yes. One of the great strategic advantages of wind energy is these parts are very big, if you have seen them on the highway, which means we have a great opportunity to produce here 

what we deploy here. That is a large reason why we have so much 

domestic production of this technology, compared to other manufacturing sectors that maybe are shipping abroad, and wind energy— 

it is most of—if we keep deploying it here, we are going to be making most of it here. 

Mr. RUSH. How has the wind industry grown in terms of both 

generation capacity, as well as private investment, and why is it 

important for policy makers to understand the trajectory of wind 

power and its potential for the future? 

Mr. GRAMLICH. As I said in my testimony, the industry is respon- sible for about $25 billion in private investment in this country. 

Last year, that is investment that would not have otherwise occurred, and there are significant jobs, as I mentioned before, that 

are resulting from that. The tax credits have been critical to keeping that investment going, and hopefully they will continue. 

Mr. RUSH. Mr. Fowke, in the brief period of time that I have left, 

in your testimony you noted that your facilities are on track to reduce carbon emissions by over 20 percent from the ’05 levels by 

year 2020, while in the same time, you have been able to maintain 

power prices at or below the national average. What kind of strategies have you implemented to achieve these goals and are these 

measures measures that can be replicated at other facilities? 

Mr. FOWKE. I think so. I mean, first, we are very fortunate to be 

in a very rich wind area, so that helps us with bringing in wind 

at a basically very competitive price. Our average wind portfolio is 

at $40 a megawatt hour, which is very close to parody with natural 

gas as an energy source. 

The second thing we did is we got started early. We started 

repowering older coal plants that were relatively small, and we realized that the additional capital improvements wouldn’t make 

sense in the long term. That said, we also built a new coal plant 

at the same time a few years ago. It came online in 2010, which 

is a supercritical coal plant, very efficient, and it allowed us then 

to retire those other, older coal plants, go to natural gas in some 

of them, and still have a good balance of fuel. 

So if you get started early—and we have been working on this 

since 2002—you can do things typically at a better price point than 

trying to do everything all at once, which is one of the concerns we 

90 

see with some of the regulations, is that if you try to do everything 

at once, you can’t find the labor, you can’t find the materials, et 

cetera. So the combination of effectively deploying an ‘‘all of the 

above’’ strategy is how we maintain our competitiveness. 

Mr. WHITFIELD. Gentleman’s time is expired. 

At this time I recognize the gentleman from Texas, Mr. Barton, 

for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. I want to make a brief 

comment before I ask questions. 

I think it is important—not necessarily for this panel, I think 

they get it, but maybe for the audience that will review the 

record—how important it is to have a robust energy market in 

America because we have based our energy policy generically on 

markets in this country. Today, we have got a situation where 

America is literally being reindustrialized in front of us. Companies 

are moving back to America. Manufacturing plants are moving 

back to America. Jobs are being created in America. I think the 

principal reason is because our energy markets are so robust and 

so diversified that we have got the lowest overall energy prices in 

the world. This committee can take credit for that. We have consistently, you know, sometimes up, sometimes down, but overall, 

supported a market-based energy policy. 

With regards to electricity generation, this panel shows the diversity of the electricity gen. We have people that are proponents 

of nuclear power, coal power, hydro power, natural gas power. We 

have got independent merchants, we have got regulated utilities, 

we have got municipal power. We don’t have co-ops, that I am 

aware, today but other than that, we have got it and we have got 

the alternative energy market, the renewable energy market. So 

Mr. Chairman and Mr. Rush, Ranking Member, you have all done 

a great job of putting this panel together. 

Now my first question is to the gentleman from American Electric Power. The ranking member of the full committee in his opening statement said that the new source power plant regulations 

that are being proposed by the EPA are fuel and neutral. Do you 

agree with that? 

Mr. MCCULLOUGH. No, sir, I do not. They are prejudiced towards 

a fuel and against another. 

Mr. BARTON. Let us be honest. You are not going to build a coal 

plant with those regulations, and you will build, probably, almost 

all natural gas. I am in the Barnett Shale, so I am not anti-natural 

gas, but I also have lignite coal plants and I support nuclear power 

and wind power. So I think it is a little bit disingenuous to say that 

they are fuel neutral. They are not. 

The gentleman from Entergy, you are a big proponent of nuclear 

power. Do you think it is possible in today’s market environment 

to build a base load nuclear power plant in America? 

Mr. MOHL. It is very challenging in this environment to be able 

to build a new nuclear plant. Currently there is a handful of them 

being developed down South. 

Mr. BARTON. Yes, where they still have the regulated markets 

and you can roll in the prices. But is the challenge for new nuclear, 

is it more still regulatory and licensing, or is it just the simple fact 

that because of the competition from coal and natural gas, and to 

91 

some extent, wind power possibly, that it is just not cost effective 

right now? It is not economically possible? 

Mr. MOHL. Well really, there are three challenges as it relates 

to merchant nuclear. Low gas prices obviously have depressed the 

markets. Regulation, we need fact-based scientific approach that is 

based on cost benefit, and we need fair and competitive wholesale 

markets. And so you are exactly right, that trying to build a new 

nuclear plant in a wholesale market is just not feasible. 

Mr. BARTON. I want the record to show that we had a witness 

say I was exactly right. If you all will make a note of that. 

I want to go to our friend that is recommending the wind industry. Texas is a big wind state. I am a big proponent historically of 

wind power. What is base load wind generation costs these days? 

What is the per kilowatt price? 

Mr. GRAMLICH. Price does vary by region. We have great wind 

resource in your State. It can be—there are published contract 

prices at FERC for wind power contracts. They—— 

Mr. BARTON. I am not talking—I just want—this is not a trick 

question. I mean, you can build—you can generate coal and natural 

gas, I would say, 3, 4, maybe 5 cents a kilowatt hour. What would 

be an equivalent cost for wind power in a perfect situation? Is it 

below 10 cents, 5 cents? 

Mr. GRAMLICH. There are 3 and 4 cent contracts in your State 

and in the middle of the country. 

Mr. BARTON. But in the right situation, is it fair to say that wind 

power can be cost competitive with other commercial base load 

sources? Is that a fair statement? 

Mr. GRAMLICH. Can be in certain locations. 

Mr. BARTON. OK. My time is expired, but I would like for the 

record an answer—the comments on bidding negative into a competitive market simply to get the tax credit. My coal producers and 

merchant natural gas plant producers in Texas say some of the 

wind producers bid negative simply to keep the windmills turning 

because of the wind tax credit basically gives them a reason to give 

the power away. And my time is expired, but I would like an answer for that, if you would, sir. I yield back. 

Mr. WHITFIELD. Thank you. 

At this time, I recognize the gentleman from California, Mr. 

McNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. You know, I really 

think this is great testimony this morning. I filled my note sheet 

with every one of your testimony, which is very unusual in a hearing, so congratulations and thanks for coming this morning. 

Before coming to Congress, I spent years in the wind industry, 

which does make me somewhat biased, but I agree wholeheartedly 

with the ‘‘all of the above’’ strategy, including nuclear. I love to see 

small modular reactors come online. It is a very good concept, and 

I did have the opportunity in my career to work with Xcel, with 

AWEA, and with the Nebraska Public Power, so it was a great opportunity to get to know some of your businesses. 

We often hear about the war on coal, but withstanding some regional differences that were pointed out by Mr. McClure and Mr. 

Mohl, the war on coal was really about natural gas under-pricing 

92 

coal in most parts of the country. So I hear that refrain often, but 

I have a hard time swallowing it. 

I have some questions, though. Mr. Fowke, would you comment 

on the assistance stability impacts of wind and solar energy in your 

utilities? 

Mr. FOWKE. Yes, the reliability issues increase, obviously, the 

more renewables you have on system. I mentioned in my testimony 

at one point earlier this year, we had 57 percent of our energy coming from wind. So when that happens, you have to quickly back 

down your generation, and typically you want that to be a gas-fired 

generation versus nuclear or coal, because they are designed better 

for those sorts of things. So you have to ramp up and ramp down, 

and you have to follow the load accordingly. And that does—as you 

get higher levels of penetration, increase the cost of having that 

much renewables on your system. 

Mr. MCNERNEY. You mentioned that Xcel is on track to reduce 

carbon emissions by 20 percent with price stability. Would you describe how that is possible? 

Mr. FOWKE. Well as I said before, I mean, it is really getting 

started early. It is taking advantage of the very rich wind resource 

in our backyard. It is retiring all aging coal plants that are probably beyond their service life, particularly with the environmental 

regulations ahead. So I would say it is an ‘‘all of the above’’ strategy to do that, but you could start it early and it is steady and 

flow. 

Mr. MCNERNEY. Good. I like your answers. They don’t last too 

long, so I still have a little time left. I could ask 30 minutes of 

questions if I had the time. 

How would you—Mr. Fowke, how would you—how does wind energy form a hedge against price spikes? 

Mr. FOWKE. You know, that is a great question. Wind, as we all 

know, is interruptible, so we view it—while it has a capacity factor 

for planning, we put a very small capacity factor on it. So it is fuel. 

So you can build it and you can determine how long it is going— 

what it is going to cost over a 20-year period. For us, that is about 

$40 a megawatt hour. Then you compare that to other fuel sources, 

natural gas specifically. Sometimes at $40 a megawatt hour it is 

in the money, as it was when natural gas was at 8 and $10. Sometimes it is a little bit out of the money, as it is today in a very low 

natural gas environment. But it is still a hedge. 

Mr. MCNERNEY. So are you investing in storage? 

Mr. FOWKE. At this point with a low natural gas environment, 

storage is not competitive. 

Mr. MCNERNEY. OK. Mr. Gramlich, would you elaborate on your 

statement that shale has benefitted from reliable credits, whereas 

wind energy hasn’t? 

Mr. GRAMLICH. Sure. I think shale gas is a success story. I know 

this committee has been interested in bringing new options into the 

electric portfolio, and shale gas, people can say a lot about it but 

certainly, it has increased dramatically and changed the game in 

the industry. And also, certainly, the tax credit was—played a key 

role in that. There was, I believe, over 20 years of stability in that 

credit which helped a lot with investors. Our problem with investors, we have many investors who would, as you know—and you 

93 

have the wind patent, I don’t—but as you know, investing in these 

technologies, you could make a lot of cost-reducing investments and 

performance-improving investments if you knew what the market 

might be like a few years down the road. But if you only know a 

year or two at a time, it is very hard to justify those investments. 

So the stability of the credit is as crucial as the value, in terms of 

cents a kilowatt hour. 

Mr. MCNERNEY. Thank you. Mr. McCullough, could you quickly 

explain what SMR development is for nuclear? 

Mr. MCCULLOUGH. Yes. It is the small modular reactor development that you referenced. 

Mr. MCNERNEY. All right, thank you. 

All right, Mr. Chairman, I yield back. Thank you. 

Mr. SHIMKUS. [Presiding] Gentleman yields back his time. Chair 

now recognizes himself for 5 minutes. My staff is bringing—and I 

agree, I think it was Mr. McClure, you mentioned this. This is in 

our committee memo and the briefing chart. It talks about the regional differences. I am in the east north central, 63 percent coal, 

which is a lot different than if you go to California, which is 40- 

some percent hydro, and 20-some percent natural gas. So the point 

being the regions are very, very different. And if we don’t have a 

diversified portfolio based upon the regions, some big wind areas, 

some areas, they don’t have a lot of wind. And if we, in a public 

policy arena, move to really disincentive base load generation, people are going to get harmed. 

Illinois is a 50–50 state, 50 percent nuclear pretty much, 50 percent coal. Although we do have a lot of wind generation, it is still 

very small in the overall portfolio of the generation. Missouri, 

across the line, 85 percent is coal generation. Mr. Barton did mention the price. I mean, it is still base load generation is the low 

priced commodity product, which—so people get harmed and the 

economy gets harmed by high prices, which is really kind of the initial in my opening statement that I wanted to make. 

And just another point before I go to my questions. Mr. 

Gramlich, if you have got a zero fuel cost, how many jobs are there 

that being that commodity product to that generator? My point is, 

none, oK? Coal miners mine coal, take it to the power plant. Good 

paying jobs, good benefits, tough work. In the coal regions around 

the world, they are critical to the southern Illinois economy, the 

West Virginia economy, the Kentucky economy. So I like zero cost, 

but when power is still a high cost generation, even though the fuel 

is no cost, and we do lose the jobs. 

Mr. McCullough, the amount of coal used to generate electricity 

is decreasing—we have all admitted that—from 50 percent to 37 

percent. What policy changes are needed to ensure that the coal 

continues to remain a significant part of our Nation’s diverse generation fuel mix? 

Mr. MCCULLOUGH. Yes, I think as we reflected earlier—and I actually would like to qualify an earlier answer to the chairman’s 

question around the legality of NSPS. We would take the position 

it is not legal because it is the first time EPA has required a technology that is not commercially available. 

Mr. SHIMKUS. I want to highlight that. There are three people 

who talked about supercritical power plants, coal, cleanest. Thank 

94 

you for doing that, but if the EPA rules on greenhouse gas ability, 

these brand new power plants, cleanest in the world, may not be 

able to operate. Is that true, Mr. McCullough? 

Mr. MCCULLOUGH. We could not retrofit Turk plant, the 

most—— 

Mr. SHIMKUS. Because there is no technology? 

Mr. MCCULLOUGH. It is not commercially available. There are no 

vendor—— 

Mr. SHIMKUS. And the other supercritical plants, do you agree 

with that, Mr. Fowke? 

Mr. FOWKE. Yes. 

Mr. SHIMKUS. Mr. Gerken? 

Mr. GERKEN. Yes. 

Mr. SHIMKUS. And that is part of the point that we are trying 

to make from the coal regions. Even though we have the best 

power plant in the world, greenhouse gas—we don’t even have the 

technology to even capture it. And if it is, it is going to—the build 

out of the footprint is going to be in the billions of dollars, and it 

is going to take about 30 percent electricity generation, if you even 

had the technology. 

Mr. McClure, let us talk about this shift in natural gas. I am all 

for it, but I think you alluded to—just like an electricity grid and 

a transmission grid, we may have some pipeline constraints, and 

you alluded that in your opening statement. Can you talk about 

that? 

Mr. MCCLURE. Well, there is a recent example, a very real example in New England that I think many of you have become familiar 

with where high demand for electricity and a very cold snap, high 

demand for gas for heating created a real spike in prices for both 

natural gas and electricity. There are other parts of the country 

where we simply don’t have the gas pipeline infrastructure. We 

could not convert our two coal plants to gas because there is no— 

not an adequate gas line infrastructure there. 

Mr. SHIMKUS. And Mr. Gramlich, that is some of the challenges 

on wind power on the reverse side, just with the transmission grid, 

is it not? 

Mr. GRAMLICH. Transmission is very helpful—— 

Mr. SHIMKUS. Just trying to wield that power to places that it 

might be used. So those are—I think those are especially issues in 

a bipartisan manner that we can talk about is expanding our natural gas pipeline, expanding the transmission grid. 

And with that, my time is almost expired. I would just like to 

say we had a very good hearing on nuclear power last week. We 

talked about the NRC and the filter vent issue and how that is 

going to create new challenges. All we are going to ask the NRC 

to do is make sure before they promulgate rules, they go through 

regular order. Those are additional rules and regulations that are 

very, very costly. 

So I yield back my time and now recognize the ranking member 

of the full committee, Mr. Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you very much. 

First of all, I wanted to comment in his opening statement, 

Chairman Whitfield cited a recent Wall Street Journal article that 

suggested wind and solar power threatened the California grid. 

95 

There are a number of serious flaws with that article, but with the 

San Onofre nuclear generating station offline, the State could face 

some challenges this summer. This is something I am monitoring 

closely. 

Mr. Fowke, my understanding is that for a decade or longer, Xcel 

has been shifting some of its generation from coal to natural gas, 

partly in anticipation of eventual requirements to reduce carbon 

emissions. Can you tell us about the thinking behind that strategy? 

Mr. FOWKE. Certainly, Mr. Congressman. You are right, we have 

been doing it for a decade. These rules—we saw these rules coming 

and we—at the same time, we had an aging generation fleet, natural gas, coal, et cetera. So our decision was to put the money into 

the coal plants that we thought could serve customers for another 

20 to 30 years, and at the same time, retire those that we felt 

would not justify the incremental capital to serve customers for another 20 years. We power some of those plants, and then added to 

that was the—our desire and the State mandate to add renewables. 

And so when you put all of that together, it is kind of an ‘‘all of 

the above’’ strategy. We were able to modernize the infrastructure, 

reduce carbon, and keep prices competitive at the same time. 

Mr. WAXMAN. Would you agree that regulatory certainty is vital 

and the climate legislation would revive that certainty? 

Mr. FOWKE. Absolutely, because everybody in my position is 

making decisions on capital that are in the billions that we are 

going to live with for decades. So you are going to—you are never 

going to have perfect certainty, but regulatory uncertainty is probably one of the biggest risks we face each and every year. 

Mr. WAXMAN. Do you support a clean energy standard? 

Mr. FOWKE. We have advocated—we believe it is inevitable there 

is going to be regulation. It is already here, and we think the important thing is that it is sensible and it gives time, it gives flexibility, and it gives that certainty that you talk about so we can get 

started on whatever the rules are. 

Mr. WAXMAN. Thank you. Well, Xcel is not alone in wanting Congress to provide regulatory certainty. Other companies represented 

on today’s panel have been supporters of a range of policies to address climate change. Mr. Mohl, Entergy supports a tax on carbon 

pollution, is that correct? 

Mr. MOHL. We support some type of market-based price signal 

that puts a price on carbon emissions. We believe that makes a lot 

of sense. We believe that is better than a command and control 

structure. We believe that that provides the incentive to develop 

new, cleaner technologies. 

Mr. WAXMAN. Thank you, and Mr. McCullough, AEP previously 

supported legislation to establish an economy-wide market-based 

system to reduce carbon emissions and continues to support a federal legislative approach to climate change. Is that right? 

Mr. MCCULLOUGH. We do support a legislative approach over a 

regulated approach, and depending upon the details, would be very 

supportive. 

Mr. WAXMAN. Thanks. There is no question the United States 

will need to address climate change. The threat is not going away. 

Delaying action will only increase the urgency of the problem. 

Entergy, AEP and Xcel are some of the biggest utilities in the 

96 

country. Together, they operate across the country. Do you all 

agree that the best way to address climate change is through legislation from Congress? 

Mr. FOWKE. Speaking from Xcel, yes. 

Mr. WAXMAN. OK. Mr. Mohl? 

Mr. MOHL. Again, we believe that whether it is legislative or regulatory, that we do need some type of market-based price signal in 

order to address that issue. 

Mr. WAXMAN. Well, you can only get that from Congress. Mr. 

McCullough? 

Mr. MCCULLOUGH. And again, with the qualification about the 

details, we would support it. 

Mr. WAXMAN. OK. Mr. Chairman, when utilities tell us they are 

looking for regulatory certainty, they are not talking about bills 

that delay action. They are looking for real action and thoughtful 

policies. They want Congress to establish the rules of the road so 

they can plan for the future and make the appropriate investments. Utilities want Congress to act and I want Congress to act, 

but if Congress doesn’t act, the President must do everything he 

can. When future generations look back on this time, they won’t 

care whether we enacted my preferred approach or your preferred 

approach. They will simply ask whether we acted before it was too 

late. This is the moral imperative of our time, and we must address 

this challenge for the sake of our children and future generations. 

That is what the President said. I support what he said, and I hope 

we in Congress can get together and pass the legislation, rather 

than have action imposed only through regulation at the Executive 

Branch. But if we can’t get anything else, I would welcome that 

regulation to make sure that we reduce the carbon emissions. 

I yield back the balance of my time. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

Ohio, Mr. Latta, for 5 minutes. 

Mr. LATTA. Well thank you very much, Mr. Chairman, and I also 

want to thank you very much for the hearing today. I think it is 

very, very informative and I appreciate all of our panelists for 

being here today. 

As some of you know—who are on the panel know my district. 

I represent northwest, west central Ohio, and I have about—according to national manufacturers, about 60,000 manufacturing 

jobs. It goes anywhere from light manufacturing to heavy manufacturing. I have got small folks out there, big folks out there. But 

when I go out—and I probably, since last August have gone 

through 200 facilities, businesses, schools across my district, and 

when I am talking to my—especially on the manufacturer’s side, 

that base load capacity is absolutely essential. 

And the two things I hear from the folks when I am back home— 

well, there are four, but the two I am going to mention right now— 

the number one issue that is always brought up is regulations. And 

the things that drive their costs and the things that prevent them 

from going ahead are regulations. And then going into that next 

area is when we talk about energy costs, because again, they cannot compete in this market today, not just in Ohio or the Midwest, 

but across the world, if we don’t have energy costs that are reasonable that they can get out there and produce that product. And so 

97 

it is absolutely essential, as Mr. Shimkus pointed out on the map 

that he held out about east north central, Ohio is included in that 

area, along with Illinois, Indiana, Michigan, Wisconsin. And we 

do—we are looking at about 63 percent of coal being used in that 

area, and even higher in parts of my area. 

So if I could start, Mr. McCullough, in your testimony, because 

it just jumps right out at me, on page nine you were talking about 

the shutdowns of coal-fired plants, that once these additional plant 

retirements, combined with already announced retirements around 

20 percent of U.S. coal fuel will be shut down within the next few 

years. And so my first question is, are we going to have energy at 

the same cost, or will energy costs go up not only for you to 

produce, but also for the end user, for the manufacturer, for the 

farmers in my district—and again, I represent the largest number 

of farmers—senior citizens, small businesses, grocery store owners. 

What is going to happen to that cost? 

Mr. MCCULLOUGH. That is a very good question, and one that 

gets misinterpreted quite often. The coal plants that we will retire 

are largely running today, and they are running because they are 

very competitive. As they move out of the generation stack, it does 

mean, naturally, that those units higher in the stack are now going 

to generate power and then any replacement capacity obviously involves capital costs and new cost of energy associated with that. So 

energy costs will go up as units retire. 

Mr. LATTA. Well, and again, I think it is important right there 

because I think as you mentioned, a lot of folks out there think we 

can switch over to something that is going to be, all of a sudden, 

voila, we are going to throw a switch and something else is going 

to happen. We are very fortunate in the State of Ohio with the 

Utica shale that has been found and we are all for an ‘‘all of the 

above’’ strategy which we have been pushing since 2008. 

As was mentioned a little bit earlier in the testimony, is it economical or can you even convert a coal-fired plant over to a natural 

gas plant? 

Mr. MCCULLOUGH. We will be converting just a few plants to 

natural gas, but that will be for capacity reserve reasons, not for, 

you know, overall energy economics. You lose some efficiency, as 

these units are designed to burn coal and gas can’t get steam temperatures to the same efficiency levels that it was designed for, so 

it is not going to be a very efficient use of natural gas, as you try 

to meet the energy needs of your jurisdiction. 

Mr. LATTA. Thank you. I am going to switch briefly and quickly 

to Mr. Gerken with AMP, especially in my area, out my back door 

I can see the four wind turbines that were first in operation in 

Ohio, and then with the solar field over Napoleon, the gas plant 

over in Freemont. If I could just ask you quickly, despite the many 

benefits behind hydro, building the new projects is increasingly difficult due to new upfront costs. What are the reasons for some of 

these costs, and can Congress do anything to alleviate that, on an 

economic scale? 

Mr. GERKEN. The hydro projects are very capital-intense, as I 

said. One of the problems is we started the permitting on the—all 

of these plants in 2005, and they will come online in 2014 and 

2015. And so the regulatory process is in need of reform. If you ask 

98 

anybody, even big investor owners are saying they need the licensing and permitting streamlined. 

We were in this process. I talked a little bit about the 404 permit 

and the 408 permit. We were the guinea pigs on the 408 permit. 

We were the first ones out of the block. We had four projects. Needless to say, it took—and each district handled it different and you 

had to go from the district to the division and then headquarters 

and then back and back and back and back. To give you an idea, 

we were permitting the last phase of the Prairie State coal plant 

in June of 2010, and then we were delayed on being able to get the 

permit—excuse me, we were financing the Prairie State project in 

June of 2010. We were waiting for the 404 permit to finalize the 

financing for the hydro projects, which was $1.3 billion. We didn’t 

get that permit until December 13. If you remember, 2010 was 

when Build America bond were available, and we were trying to 

get to market. We actually financed three days later. It cost us 60 

basis point difference in that spread on a $1.3 billion bond sale. 

And so we need to streamline it. The Corps are good operators. 

When you operate these plants, the Corps does not have a priority 

and it is not their mission to develop hydro. I think with NHA and 

a lot of other interested parties, we are trying to streamline that 

process, but there—we would like to have some help there. 

Mr. LATTA. Thank you. 

Mr. WHITFIELD. Gentleman’s time is expired. 

Mr. LATTA. My time is expired and I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and thank our panel for 

being here. 

In February of 2012, the Federal Energy Regulatory Commission 

initiated a number of efforts to coordinate the fuel transition and 

minimize concerns from both electric and gas industries. FERC received stakeholder comments and hosted five regional technical 

conferences in 2012 to discuss gas/electric interdependence in relation to scheduling communication and electric resource adequacy 

and reliability. Did any of you participate in any of these technical 

conferences, and if you did, do you have any feedback? Was FERC 

responsive to some of your concerns? Did anybody participate? 

Mr. MCCULLOUGH. I did not participate personally, but someone 

from my staff did, and we are happy that FERC is hearing the concerns. We await strong action toward the harmonization of the 

electric and gas industries. 

Mr. GREEN. OK. Anybody else that has comment on that? 

Mr. MOHL. Same comment for Entergy. We believe that is definitely headed in the right direction and something that is critical 

in the long run. 

Mr. GREEN. OK. Mr. Fowke, you testified that Xcel recently 

added a large coal plant in Colorado, and that you are also in the 

process of extending and updating three nuclear plants for another 

20 years of service, yet several of your colleagues on the panel testified as to the market conditions that are making it difficult for 

coal or nuclear plants to come online. What is the secret of Xcel’s 

success? 

99 

Mr. FOWKE. Well, I—let me just—to be sure. I don’t think that 

same plant today would be permissible under the rules and the political realities, but we had it approved—— 

Mr. GREEN. Are you saying coal plants or the nuclear? 

Mr. FOWKE. The coal plants. 

Mr. GREEN. Coal plants. 

Mr. FOWKE. Yes. So we basically—we started that process, I believe, around the 2004 timeframe. We started construction around 

the 2008 timeframe. We were able to get that plant sited and permitted and avoid some protracted litigation, because we also were 

able to commit to do some things to clean up the environment. And 

so it was a good package and it went forward in our State, and that 

was in Colorado. I don’t think that same deal could be done today. 

I forgot the second part of your question. 

Mr. GREEN. Oh, just that if those—what is different about your 

company that you are doing compared to the other witnesses we 

have? 

Mr. FOWKE. The only thing I would add, and I think everybody 

is trying to do the right job, but we have worked really close with 

our States and we have been very proactive at trying to anticipate 

regulation and other issues early so we can get started early. 

Mr. GREEN. And I know my experience in Texas is doing the 

same thing. We try to do that, and of course, I am also more familiar—you know, we are in the middle of the natural gas boom, and 

there is fuel shifting and obviously benefits, but I also know in our 

expansion with our south Texas nuclear plant, I would love to get 

more electricity out of nuclear power in Texas. We only have two, 

and the one that we lost because of one of the investors is Tokyo 

Power, and we know that story, but you know, for our country— 

and I know it is difficult with the low price of natural gas—whether it is hydro or nuclear, it is upfront investments, and it is just 

difficult to make that work, even with the loan guarantees. It is 

difficult. But although I have to admit, I read just over the weekend that in Europe, we are exporting a lot of coal and it is displacing the natural gas that they are importing predominantly 

from Russia, because natural gas is so expensive in Europe. But 

again, location, location, location. 

Mr. Mohl, you talked at length about the market conditions are 

threatening nuclear power in our country, and you testified preserving the many benefits of nuclear generation depends more on— 

rational and evidence-based regulation, and I agree. Like I said, 

even though we are in a natural gas boom, for long-term and the 

most carbon friendly is either windmills, solar, or nuclear, and as 

much as I love natural gas and the success we are having, specifically what regulations or impediments to new nuclear generation? 

Mr. MOHL. Well, one of the challenges we have right now is— 

that we are looking at is the filtered vents discussion. What is required for the BWR technology? Our point of view is that that 

should be looked at on a plant-by-plant basis, and we don’t need— 

it is probably not necessary to have something that is just kind of 

a rubber stamp that every plant needs to do. 

Mr. GREEN. And I agree, and I think I have signed a letter expressing—— 

Mr. MOHL. Yes, sir. 

100 

Mr. GREEN [continuing]. Concern. It ought to look on a case-bycase basis. 

Mr. MOHL. Absolutely. 

Mr. GREEN. We may not need to change the filter on every plant, 

but it—is there anything else other than that? 

Mr. MOHL. Nothing specifically, I mean—— 

Mr. GREEN. Because the long timeframe is just frustrating. 

Mr. MOHL. It takes a long time to, you know, work through the 

relicensing issues, as we are experiencing on several plants. Again, 

the three challenges we have are low natural gas prices, we need 

reasonable regulation, and we need fair and competitive wholesale 

markets so that we can continue to, you know, participate. And you 

know, we have to be financially viable with these facilities to participate in these markets. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

West Virginia, Mr. McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

I want to go back to Mr. Gerken. You made some remark about— 

actually it was in your testimony that only 3 percent of the dams, 

80,000 dams across America produce electricity. Could you explain 

that a little bit? What is holding that up? 

Mr. GERKEN. Well, one issue is it is very capital intense projects, 

and they take such a long time to develop. And a lot of these are 

not your big—dams or obviously run-of-the-river where we are at, 

so they have smaller capacity name plate. Our projects are, example, 105 megawatts, 82 megawatts, 72 megawatts, and 48 

megawatts. And so from that perspective, our business model fits 

it pretty well. Also I will say in defense of some of the investor 

owns, some of these projects have municipal preference on them, so 

if there is competing license and they are equal, they are going to 

go to a municipal system, the municipal preference. But for the 

most part, it is that capital intense issue. 

What we have been able to do, what sets us apart—and I am not 

sure we would build these projects today, you know, in today’s natural gas markets it would have been tough to justify this, because 

quite frankly, our run-of-the-river hydro are very similar to the nuclear when it comes to cost. But we look at that component from 

we don’t have a fuel to buy and a waste stream on the other 

side—— 

Mr. MCKINLEY. Thank you. 

Mr. GERKEN [continuing]. So I think that is the key. 

Mr. MCKINLEY. On some other matters, I would like to hear— 

coming from a coal State and seeing the pushback, I chuckle over 

the people that say there is no war on coal. They just live under 

a rock if they don’t understand that, and maybe we need to talk 

more slowly for them. But as it relates to natural gas, eventually— 

and we are going to see natural gas rise in its price. We know that. 

Right now with the—three and a quarter something. Where does 

it reach a point—at what price—many of you burn natural gas, but 

when does it reach a price—what is that level, $6, $7 when you 

have to go back to Public Service Commission and ask for a rate 

change? What would be—what is a reasonable expectation when 

we should become concerned about the price of natural gas? 

101 

Mr. MCCULLOUGH. I will take a shot at that. All of our fuel costs 

typically is pass through. 

Mr. MCKINLEY. I know that, precisely, that is what I am saying. 

So the consumer is ultimately going to pay for using this, so I am 

curious, what will that level be? What is the level that becomes—— 

Mr. MCCULLOUGH. Yes, so our average coal cost in 2012 at AEP was about $2.40 a million, so if gas were double or more than that, 

we probably would be called in to justify why we chose a certain 

scenario for building and serving the jurisdictions. I mean, that is 

kind of hypothetical, but certainly when you are passing through 

that much increased cost, it raises awareness at the commissions 

and they would like to understand what—— 

Mr. MCKINLEY. What is the—I know in the timeframe we don’t 

have enough of it, but I am hoping—and we have been discussing 

about global warming and having climate change, so that is probably a worthwhile venture of time, but I am just curious from the 

two of you at the end, Mr. Mohl and Mr. McCullough, do you believe that—I believe there is global warming going on. As an engineer in Congress, I believe there is global warming and climate 

change occurring. But my question to you though is, is it manmade? 

Mr. MOHL. I guess I will take a shot at that. 

Mr. MCKINLEY. I don’t want to let McCullough off the hook 

there, but we will go back to you. 

Mr. MOHL. That is fine. We have utilities in the Gulf Coast and 

you know, I think you could argue whether what is creating the 

issues associated with climate change, but the risks are real. I 

mean, we have seen a substantial increase in the number of hurricanes, the intensity of the hurricanes and the damage to the Gulf 

Coast. And so really, the way we look at it is it is a reality, and 

we need to manage that risk, just like we manage any other risk 

in our portfolio. So we look for opportunities to mitigate—— 

Mr. MCKINLEY. My question, Mr. Mohl, is it manmade? Did we 

cause it? 

Mr. MOHL. As I said, I am not the one to argue that point nor 

do I have the scientific background to answer that question. 

Mr. MCKINLEY. OK, Mr. McCullough, do you think—have we 

caused this? 

Mr. MCCULLOUGH. Well, great question. Again, I am not a climatologist, but the incremental part of CO2 emissions created by 

man is in the minority of overall CO2 emissions. And when you 

look at it from a global perspective, as I mentioned in my opening 

remarks, here in this country we are less than 12 percent of global 

CO2 emissions and getting smaller all the time. So whatever is offered up as a solution needs to be global in nature and marketbased. 

Mr. MCKINLEY. Thank you very much, I appreciate it. Yield back 

my time. 

Mr. WHITFIELD. At this time I recognize the gentlelady from Virgin Islands, Mrs. Christensen, for 5 minutes. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. I wonder if I 

could get a slide up on the monitor, because before I ask any questions, I wanted to just share what the pie for the Virgin Islands 

would look like, compared to the map in the corner, and it is pretty 

102 

much the same for all the smaller territories, Guam, America 

Samoa, and Northern Mariana Islands. And we are working—you 

can put the other slide up. We are working towards diversifying 

our sources of energy, but small size, distance, and other factors 

make it very difficult compared to the States, and we don’t have 

a grid that supplies electricity from other areas, so it is very difficult for us. 

But my first question, and it will be a little bit different. We 

don’t have nuclear energy, we don’t have hydropower, and not likely to be able to move in those directions. Mr. McClure, I see in your 

testimony that NPPD has been doing some planning over the last 

2 years, and we have been talking about an integrated resource 

plan in the Virgin Islands, which is something that I believe is 

really needed. Could you speak a little about the process that you 

have gone through, and describe some of the key components that 

the plan would consider? 

Mr. MCCLURE. Every utility up here goes through an integrated 

resource planning process. It involves developing a number of scenarios. There is a lot of computer modeling that takes place, and 

obviously, we have to make assumptions about the future—the future of fuel prices of various types of fuel, other things, and what 

you are trying to develop is looking both at the supply side and the 

demand side, how do you get the best result for your customers for 

the long-term reliable, affordable price of energy? And again, it has 

a lot of regional aspects to it, but it also has national aspects as 

you look at various policies. 

Mrs. CHRISTENSEN. Thank you. We are looking at wind energy. 

We have it—we are doing some solar, but haven’t really moved towards wind yet, and so Mr. Gramlich and Mr. Fowke—Mr. 

Gramlich, you had said that good operators have been able to reliably add large amounts of wind energy to the systems, and Mr. 

Fowke, wind represents a large part of your portfolio. But for a 

place that doesn’t have a grid that supplies energy from diverse 

areas, like the Virgin Islands, do you think that we could reach 

that same reliability from wind or would we need additional reserve capacity? I am thinking that we couldn’t rely on it. 

Mr. FOWKE. You know without specifics, the smaller the grid and 

the larger the one single source of wind would be, I think the more 

problems you would have making sure that it is integrated efficiently and reliably. 

Mrs. CHRISTENSEN. Right, because Mr. Gramlich, I believe in answering another question you did say that having that grid backup 

is really what makes sure that you have the reliability. 

Mr. GRAMLICH. The grid helps a great deal. It makes it a lot easier. 

Mrs. CHRISTENSEN. Thank you. 

I don’t think I have any other questions right—oh yes, I do have 

one. I am sorry. 

Hurricane Sandy, and I guess this was Mr. Gramlich, you talked 

about Hurricane Sandy and the fact that when you had that cold 

spot in Texas, the wind turbines continued to work. But I was wondering about—again, we live in a hurricane-prone area, so I was 

wondering if the fact that you were able to continue to provide 

wind—electricity from the wind from wind power in the Sandy-hit 

103 

areas was because the wind turbines in those areas were still operating, or did they come from a grid from the outside? 

Mr. GRAMLICH. Well, both in the area affected, but I was making 

the point that diversity is critical, and what diversity brings you 

is whatever may affect one resource may not affect the other, and 

you rely on this portfolio of diverse sources of generation so that 

hopefully you can rely on one if you cannot rely on the other. 

Mrs. CHRISTENSEN. So both the wind sources in the Sandy-hit 

areas worked and also it was supplied from the other? 

Mr. GRAMLICH. Right. 

Mrs. CHRISTENSEN. And I just want in closing to agree with what 

our Ranking Member, Mr. Waxman, said in the opening statement 

on the importance of climate change being a part of any energy 

conversation. We always focus on the cost, of course, of electricity 

production in these discussions, but it is also important to consider 

the cost of not reducing carbon emissions, the cost to the public 

health, the cost in the storms. And when you factor all of those in, 

really, the cost of electricity from fossil fuels with high emissions 

if we are not able to control those, the cost is really much higher 

than what we usually represent is the cost. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time I recognize the gentleman from Colorado, Mr. Gardner, for 5 minutes. 

Mr. GARDNER. Thank you, Mr. Chairman, and thank you to the 

witnesses for being here today. Mr. Fowke, welcome to the committee. Thank you so much for taking your time. 

As you know, my district in Colorado is a very diverse energy 

district. It spans from the Mexico, Oklahoma, Kansas, Nebraska, 

Wyoming borders, so it is a district that has tremendous land area 

and a State that has a great deal of energy diversity. My district 

alone has one of the Nation’s most promising oil and gas resource 

place. It has ethanol plants, about four ethanol plants, a number 

of biofuel—biodiesel plants. It has solar manufacturing. It has wind 

manufacturing. It has a coal mine, and so it really does present a 

truly ‘‘all of the above’’ strategy. I think I have at least one Xcel 

power plant in the district as well. 

Over the past several years, though, the State legislature, along 

with Governor Ritter, Governor Hickenlooper, the congressional 

delegation has worked on the Colorado SIP, and I believe the Colorado SIP has bipartisan support. The entire Colorado congressional 

delegation supports the SIP, the governor supports the SIP, the 

great bipartisan appeal. But recently, the National Parks Conservation Association and Wild Earth Guardians have filed a notice 

to appeal EPA’s approval of Colorado’s State Implementation Plan 

regarding regional haze, and Xcel has been a great player in this, 

and Xcel continues to support the SIP. Is that correct? 

Mr. FOWKE. We absolutely continue to support it. 

Mr. GARDNER. What do you think ends up happening? I mean, 

this is an idea that has such tremendous bipartisan support in Colorado. What ends up happening with States like Colorado that 

truly do come together, creating a SIP that is recognized by both 

sides as a step forward, and then you have this litigation that happens? What do you think the end game is around the country for 

SIP? 

104 

Mr. FOWKE. I think it is a model for how you can accomplish responsible and cost effective environmental leadership, and you 

know, the fact that the EPA agreed with that SIP program—and 

by the way, we are facing the same thing in Minnesota and have 

the same kind of lawsuits as well. I think it shows that—— 

Mr. GARDNER. Same bipartisan support? 

Mr. FOWKE. You have bipartisan. You can get something done at 

the State level, you can get EPA to buy off on it and you still are 

not going to make everybody happy, and that is just the way that 

works. But it has been, I think, a model that we could look at going 

forward. 

Mr. GARDNER. And we have seen tremendous development of 

natural gas in my district as well, and Xcel Energy, you are using 

that energy within the State of Colorado, is that correct? 

Mr. FOWKE. That is correct. 

Mr. GARDNER. I wanted to talk to some of the other panelists. I 

heard the mention of hydropower as well. Colorado has a renewable portfolio standard, but however, hydropower is considered not 

to be a part of that. I think micro hydro is considered to be a part 

of it, but nothing beyond on a large scale. If we were to see the 

inclusion of hydropower at a larger scale, would we increase the opportunity to use hydro as part of a renewable portfolio standard, 

Mr. McCullough? 

Mr. MCCULLOUGH. Yes, I think we would. Any incentive or motive to move forward with hydropower would be helpful in moving 

it along. 

Mr. GARDNER. Mr. Mohl? 

Mr. MOHL. Absolutely. 

Mr. GARDNER. Mr. Fowke? 

Mr. FOWKE. Yes, I think so. 

Mr. GARDNER. Mr. Gerken? 

Mr. GERKEN. Yes, I do, and to give an example is we have members in Michigan and Michigan was moving forward with an RPS 

standard, and we had five municipals in Michigan that actually— 

the State carved out specifically their participation in these 

projects we had, so I think you will see some movement there, most 

definitely. 

Mr. GARDNER. Very good. Mr. Gramlich, if you want to answer 

that question or not? Mr. McClure? 

Mr. MCCLURE. Yes. 

Mr. GARDNER. Very good. The other question I would have is to 

Xcel Energy. You have been working on the customer renewables 

credit. Can you give me—I only have a minute left—maybe a little 

explanation for the committee of that idea? 

Mr. FOWKE. Yes, it basically incents and recognizes that utilities 

that have specific amount of renewables on their system do incur 

some ancillary costs, and the more you have, he more you incur. 

It is to help those utilities and their customers bridge some of those 

costs, and it really is a fraction of what the PTC is now. 

Mr. GARDNER. Very good. 

Mr. Chairman, I yield back my time. 

Mr. WHITFIELD. Thank you. 

At this time I recognize the gentleman from Texas, Mr. Olson, 

for 5 minutes. 

105 

Mr. OLSON. I thank the chairman. 

Welcome to the witnesses. Good afternoon by about 2 minutes 

here. I appreciate your time and expertise. 

In my home State of Texas, we say Texas is like a whole other 

country, and we are. We are the microcosm of America’s diversity 

electricity generation. And like Texas, each region of the United 

States uses a mix of fuels to generate electricity, ranging from coal, 

gas, nuclear, hydropower, and renewables like wind and solar. In 

taking a page from the former chairman, Mr. Dingell from Michigan, from his way he works here in the committee, I am going to 

ask all of you a question. Pleas answer yes or no. 

Start with you, Mr. McCullough. Is fuel diversity important to 

keeping energy prices low? Yes or no? 

Mr. MCCULLOUGH. Yes. 

Mr. OLSON. Mr. Mohl? 

Mr. MOHL. Yes. 

Mr. OLSON. Mr. Fowke? 

Mr. FOWKE. Got to go with yes. 

Mr. OLSON. Got to go yes. Mr. Gerken? 

Mr. GERKEN. Yes. 

Mr. OLSON. Mr. Gramlich? 

Mr. GRAMLICH. Yes. 

Mr. MCCLURE. Yes. 

Mr. OLSON. OK, six yeses. OK, here we go with question two. Is 

fuel diversity important for reliable electric service? Yes or no? 

Mr. MCCULLOUGH. Absolutely, yes. 

Mr. MOHL. Yes. 

Mr. FOWKE. A qualified yes. 

Mr. GERKEN. Yes. 

Mr. GRAMLICH. Yes. 

Mr. MCCLURE. Yes. 

Mr. OLSON. OK, 5.9 yeses. Is fuel diversity important for keeping 

lights on or storing electricity quickly during major weather events 

or natural disasters? Yes or no? 

Mr. MCCULLOUGH. Yes. 

Mr. MOHL. Yes. 

Mr. FOWKE. Yes. 

Mr. GERKEN. Yes. 

Mr. GRAMLICH. Yes. 

Mr. MCCLURE. Yes. 

Mr. OLSON. Oh, 6.0, all right. And the final yes or no question, 

to ensure affordable, reliable electricity, should federal policies support fuel diversity? Yes or no? 

Mr. MCCULLOUGH. Yes. 

Mr. MOHL. Absolutely, yes. 

Mr. FOWKE. Yes. 

Mr. GERKEN. Absolutely, yes. 

Mr. GRAMLICH. Yes. 

Mr. MCCLURE. Yes. 

Mr. OLSON. Wow, 6.0 again, a total of 23.9. Thank you, gentlemen. 

The Lone Star State is the fastest growing State in the country. 

In a stat that matters in this town, last census, the 2010 census, 

we picked up four new congressional districts because of our 

106 

growth. We all know more people means more homes, more commerce, more industry, more need for electricity generation. ERCOT 

is the agency in our State that regulates most of the electricity in 

the State, about 90 percent of it, and they did a recent study that 

says we may have a power crisis by 2014 unless we have new 

power generation brought up online. We will be short 2,500 

megawatts is their estimate. If we have a heat wave like the August before last, we were over 100 degrees in every part of the 

State for over a month. If that happens again, we will have brownouts or blackouts. We need more capacity. And yet, any time my 

State has tried to take steps to address this shortage with coal, the 

Federal Government, through EPA, coordinated with the environmental groups, has stopped these projects dead in their tracks. One 

such project is a proposed pet coke plant in Texas called the Las 

Brisas Energy Center that has been stopped dead again by EPA 

after they slow-walked the project for more than 3 years. Pet coke 

is a byproduct from the firings right there in the Gulf Coast. I am 

going to have an op-ed in tomorrow’s Hill that details the setbacks 

Las Brisas endured. EPA blocked the permitting process, even 

though the Texas State agency authorized by federal law to enforce 

the Clean Air Act granted the permit to Las Brisas. Las Brisas 

would have been a state-of-the-art facility, featuring a ‘‘poshing 

scrubber’’ to limit sulfur dioxide emissions, a mechanism to collect 

particulate matter, and an activated carbon ejection system to remove mercury, which would have ensured better air quality than 

some of the older plants on the Texas power grid. And yet, the environmental groups and EPA blocked it, putting reliability at risk 

for Texans. 

A very short question for you, Mr. McCullough, and you, Mr. 

McClure, Mr. Gerken. In your opinion, is this treatment typical of 

President Obama’s EPA? 

Mr. MCCULLOUGH. We do see very harsh regulatory action 

against fossil fuels, yes. 

Mr. OLSON. Mr. McClure? 

Mr. MCCLURE. I would agree that fossil fuels are—— 

Mr. OLSON. And finally, Mr. McCullough—I had Mr. 

McCullough. Mr. Gerken. 

Mr. GERKEN. Yes, I believe so. 

Mr. OLSON. OK, I don’t want to put any words in anybody’s 

mouth, but it is pretty clear to me that President Obama is keeping 

a campaign promise. He is keeping his word that he said with the 

San Francisco Chronicle interview in the summer of 2008—and 

this is a quote—‘‘If somebody wants to build a coal-powered plant, 

they can. It is just that it will bankrupt them because they are 

going to be charged a huge sum for all the greenhouse gas that is 

being emitted.’’ 

I yield back the balance of my time. Thank you. 

Mr. WHITFIELD. Thank you. At this time I recognize the gentleman from Illinois, Mr. Kinzinger, for 5 minutes. 

Mr. KINZINGER. Thank you, Mr. Chairman. Thank you to the witnesses for being here today. We appreciate it. 

Mr. Mohl, I want to thank you for being here, and I want to echo 

some of the comments that I have heard from power companies in 

Illinois. 

107 

It is interesting to me—who would have imagined that 10 years 

ago we would be discussing the negative impacts that an oversupply of natural gas would have on our electrical grid. My district 

is home to eight nuclear units, and Illinois gets 1/2 of its power 

from nuclear. 

Mr. Mohl, if the price of natural gas stays at its current market price of $4 a unit, will nuclear maintain its 20 percent share, and 

if not, why not, and what can be done to ensure diverse energy supply? 

Mr. MOHL. Well as I mentioned, the three challenges we face 

from merchant nuclear, which you have in Illinois, the low gas 

prices, which are suppressed market prices, we need reasonable, 

fact-based, scientific regulation that uses cost benefit analysis, and 

we need fair and competitive wholesale markets. So there are a 

number of things that really have to happen for these plants to be 

able to continue to operate. 

Mr. KINZINGER. What can we do—so I mean, do you have any 

ideas offhand? So you are going to continue to have natural gas at 

that price? 

Mr. MOHL. Well, I mean, natural gas prices are what they are. 

We have to deal with that situation. I mean, that is part of the 

market. Where we have opportunities is to make sure that when 

we look at imposing additional costs for whatever reason that may 

be—— 

Mr. KINZINGER. Regulations, requirements, stuff like that? 

Mr. MOHL. Yes, right, that that—you know, we take a scientific 

approach, it is fact-based, and we use cost benefit. And when I say 

cost benefit, I don’t mean doing things on the cheap. 

Mr. KINZINGER. Sure. 

Mr. MOHL. What I mean is we are looking at the best alternatives. 

Mr. KINZINGER. And we would like to see the NRC, for instance, 

implement cost benefit rules and analyses. That would be nice. 

Mr. MOHL. And then lastly is, you know, we need competitive 

wholesale markets, and they need to be free markets so people 

have the opportunity to earn a return on their investment. 

Mr. KINZINGER. Now let me ask you, too. You state in your written testimony that throughout the Nation, nuclear generators help 

keep wholesale electricity prices lower than they otherwise would 

be. Can you further explain that? 

Mr. MOHL. Well sure. We talked about nuclear generation operates at a 90 percent capacity factor. It is high capital investment, 

low incremental fuel, so they are one of the first resources in a 

stack, and so they operate very efficiently and they operate a significant portion of the time. And so that is what makes them attractive. 

Mr. KINZINGER. And that is what is keeping companies like yours 

competitive in this environment? 

Mr. MOHL. Yes, I mean, it does. Keep in mind the challenges 

that I mentioned. Those are still challenges, even though they are 

base load resources. 

Mr. KINZINGER. Understood. 

And for everybody, is having a diverse fuel mix ranging from fossil fuels to renewables critical for long-term planning? Do you need 

108 

diversity to protect against unforeseen fuel shortages or disruptions? We will start over there, sir. 

Mr. MCCULLOUGH. Unequivocal yes. 

Mr. MOHL. Absolutely. 

Mr. FOWKE. Very helpful. 

Mr. GERKEN. Yes. 

Mr. GRAMLICH. Yes. 

Mr. MCCLURE. Yes. 

Mr. KINZINGER. That is not a big surprise. Is having a diverse 

fuel mix important for keeping electricity affordable? 

Mr. MCCULLOUGH. Yes. 

Mr. MOHL. Yes. 

Mr. FOWKE. Yes. 

Mr. GERKEN. Yes. 

Mr. GRAMLICH. Yes. 

Mr. MCCLURE. Yes. 

Mr. KINZINGER. Everybody has got their yes hats on. That is 

good. When electricity rates rise, are the impacts likely to be greatest for lower income consumers or those on a fixed income, or higher income consumers? 

Mr. MCCULLOUGH. When you look at the percentage of discretionary spending that people have, it is obviously a bigger impact 

on lower income. 

Mr. MOHL. It has a huge impact. 

Mr. KINZINGER. And I think you would all agree. We just wanted 

to get that out there. 

When electricity rates rise, can it also affect manufacturers and 

other businesses that are large energy consumers? We talk about 

manufacturing in this country. It is very important in my district. 

Does a higher energy cost, energy price—and when we talk about 

EPA regulations, nuclear regulations, will that affect our business 

climate here? 

Mr. MCCULLOUGH. I think it absolutely could and will if we don’t 

have the diverse portfolio that supports balance and stability in the 

future of energy prices. 

Mr. KINZINGER. Don’t you wish I was your teacher in high 

school? It would be easier to pass every class. 

With that, Mr. Chairman and the witnesses, I want to say thank 

you and I will yield back. 

Mr. WHITFIELD. Gentleman yields back the balance of his time. 

The gentleman from Louisiana—at this time I recognize for 5 

minutes the gentleman from Louisiana, Dr. Cassidy, for 5 minutes. 

Mr. CASSIDY. Hey, gentlemen, I am sorry to be coming at the 

very end. Just when you thought, man, it is over. I apologize. It 

is like a bad day that won’t end. 

Mr. McClure, you mentioned removing fossil fuel as a fuel source 

will increase costs. Clearly, there is a move by a variety of mechanisms to decrease our use of coal, our most plentiful fossil fuel, and 

saying that will have negative effects on electric reliability costs 

and the economy. I see increased utility costs as decreasing manufacturing jobs, if you will, energy intensive manufacturing jobs. 

Can you comment on that, because I think there is a push either 

through carbon tax or through EPA regulation or through a variety 

of other mechanisms to remove fossil fuel from its relative portion 

109 

of our balance, almost kind of agnostic or inconsiderate of the impact it would have on the overall economy. 

Mr. MCCLURE. Well in our system, one of our largest coal 

plants—we have two coal plants—is our lowest cost generating resource. And we have a Nucor steel plant in our system. They came 

to our system because of low cost energy, and they are very much 

concerned as energy prices go up, they become less competitive, 

and they are competing at a global market. 

Mr. CASSIDY. So there has been a consideration of a carbon tax. 

Obviously that is a way to price electricity from fossil fuel at a 

higher level relative to whatever other source you go to. Now, is it 

fair to say that would have a negative impact upon Nucor’s ability 

to hire blue collar middle class workers? 

Mr. MCCLURE. If their costs go up, it affects—I am sure it affects 

their operations and their decisions and who they can hire. 

Mr. CASSIDY. And by definition, energy intensive enterprises are 

energy intensive. 

Mr. MCCLURE. Yes, they are. 

Mr. CASSIDY. OK. And do I know that Nucor is actually a European firm? 

Mr. MCCLURE. No, Nucor is an American firm. I think they are 

headquartered in North Carolina. 

Mr. CASSIDY. Is it? I think I recall once, they were considering 

building either in Brazil or the United States, and I am sure energy cost must have played a role there. 

Mr. MCCLURE. My understanding is they have 60 facilities in the 

United States. 

Mr. CASSIDY. Got you. OK. 

And then you speak of the diversity of fuel sources provides 

lower electric rates. I think that is in your testimony. When you 

say diversity, I have always been concerned that if you look at the 

premium the taxpayer pays to subsidize some renewables, we are 

actually paying a heck of a lot for things like wind and solar. Not 

saying that we shouldn’t encourage their use, but at the same time, 

the cost per megawatt is almost exponentially higher than that 

from fossil fuel sources. Can we really build a grid based upon such 

expensive electricity? 

Mr. MCCLURE. Again, I would come back to the notion of diversity. There are certain parts of the country where wind is very competitive because of great wind conditions, and so those can be very 

low cost—that can be a low cost source of generation. And as has 

been mentioned earlier, it can help stabilize future costs because 

the fuel cost really doesn’t change, but it is regional, like so many 

other issues we have discussed today. In some areas, wind can be 

a very valuable asset. In other areas, it is not even a viable possibility. 

Mr. CASSIDY. Now, when you say that, obviously there is incredible subsidies involved with—per megawatt hour involved with, 

say, wind. So when you say it is total life cycle cost, I am just asking—I don’t know the answer. I am asking to learn. Total life cycle 

cost, if you factor in those subsidies, is it still a good bargain? 

Mr. MCCLURE. I think we are learning a lot in wind. The price 

is coming down and the early wind projects we put in, we decommissioned, but the equipment today is much better and I think 

110 

they will continue to be—the newer equipment, I believe, in the 

right locations will be valuable over the long haul with the subsidies. 

Mr. CASSIDY. Got you. I yield back. Thank you. 

Mr. WHITFIELD. Thank you, Dr. Cassidy. 

That concludes today’s hearing. I want to thank the panel of witnesses. We appreciate your expertise and your time for joining us 

today, and I would also ask unanimous consent that the following 

materials and statements be entered into the record: a statement 

for the record from the American Public Power Association, and a 

statement for the record from the American Chemistry Council. 

Mr. McClure, certainly I want to thank your company for their involvement in the Alliance for Fuel Options, Reliability, and Diversity report, and also, the Wall Street Journal article on the California grid, and the New York Times article on the New England 

gas price situation as well. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. The record will remain open for a period of 10 

days, and Mr. Gramlich and others, we will be in touch with you 

all about some additional information that we asked that you all 

provide. 

But thank you once again. Our next hearing will be on this subject relating to the RTOs, and that will be maybe in a couple of 

weeks, but thank you again, and we look forward to working with 

all of you as we move forward to try to keep America competitive 

in the global marketplace. Thank you. 

[Whereupon, at 12:19 p.m., the subcommittee was adjourned.] 

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